USAGOLD Gold Discussion Forum Archive

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$$$$$$$$$$$$$$ A "PRICE of GOLD" GUESSING CONTEST!! $$$$$$$$$$$$

We shall have a price guessing contest on the closing (Settlement price) of gold for the December COMEX contract (GCZ6) on Thursday, October 5, 2006, ---BUT all entries must be posted to the TableRound before Midnight on Monday, October 2nd, AND ALL ENTRIES must answer THE QUESTION !!

The POG Contest winner -- the closest price guess to the actual Settlement Price -- will receive a "Dutch Treat" -- No, No, No ! I mean one of these four different types of The Netherlands 10 Guilders gold coinage.
IT (<== See that Sir Smeagol ?) could be a:
"King Willem", (Minted 1875 - 1889, Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce; or a "Young Queen Wilhelmina" (Minted 1892 - 1897, Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce); or a "Queen Wilhemina", (Minted 1911 - 1917. Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce); or an "Elder Queen Wilhelmina", Minted 1925 - 1933, Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce) !!!! IT just depends which one SIR MK finds first when he goes down into the dungeon. <;-)

Please go to the USAGOLD link at:
to view these coins.

There will be also be two runners-up prizes for the next closest prognostications --- each winning an one ounce pure Silver Canadian Maple Leaf coin. ( <=== See that Sir Rich ?)

The QUESTION -- (Put on your THINKING HATS !) -- is:

"Who or what put gold to sleep, and who or what is going to wake it up?"

Answers should be in 30 words or more.


1) The Winner is the poster with the Price Guess closest to the Settlement price of the COMEX (most active) December 2006 Gold Contract (GCZ6) on the date of Thursday, October 5th, 2006.

2) Price "Guesses" shall be stated in Dollars and tenths !
(Such as $ 666.6)

3) "Guesses" shall be SHOWN in the SUBJECT BOX location AND enclosed in markers of "Dollar Signs" so as to be OFFICIAL !
(Such as $$$$$ $ 666.6 $$$$$$$ )

4) ONLY one "Guess" per Knight or Lady is allowed, and once that "Guess" has been "taken" -- no one can duplicate it !! FIRST COME has rights to that "Guess".

5) HOWEVER, All "Guesses" MUST be posted before the clock in Denver strikes MIDNIGHT (24:00) on Monday, October 2nd, 2006.

6) AND MOST IMPORTANTLY (as this part MUST accompany your Price prognostication)
--- In order for your entry to be valid, YOU will need to answer "THE QUESTION", in 30 words or more.
LET the CONTEST continue !!

Gandalf the WhiteDid you all see that the CONTEST ENTRY DEADLINE is near ?#14797910/1/06; 00:15:21

----- all entries must be posted to the TableRound before Midnight on Monday, October 2nd, AND ALL ENTRIES must answer THE QUESTION !!

The Invisible HandUK must severe its links with the US of A#14798010/1/06; 01:04:27,,1884879,00.html



Watergate journalist's new book exposes how Bush has kept the US public in the dark about the true costs of the 'war on terror'
Paul Harris in New York
Sunday October 1, 2006
The Observer
President George Bush was braced for one of the toughest fights of his political life yesterday as a fierce row broke out over whether he has been misleading the American public over the worsening violence in Iraq. The crisis also rippled across the Atlantic with claims that THE ADMINISTRATION HID CRUCIAL IRAQ INTELLIGENCE FROM ITS BRITISH ALLIES.


It is of the utmost importance that the EU disconnects itself from the US of A dominance. Failing to do so would result in the EU being dragged by the US of A into WW III.

Yes, this is easier said than done.

The only answer of the European politicians is to borrow the German vision and argue that the EU and US HAVE to further build a free-trade zone.

This is complete nonsense as the US of A only does that which is the best for itself at the expense of everybody else.

This situation lasts already for 60 years. As a result of two world wars, Europe has lost all its power to the US of A.

Europe must now try to free itself from the US of A shackles by autonomously determining its policies.

This being rendered even more difficult by the fact that the UK of GB and NI is not willing, able nor allowed to severe its links with the US of A.

Afghanistan: Why NATO cannot win

Turkmenistan and contiguous Uzbekistan are both above Afghanistan and Pakistan. And that's where the world's fourth largest gas supply is located. This gas has to reach the Arabian Sea through pipelines through Afghanistan and Pakistan.

NATO must open this territory in order to counter the oil/gas monopoly which is in the process of formation . Failing to do so would give the new GLOBAL energy cartel (and its pricing) too much power over the NATO countries

Starting from local conflicts, this global war on oil/gas runs the risk of leading to WW III.

KnallgoldPapergames#14798110/1/06; 03:39:46

As the ETF's come up again,I think it is worth reposting one of Ari's gems which served to me as a big eye-opener on the paper machinations.Yeah I had to re-read it several times and making figures to get it (english not my mother language either).I presented it then to my father which had also interest in it.You should have seen his eyes...

I'm wondering why still anyone would want to buy such derivative schemes-keep in mind this is particularly about Gold.One pre-set to accept before reading: the ultimative Goal of the game is: who has the most Gold in the end? Because he who has it makes the rules.

"Aristotle (10/17/02; 02:29:28MT - msg#: 87615)
R Powell's msg#: 87573, thank you! = = = Plus... an EXTRA SPECIAL note for Gold investors everywhere = = =
RP, Do you realize you're effectively echoing the initial point that I raised, that Pizz concurred with, and that Sierra drove home?

In case you've lost track, it was Kasperjack who appears to insist there IS solid Gold backing (deliverables????) behind this StanBan *product* we've been discussing. Rather than taking the high ground and demonstrating where WE have all erred (as doubtful as that is,) he's instead demanding that WE prove the absence, the ABSENCE(!) of such and such when no indication exists to suggest there would be any substance involved in the first place. So that's where that rests, and I'll leave it there.

Next, regarding that following post of yours. Please get out of your head once and for all your persistent and misguided notion that I "endorse physical Gold to the exclusion of everything else." It's absolutely not true and I'm vexed by the quack characterization it implies. I'm a proponent of many real things (Gold, sandwiches and patio furniture to name a few) and I heartily endorse entrepreneurial efforts and any other eyes-wide-open stock or bond investments. My lasting frustration, however, is with the widespread failure of the many promoters and participants in the wide Gold market to reach FULL DISCLOSURE on what's actually "good as Gold" (uhhhh... that would be GOLD, sir, and NOTHING else) and what's merely "Goldish... sorta... and only during good times."

But hey, let's drive my point home to bed. I've got no problem if Standard Bank wants to offer, and you or anyone else wants to invest in, a £10,000 financial product that pays 2% per annum with a 10% kicker if the price of tea in Shanghai (or pint of ale in London) goes up by 27%. I see nothing terribly objectionable with that.

Are we crystal clear on this, R Powell?

= = = = Moving right along to the main point = = = =

Let's step through the looking glass now, shall we?

Hold on to your hats and maybe take a Valium or two. If you're willing to follow along this is gonna be a helluva thing.....

You know..... it occurs to me, seeing how EASILY some Gold-minded investors may be drawn in by leverage and by less than the Real Thing, I, too, stand ready to accept £10,000 ($15,500) investments for over-the-counter 12-month maturity structured financial products offering a Goldish hue. Let's call them Ari-Instruments.

On those Ari-Instruments I'll pay 2% per annum for use of the money, and throwing caution to the wind (but mostly to make my point) just like Standard Bank I'll promise a (maximum measly) 10% interest payment kicker to the bearer upon the event of Gold's price increasing by at least 27% to $400.

Primarily to ensure the ever skeptical R Powell that everything is right in the world, I imagine I'll hedge my cash exposure to that price-rise event in the following manner: For every FIVE Ari-Instruments I've sold (for which I'll have received $77,500) I'll take up a SINGLE long position through the COMEX Gold futures market.

Are you following me so far? That means I'll deposit $1,350 in margin and if Gold's price increases by $85 during the year I'll cash it out for the leveraged payoff at 100-to-1 ($8,500) from which I can easily pay off the 10 percent interest "Gold-price kicker" on the five Ari-Instruments -- that is, $1,550 each totaling just $7,750 for all five.

In the meanwhile, God only knows what StanBan in my place would do with the balance of the $77,500 (minus the $1,350 margin deposit) received for the five Ari-Instruments for the course of the year, but they sure wouldn't have to do anything else with it even remotely connected with Gold.

But this is what "I'd" do with the cash.

Come follow along. It might prove to be an eye-opener on the nature of the world, especially for folks like Kasperjack who've said I'm full of hot air without any relevance to the real world.

Following that single long, I'd take out TWO additional gold futures positions through COMEX, but unlike the first one, these would both be SHORT. The margin would be $2,700. Then, I'd use about $65,000 of the remaining cash to buy 200 ounces of Gold for delivery to my doorstep.

Are you still with me? As more and more chumps (I mean investors) sign up for my Ari-Instruments and flood me with their cash, I'll always be taking TWO SHORT positions on COMEX for every ONE LONG (plus 200 ounces of Gold delivered to my door) all financed with their money. I assure you, all of my sharpest friends will join in this routine, and thus the price discovery mechanism provided by COMEX will be more inclined to fall than to rise.

As this continues for year after year, I never have to pay the 10% kicker to my investors, needing instead only to pay the paltry 2% which is peanuts when drawn from the broader spectrum of my other banking, finance, and derivative operations. Or how about this? I'll make interest payements with the leftover Ari-Instrument cash that didn't get used for purchases of the fixed ratio of three contract margins (one long, two short) and the 200 ounces of Gold per each five Ari-Instruments which were sold to these poor chumps.

Now get this... here's a beautiful thing. With the downward price pressure, as my long futures contracts suffer losses, it's easy to close them out painlessly using (only) half of my outstanding short contracts as offsets!

Furthermore, as opportunities in the falling market might allow, some of the remaining short positions can be further liquidated (cashed out) through COMEX as a form of compensation -- thus effectively ensuring that the net out-of-pocket expense for the physical Gold I bought and held is always cheaper than the market rate I paid at the time of the order. Think hard on that one and join me in a well-earned smile!

And you wanna know what the REALLY beautiful thing is? For this I want everyone to wake up who's been for years predicating their own leveraged paper Gold longs on predictions about **eventually** there being a massive squeeze on the shorts like me. It ain't gonna happen dudes! If you've been carefully keeping score, you'd see that through this process I've got a physical position that is ounce-for-ounce at least double my net short position.

IF (and that's a big if) there's an unlikely event in which me and my bullion banking buddies can't contain the COMEX price with our two-for-one selling, then we simply announce delivery intentions for a token amount -- that's just a *TOKEN AMOUNT* mind you -- of our physical Gold through the exchange to stand against our short positions.

Wanna know what happens next?

You guessed it! We just sit back laughing at the poor stoppers as these same over-leveraged longs fall all over themselves in their scramble to resell it -- right back to us!! Here's the thing... the thing being that their contracts represented more Gold than they ever had any rightful business or financial ability trying to "control" (and I'm NOT sorry if I'm so bold as to use the one key word always present in the honey-dripping sales pitches of their own commodities brokers.)

These poor clowns are knocked off their feet by their own successful leverage. As we say, the victory was theirs, but their hands were too small to hold it. Quickly they find it's one thing to pay a $1,350 margin to hold a "right" to buy 100 ounces, and it's quite another thing to pony up the full purchase price ($32,000+) for each contract when the chips are down and the grown men at the table aren't blinking. So you see, as fast as they're selling what they can't afford, we're one step behind them with very strong hands. Once again our token bit of Gold brought about the desired turnaround and business continues as before. Again, if you wish to a Gold accumulator at the best prices, think about this process and join me in a well-earned smile.

The Moonshot, the Worst-Case Scenario for my crew would be in the end game where the currency world comes undone and the flood of hyperinflated dollar spending washes over everything with sprees of buying anything and everything tangible in the flight from dollars.

In that case business as usual ceases to be, and conceivably we'd need to deliver up to nearly HALF of our physical Gold holdings to protect ourselves from nominal (bookkeeping) cash losses through the Exchange on our remaining open positions of short contracts.

The prospect of that being very traumatic to us is much diminished, however, given the nature of the product. In times of volatility there are trading/price limits that kick in, and the COMEX Gold exchange stands better than a good chance of its contracts being locked in "fantasy land pricing" while the prices on the physical market run away in round-the-world Gold rush trading. At least a few frustrated COMEX longs will be looking to liquidate the paper junk ASAP and take their cash where the Real action is.

Whether the exchange in Gold derivatives survives or not, the upside is we keep at least half the Gold to ourselves -- my partners and me -- all of which was purchased with other people's money through the Goldish-colored Ari-Instruments. The final small bite for me out of the worst-case-scenario is that we (my crew) would have to sell a wee bit of these Gold holdings on the soaring physical market if, in fact, our previously mentioned long contracts fail to pay out via the Exchange (due to COMEX lockdown) in order for us to cover our measly 10% interest rate kicker due to the $400-Gold-price knock-in as promised in the original terms of the Ari-Instruments. And yes, perhaps we've gotta liquidate just a little more of our remaining Gold at these glorious moonshot prices -- on an as needed basis -- as frustrated owners of the Ari-Instruments reach their 12-month cycle maturity and want to cash out their original principle (£10,000 or $15,500) on these Goldish yet quite impotent paper posers that we designed for them.

Are you a physical Gold Advocate through and through? Then smile with me a well-earned smile as you continue to buy your physical Gold at prices that others have worked so carefully for so long to bring so low for massive acquisition before the Free Gold moonshot.

If, having joined me in my office for the day, you still insist there is metallic virility in Goldish paper investments, then Heaven help you because my crew, my partners and me, we'll take you up on it. We'll work you up and roll you over, maybe make you wiser but none the richer. So please... feel free to pull up a chair and have a cigar, your head filled with promises even as we rape you.

"Golly, Ari, you've changed!"

No, I don't feel that I have. I'm still trying to help you, to wake you up. (It's the falling piano thing -- "Get the hell outta the way!") That, plus I don't want you to be a welfare case while I'm trying to live large after the dollar goes Bolivian. (The quickest road to revolution and communism is a penniless population. I WANT you to have Gold so you won't take mine. There, see? Turns out I'm not so noble after all. I'm just as selfish as the next guy.)

I just figured where attempts at friendship and various flower-filled analogies have continued to FAIL to impress upon some of you the stakes of the game, I thought perhaps a little swim, up close and personal-like, with the sharks might convince you that the blood in the water will be your own unless you heed my words.

It's just tough love, my friend, tough love. And self interest.

Here endeth the "insider view," thus endeth the lesson.

Real Gold. Right now. (What time do you think you have???) Get you some. --- Aristotle "

goldpuppy$$$$$$607.30$$$$$$#14798210/1/06; 09:51:57

$$$$607.30$$$$ Gold chloroformed and effects are now wearing off.
R PowellKnallgold // papergames#14798310/1/06; 10:17:19

Knallgold, I understand that you and many here fully believe that the POG is 100% manipulated by evil, powerful money players (bankers and NWO fiat backers, etc.) whose intent is to profit from their alleged market control or defend the fiat monetary system. Imho there is a modicum, but only that, of truth in this, but mostly on a very short time frame. Please note that I started that last sentence with "Imho". It's just opinion. Assuming that there is an evil, all powerful cabal controling the POG..with the intent to keep gold prices have they been doing these last few years?

As for derivatives, they are simply monetary investments whose lose or gain is "derived" from the price movement of the underlying stock, commodity, price of tea in China, or whatever. Almost all are settled with cash. Delivery is almost a non occurance for the majority in the game, especially in the metals markets (as compared with foodstuffs) and has no direct bearing on the workings of the market. I did NOT say no direct bearing on prices...but on the workings of the markets.

While reading that post from Aristotle from years ago I wondered how the position he described would have fared over time. Or, to make it simple, how have the paper shorts done as the POG moved up from the $300/ounce level? I fear Ari would have had to take a beating on those shorts OR actually deliver his physical to cover them. Simultaneously buying physical while shorting the same amount on paper is a simple hedge. Notice the SAME AMOUNT there. Was Ari's position hedged in equal amounts? What was the end result? You figure it out!

He also stated.....

"These poor clowns are knocked off their feet by their own successful leverage. As we say, the victory was theirs, but their hands were too small to hold it. Quickly they find it's one thing to pay a $1,350 margin to hold a "right" to buy 100 ounces, and it's quite another thing to pony up the full purchase price ($32,000+) for each contract when the chips are down and the grown men at the table aren't blinking."

Now then, let me state some FACTS (not opinions) and you can check if you've a mind to, that each + every Comex contract has an expiration date, and after that delivery dates. Anyone holding a contract...either long or short...MUST...MUST...offset or close that position by expiration date OR take the risk of "being assigned" which means actually having to purchase or deliver the physical. Soon thereafter ALL open positions for that expired time period are matched up and delivery/pickup schedules + locations are set. Futures and options are bought + sold through brokerages. brokers will NOT let anyone be assigned to deliver or take delivery without having sufficient funds. Why? Because they'll get into BIGTIME trouble if they do.

However, anyone can close (offset) any position(s) at any time prior to the expiration date. This again is not opinion, it is a fact. Those who can not deliver on shorts OR those who, as Ari mentioned, do not have the funds required to accept (PAY) for delivery MUST...MUST..offset or close their positions by the expiration date.

End result...those "poor clowns" using leverage who can not pony up the additional fund OR do not want delivery..HAD to and were force to get out by expiation. So they sold for more what they had bought for cheaper...making a paper (dollars + cents) monetary profit. This is exactly what they intended! Were they cheated out of their physical gold? No, assuming as Ari says they do not sufficent funds, then they never intended to buy physical from the exchange warehouses. Does a share of General Motors stock imply the intent to take physical possession of part of GM's holdings?

Have they lost their leverage to the PRICE of gold. Yes, if they simply close, but they can close the expiring month's contract and, if they are so inclined, simply buy the next or any of the following months. This, I believe, is what ANOO intended to do, or so he claimed...simply "roll over" the position as expiration approached. Nicely done ANOO. Congrats on your profits!

Futures + options on the same are almost 100% a monetary game. Very few contracts are NOT offset in comparison to the outstanding open interest. Physical gold in hand is physical possession of gold. Why must there be such confusion?

And, for the record, I hold physical metal (silver) and personally I highly recommend doing such. I bought mine through our host and highly recommend their professional service. And, as Aristotle, I do not find anything unusual about holding physical metal AND playing in the paper casino..whether stocks, futures or options. Why do I find myself scorned or ridiculed for such? For those of you who hold Knallgold's view that the futures markets exist mainly to "control or manipulate" prices...then let me state that I'm usually (on net) long the metals. Doesn't this place me as one fighting against the shorts? I don't see it this way, but wouldn't you if you subscribe to the total manipulation theory?

And finally, I do miss sparing with Aristotle. It would be nice just to know that he or she is still with us and in good health.
happy weekend to all.....!

Thoreauly@ Sundeck #147940#14798410/1/06; 10:42:54

My understanding is that the correlation between the NAHB Index and the SPX is strengthening, given how massively housing now affects consumption and how massively consumption in turn affects GDP.

Furthermore, in putting the question to economist John Williams at (see link) about the housing collapse prompting the Fed to slash rates to the bone and print money out the wahzoo, leading to the collapse of the dollar, followed by a collapse of the bond market (as foreign central banks begin sell off their massive holdings of US bonds) and thus a hyperinflationary depression, here's what he said:

"Your scenario is quite plausable as to how the hyperinflationary depression could break. Key will be foreign dumping of the dollar and the extraordinarily massive liquefaction the Fed will provide in an attempt to keep the U.S. markets afloat."

Notice that he said THE hyperinflationary depression, i.e., it's not a matter of WHETHER it will happen but WHAT, exactly, will trigger it and WHEN. The WHAT aside, I firmly believe that the WHEN will be sometime in 2007 or 2008.

In Gold We Trust.

R PowellKnallgold#14798510/1/06; 10:52:24

Refering to ETFs you said...

"I'm wondering why still anyone would want to buy such derivative schemes-keep in mind this is particularly about Gold.One pre-set to accept before reading: the ultimative Goal of the game is: who has the most Gold in the end? Because he who has it makes the rules"

I can share that sentiment. Perhaps these ETFs are exactly what they claim to be...a means or vehicle for stock investors (who typically do not have access to futures) to invest in commodities. These ETFs trade as stocks and mutual fund managers can buy them. Mutual fund managers do not want any physical, oil, BTUs etc.... they simply want to invest capital. The ETF's collect their fees along the way.

Gandalf the WhiteTHANKS, Sir Goldpuppy ----- BUT -----#14798610/1/06; 11:05:19

goldpuppy (10/1/06; 09:51:57MT - msg#: 147982)
You still owe me over TWENTY works of Answer !

SmeagolAll you need to know about 'goldish' and 'silverish' ETFs, precious#14798810/1/06; 12:02:02

...sss... in our opinion, anyways...


"With all the hoopla about the introduction of the iShares Silver ETF (SLV), investors seem to have forgotten a big gaping flaw in the design of all the metal ETFs.

None of the metal ETFs own any income producing assets. Metal itself is dead, and therefore fund expenses -- 0.40% for (GLD) or (IAU), 0.50% for (SLV) -- are taken from the ETF's bullion holdings. Every day the amount of gold or silver backing an ETF share shrinks. As the silver ETF's Prospectus helpfully explains:

The trust sells silver to raise the funds needed for the payment of the sponsor's fee [...] and all trust expenses or liabilities not assumed by the sponsor. The purchase price received as consideration for such sales is the trust's sole source of funds to cover its liabilities.

For example, on Jan 03 2006, each share of streetTRACKS Gold Trust (GLD) held 99.552% of 0.1 troy ounces of gold. Today on April 27 2006, each share of GLD holds 99.433% of 0.1 troy ounces of gold. On GLD's inception date November 18th 2004, each share held 100.00% of its starting NAV. You can watch your GLD vanish on the official streetTRACKS website.

An commodities fund like DB Commodity Index Tracking Fund (DBC) or United States Oil Fund LP (USO) that uses futures does not have this problem because interest from the bonds deposited as margin for future contracts is used to pay fund expenses and offset losses due to contango."


Rocky$$$$608.1$$$$#14798910/1/06; 12:08:43

Gold is napping due to what is called cheap oil, Bernanke's willingness to play the Fed until election time, and the supposed slowdown in world economic growth. The next middle-east skirmish will drive the price of oil up, and so will gold rise.
Flatliner$$$$ $590.1 $$$$#14799010/1/06; 12:11:52

It is hard to see gold sleeping, but changes in the rules are known to cause panicked liquidations from the week handed. Loses, in investments, stir heads away, turning the sentiment grey in the media for all to see. On sunny days, it is harder to see the rainy days coming because of the distraction of the picnic.

But this will all change. The carefree days of summer will be replaced by another realization that tomorrow's income will not buy what it does today. Tomorrow, I will need three jobs to provide the same buying power that my two provide today. Those of great thought will once again see that today's path is truly the same as yesterdays and the many days that preceded it. That confidence will make their hands strong. Gold they will continue to hold. Gold has functioned and will continue to function while the other opportunities wither on the vine fed by the dirty water of inflation.

Gold is awake and alive in the hearts and souls of many. We all stand witness as we see those that have completely believed in paper question its management and find strength in gold. Gold, when priced only in debt dollars and cents, is treated with limited respect in the grand scheme of things.

mikalSpeaking of paper...#14799110/1/06; 12:19:49

Sunday, October 01, 2006 -

A faithful reader and commentator, "A. Magnus" writes has written the following email, posted to FMNN General Feedback:

"Do you like October suprises? Is there a big bang coming to hit the markets? If you believe that those in the know use insider information before major events then you might be interested on the HUGE number of October 6th put options for the big indexes. Check out the concentrated puts on the Diamonds DOW Trust (DIA):

Ditto for the S&P Depository Receipts (SPY):

And the NASDAQ (QQQQ):

Even the Market Vectors Gold Miners has significant puts for October 6th:

Make no mistake - something wicked this way comes, and the smart money has already taken preventative steps."

GoldiloxCheap Oil?#14799210/1/06; 12:39:59

@ Rocky,

"Gold is napping due to what is called cheap oil"

Just like gasoline, the run up from $10 to $70 oil somehow makes $60 oil look "cheap", and OPEC has arleady made moves to defend this "line in the sand," so to speak.

Perception is such a wonderful thing for the spinsters!

Matthew$$$$612.5$$$$#14799310/1/06; 13:16:33

Ensuring the bullion banks were constantly short on gold by directly controlling the gold lease rate at a level well below the bank interest rate has resulted in massive downward pressure on the price of gold.
Once this scam runs out of steam, and these banks "take the hit" and bail out of the contracts, the PoG will rocket. The same banks will then be chasing it up. Its a case of who blinks first.

melda laureToday's sermon parody...#14799410/1/06; 14:42:22

How beautiful upon the comex floor are the feet of him who brings big shorts! Who brings low prices to those owning paper, who announces short squeezings, who says to the suckers "y'all gone broke!" In plain sight they see their margin calls approaching. Break forth into singing you physical advocates, for the shorts have redeemed their paper, and the castle vaults are well stufft' with the good stuff. And all the ends of the earth will dial 1-800 869-5115 extension 103.

With apologies to Isaiah...

I do not think there is much need to disparage the ETF's, they are what they are. The expenses are well advertised, and the actual inventory is fairly clear. The one thing that remains is that the metal is not in your personal vault but in someone else's custody, and (being easily the largest private stockpile of silver) that makes it a big target in the event of a crisis where the host country suddenly "needs" a large pile of metal.

That future risk is one that cannot be characterized. History shows that bank vaults can be locked up, and nationalized (raided) in extremis. Furthermore, paper markets can be shut down and "re-organized". For a mutual fund used to dealing in paper, and whose clients are also holders of paper, such an ETF is not a problem.

For those of us who belive that the future may well involve closed markets and "new rules", such instruments are unsuitable. Gold in a vault is useless unless you own the vault, the building and the land. For a soverign nation, it is even necessary to own the jurisdiction, (as Iran discoverd to its detriment).

SmeagolLike Thieves in the Night...#14799510/1/06; 15:18:02

...are the ETFs, wethinks.

Sss... if thiss is correct... current GLD holdings at 12,422,497.68 ounces... times expenses of 0.4 percent (annually?)... equals 49,690 ounces - over a TONNE AND A HALF of Precious evaporating in a year??? =8-0

ETF shares = paper-money under your mattress.


goldpuppy****607.30$$$$#14799610/1/06; 17:20:46

Gold has been tied, kidnapped and chloroformed and now the effects are slowly wearing off. Soon gold will gain consciousness and will work out a way to escape the powers that be and helped by a few financial and political disasters on the way such as, a few hedge funds going belly up, more local wars and skirmishes, a few earthquakes and hurricanes and more fiat money sloshing around the globe.
GOLD FINGERI LOVE BEING A GOLD BUG!#14799710/1/06; 19:01:24

Happy Day to All.....

ETF heft
Speaking of gold, I was pleasantly surprised to see two market developments:

The gold ETF (StreetTracks Gold Trust (GLD, news, msgs)) took in more gold as prices plunged (with total ounces held now at a record).

Although the silver ETF (the iShares Silver Trust (SLV, news, msgs)) saw its ounces drop a bit, they are now just shy of their previous high with silver $4 lower.

What this points out: The un-leveraged "cash-type" buyers are availing themselves of dips in price to get more exposure. Meanwhile, the leveraged futures traders are being forced to sell weakness. I recently beefed up my metals' exposure and will now be at full strength as we head into the upcoming week's data.

I think folks should keep that distinction in mind. Due to leverage, people who trade futures tend to chase strength and sell weakness, while cash buyers tend to do the opposite. That phenomenon is one reason why people who trade futures usually lose money.

P.S. I actually placed an order here with out online host. Got sum MORE gold......:-)


contrarian$$$$ $633.33 $$$$#14799810/1/06; 19:47:48

Gold is the only entity that tells the truth of what is going on in the world today...although temporarily manipulated by ever diminishing charletans, its glory will shine though the tumultuous engineered events sure to come this October.

$$$$$$$$$$$$$$ THE "PRICE of GOLD" GUESSING CONTEST!! $$$$$$$$$$$$


$$$ $8,752.0 $$$ The Invisible Hand (9/23/06; 14:30:09MT - msg#: 147701)

$$$$ $681.1 $$$$ Beamer (9/29/06; 01:14:22MT - msg#: 147907)

$$$$ $650.0 $$$$ Sundeck (9/22/06; 22:41:10MT - msg#: 147683)

### $643.0 ### Topaz (9/23/06; 04:57:44MT - msg#: 147694)

$$$$ $635.0 $$$$ Demosthenes (9/27/06; 21:18:04MT - msg#: 147871)

**** $634.0 **** jenika (9/28/06; 00:42:53MT - msg#: 147878)

$$$$ $633.3 $$$$ contrarian (10/1/06; 19:47:48MT - msg#: 147998)

$$$$ $626.3 $$$$ glockmaster19 (9/29/06; 13:22:18MT - msg#: 147931)
**** $626.2 **** Goldilox (9/23/06; 01:24:03MT - msg#: 147686)

$$$$ $620.0 $$$$ Clink! (9/22/06; 21:09:58MT - msg#: 147681)

$$$$ $615.0 $$$$ Armageddon (9/29/06; 22:17:10MT - msg#: 147948)

$$$$ $612.5 $$$$ Matthew (10/1/06; 13:16:33MT - msg#: 147993)

$$$$ $608.1 $$$$ Rocky (10/1/06; 12:08:43MT - msg#: 147989)

**** $607.3 $$$$ goldpuppy (10/1/06; 09:51:57MT - msg#: 147982)

*** FRN606.7 *** Smeagol (9/23/06; 01:57:50MT - msg#: 147687)

$$$$ $606.5 $$$$ balzac (9/27/06; 21:35:50MT - msg#: 147873)

$$$$ $605.0 $$$$ Titan (9/27/06; 12:30:56MT - msg#: 147853)

$$$$ $602.9 $$$$ GOLD FINGER (9/29/06; 18:01:04MT - msg#: 147941)

$$$$ $599.9 $$$$ DryWasher (9/24/06; 15:10:57MT - msg#: 147742)

$$$$ $595.5 $$$$ Federal_Reserves (9/25/06; 19:01:55MT - msg#: 147777)

**** $590.3 **** arbyh (9/26/06; 09:30:45MT - msg#: 147809)

$$$$ $590.1 $$$$ Flatliner (10/1/06; 12:11:52MT - msg#: 147990)

$$$$ $577.7 $$$$ Peculium Aurum (9/27/06; 23:55:29MT - msg#: 147876)

$$$$ $545.0 $$$$ Thoreauly (9/24/06; 10:22:14MT - msg#: 147738)

Did you all see that the CONTEST ENTRY DEADLINE is near ?

----- all entries must be posted to the TableRound before Midnight on Monday, October 2nd, AND ALL ENTRIES must answer THE QUESTION !!

Gandalf the WhiteThanks for the extra three cents Sir Contrarian <;-)#14800010/1/06; 20:59:11

(10/1/06; 19:47:48MT - msg#: 147998)
GoldiloxHobbit Party#14800110/1/06; 21:12:01

@ Gandalf,

The Hobbits are gonna "party hearty" with all those extra pennies and nickels!

Better lock the wine cabinet!

Golden Lionheart$$$$$$$ 603.80 $$$$$$$#14800210/1/06; 21:16:26

Its quite simple, gold was put to sleep by you and I losing confidence in the uptrend.
Gold will be awakened by you and I regaining confidence and buying gold.

Mthirsty1$$$$600.00$$$$#14800310/1/06; 21:23:13


I think the reason gold went to sleep was because we all did the same thing.We had such a great run this year that we became complacent.We all sat back and watched gold go for a ride that it had not been on in a long time.And it has been wonderful.This run made alot of people stand up and take notice what a precious comodity gold is.As far as wakeing gold up,it's already happened as we have seen in the past few days.Supply and demand,plus people trying to make money.Have a nice day.
Mthirsty1Golden Lionheart#14800410/1/06; 21:40:38

I swear i did not read your post before i did my post.I new i had to just sit down and answer the question before time ran out.I must say however when i checked my post to make sure it went through alwright and saw your post,it made me feel pretty good.Sometimes i may actualy know what i am talking about.Good luck to everyone around the table round.
24karat$$$$$631.0$$$$$#14800510/1/06; 22:02:17

During its 5-year bull run gold has gone into hibernation during the summer months. We all know that it will wake up soon because little has changed since its ATH in May. Oil took a dip but we still have the twin deficits, a slew of bad news out of the ME and the dollar looking more and more like trouble to folks around the globe. One thing that is clear today, that maybe wasn't in May, is a housing bubble on its way to getting dismantled. IMO, this all looks favorable for gold and possibly other precious metals.

Sir Goldilox - How did you find out about the SD county employees union losing a serious bundle in the Amaranth debacle? Consistent with what you said, the local fish-wrap (Union-Tribune) did not mention this. Any estimates on the losses?

Shermag$$$ 636.4 $$$#14800610/1/06; 22:08:29

"Who or what put gold to sleep?"

I believe that several Western central banks were the instigators, attempting to thwart the heady rise in gold earlier this year, for the purpose of avoiding damage in their bullion banks. This goal was likely aided by banking industry insiders who understood what was afoot, and positioned accordingly, igniting a further round of shorting. Finally the mindless "black box" trading funds provided the final ingrediants for price decline.

"Who or what is going to wake it up?"

Demand from Asian central banks, mideast oil wealthy, and India at large already provided an underpining, and will be there for the long haul. The dollar woes have only gotten worse over gold's recent "sleepy" period.

mikalGold more than a "commodity"#14800710/1/06; 22:22:36

Oil, Gold Bottom on China-Led Rebound, US Trust, Goldman Say | Bloomberg | October 2, 2006
After starting out on the subject of gold, copper and oil, it moves on to discuss commodities only.
Still this is one of the largest and most informative news stories on commodities that's come out.

GoldiloxSDCEU Losses#14800810/1/06; 22:32:08


Not only the UT and NC Times ignored the losses, but I sent the tip to all the local TeeVee outlets, who were equally unimpressed by the ramifications.

My first tip came the Elliott Wave Newsletter (can't find it amongst my myriad emails), also mentioned by one of Puplava's editorialists. I do not have verifiable quantities, but the estimate was in the $Billions.

GoldiloxSelective deleting is all academic#14800910/1/06; 23:33:03


hanks to Jim Cramer it's easy to get a hot stock tip these days. There's no need to hang around barbershops, listen closely to a cab driver or get a shoe shine. And best of all, there is no need to visit your brother-in-law and risk having to listen to his poker stories in addition to his stock tips. No sir. All investors have to do is turn on the television after the market closes. And if they can survive Larry Kudlow's steady drumbeat of optimism, Mad Money will follow and Cramer will share his idea of the day in exchange for a booya.

Cramer has an Official Trading Idea for every trading day of the week, not to mention off the cuff ideas that spring from conversations with callers with similar attention spans. Cramer is much more fun than reading the Value Line or slogging through a 10-k. Cramer's the kind of a guy you'd like to take for a cup of coffee, as long as he was having decaf.

Last March some upstart academics tried to measure what had become known as the "Cramer effect," or the tendency of stocks to trade sharply higher after being mentioned on Mad Money. Three PhD students at Northwestern examined 246 of Cramer's recommendations, apparently, about six shows worth, and tallied up the results. According to a Financial Post summary of the findings, Cramer's stocks immediately jumped 2% on average, with the smallest stocks gapping 5% higher. However, according to Joseph Engelberg, one of the three authors of the study, gains typically reversed within several days, and on average, retreated to their original levels. If the numbers are accurate (which Cramer disputes in the Post story) that means the losers are those who buy on Cramer's recommendation, and the winners are the arbs and hedge funds who have figured out to make a buck from the Cramer effect.


No different from the Internet shills of days. In fact, Cramer was even then one of the head cheer-leaders, using his IPO as a lead in.
I personally was part of the management team of a IPO that Cramer took from fairly unknown to $120 and back to $20 with his pump and dump.

GoldiloxQuotable#14801010/1/06; 23:37:52

"Bulls of 1929 - like their 1990s counterparts - had their eyes glued on improving profits and stock valuations. Not a thought was given to the fact that the rising tide of money deluging the stock market came from financial leverage and not from savings. "

- Dr. Kurt Richebacher

a bankerFinancial feet dance lightly#14801110/1/06; 23:57:59

When Mr. Powell asks that we consider what shape the dated 2002 words of Aristotle would have today, he misses the point.

Financial feet dance lightly.

In this post Mr. Aristotle provided more detail of ways and means than anyone has a right to suffer outside of the conference seminars on structured finance. Practicality and respect for the limitations and patience of his audience require the understanding that his lengthy exposition remains but a scratch upon the surface of the comprehensivie reality.

I would have Mr. Powell curb his critique briefly to consider that the daily ways and means of the financial ballroom are not set rigid into concrete. The feet fly freely now this way and now that way as the new tune requires.

Do not expect to see the musics of today served by the old footworks of 2002. It is a mistake to look for the words of Mr. Aristotle to have applicability beyond the intended scope. They serve only to give you one basic portal to see financial designs of fancy footwork for effects typical of the past two decades.

But lately the euro-style MTM conductors are beginning to call the new tunes.

The old dance now shuffles to new steps. Most visible among these is the ETFs to remain most closely in service of the old objectives of gold containment.

Caradoc$$$$$ $ 671.2 $$$$$$$#14801210/2/06; 00:05:00

Ever see one of those mechanical bulls that, for a few quarters, will give you a great ride and most likely dump you on your keester? Like the real bulls that macho types try to stay on top of for eight seconds in rodeos, these automata are programmed to buck, jerk, and twist while taking you up, down, and sideways. In short, a combination of moves designed to throw you off the bull.

A "bull market" isn't much different in its moves and is identical in its purpose: to throw off as many riders as possible and make the ride look like a bad idea to non-riders who were thinking about trying it themselves. Those who climbed onboard at or near the interim high in the low 700s (even without the multiplying effect of margin) were the most likely to unload in the 590s or 580s. As revealed by The Economist, last May certain financial houses found themselves "looking into the abyss" if gold were to go any higher. The actions of these financial houses during May and June were the proximate cause of the recent decline in gold's dollar price. (See inked article by Dan Norcini.) Once that decline began, the way to throw off the greatest number of riders (even those operating without margin) is for the bull to dive more than needed to solve the "abyss" problem. Note two things: (1) flirting with 200-day moving average provided the opportunity for the "right people" to buy in both corporately and personally and (2) the preponderance of computer-generated trades (black boxes responding to other black boxes) only exaggerated the bull's natural tendency to provide a rough ride.

So what makes the bull reverse its course and begin to head in the other direction? Easy answer: the first hint of buying (paper or physical) whether prompted by technical analysis or manufacturers deciding its a good time to buy their raw material.

Going beyond the question, look for even greater volatility (up AND down) as the gold bull continues its next leg up. Just as the 6-dollar limit gave way to upward moves in double digits, the current/pending move up should see surges of $50 and %100 per day paired with occasional plunges of $75 to $150 per day.

With so many people looking at either $628 or $636 as a signal for gold to take out its previous high, we should see remarkable volatility above any figure in the mid-620s. For example, if gold has its first $50 day moving from mid 620s to mid-6760s, how many of those watching and waiting will say "It's too late. I missed it"? Most of them, probably. And with the bull having thus succeeded in discouraging folk from climbing onboard, it's free to have its first $100 day during the following 24 hours with relatively few regular Joes benefitting from the move.



$$$$$$$$$$$$$$ A "PRICE of GOLD" GUESSING CONTEST!! $$$$$$$$$$$$

We shall have a price guessing contest on the closing (Settlement price) of gold for the December COMEX contract (GCZ6) on Thursday, October 5, 2006, ---BUT all entries must be posted to the TableRound before Midnight on Monday, October 2nd, AND ALL ENTRIES must answer THE QUESTION !!

The POG Contest winner -- the closest price guess to the actual Settlement Price -- will receive a "Dutch Treat" -- No, No, No ! I mean one of these four different types of The Netherlands 10 Guilders gold coinage.
IT (<== See that Sir Smeagol ?) could be a:
"King Willem", (Minted 1875 - 1889, Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce; or a "Young Queen Wilhelmina" (Minted 1892 - 1897, Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce); or a "Queen Wilhemina", (Minted 1911 - 1917. Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce); or an "Elder Queen Wilhelmina", Minted 1925 - 1933, Fineness: 0.900 and Actual Gold Content: 0.1947 troy ounce) !!!! IT just depends which one SIR MK finds first when he goes down into the dungeon. <;-)

Please go to the USAGOLD link at:
to view these coins.

There will be also be two runners-up prizes for the next closest prognostications --- each winning an one ounce pure Silver Canadian Maple Leaf coin. ( <=== See that Sir Rich ?)

The QUESTION -- (Put on your THINKING HATS !) -- is:

"Who or what put gold to sleep, and who or what is going to wake it up?"

Answers should be in 30 words or more.


1) The Winner is the poster with the Price Guess closest to the Settlement price of the COMEX (most active) December 2006 Gold Contract (GCZ6) on the date of Thursday, October 5th, 2006.

2) Price "Guesses" shall be stated in Dollars and tenths !
(Such as $ 666.6)

3) "Guesses" shall be SHOWN in the SUBJECT BOX location AND enclosed in markers of "Dollar Signs" so as to be OFFICIAL !
(Such as $$$$$ $ 666.6 $$$$$$$ )

4) ONLY one "Guess" per Knight or Lady is allowed, and once that "Guess" has been "taken" -- no one can duplicate it !! FIRST COME has rights to that "Guess".

5) HOWEVER, All "Guesses" MUST be posted before the clock in Denver strikes MIDNIGHT (24:00) on Monday, October 2nd, 2006.

6) AND MOST IMPORTANTLY (as this part MUST accompany your Price prognostication)
--- In order for your entry to be valid, YOU will need to answer "THE QUESTION", in 30 words or more.
LET the CONTEST continue !!

specie-man$$$$ 617.80 $$$$#14801710/2/06; 01:15:02

Gold never sleeps.
People are sheep.
Sheep sleep.
Until they are fleeced.
Then reality seeps in.
Left cold without any gold,
they must bear the beast of burden
and serve their master wolves.
Awaken sheep !

KnallgoldPaulson#14801810/2/06; 01:59:52

You can bet the Amaranth disaster is on the agenda.Btw,did anyone catch something about Amaranths potential Gold position?Will that remain a secret like on LTCM?Maybe the recent pressure on POG was indeed forced liquidation as some have speculated.

"US Treasury's Paulson to hold New York meetings

WASHINGTON, Sept 29 (Reuters) - U.S. Treasury Secretary Henry Paulson is due to hold closed-to-the-public meetings with the New York Federal Reserve Bank and financial and business executives in New York on Monday, a Treasury spokeswoman said on Friday.

Treasury spokeswoman Brookly McLaughlin, speaking to reporters at the Treasury, would not provide details about who Paulson is scheduled to meet or what the themes of the meetings would be. "

USAGOLD / Centennial Precious Metals, Inc.Step inside and shop at your convenience. Open 24/seven.#14801910/2/06; 02:13:20

shop for gold coins
GoldiloxGold's Dynamics Rise Again#14802010/2/06; 05:01:39


There are thousands of hedge funds around the world – and possibly as many as 100 in South Africa – which operate in a largely unregulated environment, and manage as much as $1 trillion globally. Hedge fund managers are experts at leapfrogging into the best-paid brackets in the world, but when something goes wrong, they are simply not accountable.

It is difficult to say where all the trouble started, but more difficult is to guess when investors will learn. Take the infamous case of John Meriwether, the once-fabled Wall Street Salomon Brothers bond trader, who founded Long-Term Capital Management (LTCM), a hedge fund, in 1994. LTCM was populated with the best-of-breed, including Nobel-prize winning economists Myron Scholes and Robert Merton, and also David Mullins, a former vice-chairman of the Federal Reserve, the US central bank.

Apparently smart investors, including the inevitable investment banks, charged to invest, pumping $1.3bn into LTCM up-front. Less than four years later, LTCM was technically bust; to avoid a possible systemic crisis in the global financial system, the Federal Reserve drummed up a $3.5-bn rescue package from leading Wall Street investment and commercial banks.

Meriwether was one of the unwilling stars of the Michael Lewis book, "Liar's Poker: Rising Through the Wreckage on Wall Street". The game of Liar's Poker depends on mixing statistical probability with deception, hopefully to vanquish rivals. Hedge funds rely on a very similar mix, but ultimately fall victim to exogenous factors.

There is simply no way of outguessing exogenous pricing mechanisms. This impossibility was, however, the very basis of Hunter's career, and remains the shaky and fragile foundation of the hedge fund sector. In his book "The Fortune Sellers: The Big Business of Buying and Selling Predictions," William Sherden reviewed leading research concerning the accuracy of economic forecasts, conducted since the 1970s.

He found that economists cannot do anything, really; they cannot predict turning points; their ability to forecast is neither better nor worse than guessing; there is no evidence that forecasters’ skills have increased since the 1970s (if anything, it has deteriorated over time), and that "consensus" forecasts are of no special help, and so on.

Buffett once stated that "we've long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie [Munger, Buffett's partner] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children."

For investors who disavow the fantasies of hedge fund managers, along with fiat money, gold bullion remains one of the most attractive alternative investments. This week, analysts at ING Financial Markets said gold prices were likely to rebound going into next year. Among the bull points for gold bullion, ING analysts mention rising geopolitical tensions, gold's status as a safe-haven asset, support from still-high crude oil prices, the easing of central bank selling of gold, and an increase in institutional demand.


A couple weeks old, but a good reminder of the inherent risks of trading derivatives.

GoldiloxSheep sleep#14802110/2/06; 05:19:42

@ specie-man,

Nice verse.

The "good shepherd" stories never seem to end up with them turning "vegetarian"!

Freedom$$$$ 611.0 $$$$#14802210/2/06; 05:24:30

Ladies and Gentlemen, I know so little about gold, markets and hedge funds that, the only time I post to our discussion is when there is a contest. I read this page and learn something new every day. You are a very good group of gold market investigators. It's an honor just to have Observer Status in this group.

Your question ~ what put gold to sleep ~ reminded me that I asked myself "what is going on?" back when gold reached $730 and was crushed. In my opinion, only someone or a group very powerful could be responsible; because the underlying fundamentals (supply / demand) remained the same ~ even during the crushing of the price. I can not put it down to insanity; so I know, whoever that group is, they are WAY outside my circle of friends and influence.

As to who or what will awaken gold; I suspect it will be a cataclysmic event caused by the miscalculation of the same powerful person or group. I really don't know (can only guess) what the price of the October gold contract for December will be; but I believe the person who can afford to buy that contract at today's prices will be astounded at the price he will get for that gold in December.

As Always, Freedom

NedMan 'o Man !#14802310/2/06; 05:26:05

I hope 'The Invisible Hand' wins the gold guessing contest one day !
Usul$$$$$ $ 618.4 $$$$$$$#14802410/2/06; 06:49:33

What put gold to sleep is more a question of what halted its rise. Not very long ago, the buyers were very nervous about economic disruptions - mainly involving oil supplies- due to relations between Iran and the West over Iran's uranium programme, and also the Israeli action against the Hezbollah in Lebanon. I am sure a significant amount of gold had been purchased as a hedge against an energy catastrophe. Another little surprise that spooked the oil markets was the interruption of oil from Prudhoe Bay due to pipeline corrosion. Is it any surprise that gold's bull market was seemingly put to sleep after a ceasefire in Lebanon, an apparent cooling off of Iran tensions, the non-appearance (so far) of hurricanes in the Gulf of Mexico, and progress with the Prudhoe Bay pipelines?

Yet the fundamental issues haven't gone away. Very recently Iran restated that it won't suspend uranium enrichment. Internecine violence flared up in Gaza. The hurricane season is far from over. There are still many unknowns in oil supply and any touted new discoveries are years from coming to market. And there is still inflation in the money supply, M3 is still hidden, there is still a huge trade deficit and huge debt loads, and the US housing bubble is deflating. So, the gold bull is inevitably going to wake up ... it was only napping after all.

Chris PowellHedge funds are short copper, not long; Barclays says metal stocks low#14802510/2/06; 06:55:02

By Ambrose Evans-Pritchard
The Telegraph, London
Monday, October 2, 2006

Arrayed on one side of the commodity debate are the ivory-tower economists and perma-bears, all warning that the four-year boom is over -- with worse to come. On the other are the traders and specialists who live and breathe the stuff every day, convinced that the market is tighter across the spectrum of metals and energy than outsiders realise.

For them the commodity crash of the past four months has been a mid-course shake-out, a rare chance to jump back in for the next leg of the boom.

Paul Horsnell, commodities chief at Barclays Capital, remains defiantly optimistic. "I don't thing anything has changed. This feels like the dips we saw in 2004 and 2005, a move down before swinging to new highs," he said.

Barclays' latest report, "Pausing, not Peaking," said the worldwide stock-to-use ratio of all industrial metals was at a record low, down to five days' cover.

Far from pushing prices above their fundamental level, hedge funds have been "shorting" copper all through 2006, leaving themselves with a fearsome overhang that will have to be covered at some point by buying the metal.

China's oil demand is resuming its relentless upward push after a summer blip, with GDP growth expected to hit 10 percent in 2007, even higher than 2006. Chinese crude demand has already risen from 4.5 million barrels a day in 2001 to around 7 million this year.

Yet OPEC oil output is stagnant if not slipping, and production by the United States, Norway, Mexico, and Britain is falling fast (down 3 million barrels a day since 2002).

Mr. Horsnell said the China-led pack was now the driver of world commodity prices, making it less relevant whether the U.S. housing market turns ugly. "OECD demand for oil has been flat for two years. The growth is coming entirely from the emerging world," he said.

The International Monetary Fund has upgraded its forecast for global growth next year to a blistering 4.9 percent.

Much has been made of an International Monetary Fund report last month forecasting a metals bust by 2010. The IMF relied on an abstruse model that assumed metals will resume their gradual half-century slide as miners crank up production.

This is hard to square with a more revealing study by the U.S. National Academy of Sciences warning that mankind has already used up a large chunk of all the metals ever likely to be found.

"It is clear that scarcity value will raise the real prices of metals. Nations such as China will need to increase their average urban per capita use by seven to eight times to achieve the same level" as the West, said the report.

For good measure, let me throw in a study by the Bank of Canada predicting the migration of 300 million Chinese peasants into the towns by 2020.

But Stephen Roach, Morgan Stanley's chief economist and lead voice of the commodity bears, insists that "China mania" has intoxicated investors with fanciful theories of eternal hyper-growth.

"Commodities are as bubble-prone as any other investment," he said. "As is always the case in every bubble I have lived through, denial is deepest when asset values go to excess. That's very much the case today. I will definitely be wrong if the China slowdown doesn't materialise."

In case Mr. Roach hadn't noticed, the mini-bust has already happened, culminating last month when a Calgary trader lost $6 billion (£3.2 billion) for Amaranth Advisers betting that natural gas prices could fall no further. They fell.

Nymex gas futures for the October 2006 contract had plunged to $4.02 by the end of last week, down from a peak of almost $16 nine months ago. The Reuters CRB index of commodities is down 8 percent since May. Oil dropped 22 percent before forming a base at around $60. All now looked poised for a rebound.

I believe the sell-off was an inchoate response to the start of monetary tightening in Europe, and action by Japan to drain $300 billion of excess liquidity as a precursor to ending zero interest rates. In both cases their bark has been worse than their bite.

No surprise that Tokyo's yield-hungry grannies are once again snapping up "Urudashi" bonds in New Zealand and beyond.

In the end, I suspect the U.S. housing slump will cause some wreckage, but property slides are glacially slow -- outpaced for now by the electrification of China. Sometimes you have to put away your historical charts and simply ride the wave.

pilgrims_gold$$$$ 610.0 $$$$$#14802610/2/06; 07:01:53

I think a few hundred bombs exploding in Iran's nuclear research site might just be loud enough to make gold wake up! Probably to 2000$
GoldenBear$$$$$ 601.0 $$$$$$#14802710/2/06; 07:08:12

Mrs doesnt know but wants a guess in anyways. Stock market is at all time high, time to get out and buy gold.
White Rose$$$$ 609.0 $$$$#14802810/2/06; 07:28:15

Water dribbles over a dam. There are leaks here and there. When does the dam burst? When the pressure is overwealming.

Gold will come to center stage when nothing can hold it back.

Ag-geek$$$$$604.0$$$$$#14802910/2/06; 08:48:09

While I don't pretend to know as much as many on this board. I believe the combination of things settling down in the ME (relatively), a mild (so far, thank you El Nino) huricane season, and TPTB doing their best to make things look rosy for the elections are all singing gold a lullaby. But, no matter how sweet the song the baby can only sleep for so long, and after all that rest baby will be ready for a nice climb!
mdgc*** 622.2 ***#14803010/2/06; 09:25:31

The Fed and TPTB put gold to sleep, Novembers first Tuesday will reawaken gold and silver.
White Hills$$$$604.50$$$$#14803110/2/06; 09:50:25

The appointment of Paulson as Secretary of Treasury signaled an effort by TPTB to control the falling $dollar and the rising price of commodities, especially Gold. The November elections being the short term goal of the effort,as bad economic news is the last thing the administration wants the voter to hear. Long term goal can only be to control the devaluation of the currency and hope for a soft landing of the economy. The only real solution is a devaluation of the $dollar and a correction of the imbalances in the World economy. White Hills
The Hoople$$$$598.7$$$$#14803210/2/06; 10:15:50

I think gold's sleep was induced by an IMF/Fed/ tranquilizer dart shot at it in the form of a physical off-load. The orchestration rivals the New York Philharmonic. But as Neil Young said rust never sleeps, and nor will gold. It silently accumulates the value that occurs when money is being printed and circulated to cover 800 billion annual budget and trade deficits. Rhodium might better reflect gold's true value when it's all said and done.
GoldiloxUSDX#14803310/2/06; 10:44:02

As Sinclair says, "Went boom this morning"

PMs have yet to reflect this in any counter-move - probably waiting to see if 85 support is breached.

KnallgoldR Powell (but I know you don't subscribe to the basic premiss,just trying to convince you of THAT FACT,my friend)#14803610/2/06; 11:07:27

Not wanting to debate technicals with you,a banker can this way better,he even confirmed my suspicions about the ETF's (common sense for a technical laymen like me,I just incorporated the thinking behind Ari's example!).Just that:what you describe as FACTS and MUSTS will all go up in smoke if the other party declares default (with gov. etc backing),no physical will be delivered-hey'simply aknowledging the asymetric power structure.

Result:the longs lose (hint:the goal of the game is to have the most Gold in the end).If it wasn't the speculators goal in the first place to aquire physical-just to play a money game,well,it was their fault in the first place.Just trying to check if you really share my sentiment as you wrote in #147985 !

Do you try to make profits to aquire more physical which you otherwise would not have gotten?Yes?Good!No?Well,I know THEY do,and all it takes is to convince an investor a)giving his physical Gold out of his hands or b)not to buy the physical Gold at all.Now that you did not buy the physical (but the xypaperGold) I can safely say they played you,and they have won,hook,line and sinker!And it wasn't even that difficult, no need for evil big powerful NWO fiat bankers.(Though SOME of them have plans with that Gold,and though,the various paperGoldmarket tools are helping them...).

And you belittle those who say the price of Gold is totally controlled???Ever looked in the mirror?

R PowellA Banker#14803710/2/06; 11:32:31

From your post of yesterday...

"When Mr. Powell asks that we consider what shape the dated 2002 words of Aristotle would have today, he misses the point."

No sir!!..I did NOT ask that you or anyone "consider what shape the dated words of Aristotle would have today." You are misinterpreting or trying to distort my request. I asked that the financial outcome of the position he described be considered. He gave a specific scenario. If held, it would have had a specific (dollars + cents) outcome. I asked that the outcome be considered, not how or if the methods would now be different.

But, If I understand correctly, you are suggesting that Aristotle was just describing a means or method that may have been used to contain or surpress the POG. Then you suggest that "new dance steps" or different methods may now be the means. Hey, of course yes, there's always more than one way to skin a cat. If I believed in the grand conspiracy to surpress the POG I would certainly agree with you, many methods will work.

I was merely stating that shorting the market to drive down the price works only on a very short term basis. One Chinese roque trader took the price of copper down from about 160 to 135 before the market forces of supply/demand simply overwhelmed even his billions invested on the short side. Aramanth's 6 billion could not support the price of NG in the face of rising inventories. Even huge amounts of capital can not change supply + demand forever (or for very long, again imho).

But, could it have been done, price manipulated down that is? Probably, assuming that the conspiracy does exist + has almost unlimited funds at it's disposal. I also noted that the scenario as described would have lost ungodly amounts of money. A bet on the short side, on Comex, loses when the price rises, especially when it moves from the $320 level Ari mentioned to current levels. One, just one, short contract on Comex shorted at $320 would be $28,000 in the hole with POG at $600, not including commish + rollovers spread loses. Goldman Sacks today suggested that both oil + gold will be heading much higher soon. Are they a member of the short it conspiracy?

It is possible that a grand conspiracy does exist. Just because I do not believe does not make it impossible. In fact, my believes usually do not amount to a hill of beans. But I shutter to think how many thousands of contracts would be needed, also increasing over time, and how far underwater their position would be by now..? I also disagreed with Ari then and still do now that losing huge amounts of capital can somehow gain money. Just my opinion. I simply ask that you consider what the financial outcome of the situation Ari described would be....

To what degree the gold or any market is "controled" is probably a matter that will never be resolved. I tend to think the days of Jay Gould, J.P. Morgan, Jessie Livermore and the like moving markets are over. Even then, with huge amounts of capital in relation to the market caps they were manipulating (usually individual companies), their efforts were short lived at best...disasterous at worst. And the gold a global one, not a New York only one.

Again opinion, here, but here goes.....the price of commodities (gold among them) will rise again near term and long term, based on so many market + monetary factors. An economic meltdown and/or an overthrow of any price surpressing cabal is not in the cards, and won't be necessary. Just one man's opinion.

R PowellKnallgold // Armaggedden#14803810/2/06; 11:45:40


"Just that:what you describe as FACTS and MUSTS will all go up in smoke if the other party declares default (with gov. etc backing),no physical will be delivered-hey'simply aknowledging the asymetric power structure."


Yes, in almost all settlements "no physical will be delivered". I agree. The settlement will be in dollars.

As for a total system default, the end of days has been predicted for as long as man has existed. Again I agree, if an asteriod the size of our moon hits the earth, or something else causes total financial choas, then all is lost and all investments are mute. I do not plan my future on that contingency, although I do have a stash of silver eagles. (G)

Quickbeam$$$$ $594.0 $$$$#14803910/2/06; 11:45:53

Gold is still thought of by most people as a commodity. As most other commodities have been in a slump lately, gold is following suite. Commodities (including gold) will wake up right when people start to think they are getting a bargain for $2.00/gal of gasoline - say maybe 1 - 2 months?
GoldiloxGains and losses#14804010/2/06; 11:55:13

@ R Powell,

"I also disagreed with Ari then and still do now that losing huge amounts of capital can somehow gain money."

For those who still measure their assets in "bank accounts", your premise makes perfect sense. To someone with the power to print money at will, the "game' is not always purely about money, but power itself. After all, once you have the first $billion, you're no longer playing a "consumption" game.

Why not lose Billions of a declining asset, keeping the acculative price in the desired neighborhood, when all those "losses" can be hidden in black ops off-budgets and hedonistic official numbers? Isn't that what we all watch China for signs of?

Especially if the game is to keep the miners and owners of tangible assets bringing their goods to your table? Comex is like a giant "pawn shop".

I'm not terribly sophisticated about this stuff, but I remember a late night game of monopoly as kids when my brother offered my sister $100,000 in monopoly money for her piece of banana creme pie (last one). She got to stay in the game a while longer, but he got the pie. Had that been a tangible asset rather than a consumable, he would have walked away with the only real proceeds at games' end.

Maybe both got what they wanted, but I think the pie was the only "real" commodity in that game.

Rimh$$$$ 602.0 $$$$#14804110/2/06; 12:07:55

The masters of the black boxes have lulled this market to sleep since the greatly overbought position in May. They have used every trick in the book over the summer doldrums and early fall season to convince us that gold is going nowhere from here. But the same charts that allowed them the great "selloff" have turned against them such that they are now greatly oversold. While they will try their best to hold it down before Early November election day, it will not be possible to contain completely. With Indian wedding season ramping up the offtake, there will be ever increasing pressure on gold to snap back up likely well before November. The black box masters know this, too, of course, and will be prepared to allow some price rise to ease the chart pressure followed by another orchestrated selloff shortly before election day. Once election day is over, all bets are off!!!
Gandalf the WhiteTHE "KING OF THE HILL" REPORT <;-)#14804210/2/06; 12:19:44

GCZ06 Gold Dec '06 HIGH = $609.2 low = $602.0 SETTLE = $603.3

The following GOLDHEARTS were atop the HILL today !

$$$$ $609.0 $$$$ White Rose (10/2/06; 07:28:15MT - msg#: 148028)
$$$$ $608.1 $$$$ Rocky (10/1/06; 12:08:43MT - msg#: 147989)
**** $607.3 $$$$ goldpuppy (10/1/06; 09:51:57MT - msg#: 147982)
*** FRN606.7 *** Smeagol (9/23/06; 01:57:50MT - msg#: 147687)
$$$$ $606.5 $$$$ balzac (9/27/06; 21:35:50MT - msg#: 147873)
$$$$ $605.0 $$$$ Titan (9/27/06; 12:30:56MT - msg#: 147853)
$$$$ $604.5 $$$$ White Hills (10/2/06; 09:50:25MT - msg#: 148031)
$$$$ $604.0 $$$$ Ag-geek (10/2/06; 08:48:09MT - msg#: 148029)
$$$$ $603.8 $$$$ Golden Lionheart (10/1/06; 21:16:26MT - msg#: 148002)
$$$$ $602.9 $$$$ GOLD FINGER (9/29/06; 18:01:04MT - msg#: 147941)

THEREFORE Sir GOLD FINGER is "KING OF THE HILL" for Monday 10.2.'06 !!!

Lothar of the Hill People$$$585.0$$$#14804310/2/06; 13:34:17

It is not that Gold slumbers, but those who seek value are seeking direction. The signs are mixed and uncertain. The sooth-sayers debate without substance.

In the hidden world, evil and good continue their eternal conflict.

It is only the wise, those who honor the hard lessons of history past, who continue on their relentless path--acquiring the wealth of Kings, certainty in uncertain times.

Fare ye well,

I am Lothar of the Hill People.

Ten Bears$$$$597.50$$$$#14804410/2/06; 14:36:09

I do not believe that gold is asleep, it is just held down by the tremendous leverage of unlimited derivatives, under the control of those who cannot experience a real loss, since the power to create money from thin air precludes that possibility.

From my perspective, the country (USA) appears more divided than at any time since the later stages of the Vietnam War, therefore it may be possible for spring to unwind. Perhaps it is a good time to purchase gold as insurance from our host.

Referenced is one of many indicators of a divided country...raw story

Shanti$$$$616.1$$$$#14804510/2/06; 14:38:31

Imo the following:

What brings POG asleep?
The semi-concerted work of the fiat printers and thru the unregulated credit growth of the virtual derivate's. All together with their magician marketing strategy.

What wakes POG up?
Fysical buyers thru distrust in the virtual economy. Just watch the first sheep over the dam.....

Sal-OM All !!

R PowellGoldilox#14804610/2/06; 14:50:59

Your question....

"Why not lose Billions of a declining asset, keeping the acculative price in the desired neighborhood, when all those "losses" can be hidden in black ops off-budgets and hedonistic official numbers? Isn't that what we all watch China for signs of?"

I had thought someone would reply that billions or even trillions of dollars have been + were still being sacrificed to surpress or contain the POG simply to support the fiat dollar. I don't believe so but have no information that others do not have who vehemently believe this to be true. I just don't believe that the fiat is at that much risk directly from a rising POG. Fiat is at risk from many forces, for sure, but not, imho that much from the POG. Haven't we seen a disconnect over the last year from the old adage of buck up...POG down + vice-versa?

But I interpret your question as suggesting that capital is sacrificed in the paper markets so as to accumulate physical metal at a cheaper price. I guess this is a zero sum gain up to and until the gamesters stop playing but would still require huge amounts of capital to finance. At some point the physical would have to be liquidated to pay for the paper loses, no?

And yes, if severely devalued dollars were used to finally pay back the paper loses, the scheme works. I guess this works with any tangibles bought now and paid for at a latter date with "cheaper money" This has worked well for homeowners since the Fed. started to depreciate our currency in 1913, no? Is this what you refer to?

YGM$$$609.10$$$#14804710/2/06; 14:51:21

The only Gold that really sleeps is lying as yet undiscovered in mother earth. Above ground it never sleeps. All manner of financial deals, Oil deals, paper instruments, Central Bank's, nefarious deals and even Nations make use of Vault Gold one way or another. Payment or collateral, one or the other. Gold's price doesn't sleep either, it like other old folks (myself included) just takes power naps, awkening with a refreshed, can do, get going attitude. This latest power nap is almost over. When this nap "is" finally over my next guess will be much, much higher.
Prius$$$$608.5$$$$#14804810/2/06; 15:09:30

It has become obvious that the "controlers" (manipulators) of the market have been smiling for whatever reason. That has been well debated here. It would seem that the geopolitical climate is in for a major low-pressure system and the smile may become a frown. As we see the not-so-smiling faces we will finally know for sure who the manipulators are.
R Powell $$$$ 617.2#14804910/2/06; 15:11:21

Does the closing Comex POG ever exactly reflect the intrinsic value of gold? If not, and that elusive intrinsic value is more of an ideal or notion than ever a reality, then what does the Comex price represent?

Perhaps it is a monetary reflection of all monies invested in that one market Exchange, a reflection of the future price predictions of all the players, altered somewhat by some true hedge positions....which simply hedge either long or short positions elsewhere. Perhaps this overall market view of price prediction can be named market sentiment. This then, being a human determination, is subject to all our human emotions....namely fear and greed.

"Who or what put gold to sleep, and who or what is going to wake it up?"

Market sentiment drove it up too far too fast and then market sentiment brought it back down (ah but a level much higher still than that from which it started!). When will it wake up? Probably when more investment money THINKS it will go up + bets accordingly.

Price guess....optimistic, and there because there seemed to be some room between Shanti and Usul...both of whom I know to have secret insider info. They know what the "Shadow" knows!

R PowellGandalf#14805010/2/06; 15:25:57


Please accept these + place them to the right of my price guess. I forgot to include them earlier..G

spikedog$$$$ $580.0 $$$$#14805110/2/06; 15:36:53

There are many things which may have "put gold to sleep", although I believe that phrase to be a misnomer as it is the people who are lulled into sleep with respect to gold.

Having said that I believe the US government, the Fed, and their Wall Street cronies are not just managing inflation expectations. I believe they are managing ALL public expectations spanning economics and politics; the line between which is at best very fuzzy. This coming election cycle is very important to the incumbent players and every effort must be made to secure the status quo (dollar hegemony). I also believe that they are acting alone in the world – any perceived cooperation by other countries is purely self-interest in avoiding cascading defaults. Don't ask me about England, I can't figure them out either.

The US players have tried and tried to get other currencies to rise in value against the dollar even though they talked tough of "having a strong dollar". They have run the presses half-full blast so that the US can inflate its way out of its excesses. Helicopter Ben stands at the ready to throw the switch to full blast (akin to Ludicrous Speed for you Spaceballs fans). Other countries and blocs (EU) have seen the benefits, but ultimate pending disaster that a world reserve fiat currency can cause and do not want any part of that mess. Therefore, they have chosen to inflate their currencies just as fast as the US and close the door to the easy way out. When people begin to see that all currencies are inflating, perhaps then they begin moving en masse to Club Gold.

Some may argue that the world's bankers are trying to work together to have control of everything. I say, they've had that and it was called the dollar: vis-à-vis Bretton Woods. Except a problem happened: the bankers found out that even they could not all play together without some of participants getting greedy.

The US Gang seems to know they are losing the FREEGOLD war and are only choosing the fronts on which they can win small skirmishes and maybe even major battles. They will not win the war. Hence, their efforts to slip gold a "mickey" and encourage it to leave the financial party.

Without gold, the only choice is a fiat currency. They don't want you to have Another choice.

a bankerTripping on a label#14805210/2/06; 15:37:11

I understand Mr. Powell has the healthy predisposition to be skepical of conspiracies. This will usually serve the body well unless, like Mr. Powell, you begin to attach the conspiracy label in error to standard business practice and thereupon bias yourself with resistance to accept the normal events.

The state of the exchange rate of Chinese currency is by all accounts not free. But you likely accept this artificial condition as being a matter of procedure which you may comfortably label "policy". Because you do not label it "conspiracy" you do not struggle to accept the unnatural price condition as being an outcome of deliberate operating procedure.

Put all ideas requiring conspiracy out of your mind and you may find it easier to accept that deliberate policy and associated commercial activity could be used and has been used to tame the price regime of gold.

Also do not use your tunnel vision to doubt the willingness of a party to incur and sustain an avenue of loss. It is normal for an enterprise to sustain expenses (here I ask that you consider utility payments) as one small component to facilitate larger scale profitability of the operation in totality. Yet for decades taming gold has been singularly profitable as standard operating procedure. As it turns toward losses, what sustained line item of expense would Uncle Sam & Co. deem too high to sustain the utility of the strong reserve dollar to facilitate Uncle's operational totality?

The good students of martial arts do not miss the opportunity of Uncle's policy practices as economic momentum usable for their own advantage. Even those with little skill can buy the cheap gold.

Flatliner@mikal's PUTS FORECAST OCT. SURPRISE?#14805310/2/06; 16:25:28

Mikal, do you have more information with regards to this surprise information? In other words, is there anyone in the forum that typically tracks put information with regards to these indices that would be willing to share a historical summary? In other words, what volume of puts to we have on QQQQ and how far off the norm is it? Is it a few percent? Or is it orders of magnitude out of line? Or… Is this just hot air looking to escape?
Toolie$$$$ $592.1 $$$$#14805410/2/06; 16:26:57

What put gold to sleep?
An orchestrated sale of paper and bullion, media bromides that proclaim the exaggerated death of the commodities bull. Central banks that don't wish the dollar to fall too far, too fast – especially prior to November.

What will wake gold up?
A busting housing bubble that forces the fed to lower rates in order to avoid too many homeowners just walking away from their problems. Having the November elections in the rear view mirror.

a bankerHaving the lesser half right Mr. Powell#14805510/2/06; 16:38:12

"I just don't believe that the fiat is at that much risk directly from a rising POG."

Where "the fiat" is taken to mean the dollar in its role as the currency of commerce within the United States, including also the unit of the welfare dole, the government pork, and the officially accepted remittance for taxes due, we have no quarrel. Inflation expectations may be fosters and prices may rise, but in matters of consequence this is by far the lesser half.

OF greater significance than the domestic role as transactional currency is the impact that untamed gold would have upon the dollar's international merit as a reserve currency. It would fall out of use for reasons then obvious, and the asymmetric utility now enjoyed alone by Uncle Sam would be at the end of its service.

USAGOLD Daily Market ReportPage Update!#14805610/2/06; 16:52:12">
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 eases as China takes holiday

October 2 (from DowJones) -- COMEX gold futures settled lower Monday after a lackluster session that kept the metal nearly flat as it eyed the moves of crude oil.

At settlement, the most-active December contract was down 90 cents at $603.30.

Earlier in the session the gold contract gained momentum from a rise in spot gold as physical buying interest was seen but that later cooled. The physical interest is expected to calm down with China out of action for a week long National Day holiday, the analysts noted.

Analysts at MKS Finance said the yellow metal lost ground then was later "deadly quiet" before light fund selling forced oil down more than a dollar, dragging gold with it.

The contract managed to hold the key $600 an ounce level but did trade as low as $602 during the session.

"We believe that gold will continue to draw direction from the U.S. dollar and crude oil price fluctuations in the short term," the analysts said.

"Strong physical demand is providing a support, with for example, Turkish gold imports jumping 46.7% in September compared with a year ago."

---(see url for full news, 24-hr newswire)---

melda laureETF silliness, in the long term we're all dead (most of us)#14805710/2/06; 17:12:06

I suppose its silly, but at a o.4% expense ratio, after about 24 years the ETF's would be down by 10% (on a metal basis). Of course if the metal price is rising, their "annual cut" will be rising too (FRN basis). On year 25 they could just issue a 9 for 10 reverse split and re-normalize. After about 173 years, your paper gold would have shrunk by 50% (not including taxes on about three average lifetimes, but elves put that sort of thing in the footnotes) Though I am sure your paper profits will be huge in terms of whatever scrip you originally paid in.
Pal$$$$$ $700.0 $$$$$#14805810/2/06; 17:22:21

In my opinion the recent price action in gold is a short term reaction to deflationary concerns. I've noticed in the last month that the 'deflationists' on a myriad of financial newsletter/opinion sites seem to be more vocal lately and speaking as if they are right and the 'infationists' are wrong. If you take a look at the Fed's site:
you'll notice that the supply of credit has actually contracted recently. BTW, the other answers that I've read here make good points and I don't think they are wrong. I'm just reaching for something different;)
In the longer term I do see deflation in stocks and real estate(this one being the reason for the contraction listed above) but barring an exogenous event before the election I think we'll see the Fed liquefy the system after the election before serious deflation takes hold of the economy. But unlike five years ago I believe there are no longer any assets left to inflate. Dropping interest rates again to 'save the economy' will not help and will only hurt the Dollar.


Boilermaker$$$$$ 599.0 $$$$$#14805910/2/06; 17:42:27

Who or what put gold to sleep?
Ignorance, greed and corruption, all interrelated and orchestrated to maintain the dominance of a fiat currency that's headed for oblivion.
Who or what is going to wake it up?
Knowledge, fear and reality, all interrelated and coming to a marketplace near you.

melda laureSupply Demand, totals, annuals, and mythical deficits.#14806010/2/06; 17:45:39

Wow! Something new! Or at least something underappreciated.
Nathan Brazil$$$$ 597.1 $$$$#14806110/2/06; 18:33:09

Gold went to sleep along with the rest of the sheeple, lulled by the melody of "don't worry, be happy" playing softly on the megamediamuzak on all channels. In a nutshell, no one is worried.

Gold will wake up and throw a fit when, somehow, the sheeple smell the wolf and learn that there is only one way to escape his jaws. Of course by then it will be too late. It always is.

Buy gold now, while you can. Silver too!


Black Blade$$$$$ $ 603.6 $$$$$$$#14806210/2/06; 18:49:46

The hedge funds were in for a quick profit and others believe the Federal Reserve's low inflation estimates and lower energy costs believing that will spur consumer spending in spite of the housing glut. The institutional investors have temporarily put a lid on the metals for now. It will be when the real inflation numbers are revealed and the soaring twin deficits that will be once again recognized and the "flight to quality" goes for the gold. However, soon Asian buying will perk up on "Festival and Marriage Season".

- Black Blade

R PowellA banker // policy huh?#14806310/2/06; 18:52:45

Your words here.....

"I understand Mr. Powell has the healthy predisposition to be skepical of conspiracies. This will usually serve the body well unless, like Mr. Powell, you begin to attach the conspiracy label in error to standard business practice and thereupon bias yourself with resistance to accept the normal events.

The state of the exchange rate of Chinese currency is by all accounts not free. But you likely accept this artificial condition as being a matter of procedure which you may comfortably label "policy". Because you do not label it "conspiracy" you do not struggle to accept the unnatural price condition as being an outcome of deliberate operating procedure."


Ahh, yah, that does make it much more palatable. It takes away the connotation of secretive, clandestine, unlawful, covert and unsustainable. It also removes a great deal of the importance or urgent necessity of being maintained that was often presented with the conspiracy know, that one about surpressing the POG at all costs with the alternative being the immediate demise of all world currencies, total choas and...a fall into the financial and social "abyss".

I never could quite reconcile this idea with the Comex + other world exchanges setting the price of one metal market....especially so since the total market cap of the gold market is probably dwarfed by that of many individual companies. If the POG could cause such damage, I would imagine it would not be subject to market whims at all, not placed at risk, but guarded like the arc of the covenant. Gold is not an allpowerful substance.

Consider that the dow index is a composit of many such companies and the Nasdoggie many more, many of whom have a market cap greater then that of the gold market. In the hugeness of today's global economies, I fear the gold market is small potatos, probably totally off the radar screen of most of the financial world. I'm sorry folks, but (imho) I fear gold is not only unloved by so many but also unnoticed. I do NOT advocate this, I just judge it to be so.

Policy you say, Mr. Banker? Okay then, policy it may well have been and still be, but I'd venture to say not one of utmost importance in the financial world. Perhaps I should add that a POG spiking up to many thousands of dollars in a heartbeat's worth of time would indeed bring chaos, but not in and of inself. Such an event would be the result of other cataclymic events, not the cause of them. The POG is more akin to the fevor which indicates the infection. It is not the infection or the cause of the fevor, it merely indicates that something is drastically amiss, if you will. Taking the analogy one step further, attempting to hide the fevor through a "policy" of controling the POG (indicator), is a most acceptable theory, sounds like most government policies. Don't fix the problem, hide it or blame someone else for it's existence. Thanks....

goldenpeace$$$$$$$$$616.6$$$$$$$$$#14806410/2/06; 19:46:38

Who put gold to "Sleep"....the Wall Street investment banks and their hedge fund friends did it at the behest of and with guarantees by the Goldman Sachs Treasury(Mr. Paulson in charge) and the White House...there's an election coming.
Gold will wake up when someone with enough heft in Forex reserves gets tired of our manipulative antics and tanks the $, thereby teaming with the natural physical buyers in the East.

Lies, seeming eternal,
will die quicks deaths of ignomy
as Green turns to Gold.


mikalIndia's gold buying habits and new ETF's#14806810/2/06; 20:07:38 Unearthing India's Glittering Stockpile | Andy Mukherjee | Bloomberg | October 2, 2006
Though advocating the new Indian gold ETF and two more likely to be approved, that issue is actually shadowed by his detailed discussion of the who, what, where, when, why and how of Indian gold buying. A multifaceted basis of further growth in demand, and a testament to the
reach of banks.

otish mountain$$$$613.60$$$$#14806910/2/06; 20:13:36

Gold was put to sleep because it was not to be considered an indicator of how messed up the world financial scene is.
Most probably the culprits are the same as the ones working to butter up the USA mid term elections.

timbervision$$$$$601.50$$$$$$#14807010/2/06; 20:19:07

Bob Woodward appeared on 60 Minutes and criticized Bush (correctly) with information which is a couple of years old. So why now? Because Woodward is, and has always been, in the employ of the giants. The giants have decided that Bush and his gang, at least overtly, are not the one's to carry out their agenda anymore. These are the same giants that control the illusion of the sleepiness of gold. These are the same giants whose footsteps Another told us we should walk in. The giants created the illusion that wealth can be achieved playing with paper, including paper gold. As every planned fiat currency regime eventually collapses. It will be at that point that gold truly awakens. The giants will not be broadsided by this. It is an inevitable part of their centuries repeating fleecing "black op."
Wky_Woodsman$$$$611.5$$$$#14807110/2/06; 20:42:02

Gold was put to sleep by the attendants of the empire. With the polls demonstrating all time lows, all stops are pulled to keep the incumbents in charge. New Sec of Treasury, a Goldman Sachs Trader, now is dealing for incumbents. Spin economy and control price of gold. High gas prices? No problem, change GSCI to force sale of gasoline futures. Voila, $3.00 gas becomes $2.00 gas. Bad juju in Iraq and Afghanistan? Clamp down hard on any bad news. Banks told to maintain close watch on how clients spend/save FRNs and let's get on with the torture. What will wake Gold up is the torching of the dollar. Until then, little dogs hide with what is in their stomachs. Stay the course with what you hold and add to it as you can. Good luck to all of you. We'll all need it.
silvester$$$$601.50$$$$#14807210/2/06; 20:42:20

The working class of America put Gold to sleep. They allowed their leaders to gain control of this market many years ago. These same folks who have been cleverly taught to ignore true value will eventually come to understand they have been duped. Along with many other hard working people. This will awaken gold again. True value will once again be honest.
Tranquility Base$$$$$614.00$$$$#14807310/2/06; 20:43:59

In regard to who put gold to sleep. I am afraid that I did and many others similar to me who got a little bit giddy about the move to $730. There were too many longs and much profit to be made. The rest was left to normal market action and a lot of pocket picking. It will wake up when all that is left are the strong hands and some external event will send people running for the worlds strongest currency. An added note. Although I help cause this fade, thanks to our host and you at the round table, I am comfortably holding my position. Thanks to all. Tranquility Base
The AlchemistCLOSING GOLD PRICE GUESS IS: $605.60#14807410/2/06; 21:05:15

Gold's price advance was put to sleep because of the acute awareness of Millions/Billions of people in the emerging economies and their eagerness to abandon fiat in favor of gold. The world central banks could not tolerate this type of stress on their respective currencies........The NWO can tolerate economies rising and falling within the universal fiat system, but at all cost the fiat system must remain to insure the preservation of the established power fell asleep from lack of oxygen(the worlds central banks choked off margin money). Gold will awaken when the oil producers find they must provide for their own protection in the present and forseeable future and their 911 call to the worlds favorite uncle can't get them any more than pepperoni pizza or your favorite 1/4 lb. burger made "your way"...or of course a few more billion ol greenbacks to go next to the mountain they all ready have.......then gold will awaken. My sincere thanks to those like minded people who participate and share your knowledge and expertise on this forum.............
Druid$$$$603.10$$$$#14807510/2/06; 21:16:24

Druid: Who put gold to sleep? My guess would be team London/Wall Street/Tokyo with Tokyo doing the dirty work by jawboning a shift in interest rate policy. There was quite a bit of discussion prior to May of this year concerning the Yen Carry trade and its demise by a shift to higher rates for Japanese Government Bonds. This was supposed to have had an affect of draining a tremendous amount of liquidity throughout the world causing a tremendous amount of volatility in pretty much all markets with the much smaller commodity markets taking the brunt of the initiative.

Call me crazy but the brilliance of any strategy is to have multiple application hiding behind plausible deniability. Yes it was a very indirect way to go about it but it got the job done by smashing the momentum that was building in the gold market.

What will cause gold to wake up? Much more momentum forcing a fracture in the relationship between London/Wall Street/Tokyo. China will force Tokyo's hand regarding trade relations and Euroland will pressure London.

Max Rabbitz$$$$ 596.3 $$$$#14807610/2/06; 21:26:12

The Socialist Central Planners/Bankers/Politicians put gold to sleep as part of their financial war against those selfish greedy and uncouth peasants who think they should be able to run their own lives without help from their betters. Gold will wake up when dollars begin to be unloaded and the peasants begin to get nervous. But too late for most. Last ones out get stuck with bags of paper.
7nomads$$$$$595.7$$$$$#14807710/2/06; 21:27:37

Politics has put gold to sleep for awhile. We voters all get our day in early November. After that it will be back to normal. So load up the truck and pack it with something real that will last longer than any of us.
GoldenRooSleepy gold?#14807810/2/06; 21:29:56

$$$$611.50$$$ Gold was put to sleep by China's absence from the commodity market. Sick of paying top dollar China accumulated faster than normal, then with drew slowly taking the index down to the 200MDA. Gold was caught out by Hedge Fund liquidation to the STRONG ONE below that has been accumulating out of sight for years. Gold has woken already and is slowly rising. It will take off once past $625. Will be at $920 by the end of March. Bouncing up and up like a kanga.
GoldenRooOOPS#14807910/2/06; 21:32:38

$$$$613.50$$$ Sorry to have chosen someone golden number on my first post.

$$$$$$$$$$$$$$ THE "PRICE of GOLD" GUESSING CONTEST!! $$$$$$$$$$$$


$$$ $8,752.0 $$$ The Invisible Hand (9/23/06; 14:30:09MT - msg#: 147701)

$$$$ $700.0 $$$$ Pal (10/2/06; 17:22:21MT - msg#: 148058)

$$$$ $681.1 $$$$ Beamer (9/29/06; 01:14:22MT - msg#: 147907)

$$$$ $671.2 $$$$ Caradoc (10/2/06; 00:05:33MT - msg#: 148013)

$$$$ $650.0 $$$$ Sundeck (9/22/06; 22:41:10MT - msg#: 147683)

### $643.0 ### Topaz (9/23/06; 04:57:44MT - msg#: 147694)

$$$$ $636.4 $$$$ Shermag (10/1/06; 22:08:29MT - msg#: 148006)

$$$$ $635.0 $$$$ Demosthenes (9/27/06; 21:18:04MT - msg#: 147871)

**** $634.0 **** jenika (9/28/06; 00:42:53MT - msg#: 147878)

$$$$ $633.3 $$$$ contrarian (10/1/06; 19:47:48MT - msg#: 147998)

$$$$ $631.0 $$$$ 24karat (10/1/06; 22:02:17MT - msg#: 148005)

$$$$ $626.3 $$$$ glockmaster19 (9/29/06; 13:22:18MT - msg#: 147931)
**** $626.2 **** Goldilox (9/23/06; 01:24:03MT - msg#: 147686)

**** $622.2 **** mdgc (10/2/06; 09:25:31MT - msg#: 148030)

$$$$ $620.0 $$$$ Clink! (9/22/06; 21:09:58MT - msg#: 147681)

$$$$ $618.4 $$$$ Usul (10/2/06; 06:49:33MT - msg#: 148024)

$$$$ $617.2 $$$$ R Powell (10/2/06; 15:11:21MT - msg#: 148049)

$$$$ $616.6 $$$$ goldenpeace (10/2/06; 19:46:38MT - msg#: 148064)

$$$$ $616.1 $$$$ Shanti (10/2/06; 14:38:31MT - msg#: 148045)

$$$$ $615.0 $$$$ Armageddon (9/29/06; 22:17:10MT - msg#: 147948)

$$$$ $614.0 $$$$ Tranquility Base (10/2/06; 20:43:59MT - msg#: 148073)

$$$$ $613.6 $$$$ otish mountain (10/2/06; 20:13:36MT - msg#: 148069)
$$$$ $613.5 $$$$ GoldenRoo (10/2/06; 21:32:38MT - msg#: 148079)

$$$$ $612.5 $$$$ Matthew (10/1/06; 13:16:33MT - msg#: 147993)

$$$$ $611.5 $$$$ Wky_Woodsman (10/2/06; 20:42:02MT - msg#: 148071)

$$$$ $611.0 $$$$ Freedom (10/2/06; 05:24:30MT - msg#: 148022)

$$$$ $610.0 $$$$ pilgrims_gold (10/2/06; 07:01:53MT - msg#: 148026)

$$$$ $609.1 $$$$ YGM (10/2/06; 14:51:21MT - msg#: 148047)
$$$$ $609.0 $$$$ White Rose (10/2/06; 07:28:15MT - msg#: 148028)

$$$$ $608.5 $$$$ Prius (10/2/06; 15:09:30MT - msg#: 148048)

$$$$ $608.1 $$$$ Rocky (10/1/06; 12:08:43MT - msg#: 147989)

**** $607.3 $$$$ goldpuppy (10/1/06; 09:51:57MT - msg#: 147982)

*** FRN606.7 *** Smeagol (9/23/06; 01:57:50MT - msg#: 147687)

$$$$ $606.5 $$$$ balzac (9/27/06; 21:35:50MT - msg#: 147873)

$$$$ $605.6 $$$$ The Alchemist (10/2/06; 21:05:15MT - msg#: 148074)

$$$$ $605.0 $$$$ Titan (9/27/06; 12:30:56MT - msg#: 147853)

$$$$ $604.5 $$$$ White Hills (10/2/06; 09:50:25MT - msg#: 148031)

$$$$ $604.0 $$$$ Ag-geek (10/2/06; 08:48:09MT - msg#: 148029)

$$$$ $603.8 $$$$ Golden Lionheart (10/1/06; 21:16:26MT - msg#: 148002)

$$$$ $603.6 $$$$ Black Blade (10/2/06; 18:49:46MT - msg#: 148062)

$$$$ $603.1 $$$$ Druid (10/2/06; 21:16:24MT - msg#: 148075)

$$$$ $602.9 $$$$ GOLD FINGER (9/29/06; 18:01:04MT - msg#: 147941)

$$$$ $602.0 $$$$ Rimh (10/2/06; 12:07:55MT - msg#: 148041)

$$$$ $601.5 $$$$ timbervision (10/2/06; 20:19:07MT - msg#: 148070)
$$$$ $601.4 $*$* silvester (10/2/06; 20:42:20MT - msg#: 148072)

$$$$ $601.0 $$$$ GoldenBear (10/2/06; 07:08:12MT - msg#: 148027)

$$$$ $600.0 $$$$ Mthirsty1 (10/1/06; 21:23:13MT - msg#: 148003)
$$$$ $599.9 $$$$ DryWasher (9/24/06; 15:10:57MT - msg#: 147742)

$$$$ $599.0 $$$$ Boilermaker (10/2/06; 17:42:27MT - msg#: 148059)

$$$$ $598.7 $$$$ The Hoople (10/2/06; 10:15:50MT - msg#: 148032)

$$$$ $597.5 $$$$ Ten Bears (10/2/06; 14:36:09MT - msg#: 148044)

$$$$ $597.1 $$$$ Nathan Brazil (10/2/06; 18:33:09MT - msg#: 148061)

$$$$ $596.3 $$$$ Max Rabbitz (10/2/06; 21:26:12MT - msg#: 148076)

$$$$ $595.7 $$$$ 7nomads (10/2/06; 21:27:37MT - msg#: 148077)

$$$$ $595.5 $$$$ Federal_Reserves (9/25/06; 19:01:55MT - msg#: 147777)

$$$$ $594.0 $$$$ Quickbeam (10/2/06; 11:45:53MT - msg#: 148039)

$$$$ $592.1 $$$$ Toolie (10/2/06; 16:26:57MT - msg#: 148054)

**** $590.3 **** arbyh (9/26/06; 09:30:45MT - msg#: 147809)

$$$$ $590.1 $$$$ Flatliner (10/1/06; 12:11:52MT - msg#: 147990)

$$$$ $585.0 $$$$ Lothar of the Hill People (10/2/06; 13:34:17MT - msg#: 148043)

$$$$ $580.0 $$$$ spikedog (10/2/06; 15:36:53MT - msg#: 148051)

$$$$ $577.7 $$$$ Peculium Aurum (9/27/06; 23:55:29MT - msg#: 147876)

$$$$ $545.0 $$$$ Thoreauly (9/24/06; 10:22:14MT - msg#: 147738)


Black Pearl$$$$$ 604.9 $$$$$#14808210/2/06; 21:43:34

With a strong third quarter in the stock market, the trillion dollar hedge fund market needed to unwind their hedge against the dollar. As seen with Amaranth, being on the wrong side of a bet can close a lucrative shop.

Once the home builders start to release their 3rd quarter numbers, people will panic that their golden goose is going away. This will put pressure on consumption and force Paulson to get tough with a weak dollar.

DruidThe March to War: Naval build-up in the Persian Gulf and the Eastern Mediterranean.#14808310/2/06; 21:51:13

Druid: Interesting days ahead.
GoldenBullet$$$$607.50$$$$$#14808410/2/06; 21:53:59

Up here in edmonton its warm,the rigs cant get out to drill and global warming aint letting up.I am in sales and from san jose to colorado to detroit they all say the economy is slowing.People are cathcing on to the tv lies and the manipulation of oil.Ever since Bush came in oil has done nothing but go up.All we need is for them to deny it 3 times and everyone will know they are rigging the markets for the upcoming elections in november.Please guys keep the gold selling going i need more physical.People are starting to worry and ask questions and my gut says it's about to get ugly.

$$$$607.50$$$ she will go up but they will sell all the way till elections.

Goldendome$$$$ 598.10 $$$$#14808510/2/06; 22:41:37

Sellers put the gold market to sleep. Paper let the buyers get giddy...overextended...then pulled the rug out from under the market. Right now, we have the Goldilox economy and financial markets. Everything is perceived as being good for the economy...not too hot, not too cold. Something will have to shake that confidence in the Goldilox, IMO, to get gold moving upward again; it could happen at anytime, but it's impossible to know what will be the trigger event.
TownCrierShareholders beware: One of the varied faces of the resource nationalizations sure to gain traction#14808610/2/06; 22:56:05

HEADLINE: Uzbek court declares Newmont gold venture bankrupt

TASHKENT, Oct 2 (Reuters) - A court in Uzbekistan has declared bankrupt the gold mining joint venture half-owned by U.S.-based Newmont Mining Corp. after seizing $49 million in tax...

"The court has declared the joint venture bankrupt and given three months for the liquidation of the enterprise,"...

In July, Uzbek authorities seized gold and some of the assets belonging to Zarafshan-Newmont, the other 50 percent of which is owned by the government of Uzbekistan, and launched two tax claims for payments it said were due between 2002 and 2005...

Denver-based Newmont has called the tax claims an attempt by the Uzbek government to expropriate its share of the company. The company has said the joint venture met its tax obligations...

Newmont CEO Wayne Murdy said last week the company would write off its operations in Uzbekistan, where the joint venture ran for more than a decade... Newmont's 50 percent share of gold sold by the Uzbek joint venture last year was 122,700 ounces.

^---(full article at url)---^

As a resource takes on strategic significance, sovereign powers will not be slow to put other interests behind their own. At an unispiring $600 price level and with only 122,000 annual ounces in question, it would seem that the Uzbek government foresees a future significance for gold that remains hidden from most eyes. Give it time.


Gandalf the WhiteTICK TOCK, tick, tick, tick, tick, tick !!!#14808710/2/06; 23:04:11

TAAAAAAAAAAAA --- A little LESS THAN ONE HOUR (1) to go !!!!!

Did you all see that the CONTEST ENTRY DEADLINE is near ?

----- all entries must be posted to the TableRound before Midnight (24:00) Denver time, on Monday, October 2nd, AND ALL ENTRIES must answer THE QUESTION !!

GoldiloxUnearthing India's glittering stockpile#14808810/2/06; 23:11:33


If the women and temples of India were to sell every ounce of the 15,000 tonnes of gold they collectively possess, they could buy Citigroup at a 17 percent premium to the bank's market value.
Of course, it won't happen, and not just because selling 10 percent of the world's above-ground stock of yellow metal would depress the price so much that the sale proceeds would not be enough to buy the world's biggest financial-services company.

The reason that the idle wealth of India is not put to a productive use is a combination of economics, demographics, inheritance laws and a deeply rooted cultural affinity for gold.

With the onset last week of the annual Hindu festival season, a busy period for jewelry purchases, bullion prices have started climbing, increasing the cost of what is already a colossally wasteful national habit.

Financial innovation is needed, not to prompt Indian families to sell their grandmothers' bracelets - they will only do that to make a new pair of earrings - but to make better use of the money that is coming into precious metals either to speculate or to hedge against a drop in the value of paper money.

Indian Prime Minister Manmohan Singh wants US$150 billion (HK$1.17 trillion) of overseas investment in roads, ports and power stations. With the government last week announcing 8.9 percent economic growth in the quarter ended June 30, bankers are forecasting industrial credit requirement at US$175 billion over the next three years.

Most of this money - US$290 billion at the current gold price of more than US$600 an ounce - is already in India, lying in bank safe-deposit boxes, earning nothing. But far from channeling the gold into the financial system, households are spending more of their current incomes on adding to their hoard.

India is the world's largest consumer of gold by volume, with average annual demand of 676 tonnes during the past decade, three times more than in China. Gold futures rose 3 percent in New York over the past two weeks as Indian jewelers began stocking up.

Price alone does not deter Indian buyers. As the World Gold Council's recent research shows, when the precious metal became steadily more expensive from 2002 to 2005, Indians bought more of it. Demand for the yellow metal in India ebbs only when the price fluctuates too wildly, as it did in the first half of this year.

An exchange-traded gold fund, such as San Francisco-based Barclays Global Investors' 21-month-old Ishares Comex Gold Trust, may be a good way to monetize investment demand for the metal.

In January, the Indian regulator allowed exchange-traded funds, with gold as the underlying security, to be set up in the country.

UTI Mutual Fund, the nation's second-biggest money manager, and Benchmark Mutual Fund, which specializes in index-tracking investment pools, are awaiting regulatory clearance to launch exchange-traded gold funds, which would buy physical gold from market makers - called authorized participants - in return for shares that can be bought and sold on a stock exchange.

US-traded gold ETFs have returned 28 percent over the past year. In India, they would offer Hindu temples a good way to earn a high return on their devotees' affection. Gold ETFs will have a much better chance of success than a government plan seven years ago to get families to melt their jewelry and deposit the gold in a bank account for a paltry 3.5 percent per annum. No wonder the plan bombed.

As part of her bridal trousseau, or as a gift from her husband, gold is a Hindu woman's property. If a husband or a son borrows the jewelry and fails to return it with interest, he is guilty of criminal breach of trust.

By contrast, the Hindu Succession Act of 1956 gave a man the right to will away his wealth. This clause was flagrantly abused to disinherit married daughters from paternal property. This inequity in inheritance laws enhanced the ancient religious appeal of the metal.

But after an amendment last year, daughters have won the same legal rights as sons to reside in and claim a share of their parental homes.

Their birthright in a family's joint property can no longer be willed away by the father. It might take a decade or two, but this legal change and an inevitable lifting of restrictions on taking money out of India will surely take some shine off gold.

In the interim, jewelry demand may keep increasing as the economy and disposable incomes grow rapidly.

Gold may also benefit from India's youth bulge. With two-fifths of the current population - or more than 450 million people - aged 19 years or younger, there won't be a dearth of marriages over the next couple of decades.

Besides, don't expect any bride to ever be willing to take shares in an ETF.

GOLD FINGERHow do you mess up an election or newly elected president?#14808910/2/06; 23:30:19




Not that I am speculating a new terrorist strike......however, this is the way things go now days...correct?


TownCrierThe Standard's Indian gold article#14809010/2/06; 23:38:14

I pity the novice reader who lacks the depth of understanding necessary to see this article for the lame presentation that it is.

Will the typical reader comprehend the contradiction and anti-investor mechanism and motivation couched in the following passage?

"US$290 billion at the current gold price of more than US$600 an ounce - is ... lying in bank safe-deposit boxes, earning nothing. But far from channeling the gold into the financial system, households are spending more of their current incomes on adding to their hoard. ....... An exchange-traded gold fund, such as San Francisco-based Barclays Global Investors' 21-month-old Ishares Comex Gold Trust, may be a good way to monetize investment demand for the metal."

I wager that the typical reader cannot fathom the consequnces of this shabby "monetization" advice.

Further, will the typical reader be able to ferret out the additional contradiction in thought presented also by the following passage?

"US-traded gold ETFs have returned 28 percent over the past year."

Let me put it this way. If gold, watered down in the form of ETF shares, was STILL able to gain 28 percent, then how can this article dare to make the claim that the gold owned outright in the form of metal sitting in safe-deposit boxes is earning NOTHING??????!

Again, the article is pushing the agenda of monetization of gold (done here in the form of shares) for a reason. And it is not in the individual's best interest.


GoldTags$$$$ $598.4 $$$$#14809110/2/06; 23:47:53

$$$$ $598.4 $$$$
Deception, perception, manipulation and confusion about what inflation is, are the reasons why I think the gold price is sleeping. It will wake up either slowly or quickly because there is no denying this long-term commodity-gold bull market.

GOLD FINGERWake up people!!#14815410/4/06; 00:22:32

The elections will be a joke....Dem or Rep nothing will change.......

Instead of changing the government, I recommend that you change yourself and prepare for the economic turbulence that lies ahead. If you think political action can save this country from itself, I'm afraid you're dreaming -- or perhaps daydreaming as you waddle through the crosswalk of life.

In the next five years, the United States and the world will go through some of the most financially disturbing times in the history of the world. Once again, the rich will become very, very, rich, and the unsuspecting will be left like the passengers on the S.S. Titanic, heading straight for an economic iceberg.

Another quote from "Robert Kiyosaki"

He has nothing to loose by telling the truth..

NedTo Chris Powell#14815510/4/06; 04:40:52

From yours:

"The pace of that dishoarding and the
willingness of central banks to
continue to dishoard to support the
American empire's exploitation of the
rest of the world via the rigging of
the currency markets are, I think, 90
percent of the price and the great

So if Mr. Sinclair is correct about "the end is near", if I was a Central Banker would I not begin to stop the dishoarding? At the end of the day the reason I have the physical is to act as reserve even though I may tend to play games when playing games are 'playable', yes?

Surely there comes a time when even a gold perma-bear must succumb to the paper (dollar) anxiety?

Looking forward to your (and others) response.

Chris PowellReply to Ned on central bank gold#14815610/4/06; 06:54:40

Ned, any non-U.S. central bank's participation
in the gold suppression/dollar support scheme
always has looked like treason to me, so I
don't know how much more cause any such bank
would need to withdraw from the scheme. Some
have suggested that the central banks are
carefully reallocating gold reserves to
insure big dollar holders against devaluation
of the dollar. That seems plausible. In any
case central bank operations and deliberations
are largely secret and unaccoutable and thus
completely incompatible with free markets and
democracy itself. That is the biggest offense.

mikalThe $'s nemesis Yen is bullish#14815710/4/06; 08:18:07 Japanese Yen Continuous Weekly [Futures Price Chart and Commitments of Traders Net Traders Positions Plotted from the Weekly CFTC COT Report] Many traders watching the figures showing Yen poised for rise. Also China's on holiday this week.
N. Korea's announcement, "will test nuke" seen as indicating Iran owns similar equipment and deterring U.S./Britain/Israel invasion plans.
U.S. on Columbus day holiday Monday.
Today Walmart revised Sept retail sales lower.

arbyhDobbs: Are you a casualty of the class war?#14815810/4/06; 08:28:09

(CNN) -- The Dow Jones Industrial Average has hit an all-time high and Wall Street firms are posting some of their best earnings ever. For the first time in our nation's history, the Forbes list of the 400 wealthiest Americans includes only billionaires. In fact, having only a billion dollars means you're not on the list. As a group, the Forbes 400 has a collective net worth of $1.25 trillion.

So the rich are doing well. But how about the middle class?

More Americans than ever are living in poverty, living without health care, paying more for housing and for the costs of our public education. And real wages are falling.

Real median earnings of full-time working males fell nearly 2 percent last year, according to the Census Bureau, while the real wages of working women fell by 1.3 percent. Despite that, real median household income did manage to rise slightly last year, though that small gain was the first increase in household income since 1999.

So what has been keeping our middle class afloat in the face of rapidly rising costs? American families have been living on, as well as in, their homes. More than one-third of homeowners are spending more than 30 percent of their income on the cost of housing, a level that pushes the edge of affordability. Nationwide median home values from 2000-2005 jumped 32 percent, and homeowners have been pulling equity out of their houses in order to keep up with escalating tuition bills, health care costs and energy costs.

But not everyone is so lucky. The number of Americans without health coverage rose by 1.3 million last year, up to 46.6 million, according to the Census Bureau. ...

The same holds true at the pharmacy....

The costs of higher education are also hurting middle-class families like never before....

Our dependency on foreign oil is also hamstringing working men and women....

...Forbes or Fortune 250 Million list, which would reveal the dire financial pressures that our public policies have produced for working men and women and their families....

Otherwise, there will be 250 million casualties in what has become nothing less than class warfare.

Myself, and my Son-in-Law had to go to a war zone to make decent money. Big gambles for bad times. The prisons are full, but I bet crime has pushed up as the needs increase.

contrarianDow versus dollar#14815910/4/06; 08:39:54

Jim Sinclair hit the nail on the head about the bogus state of the Dow. Why has the dollar not matched the performance of the Dow? It's all manipulation. Something is rotten in Denmark.

"In an attempt to paint a picture of calm by stressing strong economic growth, lack of inflation and peace in the world for early November, they have broken the bank. The broader ramification is for much higher gold prices as the phoenix gets launched out of the ashcan. The common stock of those that tried to paint this rosy November picture will drop precipitously. It is called the US dollar. The evidence for this once again is the fact that the US dollar has moved sideways even though markets have reached all-time highs. Something is rotten my friends and it is not in the state of Denmark."

contrarianA War and a Stock Market Crash--An Amazing Coincidence#14816010/4/06; 08:59:57

How convenient, a stock market crash, just in time for a new war. Isn't that an amazing coincidence! Or maybe just a silent crash (in which case gold skyrockets to the moon).

"...The first stage of shock is denial ("Stock market/real estate market falling in price? Inflation in consumer prices are rising as the Fed keeps increasing money and credit? Nonsense! Keep buying!"), then fear and anger show up for awhile, constantly jostling for attention, and only THEN does the government look for a scapegoat, as in teenage immigrant welfare mothers on drugs. But more probably Iran, which we will get us into a world-wide war with Muslims, which will bring on stage four of shock (bargaining) so that the government can easily impose a Patriot Tax, or a Save America Tax, or a Defend America Tax, or an Anti-Terrorism Tax and they can force people to buy Patriot Bonds, or Save America Bonds, or Defend America bonds, or Anti-Terrorism bonds, and use the money to spend, spend, spend our way to Utopia.

The final stage of shock is acceptance, ("The idiot Mogambo was right after all!"), and this is when you get questions like this one from quizzical reader Rob H, who asks "After the world economy collapses, which is the correct good way to speak English: 1) I now live in a shack, 2) I now live in a shanty, or 3) I now live in a hovel. I just want to know so I don't sound all dumb like." My first answer is, of course, "Like, you know, whatever, dude!"

The more thoughtful answer is "We live under a bridge." Ugh.

****Mogambo sez: If you are not buying more gold and silver at these ridiculously-low manipulated prices, then you are making the biggest mistake of your life. And that egregious mistake is why the rest of your life will be spent reading investment commentary, like the stupid Mogambo Guru, instead of drinking champagne at a fabulous luxury resort and hanging out with your rich friends.

KnallgoldStrange "announcement" today#14816110/4/06; 09:27:37

"European Central Bank (ECB) will disclose later today whether the signatories to the Central Bank Agreement rushed to sell their full allocation of gold just before the deadline of September 26."
"If the signatories, some of the world's biggest holders of gold, sold considerably less than they were permitted under the agreement,>>> it could indicate a fundamental shift in key governments’ attitudes towards gold as a store of value.<<<<"

Either the journalist is a good observer or it was planted.

TownCrierECB Gold Reserves -- there was NO last minute rush to sell#14816210/4/06; 10:52:31

During the last two days of the previous 'fiscal year' of the Central Bank Gold Agreement, plus the first three days of the next one (i.e, together being the sum of last week), the eurosystem of central banks sold gold reserves totalling only EUR 37 million.

Due to quarterly MTM revaluations effective on Friday, however, the eurosytem gold reserves vaulted in value by 1.164 Billion euro.

Gold in the eurosystem is now booked at EUR 475.316 per ounce, versus EUR 472.27 effective for the previous quarter.

Total gold reserves now stand at EUR 174.4 billion.

The net position in foreign currency is now at EUR 152.9 billion.


Sierra MadreTomfoolery with regard to WAG II gold quota sales....?.#14816310/4/06; 10:58:42

Did the signatories of Washington Agreement II sell or not sell their full quota of gold in the year ending September 26th?

We may be told, they did NOT - they only sold, say 398 tonnes out of a quota of 500 tonnes.

However, before we believe this, we have to take into account that there are many ways to do something and call it something else...

For instance, suppose the Seller of the gold is the US Treasury. Would it not be possible to induce one (or more) of the signers of WAG II to "lend" it some gold for a few weeks, with a promise to "repay" it at the end of the loan period? The US Treasury gets the temporarily loaned gold, and sells it immediately; when the next gold-quota is up for sale, Treasury and Lender transform a "loan" into a sale. The US pays for the purchase of gold which it has already sold - if there is a loss, no matter! "Deficits don't matter (when you create the fiat with which to pay the deficits)". Thus the CB gold seller did not, TECHNICALLY, sell more than its yearly quota of gold. But it did provide the gold which the Treasury sold.

There were instructions recently, to withhold Medicaid (or Medicare) payments for nine days, until the fiscal year was over, in order to present a lower deficit. So the payments are shifted over to the new fiscal year.

Same deceit can be implemented for a CB to sell its quota (or more than its quota) of gold, but call it something else, until the time comes when the "quota" allows the sale - of what has, in effect already been sold.

We won't be out of the woods, as Chris Powell says, until these organizations run out of gold. And they will. If we do not see it, our children and grandchldren will.

"I do not care so much about this brief life, as about that long time in which I shall no longer exist". Cicero.

The words of a civilized human being who wished to transcend - and did transcend - his own lifetime through his thoughts.

Gold represents Man's effort to transcend his time through his heirs, to whom he hands across the generations, the best tool for their survival - GOLD.


FlatlinerThose wacky puts#14816410/4/06; 11:02:47

"Concerning those puts, it may also be that funds or large money investors are buying stocks (new Dow high today, although not inflation adjusted) and hedging by buying puts on the index numbers." Yes, this is exactly what I would expect is going on. In an unsure environment, spending a little more for insurance gives piece of mind and stability in the short run.

But this only explains half of the transaction. We can see that this example clearly states why the buyer of the puts entered into the transaction. Here, the buyer wants to buy insurance. Why did the seller supply the insurance?

"I'm not sure who you consider the house, but there are plenty of small players + smallish commodity funds who sell puts, often as one half of a spread trade. Some are covered sales, some are not. The margin required to sell is the same as that to buy...both usually not enough." If I've got the context correct, this is also more then correct. Those selling the puts could have a huge stash of cash (no margin) that they are looking to grow even larger by taking the premium from the buyer of the put. Or, it could be that they say they'll come up with the cash (some x days from now) and just take the premium today thus taking cash now for a promise into tomorrow. The one difference between buying and selling is that the ‘margin’ associated with selling is a positive transaction. Is it not? You sell a put but it's naked. That naked position is one where you said you'd come up with the cash later rather then right now. Thus, you do not acquire margin today, you may acquire it in the future. Thus, the transaction nets you the premium with no costs. When you sell a naked call, you also defer into the future the act of acquiring the resource (whatever it is) so the margin cost is effectively deferred. The buyer of either spends the currency upfront, thus if they borrow the currency to do so, they incur margin responsibility right away. This would imply to me that there is a significant difference between buying and selling contracts.

The house is the seller. The house is the organization that plays the odds where the guaranteed fraction (if there is one) is on their side. There are multiple ‘houses’ in the markets. A house gets to weigh risk in order to generate return. For instance, a ‘safe’ house may not go naked. Rather, they will sell calls against assets that they hold. This implies that they have huge amounts of capital that, when the transaction of selling a call transpires, they cover themselves by acquiring the stock and selling the call. The unlimited loss (infinite rise in the asset price) condition is covered, but there is still risk if they do not also protect their capital on the down side. When you consider selling puts, the house already has the cash and they add to it with the premium. In this case, the limited loss (100% of the cash) condition is covered, but there is still risk if they do not also protect their capital from this 100% loss. Also, to keep the loses at a minimum, the house must insure that the tools used to cover capital are present and available before entering into a position. This is very important if you want to stay in business long.

Naked sellers, on the other hand, leave themselves open to risk during the entire transaction. When the piper calls on delivery day, which may be 1 in 10 or 1 in 100, the act of covering can be spectacularly devastating.

Overall, these transactions are contractual bets. The key word here is bet. Those that enter into the positions are betting on a particular outcome. Like going to the horse races, you bet on positions over time. In some cases, people transfer that position while the horses are still in the backstretch, others, while the horses are making the turn and still others hold on to the end. There is transactional value at all points along the race. But no matter what you call it, it's a bet on a particular outcome.

"The hedge funds, acting on "insider" tips, bought puts against the indices, only to find they were hoodwinked and the liquidity-supported stock indices continued to rise?" Here again, the thought is on the side of the buyer. It could be that the hedge funds are hedging because they are buying at the top of the market while there is the threat of a contracting credit system top in the headlines. It's only smart to hedge. But again, what is the organization of the seller thinking here? Someone is taking the opposite side of this transaction. And, if it's larger then usual, someone is really sticking their neck out.

Now, I'm still curious why these indices? Are they big enough to hide in? Are the bets covered – in a safe way as to minimize losses? Or, are they open bets of great risk supported by the fact that someone knows something about what's going on? This last question is what holds my attention. The reason why it holds my attention is that we have all heard about the ‘big silent trader’ that comes to market to save falling stock prices. We all know that consumers hold their life savings in the markets and it must be preserved at all costs or its game (start) over. This ‘big silent trader’ deals in these indices. Thus, to the insurance man that might also be ‘big silent trader’, they might see that being on the selling side of specific transactions is very profitable relative to other transaction in other markets.

Wouldn't it be nice if the stock market roared its way into the elections? Wouldn't it be nice if commodity prices felt cheap as we move into elections? It would stand that those in office would blow their horns from the rooftops in an effort to let everyone know how good they have it.

Hey, it's a great day for speculation. It's a great day to question everything out of the ordinary. It's also a great day to remember that the long term fundamentals (of just about everything) have not changed direction. The biggest guarantee that everyone here has is that currency must be created in order to service debt. If this does not happen, cascading defaults will occur and the economy will flat out halt. Thus, behind the scenes, inflation is an ever occurring phenomenon that will empower savers of the world to acquire gold for the long haul. Those that benefit from the ability to create money from thin air hate gold. Those that fight against this unfair privilege buy gold.

968@ Towncrier msg#: 148162#14816510/4/06; 11:55:48

Nice to see the ECB marking their goldreserves to the market, whatever the price may be... in sharp contrast with the US Treasury.

Thanks for the update !

Gandalf the WhiteTAA TAA TAAAAAAAAAAAAA --- King of the Hill report !!#14816610/4/06; 12:10:30

Today "KotH" is:

$$$$ $577.7 $$$$ Peculium Aurum (9/27/06; 23:55:29MT - msg#: 147876

Sir Peculium Aurum

ONE more day to go before we Crown the WINNERS !

(BUT -- please read the next post !)

Gandalf the WhiteTAA TAA TAAAAAAAAAAAAA, TaTaTa, TaTaTa, TAAAAAAA <;-)#14816710/4/06; 12:23:58

WOWSERS !!! Wednesday's RESULTS --- GCZ06 Gold Dec '06
HIGH = $585.7 low = $563.5 SETTLEMENT = $566.7 Change -$14.8

Email, Cellphone, Landline, semiphore, and smoke signals, directed at the White Wizard Gandalf, have been received by the Hobbits !

They all ask --- WHAT is that Wiz going to when the SETTLEMENT POG of the Comix December Contract falls below the lowest Contest entry ?

ALL the Hobbits got together and decided to help Ol'e Gandy solve the potential problem by making a list of the possible solutions. Whereas, MANY ideas were proposed, only the following three were realistic enough to be presented to Gandalf.

These were: (solutions are not listed in any order of optimism !!)

1) Cancel this CONTEST and double the next contest prizes, (BUT, this assumes that there will be ANOTHER CONTEST);

2) Award all three coins to the LOWEST OFFICIAL Entry;

3) Change the prizes and give all those that entered the contest a Silver Canadian MAPLE LEAF;

So, Sam was chosen to give Gandy these answers.

Sam approached the Wiz, advised of the questions and suggested the three solutions. The White Wiz smiled and told Sam the Man to "FORGETABOUTIT" ! <;-)

The Wiz told Sam that he had already devised a solution to solve ALL potential CONTEST problems. The Wiz said, "We shall do what the COMEX would do, simply lower all Entries by a percentage so that a large range of entries will cover the final SETTLEMENT price."

Then Sam ask, "What is that percentage ?", --- and with a flash of light and a cloud of smoke --- the Wiz vanished !



Thoreauly@ Gandalf the White#14816810/4/06; 12:33:34

2) Award all three coins to the LOWEST OFFICIAL Entry.

But of course! :-)

contrarianThe Real (Bogus) Value of the Dow#14816910/4/06; 12:34:59

Here's a good snippet:

Here's a good snippet:

"As I pointed out in my earlier article, Manipulation, if the Dow were to make a new high, it would be a phony new high, since adjusted for inflation, we are nowhere near the old highs. Using the Fed's very own CPI Inflation calculator (Thanks to George Ure at Urban Survival for keeping a handy link to this calculator right on his homepage) we find that we'd need a 13,817 Dow today to equal the 11,750 Dow of 2000. Put another way, today's Dow High of 11,754 is equal to only a Dow of 9,995 in 2000. Pfffttt - we didn't even make Dow 10K!

If you calculate the Dow using real money - gold - you find an even worse picture. Measured in Gold, today's Dow is equivalent to only about 5,100! Using an average gold price of $275 in 2000, we establish our year 2000 benchmark: 10,750/275= 39. Using today's gold price of $580, we have 10750/580=18.5 From 39 to 18.5 is a 52.5% drop, which is equivalent to only Dow 5K!

So is it really a new high? No. But please let me know if you hear any of this mentioned on the evening news tonight."

ShermagWhat to do if the close is lower than the lowest guess#14817010/4/06; 13:22:07

Sir Gandy

Hmm. I suspect that you are playing with us, but if not, I ask what is wrong with simply following the contest rules as stated. That is:

"1) The Winner is the poster with the Price Guess closest to the Settlement price."

"There will be also be two runners-up prizes for the next closest prognostications."

In that event, Sir Thoreauly as the closest would win gold, and Sirs spikedog and Peculium Aurum with the next closest would each win silver.

Armageddon@Gandalf/USAGOLD#14817110/4/06; 13:34:57

Regarding the contest I like the choice

>Change the prizes and give all those that entered the contest a Silver Canadian MAPLE LEAF;

I think that participation on this forum should be rewarded. :)

GOLD FINGERKeep the contest as IS!#14817210/4/06; 13:47:36

We still have tomorrow....rule is made...leave it the hell alone.....
USAGOLD Daily Market ReportPage Update!#14817310/4/06; 14:06:26">
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 down as DOW revisits record high

October 4 (from MarketWatch) -- The Dow Jones Industrial Average closed at a record 11,727.34 on Tuesday, and U.S. stocks moved even higher Wednesday.

Gold bullion was not about to "contradict one of its most obvious inverse correlation factors," said Kitco's Jon Nadler.

So for the moment, "oil and inflation threats (or the lack thereof) coupled with deteriorating technicals are pushing the precious metal around, much to the dismay of pundits who will not look good in light of the calls they made for $800 gold prior to the end of 2006," he said.

"While we can never say 'never,' it is becoming safe(r) to say that an extreme event would now have to come into the picture for such a violent rally to take place," Nadler said.

The COMEX December gold contract closed down $14.80 at $566.70 after reaching $563.50, an intraday level the contract hasn't seen since mid-March.

Peter Grandich, editor of The Grandich Letter, said what happens in the next few sessions will go a long way toward determining gold's direction for the rest of 2006.

For his part, Grandich laid out both bullish and bearish cases for gold. Holding above September's low around $570 and then closing above $610 should clearly indicate the bull market remains intact and new highs are on the offering," he said. "However, a close below $570, and a test of the May lows of $540 and even ultimate support at $500 is quite possible."

James Moore, analyst at TheBullionDesk said, "Despite this apparent short-term complacency I still think gold will see a fresh high above $850 in the next 12-24 months with oil, Iran/Iraq, North Korea and terrorist activities by al-Qaida all potential catalysts."

---(see url for full news, 24-hr newsire)---

Gandalf the WhiteNOT to worry, GOLDHEARTS !! #14817410/4/06; 14:12:11

Gandy's change is to be ZERO percent !
( GOTCHA !!)

SundeckRules...we must have rules!#14817510/4/06; 15:34:20

Ahhh Sir Gandalf...whose words are they?

Surely, too, we must ABIDE by the rules; even though there is unrest across the land...and rules have been transgressed aplenty.

Award the gold and silver as stated...there can be no ambiguity...

...and good fortune to those knights or ladies who presciently forsaw the dark hand descend upon gold at this time...


GoldiloxSoftware Giants Shut as Strike Hits Indian Tech Hub#14817610/4/06; 15:43:40,1895,2024262,00.asp?kc=EWEWEMNL100206EP13B


BANGALORE (Reuters)—Operations of global software companies, financial institutions and government offices in India's main technology hub shut on Wednesday after activists called a strike over a border dispute with a neighboring state.

The 12-hour stoppage in Bangalore, the capital of the southern state of Karnataka, was called by groups disputing claims by next-door Maharashtra over a small border town.

"The strike is going on very well all across the state. All works in government departments have come to a complete standstill," L. Byrappa, president of the Karnataka Government Employee's Association, told Reuters.

The streets of Bangalore, home to over 1,500 Indian and multinational tech firms like Microsoft Corp., Intel Corp. and IBM, were deserted as companies and shops shut down. Schools closed and traffic was sparse.

A spokeswoman for Infosys Technology, India's second largest software services exporter, said the company had closed its three software development facilities in Karnataka.

"We have closed offices as a precautionary measure. Work would not be impacted as we have decided to work on Saturday, October 14 to compensate today's leave," she said.

Offices of Bangalore-based Wipro Ltd., India's third-largest software exporter, were also closed.

B.S. Sial, the state's police chief, said arrangements had been made across the state to prevent violence.

Bangalore shut down for two days in April as people rioted following the death of film icon Rajkumar, leaving eight people dead. Software firms lost $40 million in revenues.

Karnataka and Maharashtra have been embroiled in a battle over Belgaum town—500 km (310 miles) north of Bangalore—and other towns and villages for years as part of a long-running border dispute.


Globalist success also has its "challenges".

Chris PowellEurope's central banks sell less gold than target#14817710/4/06; 15:46:47

So where did all the metal dumped over the last week come from? Would you happen to know, Secretary Paulsen?

* * *

From Reuters
Wednesday, October 4, 2006

LONDON -- Europe's central banks sold just 393 tonnes of gold against the full quota of 500 tonnes in the second year of an agreement that regulates bullion sales, precious metals consultancy GFMS Ltd said on Wednesday.

"This confounds market speculation during much of September that there had been a last minute rush to sell gold before the end of the second agreement year and that this was responsible for the period's price weakness," it said in a statement.

On Wednesday, spot gold fell nearly three percent to $559.40 an ounce, the lowest since June 15. Prices have fallen about 23 percent from its 26-year high of $730 in May.

Europe's Central Bank Gold Agreement (CBGA) was negotiated in 1999 to stabilise prices when gold was languishing below $300 because of the attraction of other investments.

The pact, agreed in 2004, raised the limit on gold sales by its 15 signatories over five years to 2,500 tonnes at a rate of 500 tonnes a year, from 2,000 in the previous 1999-2004 period. The second year of the current agreement ended on Sept. 26.

The banks sold the full quota of 2,000 tonnes during five years of the first agreement and 497.2 tonnes in the first year of the current pact.

"Looking ahead, GFMS also see little reason to alter their belief that sales under the remainder of the agreement are unlikely to reach quota either on an annual basis or for the full five-year agreement period," the statement said. "We are perhaps on the threshold of an era of more moderate net official sector selling."

According to a financial statement by the European Central Bank, Eurosystem members sold two tonnes of gold over the week ending Sept. 29, GFMS said.

"GFMS believe that the fact that CBGA signatories are not expected to fulfil their 2,500 (tonnes) sales limit over the duration of the second agreement, coupled with the very different market and price conditions likely to prevail in the next few years compared to those in 1999, probably indicates that a third CBGA is unlikely to materialise," it said.

spikedogSir Gandalf experimenting in the lab again#14817810/4/06; 15:47:29

I think Sir Gandalf just wanted to try a few of the formulas from his bootlegged copy of "Official Government Statistics and How to Manipulate Them".



Chris PowellThe money isn't as good as the coffee anymore#14817910/4/06; 15:50:24

5:36p ET Wednesday, October 4, 2006

Dear Friend of GATA and Gold:

Who says there's no inflation?

Maybe only Federal Reserve Chairman Ben
Bernanke and Treasury Secretary Henry
Paulson. Certainly not the makers of
Chock Full o' Nuts coffee, whose jingle
used to proclaim, "Better coffee a
millionaire's money can't buy."

But those were the old days ... like a
few months ago. The coffee company has
updated its advertising to fit the age
of infinite money. Now the company
sings of its product, "Better coffee a
BILLIONAIRE'S money can't buy."

Listen for yourself:

Indeed, as the commentary appended here
notes, you can't get on Forbes' list of
the 400 richest Americans anymore if
you're a mere millionaire. The top 400
now are all billionaires.

At this rate in a few years American
"millionaires" may be qualifying for
food stamps. Like the "millionaires" of
the early Weimar Republic, they may not
even be able to afford coffee.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Economy Booms ... for Billionaires

By Holly Sklar
McClatchy-Tribune News Service
via Jackson (Mississippi) Clarion-Ledger
Tuesday, October 3, 2006

Millionaires are so last millennium. The new Forbes 400 list of richest Americans is billionaires only.

If you're net worth is a mere $999 million, forget it. A billion means a thousand million, and that's the Forbes 400 minimum -- up from $900 million in 2005.

Donald Trump and two of his kids grace the Forbes 400 cover, but ranked No. 94 with $2.9 billion, Trump's a long way from No. 1 Bill Gates with $53 billion.

The combined wealth of the 400 richest Americans is a record-breaking $1.25 trillion. That's about the same amount of wealth held by half the U.S. population, numbering 57 million households.

The economy is booming for billionaires. It's a bust for many other Americans.

A record 400 Americans are billionaires -- and a record 47 million Americans have no health insurance. America has 400 billionaires -- and 37 million people below the official poverty line.

The official poverty line for one person was just $9,973 in 2005 (latest data). That wouldn't cover the custom-made men's shoes ($4,128) and Hermes purse ($6,250) on the Forbes Cost of Living Extremely Well Index. The official poverty line of $15,577 for a three-person family is lower than the cost of the Patek Philippe men's gold watch ($17,600).

The Forbes 400 minimum is up $100 million since 2005, but the federal minimum wage has been stuck at $5.15 an hour -- just $10,712 a year -- since 1997. GOP leaders in Congress have been holding a raise for minimum wage workers hostage to more giant tax cuts for wealthy inheritors.

Wealth isn't trickling down. It's flooding up -- from workers to bosses, small investors to big, poorer to richer.

The heirs to Wal-Mart founders Sam and Bud Walton have a combined $82.5 billion -- while the children of Wal-Mart workers swell the ranks of state health insurance programs for the neediest.

In today's corporate America, workers see gutted paychecks and pensions despite rising worker productivity, while CEOs get golden pay, perks, pensions and parachutes. The pay gap between average workers and CEOs has grown nine times wider since the 1970s.

The number of billionaires is a record high, but the share of national income going to wages and salaries is at a record low.

U.S. corporate profits increased 21 percent in the past year, Market Watch reported in March. "Profits have been so high because almost all of the benefits from productivity improvements are flowing to the owners of capital rather than to the workers," said Market Watch.

The wealthiest 1 percent of Americans (minimum net worth $6 million) owned 62 percent of the nation's business assets, 51 percent of stocks and 70 percent of bonds as of 2004, according to the latest data from the Federal Reserve Survey of Consumer Finances - which excludes the Forbes 400. That's way up from 1989, when the wealthiest 1 percent owned 54 percent of business assets, 41 percent of stocks and 52 percent of bonds.

Our growing economy is not producing a growing middle class, but a richer aristocracy.

The high point for median household income - the income of the household in the middle -- was $47,671 in 1999, adjusted for inflation. In 2005, median household income was $1,345 less at $46,326. In the same period, the Forbes 400 gained more than 100 billionaires.

Government policies are fueling rising inequality. Taxpayers with incomes above $1 million will see their after-tax income grow by about 6 percent this year thanks to tax cuts the nation can't afford.

In an economy where money is flowing up to the very top, even college-educated workers are going backward. Inflation-adjusted median household income was lower in 2005 than 1999 even when the householder had a bachelor's degree, master's degree, professional degree or doctorate.

The problem is much bigger than the rich getting richer, while the poor get poorer. The really rich are getting richer at the expense of most everyone else.

Solutions include restoring the link between rising worker productivity and pay, raising the miserly minimum wage, narrowing the obscene pay gap between workers and CEOs, rolling back tax cuts for the wealthy -- and stop taxing income from work more than income from capital gains.

R PowellFlatliner#14818010/4/06; 16:22:10

This post is a response to Flatliner containing some little explanations of paper market trading. I mention this from the get-go so those not interested can skip over it.

Your words here....

"I'm not sure who you consider the house, but there are plenty of small players + smallish commodity funds who sell puts, often as one half of a spread trade. Some are covered sales, some are not. The margin required to sell is the same as that to buy...both usually not enough." If I've got the context correct, this is also more then correct. Those selling the puts could have a huge stash of cash (no margin) that they are looking to grow even larger by taking the premium from the buyer of the put. Or, it could be that they say they'll come up with the cash (some x days from now) and just take the premium today thus taking cash now for a promise into tomorrow. The one difference between buying and selling is that the ‘margin’ associated with selling is a positive transaction. Is it not? You sell a put but it's naked. That naked position is one where you said you'd come up with the cash later rather then right now. Thus, you do not acquire margin today, you may acquire it in the future. Thus, the transaction nets you the premium with no costs. When you sell a naked call, you also defer into the future the act of acquiring the resource (whatever it is) so the margin cost is effectively deferred. The buyer of either spends the currency upfront, thus if they borrow the currency to do so, they incur margin responsibility right away. This would imply to me that there is a significant difference between buying and selling contracts.

I should start by clarifing that the margin to buy or sell futures contracts is the same, this is not true of options. I may have mislead you there, sorry. A bought option cost whatever (some amount of $$$, called premium) and no more, and this one-time, upfront cost is paid when bought...a COD transaction. There is no further liability incured by owning options. Their value changes daily according to the underlying price of the item. They are also time wasting assets, ie part of their $$ value is determined by the time they hold until expiration.

A sold option DOES require margin as it has the same risk as a futures contract. A sold option grants to the buyer the right to buy or sell (call or put) so the liability, to the seller, is unlimited. Margin MUST be in the account BEFORE any futures are bought or sold. Margin MUST be in the account before any options are sold. So sellers have money to back their bets and, right you are, they want more $$$, that's exactly why they sell. Don't confuse yourself thinking of any tangibles here...the game is more easily understood in terms of cash settlement only. Delivery of goods and pick up of same is a matter for farmers or producers and end users...

Don't confuse margin with premium. Initial margin is the amount required to initiate certain positions. Should the market price move against you, the margin changes or additional funds are necessary (initial margin plus whatever amount the position is losing marked-to-market DAILY) + additional $$ is required, usually IMMEDIATELY or your position is liquidated. Your broker's clearinghouse guarantees couterparty payment should you default.

Premium is that amount collected from the sale of an option (not a futures contract but an option). All this refers to naked positions but option spreads can be had in which a bought option can limit the liability (potential loss) of a sold option. Also spreads can lower the cost of positions while also limiting potential gains...example...buying a dec. gold 580 call while also selling the 680 pay for the 580 while collecting from the sale of the 680. This is a common bull spread + involves both buying + selling. Note in that bull spread there is no risk incured from the sold option, it merely limits the potential gain of the held option. Combinations of futures contracts + options are also common + combinations are almost infinite. Simple, no? (G)

It can get somewhat complicated. I'm going to wrap it up now with the suggestion that you read "How the Futures Markets Work" by Bernstein. It's a good explanation of the basics, available in paperback (for [paper markets) + an easy read. Hopefully, too, this has suggested to others that imho, it is usually next to impossible, given the complexity of options' strategy, to definitively determine too much from news regarding put sales. There are numerous studies + opinions on such but certainly no definitive dogma. Numerous books on the subject of options strategies are available...and should you buy any one of them I can guarantee money will be the author + publisher.

For the technicians here, how long can POG + POS hold this far below the 200 day average....? Looking to buy? Now may be a good time...physical or paper or both!

Flatliner, hope this helps some, let me know.

TopazComex Del'y#14818110/4/06; 16:27:58

Again we witness a paultry delivery number so early in the Month.
To explain, normally Comex Gold deliveries average 10K Contract equivalent Oz/mth +or- so it is highly unusual to see the trickle we're being presented with now.
Particularly in light of (a) the WAG 2b 110T shortfall and (b) we're now into the Eastern Buy-up.
At this rate, Gold Del'y for Oct will be scratching to get to 2K.
It's weird! Active month futures Vol and OI might be a clue...I can't rule out a Comex default looming. That'd be sad wouldn't it....;-(

TopazR Powell#14818210/4/06; 16:49:24

Seeing your handle jogged my memory Rich about a post of yours the other day re: Deflation.
The term is misconscrued a lot nowadays but it is and can be upon us in a twinkling, Bens Helicopters notwithstanding.
The fatal flaw with a fractional reserve system is that there NEVER is enough money (debt) to satisfy yield demand ...and should borrowings shrink to such a level that Yields fall effectively to Zero, we'd be in that deflationary position.
Without a new debt creating "adventure" we are headed that way sure as eggs. Even IF they are stupid enough to embark upon another debt folly, ultimately the future is assured, the Currency timeline been reached IMHO.

R PowellFlatliner#14818310/4/06; 17:00:17

Just read the rest of your post and have one suggestion to add. There are funds (mutual money pools) who do trade in futures similar to stock mutuals. Not nearly as many as stock mutuals but some exist. There are also individual investors, lots of them, similar to stock + bond investors. These markets are not exclusive or esoteric. Perhaps the largest perpertrator of that long standing notion is that futures + options are zero sum markets and there is no financial preference between long or short positions. For every future or option sold, one is bought, shorts always equal longs. Many people simply can not understand how one can sell that which one does not possess. Some understand but consider the practice to be somehow unethical. But, it's all a paper game... a big financial betting casino, if you will. The speculative purpose is to provide liquidity for those who hedge real physical commodities, gold included.
R PowellTopaz#14818410/4/06; 17:07:06

Agree. Perhaps deflation is the greater risk. More monetary liquidity + price inflation steals wealth from those who have it but, god forbid, if money seizes up and deflation hits, then the vast majority (the non-wealthy) will default, of necessity) when jobs dry up and/or pay less, no? They will default on past debts like mortgages + revolving credit debt. And yes, although Bernanke will do all in his power to prevent such, it could very well happen!
FlatlinerThanks R Powell#14818510/4/06; 17:27:46

It does and I think I see. Bets in the casino are puts and calls.

The paper rules skew the advantage into the lawmakers hands. It still seems to make more sense to hold the cup-cake rather then the monopoly money.

Ned@ Chris Powell#14818610/4/06; 17:31:47

Thanks for the news:

"Europe's central banks sell less gold than target

So where did all the metal dumped over the last week come from? Would you happen to know, Secretary Paulsen?"

Perhaps it's time for that long, long, long awaited physical audit that is some 35 years overdue?

I've got nothing going on this weekend, I'll volunteer to be a 'counter' !! Get a dozen or so guys, a couple cases and we can count 2, mean 12,000 tonnes.

NedAnother thought !#14818710/4/06; 17:36:23

Europe selling less (and a lot less, 393 vs 500) of gold this past year.....China and Japan buying or so they say. Russia buying, M-E buying......who the heck is selling?

Must be some hard ball, major league, imaginative accounting going on somewhere.

IMF as well?

melda laureThe new Roman Senate will never admit their complicity#14818810/4/06; 17:46:54

"Solutions include restoring the link between rising worker productivity and pay, raising the miserly minimum wage, narrowing the obscene pay gap between workers and CEOs, rolling back tax cuts for the wealthy -- and stop taxing income from work more than income from capital gains."

Hmm. How did that come to be? One man relies on wages, the boss relies on the market: if he doesn't like the particular market he's in, he changes the business plan and goes to where the big bucks are, eg, services, finance, resources (GOLD), leverage. The wage earner is stuck shopping among a bunch of jobs that dont require skill, where there is more than enough labor to fill, because the market is wide and undifferentiated (fungible).

Somehow I have a hard time beliving the higher rates of income tax are somehow "responsible" for low wages. If there's a lack of high paying jobs it is because the government killed off all the high paying work (or, in the case of the AMA, a trade organization colluded with government to errect barriers to entry).

But of course, we NEED more H1B visas! Dont you know, there's a shortage of engineers, nurses, doctors, even lawyers. Clearly by this logic, there is a severe shortage of CEO's because their pay is out of sight.

And for those who think the solution is to "buy stocks" I can only echo Robert Kiyosaki: "the average investor barely beats inflation, and doesn't beat the market- the lesson: dont be an average investor..." How did those folks end up with so much stock? They ISSUED it, because they owned (ie BUILT) the underlying companies. Why don't they fear bankruptcy? Because a wealthy person will not sit idly by when their wealth is at risk, they will move as much of it to a safer business model, use ring-fencing, open a subsidiary, and so on. And the very last thing they would ever consider doing is leaving a bunch of cash around when inflation is raging and doofusses are clamouring for more goverment stealing, um, er taxes, or deficit-financed giveaways. Businessmen are too smart for the government, the only way to stop them is communism where EVERYBODY goes broke.

Work is too hard. It's much better to figure out how to make your money work harder, and if you cant do that, then take your ball home. Cash out. Buy GOLD. This is no stock market for the clueless.

The Globalization will continue until the imbalances are leveled, and as long as funny money reigns, and derivatives enslave the "undeveloped" nations of the world, and crazy gravity-defying trade deficits float upwards, there will be no bottom for american labor. Welcom to the new rome, Citizen Slaves; if you want to make it big I suggest sucking up to the Senate, or heading out to the provinces, and whatever you do, cash out those tin denarii for gold sesterces at whatever price you can get them for.

Buy gold, The Senate will never admit their complicity.

melda laureUntil Rome crumbles, or comes to it's senses.#14819010/4/06; 18:01:32

Ooh! a double helping! whoops!. Good article Mr Powell. I like my coffee well roasted. Poor Mr Bush, he can hand out tax cuts but cant fix the dollar globalization (wall street would have a snit). Poor Mrs Pelosi, she can root for more unemployment benefits but cant fix the dollar mess either (and for the same reason). And the poor chinese, they just look at us and say "What?! It's not our fault, it's YOUR goofy system."

And as long as both parties defend this broken excuse for a monetary structure the american workingman is going to loose loose loose, and now gold is going to win win win.

GoldiloxThe Fountainhead#14819110/4/06; 18:41:42

For all you Ayn Rand fans, TMC is playing Gary Cooper's rendition of "The Fountainhead" right now - at least on the west coast.
spikedogGoldilox - The Fountainhead#14819210/4/06; 18:47:46

Thanks, Goldi. I least I can catch the last half.
R PowellDollar prices#14819310/4/06; 19:31:14

POG +7.60
POS +0.21
in the overnight markets. Sometimes they go down faster than they go up, sometimes they don't.

DruidOCTOBER SURPRISE#14819410/4/06; 20:05:56

Morpheus: The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inert, so hopelessly dependent on the system, that they will fight to protect it.
[Neo's eyes suddenly wander towards a woman in a red dress.]
Morpheus: If you are not one of us, you are one of them.

Druid: Mthirsty1 see above. I've tried helping but it doesn't resonate well with the blue pillers and when you hand out the red pill you have to be extremely gentle otherwise you might have to physically subdue the blue piller on the receiving end. Ain't it cool?

Ron Kirby wrote a pretty interesting article concerning the month of October. Enjoy the read.

Black BladeGandy - Contest#14819510/4/06; 20:53:28

No need to change contest rules. Let the chips fall where they may. Amazing how the hedge funds ran for the exits over the last couple of days as major losses were incurred by selling to cover over-leveraged positions. This is just the tip of the iceberg IMO. ;)

I understand that physical buying remains strong but the gamers in the "sophistocated investors" don't understand the real world. It does make for some quirky amusement though.

As always, get out of debt and stay out of debt, stash enough emergency cash for several months of household expenses, accumulate Gold and silver "portfolio insurance", and start a storage program of non-perishable food and basic necessities.

These are "interesting times".

- Black Blade

TownCriermelda laure#14819610/4/06; 21:29:09

Your "Roman Senate" post was definitely good enough to warrant the double posting, but for the sake of efficiency in the pushing of electrons I've eliminated the duplicate text.

I especially liked the delivery of your comment:

"How did those folks end up with so much stock? They ISSUED it, because they owned (ie BUILT) the underlying companies."

Perhaps I liked it so much because it helps strike the right tone in the matter of this particular McClatchy-Tribune News Service article.

To be sure, I'm among the first to insist upon the existance of gross socio-economic misalignments in the international financial and monetary system architecture -- its foundation and resulting superstructure. HOWEVER, I have enough fibre of social responsibility to know that there are wrong ways to implement change, and there are better ways to implement change. And among them, the sort of "rabble rousing" technique that the McClatchy-Tribune News Service article lends itself to is among the wrong ways.

Another reason I liked that passage is because it also strikes a harmonious note with something that I often convey to people in the course of our financial conversations. As follows (in extreme brief).

After a no-nonsense discussion of the gloriously functional usage AND associated pitfalls (e.g., inflationary loss of value) of the world's system of national fiat currencies, I extend that coverage to the equities market's system of investment banks/brokerage houses within which companies can issue fiat shares of their own stock which provides themselves with a corporate-scale parallel of the power and privilege (and pitfalls to the end user/saver) wielded by the nation-states in the issuance of their own fiat currency.

It always makes for a very eye-opening discussion and usually results in a distinctly modified attitute and approach to the conventional investment strategies.


TownCrierOn this occurance of cheap(er) gold#14819710/4/06; 21:42:29

The arrival of cheaper gold at this time is very much akin to a hypothetical scenario in which a vendor on the deck of the Titanic announces discounts on the sale of his available inventory of personal liferafts -- even now, AFTER the iceberg damage has sealed the fate of the Ship!

It's hard to believe, but even at such a late hour there are people who remain too dumbfounded to take advantage of any opportunity for self-protective measures.


physicalmantopaz-deflation#14819810/4/06; 21:42:38

Your so very right on that point. The Fed can create all the money it wants but if it is not borrowed into existence for the purchase of consumer goods or capital investment domestically than the only place it can go is into monetization of the " casino-markets". That would only prop markets for a very short time though before some insiders break ranks and jump ahead to hoard cash and wait to buy the scraps. That is if the cash will buy anything after oveseas bond-holders start dumping.
That to me would be the worst of all possible outcomes, scarcity of cash, but us cash being worth next to nothing and foreign dollars holders and holders of other units of account buying up most us assets while the inhabitants starve, homeless with no internationally viable currency and no jobs. This country has been hollowed out over the last 40 years. Walk up sometime and kick the log. ain't nothing left but the bark.
Ounces of gold and silver will about always buy something. Good to own a little lead too.

The Invisible HandThe link I missed#14819910/4/06; 22:28:14


By the close of day at the New York Stock Exchange (NYSE), its most prominent index, the Dow Jones Industrial, had hit an all-time high of 11,850.61.
Another event of similar global significance is the sharp downward move in world oil prices that begun yesterday and has seen the price of the commodity tumbled to an all-year low of under $58 a barrel early this morning before recovering to just over $59.
Given the ROLE OF OIL AND INVESTOR SPECULATION IN THE COLLAPSE OF THE FIRST INTERNATIONAL MONETARY ARRANGEMENT OF MODERN TIMES -- THE BRETTON WORDS SYSTEM -- IN THE MID-70S, the two events provide an auspicious background for a discussion of the international financial system and the world economy.
That the events have occurred at all, at this time, will be equally thought-provoking for those concerned about the health of the world economy. For, strictly speaking, it is difficult to find solid causes for either of them. The Dow Jones record comes amidst continuing concerns about the underlying health of the U.S. economy: some pundits are still predicting a collapse in house prices, both the budget and trade deficits are at an all-time high, and job-creation appears to have stalled. With anxieties growing over the Iranian and North Korean nuclear programs and Venezuela racking up the anti-U.S. rhetoric, it also seems quite bizarre for oil to be behaving the way it is on the commodity markets.


And thus it is oil which will lead to Freegold.
Does that explain why oil and gold are tumbling together?

What about the CHICKEN AND EGG mystery?
Is it not Nixon who broke the system in 1971 and oil which then reacted in 1973?

TownCrierGFMS: Official Statistics Confound Rumour of Heavy Central Bank Sales#14820010/4/06; 22:49:28

-- CBGA Sales in Year 2 Confi rmed as Well Under Quota at 393 Tonnes --

London, 4th October 2006

As forecast in mid-September's Gold Survey Update 1, sales by the signatories to the Central Bank Gold Agreement (CBGA) ended up far short of their annual 500 tonne quota at just 393 tonnes. This confounds market speculation during much of September that there had been a last minute rush to sell gold before the end of the second Agreement year (on 26th September) and that this was responsible for the period's price weakness.

Looking ahead, GFMS also see little reason to alter their belief that sales under the remainder of the Agreement are unlikely to reach quota either on an annual basis or for the full five year Agreement period. We are perhaps on the threshold of an era of more moderate net official sector selling.

A more detailed synopsis follows:

At 14:00 GMT 4th October 2006, the European Central Bank (ECB) released the final weekly financial statement of the Eurosystem, of the current Central Bank Gold Agreement (CBGA) year. According to the document, Eurosystem members sold two tonnes over the week ending Friday 29th September 2006. (As information on daily activity over the week is not available, we cannot be certain of what portion of that figure was sold in the last two days of the second Agreement year, Monday 25th and Tuesday 26th October.)

...In September, there was much discussion in the market over the potential for a major ramp-up in Eurosystem sales. Specifically, there was talk of forward sales having already taken place, with their settlement expected before the end of the second Agreement year, as well as continued disposals throughout the month. A number of analysts contended at the time that this activity was pushing the second CBGA year annual fi gure towards its 500-tonne limit, contributing significantly to the weakness in the price of the yellow metal over much of September...

Nevertheless, their absolute levels remained insufficient for annual CBGA sales to even come close to their 500-tonne limit. In fact, September saw Eurosystem countries dispose of approximately 55 tonnes, bringing the second Agreement year total to a maximum of 393 tonnes (depending on what portion of last week's sales took place on Monday and Tuesday).

...With regards to the significance of CBGA sales over the second Agreement year failing to reach 500 tonnes, GFMS are neither surprised nor alarmed by sales volumes falling short of their quota. Indeed, we expected this would happen at some stage of the fi ve-year Agreement, although perhaps not as early as its second year.

From the very early stages of the current CBGA, GFMS have argued that it is unlikely that the second CBGA would see its members sell the full 2,500 tonnes the Agreement limited them to.

...It is worth mentioning here the theory that the failure to meet the maximum quota signals a major policy shift within some of the Agreement's signatories, driven by a change in their attitude towards gold as a reserve asset.

While at the margin sentiment towards gold may have improved, GFMS would
remain cautious about attaching too much weight to this as an explanation for last year's sales shortfall. ... Nevertheless, the fact that the CBGA probably will not deliver the once-expected 500 tonnes of gold to the market each year (through to 2009 at least), plus evidence of some buy-side interest elsewhere in the world, suggests that a high watermark for net official sector sales was probably reached in 2005, with the lower level of sales expected in 2006 indicating a new trend of more moderate net selling from the official sector.

...a third CBGA is unlikely to materialise.

^---(see full PRESS RELEASE pdf at url)---^

On the notion of no third CBGA being necessary, as I've stated before, the expiration of the current CBGA in September 2009 looks to coincide with many auspicious and portentious geopolitical plans and event horizons that may indicate the likeliest launching point (early 2010)for the full revaluation switchover to a MTM freegold reserve paradigm in place of the tired dollar-centric reserve paradigm.

But sooner if needs be. Can you afford to be caught sidelined?


Chris PowellOnce in Morgan's hands, Amaranth's losing trades turned to winners overnight#14820110/4/06; 22:57:49

How the Wreck
From Amaranth
Was Contained

J.P. Morgan and Citadel
Swooped In, Assumed Risk,
Proving Markets' Resilience

By Gregory Zuckerman
The Wall Street Journal
Thursday, October 5, 2006

As Amaranth Advisors scrambled to unload its sinking energy investments last month, here is what potential bidders saw:

There were thousands of complicated contracts at the Connecticut hedge fund to buy and sell natural gas, power generation and oil in increasingly jittery markets across the globe. Though some were regulated by futures exchanges, others were one-on-one deals with two dozen or so banks and other investors. Some were in markets with relatively few buyers and sellers, making them vulnerable to big price moves.

In other words, this multibillion-dollar transaction looked like it wouldn't be easy to accomplish quickly without causing broader market turmoil. Yet J.P. Morgan Chase & Co. and hedge fund Citadel Investment Group LLC managed to smoothly assume Amaranth's energy portfolio in under 48 hours.

How they did it illustrates the global markets' resilience to massive blowups at a time when some other hedge funds are struggling.

The transaction was a two-step process, people familiar with it said. J.P. Morgan's bankers and Citadel's portfolio managers first raced to estimate the value of Amaranth's investments -- a difficult task, given the illiquidity of some of the markets the hedge fund focused on. Derivative trades -- contracts whose value rises and falls based on an underlying asset's price -- aren't like stocks and bonds. How much is an asset worth if there is a paucity of investors regularly trading it?

Then they spent a furious day persuading those two dozen or so counterparties to rip up their derivative-trade contracts with the struggling hedge fund and sign agreements with the new owners, and then transfer the portfolio to them. Along the way, J.P. Morgan and Citadel hashed out their own agreement to share the deal's risk and potential upside.

The frenzy began in mid-September, when Amaranth realized its losses were so deep that it needed to unload its energy investments to meet demands for additional collateral to back its investments and to avoid a credit cutoff. The firm eventually reported losing upward of $6 billion of its $9 billion or so under management, mostly from bad natural-gas bets. If it couldn't get rid of the energy investments, Amaranth might have been forced to close its doors immediately.

By Sept. 17, the firm had invited several parties, including some investment banks, to bid for its energy holdings. There was limited interest, in part because of how complicated and large the investments were. Citadel and J.P. Morgan, however, were amenable. Both have gotten more involved in energy trading in recent years, despite the market's ups and downs.

Some of Amaranth's derivative trades wagered that prices for natural-gas futures contracts for March 2007 would be much higher than those for April 2007. Other such so-called spread bets involved other months' prices.

As Citadel and J.P. Morgan examined these investments and others, their value was continuing to plummet. The team had to quickly assess the risk of further losses. The spread trades weren't working out, for example, because natural-gas prices were weakening amid a glut of reserves.

Citadel and J.P. Morgan employed their risk-management systems to estimate the investments' value. Their conclusion: Once transferred from Amaranth, the trades would be more valuable than the market assumed. The new owners would be able to hold them until they proved to be winners, in part because each was bigger than Amaranth and so could afford to wait. J.P. Morgan and Citadel also felt they could hedge, or reduce the risk of the trades, through other investments.

Working with Amaranth's traders, they concluded that enough collateral remained to back the investments, so they could be assumed. The collateral totaled $2 billion, people familiar with the situation said. Along with the investments, that money was transferred to J.P. Morgan and Citadel.

To reduce some of their risk, the partners immediately moved to sell some of the investments after concluding that the energy market wasn't buckling, despite worries about ripple effects from Amaranth's woes. Willing buyers quickly emerged. Some were J.P. Morgan's investor clients. Others were traders on the other side of Amaranth's bets eager to cash out and pocket their winnings.

Within days, the firms had sold enough of the portfolio to shift more than 50% of its risk to others, according to someone close to the matter.

The Invisible HandSomething for Gata#14820210/5/06; 03:53:38

The London Metal Exchange is to face an European Union investigation over alleged monopoly practices after receiving a dossier of complaints from angry copper users. The International Wrought Copper Council has accused the LME and its network of warehouses of exploiting a stranglehold on the market to push up charges and boost profits for brokers.

The Invisible HandWar is good for gold, isn't it?#14820310/5/06; 05:38:12

Four years after George Bush unveiled his Middle East peace plan, Condoleezza Rice arrived there to find peace as far away as ever

Javier Solana, the European Union's foreign policy chief, suggested today that talks with Iran over its nuclear program have all but reached a dead end
As the US Secretary of State, Condoleezza Rice prepares to try to restart the Middle East peace process, the US position of trying to bolster one part of the Palestinian Government while snubbing another, may be about to throw up new problems.
The Palestinian President Mahmoud Abbas says he might opt to dissolve the Hamas-led Government after unity talks with the Islamist group broke down.
Dr Rice's visit also comes as there's more deadly violence in the Palestinian Territories and fears of civil war because of a power struggle between Palestinian President Abbas and his Prime Minister.

What's going on with the current bustle around U.S. naval stations? According to Time, the Navy has issued "Prepare to Deploy Orders" (PTDOs) to a strike group including minesweepers, a submarine, an Aegis class cruiser, and a mine hunter. Taken alongside disclosures that the chief of naval operations asked his planners for a rundown of how a blockade of Iranian oil ports would work, these military preparations led Time to conclude cautiously that the United States "may be preparing for war with Iran."

The Invisible HandThere are the helicopters already!#14820410/5/06; 06:11:32


New York Fed Bank President Timothy Geithner on Wednesday said in a speech to international affairs students in Washington that developing economies are better positioned now to weather financial shocks of the kind they faced in the 1990s because they are adopting more cautious fiscal policies and are moving to more flexible exchange rates.


Only "developing" economies can fiscally/monetarily weather (neutralise) a financial shock at the expense of a mass of subordinates (non-developed economies).

What a hubris!

And is it then really possible to achieve this through fiscal/monetary measures?

Why don't they give instructions for devising so-called policies for weathering financial shocks (in the plural)?

Answer: Helicopter dollar-digits!

Even the blind should now see that intervention is occurring on a massive scale.

And they should realise that this is the very ESSENCE of the dollar-regime. The said regime is lame to such an extent that digits can be created at will in order to uphold the appearances.

The talking heads talk only about the surface-problems, never about the real problems.

GoldiloxGold Council to Offer Bullion-Backed Shares in Asia #14820510/5/06; 06:44:11


Oct. 5 (Bloomberg) -- The World Gold Council, a producer group supported by the biggest miners of the precious metal, will sell securities backed by the bullion in Singapore from Oct. 11, the first such offering in Asia.

The securities, known as an exchange-traded fund, are similar to those traded on the New York Stock Exchange, and will also be called StreetTracks Gold shares, the London-based council said today. Each share on the Singapore Exchange will represent one-tenth of an ounce of gold, and enables a holder to trade the commodity without taking physical delivery of it.

The number of exchange-traded funds has grown dramatically since they were created in 1993, gaining in popularity as they broadened investors' access to different types of asset, including commodities. Commodity prices have surged this year on rising demand from developing countries, including China, and increased interest from institutional and individual investors.

The launch "will increase demand for gold, and it will bolster gold prices,'' said Ellison Chu, manager for the bullion desk at Standard Bank Asia Ltd. in Hong Kong. "It's more convenient and easier for individual investors'' to trade shares in such a fund than to own the metal.

The World Gold Council's members include Toronto-based Barrick Gold Corp., Johannesburg-based Anglogold Ashanti Ltd. and Denver-based Newmont Mining Corp., the world's three leading gold miners.

`Gold Affinity'

"There is a long history in terms of gold affinity in the Far East,'' said James Burton, the council's chief executive officer. The shares would appeal to investors who wanted to have gold in their portfolio, but didn't own it, he said.

The Singapore fund will be marketed by State Street Global Advisors, a unit of State Street Corp., the world's biggest provider of investment services to institutions. It'll have about $30 million already invested when launched, James Ross, senior managing director of State Street Global Advisors, said.

The size of the assets linked to the nine other gold exchange-traded funds in the world, six of which are owned by the council, is about $11 billion, Burton said in an interview.

"We didn't think that we'd have $9.5 billion in three years,'' he said, referring to the council's funds, while declining to forecast future growth rates. The council launched its first gold exchange-traded fund in Sydney in April 2003.

After next week's launch, these securities may also be launched in other Asian countries, including China, he said.

"There will be a time when we go to China,'' he said. ``We need to keep contact with the market there, and then decide when the time is right.''

New Listings

Gold-backed funds "are very important developments in the gold mining industry and for gold prices,'' Greg Wilkins, Barrick's chief executive officer, said after a speech in Melbourne today. "It has restored gold's legitimacy as a financial investment.''


Now, THAT's HUBRIS! ETF's have "restored" gold's legitimacy as an investment. I bet MK has been waiting all his life for that Barrick miracle.


Nathan BrazilPreparedness#14820610/5/06; 08:23:57

We are experiencing a perfect example of the old adage that the market can be wrong longer than you can stay solvent.

It is likely that some reading this are underwater on their house, with credit card debt standing on their shoulders. They see gold and silver as the magic elevator to safety. While I believe that PM will eventually serve that role, much depends on how long you can hold your breath. Downside leverage will only be an anchor on your feet. Fully paid physical is the route I choose.

Some may remember my previous post in which I wished the manipulators success at keeping the status quo. My wishes have not changed. I like living in a civilized society with laws and stability, (at least on the surface) and I hope it continues this way for many years. Unfortunately for me, the world seldom arranges itself to my wishes.

I began to seriously worry that the crisis was near when gold rose in May. Fortunately (I believe) for all of us, prices moderated. Now I can continue to live my life and accumulate gold in my small, poor, ounce or two at a time way at prices I can afford. Just because I see the iceberg and understand our ultimate fate does not mean I long to hurry my trip into the icy waters of collapse and anarchy.

Does anyone here believe that gold could simply rise to $2000/oz and life would go on in the U.S. as before? Such a dramatic change is not likely to happen in isolation, but only as part of major worldwide economic upheaval.

I wish to acknowledge a couple of other posters of what I consider very good advice:
As always, get out of debt and stay out of debt, stash enough emergency cash for several months of household expenses, accumulate Gold and silver "portfolio insurance", and start a storage program of non-perishable food and basic necessities.

These are "interesting times".

- Black Blade

physicalman (10/4/06; 21:42:38MT - msg#: 148198)
Ounces of gold and silver will about always buy something. Good to own a little lead too.

Interesting bit that about the lead, and well put. I believe I will increase my holdings.

Do you skip such advice with a "there is nothing I can do" mentality? While you yet live, there is something you can do.

Downsize, sell your house, declare bankrupty, whatever it takes. Figure out what you can "REALLY" afford and start living within your means, for cash. Implement a microcosm of what we all know is the politically impossible medicine that the whole economy really needs if we were going to fix it. You can do it, all it takes is the will. Your wife would divorce you? (population won't re-elect you?) It would be too painful? (we'd have riots in the streets?). Too bad, it's going to happen anyway. Doing nothing is making a decision to be among the unprepared.

I HOPE it is still years off, but I fear it is not. Time *may* be short. A call to our gracious hosts for real physical gold could be the first step on your road.


Gandalf the WhiteToday's SETTLEMENT will determine the WINNERS !! <;-)#14820710/5/06; 08:24:37

$$$$$$$$$$$$$$ THE "PRICE of GOLD" GUESSING CONTEST!! $$$$$$$$$$$$


$$$ $8,752.0 $$$ The Invisible Hand (9/23/06; 14:30:09MT - msg#: 147701)

$$$$ $700.0 $$$$ Pal (10/2/06; 17:22:21MT - msg#: 148058)

$$$$ $681.1 $$$$ Beamer (9/29/06; 01:14:22MT - msg#: 147907)

$$$$ $671.2 $$$$ Caradoc (10/2/06; 00:05:33MT - msg#: 148013)

$$$$ $650.0 $$$$ Sundeck (9/22/06; 22:41:10MT - msg#: 147683)

### $643.0 ### Topaz (9/23/06; 04:57:44MT - msg#: 147694)

$$$$ $636.4 $$$$ Shermag (10/1/06; 22:08:29MT - msg#: 148006)

$$$$ $635.0 $$$$ Demosthenes (9/27/06; 21:18:04MT - msg#: 147871)

**** $634.0 **** jenika (9/28/06; 00:42:53MT - msg#: 147878)

$$$$ $633.3 $$$$ contrarian (10/1/06; 19:47:48MT - msg#: 147998)

$$$$ $631.0 $$$$ 24karat (10/1/06; 22:02:17MT - msg#: 148005)

$$$$ $626.3 $$$$ glockmaster19 (9/29/06; 13:22:18MT - msg#: 147931)
**** $626.2 **** Goldilox (9/23/06; 01:24:03MT - msg#: 147686)

**** $622.2 **** mdgc (10/2/06; 09:25:31MT - msg#: 148030)

$$$$ $620.0 $$$$ Clink! (9/22/06; 21:09:58MT - msg#: 147681)

$$$$ $618.4 $$$$ Usul (10/2/06; 06:49:33MT - msg#: 148024)

$$$$ $617.2 $$$$ R Powell (10/2/06; 15:11:21MT - msg#: 148049)

$$$$ $616.6 $$$$ goldenpeace (10/2/06; 19:46:38MT - msg#: 148064)

$$$$ $616.1 $$$$ Shanti (10/2/06; 14:38:31MT - msg#: 148045)

$$$$ $615.0 $$$$ Armageddon (9/29/06; 22:17:10MT - msg#: 147948)

$$$$ $614.0 $$$$ Tranquility Base (10/2/06; 20:43:59MT - msg#: 148073)

$$$$ $613.6 $$$$ otish mountain (10/2/06; 20:13:36MT - msg#: 148069)
$$$$ $613.5 $$$$ GoldenRoo (10/2/06; 21:32:38MT - msg#: 148079)

$$$$ $612.5 $$$$ Matthew (10/1/06; 13:16:33MT - msg#: 147993)

$$$$ $611.5 $$$$ Wky_Woodsman (10/2/06; 20:42:02MT - msg#: 148071)

$$$$ $611.0 $$$$ Freedom (10/2/06; 05:24:30MT - msg#: 148022)

$$$$ $610.0 $$$$ pilgrims_gold (10/2/06; 07:01:53MT - msg#: 148026)

$$$$ $609.1 $$$$ YGM (10/2/06; 14:51:21MT - msg#: 148047)
$$$$ $609.0 $$$$ White Rose (10/2/06; 07:28:15MT - msg#: 148028)

$$$$ $608.5 $$$$ Prius (10/2/06; 15:09:30MT - msg#: 148048)

$$$$ $608.1 $$$$ Rocky (10/1/06; 12:08:43MT - msg#: 147989)

$$$$ $607.5 $$$$ GoldenBullet (10/2/06; 21:53:59MT - msg#: 148084)

**** $607.3 $$$$ goldpuppy (10/1/06; 09:51:57MT - msg#: 147982)

*** FRN606.7 *** Smeagol (9/23/06; 01:57:50MT - msg#: 147687)

$$$$ $606.5 $$$$ balzac (9/27/06; 21:35:50MT - msg#: 147873)

$$$$ $605.6 $$$$ The Alchemist (10/2/06; 21:05:15MT - msg#: 148074)

$$$$ $605.0 $$$$ Titan (9/27/06; 12:30:56MT - msg#: 147853)
$$$$ $604.9 $$$$ Black Pearl (10/2/06; 21:43:34MT - msg#: 148082)

$$$$ $604.5 $$$$ White Hills (10/2/06; 09:50:25MT - msg#: 148031)

$$$$ $604.0 $$$$ Ag-geek (10/2/06; 08:48:09MT - msg#: 148029)

$$$$ $603.8 $$$$ Golden Lionheart (10/1/06; 21:16:26MT - msg#: 148002)

$$$$ $603.6 $$$$ Black Blade (10/2/06; 18:49:46MT - msg#: 148062)

$$$$ $603.1 $$$$ Druid (10/2/06; 21:16:24MT - msg#: 148075)

$$$$ $602.9 $$$$ GOLD FINGER (9/29/06; 18:01:04MT - msg#: 147941)

$$$$ $602.0 $$$$ Rimh (10/2/06; 12:07:55MT - msg#: 148041)

$$$$ $601.5 $$$$ timbervision (10/2/06; 20:19:07MT - msg#: 148070)
$$$$ $601.4 $*$* silvester (10/2/06; 20:42:20MT - msg#: 148072)

$$$$ $601.0 $$$$ GoldenBear (10/2/06; 07:08:12MT - msg#: 148027)

$$$$ $600.0 $$$$ Mthirsty1 (10/1/06; 21:23:13MT - msg#: 148003)
$$$$ $599.9 $$$$ DryWasher (9/24/06; 15:10:57MT - msg#: 147742)

$$$$ $599.0 $$$$ Boilermaker (10/2/06; 17:42:27MT - msg#: 148059)

$$$$ $598.7 $$$$ The Hoople (10/2/06; 10:15:50MT - msg#: 148032)

$$$$ $598.4 $$$$ GoldTags (10/2/06; 23:47:53MT - msg#: 148091)

$$$$ $598.1 $$$$ Goldendome (10/2/06; 22:41:37MT - msg#: 148085)

$$$$ $597.5 $$$$ Ten Bears (10/2/06; 14:36:09MT - msg#: 148044)

$$$$ $597.1 $$$$ Nathan Brazil (10/2/06; 18:33:09MT - msg#: 148061)

$$$$ $596.3 $$$$ Max Rabbitz (10/2/06; 21:26:12MT - msg#: 148076)

$$$$ $595.7 $$$$ 7nomads (10/2/06; 21:27:37MT - msg#: 148077)

$$$$ $595.5 $$$$ Federal_Reserves (9/25/06; 19:01:55MT - msg#: 147777)

$$$$ $594.0 $$$$ Quickbeam (10/2/06; 11:45:53MT - msg#: 148039)

$$$$ $592.1 $$$$ Toolie (10/2/06; 16:26:57MT - msg#: 148054)

**** $590.3 **** arbyh (9/26/06; 09:30:45MT - msg#: 147809)

$$$$ $590.1 $$$$ Flatliner (10/1/06; 12:11:52MT - msg#: 147990)

$$$$ $585.0 $$$$ Lothar of the Hill People (10/2/06; 13:34:17MT - msg#: 148043)

$$$$ $580.0 $$$$ spikedog (10/2/06; 15:36:53MT - msg#: 148051)

$$$$ $577.7 $$$$ Peculium Aurum (9/27/06; 23:55:29MT - msg#: 147876)

$$$$ $545.0 $$$$ Thoreauly (9/24/06; 10:22:14MT - msg#: 147738)

YGMBarrick, The Next Copper Hedger. $ 1 Billion Shell Game.#14820810/5/06; 09:12:18

Notes out to 2016 & 2036? Give me a break! Barrick will now become the pawn for Cu hedging. Just another manipulating hog at the trough w/ house of Morgan and G Sachs.
Thoreauly@ Nathan Brazil & Black Blade re: getting out of debt#14820910/5/06; 09:13:41

Not necessarily, as it depends on (1) what the interest rate is, (2) what you do with the money you borrow, and (3) what the future holds for the dollar. For instance, below is the reply of Jack Pugsley, Chairman of the Sovereign Society, in answer to this question from a reader:

"If our country defaults financially what happens to individuals who have a mortgage, credit card debt, auto payment and other types of business debts? It would be good to see if anyone has an opinion in the light of current trade and deficit spending by our country. Would the American citizen still have the same debt or how would this be handled?"


The U.S. won't default on its IOUs (T-bonds or T-notes). When someone (you or me or China) buys a T-bond, and thus lends money to the Treasury, it pays for that bond with dollars and the bond promises the return of dollars, plus interest. If a bond owner demands payment, the Federal Reserve will just redeem the government bond with dollars (Federal Reserve Notes). It can create as many as needed with a few strokes on the keyboard.

In the days when the dollar was defined as 1/20th or 1/35th of an ounce of gold, if the government ran out of gold (which effectively it did) it could default (and did). But the dollar is no longer backed by anything, it's an "IOU nothing." Thus, there's no risk of default...the government has plenty of nothing.

Other countries often do default on their debts. When a country like Argentina borrows from international banks or the IMF, it borrows foreign currencies, typically dollars. In exchange, it gives an Argentinean IOU. When time comes to repay, if Argentina doesn't have enough dollars to meet its promise, and since it can't print dollars, it will default on its debts.

The risk in holding dollars isn't in the possibility of default - it's in the probability that there are so many of these "IOU Nothings" out there that they'll eventually lose purchasing power. Price inflation is a de-facto default.

The question of what happens to private debtors in an inflationary 'default', such as those with car loans, etc. Well, they win, because they can pay off their debts with cheaper dollars. And, when so many voters are deeply in debt (mortgages, credit-card debt, etc.), they form a huge political constituency that resists deflation, and always supports further money printing, and thus, solving the problem through inflation.


Thus, if the real rate of inflation is the 6-11% that economist John Williams at says it is, and if you figured that the dollar will be toast at some point (which of course will), then if you took out a home equity loan at or below the real inflation rate (which you can) and bought physical gold with the proceeds, you'd eventually be able to pay off your loan with "IOU Nothings," even as your gold turned increasingly into "I Have Me Somethings."

Nathan BrazilDebt and inflation#14821010/5/06; 10:13:01

Thoreauly (10/5/06; 09:13:41MT - msg#: 148209)
@ Nathan Brazil & Black Blade re: getting out of debt
Not necessarily, ...

The question of what happens to private debtors in an inflationary 'default', such as those with car loans, etc. Well, they win, because they can pay off their debts with cheaper dollars. And, when so many voters are deeply in debt (mortgages, credit-card debt, etc.), they form a huge political constituency that resists deflation, and always supports further money printing, and thus, solving the problem through inflation.


This is true, but difficult to manage in my opinion. You must time it so that you don't lose your job, default, and lose everything before the problem reaches the threshold of political intervention or hyperinflation. Also, in stagflation you may have few dollars no matter how worthless they are.

If I am debt free and have some reserve, I am in a much better position to borrow a huge amount of money and buy capital goods/PMs when I see hyperinflation coming if I so choose, and am certainly in no worse a position than someone already in debt. Joe Public may conceivably get a free house, but I will be able to choose my investments. If deflation is the outcome, your point is moot.

In the Nightmare German Inflation, posted in the resources on this site, reference is made to German farmers paying off their whole mortgage with the proceeds of one years' crops. This was only possible because they dealt in real products. Many in the U.S. will be jobless. The article also mentions that they wound up having to re-mortage the property to pay for what amounted to windfall taxes, so did not come out ahead much in the end.

My point is that betting your well being on a particular outcome (hyperinflation on a schedule) is risky.

Also, one must consider what will benefit those in power. In hyperinflation, debtors can win and wealth can lose. All dollar wealth dissolves away in a sea of fiat. Does this sound like an outcome the CBs will want? Everyone assumes the Fed and other CBs are trying to do what is best for the citizens of the world (as they see it). Is it not possible that they are doing what is best for themselves? Is it time for the beekeepers to raid the hive for its honey? If so, deflation is the answer, the economy while devastated is not destroyed, everyone defaults, and wealth buys property for pennies on the dollar. I do not rule this out.

I prefer wealth to debt, but to each his own.

Thoreauly@ Nathhan Brazil re: deflation#14821110/5/06; 10:24:46

I'd say the odds are slim to none, as Helicopter Ben made clear yesterday (see link). But as you say, to each his own regarding debt.
mikalGold sales... and purchases#14821210/5/06; 11:51:21

Bank of France blamed for gold sell off
By Ambrose Evans-Pritchard (Filed: 05/10/2006)
Central banks may have dumped far more gold on the markets over the last three weeks than officially reported, accounting for the sudden plunge in prices that has stunned investors. Barclays Capital said Europe's banks had sold an extra 100 tonnes from reserves in a rush to meet a quota deadline on September 26, but had done so by selling through forward contracts that disguised the effect. "We have been able to infer this from trading patterns. It has had a major impact on the markets," said Costanza Jacazio, the bank's gold expert. Barclays is one of the world's three top bullion traders. "We suspect that the Banque de France has been involved," she said.
The huge sales would help explain why gold's brutal fall from $640 an ounce in early September to $559 this week, an effect compounded in recent days by hedge fund liquidation. It was up slightly yesterday at $569.75 in New York trading.
Gold typically rallies in September in the build-up to the Indian marriage season. While gold has undoubtedly been hit by the broader fears of a commodity slump, base metals have held up much better. The central banks have reported sales of just 393 tonnes of gold for the year, far below the 500 annual limit agreed under the Washington Accord, and agreement by 15 centrals banks in Europe. Barclays said the group had in reality met the 500 tonne limit, with others snapping up the unused quota of the Bundesbank -- which has balked at selling in order assert its independence against Berlin's politicians.
"We believe this is actually very bullish for gold because it shows that the sell-off was not driven by investors," said Ms Jacazio.
Philip Klapwijk, chairman of the precious metals group GFMS, said bullion would soon resume its five-year bull market.
"The game is not over for gold. We've still got a big dollar devaluation ahead," he said.
"Hot money has left the market and we've seen chart-based selling as the fall triggered stop-losses. But at this level we are going to see support from miners like Barrick that want cut their hedge books," he said.
Russia's central bank is also likely to buy on the dips. It plans to raise the gold share of its reserves from 3pc to 10pc, a move that would soak much of global mine supply. Russia's reserves are now world's third biggest at $267bn, and rising at $12bn a month.

mikalAccident at the debt circus #14821310/5/06; 12:17:35

The Upcoming Mega-Storm | Jim Willie CB | Thursday, Oct 5
Willie proves we're having inflation AND deflation.

mikalMonetize the money#14821410/5/06; 12:48:07

A 'fair and balanced assessment | Enrico Orlandini | 10/05/06 | Snippet:
"I have wondered out loud for the past several months just how the US plans to finance their debt with a loose money policy when the rest of the world is tightening. Well the answer is the one I didn't want to acknowledge: they are going to print their own money and buy their own debt through the Caribbean Money Centers. The Fed is so afraid of the affects deflation can have on the heaping, steaming pile of debt in the U.S., that they are willing to drive the U.S. economy into a hyperinflationary crisis in order to avoid it. Hyperinflation will eliminate the debt but it will also destroy the economy."



GCZ06 Gold Dec '06 Contract on 10.5.'06

THEREFORE, using the "RULES" <;-), the Prize WINNERS are:

$$$$ $585.0 $$$$ Lothar of the Hill People (10/2/06; 13:34:17MT - msg#: 148043)

$$$$ $580.0 $$$$ spikedog (10/2/06; 15:36:53MT - msg#: 148051)

$$$$ $577.7 $$$$ Peculium Aurum (9/27/06; 23:55:29MT - msg#: 147876

with Sir Peculium Aurum winning the Netherlands 10 Guilders gold coin (which SIR MK and Lady Marie are now searching for in the lower levels of the Castle).


the next TWO closest prognostications to the SETTLEMENT price are:

Sir Spikedog and Sir Lothar of the Hill People
--- each winning an one ounce pure Silver Canadian Maple Leaf coin.

Will each of the three WINNERS provide an EMAIL to This email address is being protected from spambots. You need JavaScript enabled to view it. which includes their Forum "Handle", REAL NAME, and posting address for mailing the PRIZE !

THANKS for all the assistance in the Contest !

spikedogContest - Thank you#14821610/5/06; 13:07:55

Thank you Sir MK for your generous hosting of this contest.

Thank you Sir Gandalf for your patient managing of the contest.

Congratulations Sir Peculium Aurum for your victory on the field of combat.

Congratulation Sir Lothar - your prognostication skills are the stuff of legend.


Topazhmmm!#14821710/5/06; 13:16:31

This IS curious!
Our Comex deliveries shot up today to more than double the MTD total.
240,000 Oz's = 8T metal give or take must've appeared out of the blue for del'y such a low price, how convenient for somebody.

MatthewBank of France blamed for gold sell off#14821810/5/06; 14:13:51
Lothar of the Hill PeopleContest#14821910/5/06; 14:57:12

Congratulations Sir Perculium Aurum, cleanly struck--the victory is clearly yours.

Well fought Sir Spikedog, and thanks for your gracious words.

Thanks to you Sir Gandalf for your skillful stewardship of the games.

A bow to you Sir MK, for a contest of legend and glory.

Fare ye well,

I am Lothar of the Hill People

mikalBundesbank : We'll hold it all for a third year#14822010/5/06; 15:00:47

Bundesbank Boosts Sentiment For Gold Market By Chris Flood
Published: October 5 2006 20:11 | Last updated: October 5 2006 20:11 -- SNIPPIT: "Germany's Bundesbank said on Thursday that it does not plan to sell any gold from its reserves for a third year, giving a significant boost to sentiment in the gold market after recent sharp falls in prices.
This news means that European central banks are unlikely to reach the 500 tonne Central Bank Gold Agreement sales quota for a second year in succession as they re-evaluate the importance of gold's role in their foreign exchange reserves."

Chris PowellBarrick switches from hedging gold to hedging copper#14822110/5/06; 15:28:14

From Reuters
Thursday, October 5, 2006

TORONTO -- Barrick Gold Corp.'s $1 billion copper-linked debt financing is a cheap way for the world's biggest gold producer to get cash to fund projects, one analyst said on Thursday.

Barrick is selling $1 billion in notes, consisting of $400 million of 5.75 percent notes due 2016 and $600 million of 6.35 percent notes due 2036.

The original $1 billion of funding is to be repaid over three years by selling about 324 million pounds of copper at about $3.08 a pound.

These copper-linked notes will then be replaced with $1 billion of funding in the form of conventional interest-bearing notes maturing in 2016 and 2036.

"They wanted some more debt. It's much cheaper than equity. It gives them capital to fund their projects and it's a cost effective way to do it," said Kerry Smith, analyst with Haywood Securities.

"They lock in some copper price and that just gives them a little bit of downside protection on a third of their production."

The transaction represents less than a third of its copper production over the next three years and 5 percent of its reserves. The company expects to produce 370 million pounds of copper this year.

Proceeds will be used to prefinance some existing debt and fund development projects like Pascua Lama and Pueblo Viejo.

"I think it's fine, they are not going to hedge gold, to them it's securing cash for the development-phased projects," Smith said. Barrick has been aggressively unwinding its forward gold contracts to benefit price of the metal, which is at a multi-year high.

The offering is expected to close on about Oct. 12.

The Barrick notes will be bought by ABX Financing Company, a company incorporated for the purpose of acquiring Barrick notes.

ABX Financing issues conventional interest bearing-notes to fund the purchase of the Barrick notes and enters into copper swaps in order to offset its exposure to copper prices.

"The most important thing for us, was that these notes, at the end of the day, represent a bona-fide unsecured obligation of Barrick that ranks along side with all other unsecured obligations," said Don Marleau, analyst with rating agency Standard & Poor's. "Investors are well protected."

USAGOLD Daily Market ReportPage Update!#14822210/5/06; 16:04:56">
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 closes nearly $9 higher

October 5 (from MarketWatch) -- Gold futures closed with a gain of almost $9 an ounce Thursday, to recoup part of a four-session loss of 7% as oil spiked higher on news that major oil producers will cut output.

"Bargain hunters emerged, buying up the battered gold and silver markets," said Peter Spina, chief investment strategist at GoldSeek. "The fact remains: oil is a short-term driving force as speculators trade the metal based off this lead indicator, for the time being," he said.

Crude futures for November delivery closed above the $60-a-barrel level Thursday, gaining after news that the Organization of the Petroleum Exporting Countries has informally agreed to cut production by one million barrels a day.

Strength in energy prices raises concerns about higher energy costs, prompting investors to seek refuge in the precious metals.

COMEX December gold contracts closed up $8.80 at $575.50 after a high of $578.80.

Overall, "the bullion market is now setting out on the long and difficult process of repairing the damage it sustained in recent sessions," said Kitco's Jon Nadler, an investment products analyst.

"Long-term buyers should welcome an opportunity to cost-average their holdings," said Nadler, adding that he doesn't see evidence that the U.S. dollar's "ills have suddenly been cured."

Dale Doelling, chief market technical at Trends In Commodities said in the end, "the recent pullback in the metals complex will pale in comparison to what's in store for the financial markets...and this will benefit gold and silver tremendously over the next couple of years."

"As a matter of fact, by the time the dust settles, traders won't want to own anything but gold and silver," he said

---(see url for full news, 24-hr newswire)---

GoldiloxDespite blue-chip gains, hedge funds are faltering#14822310/5/06; 16:09:03


As the Dow Jones Industrial Average climbs to record heights, many hedge funds are stumbling and more than ever are closing shop.

The latest to falter: Vega Asset Management. One of the world's largest hedge funds a few years ago, Vega has suffered losses from a bad bet against U.S. bonds, and is now down roughly 75 percent from its peak two years ago to about $3 billion in assets. The firm says it has no plans to cease operations.

New figures show that more than 1,000 hedge funds have shut in the past two years, as competition has squeezed profits. Even some veteran managers, in a bid to boost returns, have made concentrated bets that have backfired. All this has set up the $1.23 trillion industry for its first meaningful consolidation, Wall Street executives say.

In just the past few weeks, Amaranth Advisors LLC announced plans sell to its investments after losing $6 billion, mostly in the energy markets, heightening the prospects it will close its doors. Narragansett Management LP in New York recently said it will return $800 million to investors. And two European-based hedge funds recently have told investors they are shutting down one or all of their funds.


The Hedge funds without "insider connections" are lining up for a sheep sheering. How many will it take until someone "connected" loses money and buys another taxpayer bail-out with his "political" capital.

The Invisible HandThis poster goes lalala!#14822410/5/06; 20:11:30


is reporting that Barclays Capital said on Thursday that commodities’ rise has just been halted and will continue

report that Barclays Capital said on Thursday it BELIEVED Europe's central banks sold the full 500 tonnes of gold in the SECOND (The Invisible Hand: ???) YEAR of an agreement that regulates bullion sales.

The said lunatics, who think the Washington agreement is less than two years old, have no reason to ask why the ECB would be so stupid as to sell gold (if as Le Monde reports its price will rise.)

If Barclays cannot deduce from the ECB's weekly financial statements whether the ECB sold gold forward, how can this supposed forward-sale be destabilising after the fact?

Why did Barclays issue that statement? Or why did the English language press invent it?


This is LE MONDE
Le repli des cours des matières premières ces dernières semaines, très marqué pour le pétrole, constitue une simple pause dans le cycle de hausse des prix qui devrait bientôt reprendre, ont estimé jeudi les analystes de la banque Barclays Capital. "Nous restons haussiers à l'égard des matières premières", a indiqué Kevin Norrish, directeur de recherche dans ce secteur pour la banque, lors d'un point de presse à Londres.,14-0,39-28408431@7-46,0.html


Every is okay, Madam the Marchioness –
song which continues by saying that only your castle has been burnt down etc.

The Invisible HandI need a holiday break ... to Isfahan#14822510/5/06; 20:28:18


LONDON, October 5 (IranMania) - Tourists visiting Iran might be able to add an unusual stop-off on their itinerary, a trip to one of the Islamic republic's nuclear sites at the centre of a standoff with the international community.
Possible attractions for tourists would include the uranium conversion facility outside Isfahan, the uranium enrichment plant in Natanz or the Islamic republic's first nuclear plant being built in the southern city of Bushehr, AFP added.

The Invisible HandSome are very frightened!#14822610/5/06; 20:40:21

Signals from the cartel that it was planning its first output reduction for two years sent the oil price surging back above $60 per barrel

Former Spanish President 9sic) José Mar'a Aznar, who is visiting Chile, said that Venezuelan President Hugo Chávez' policy "is a threat" against Latin America, and added that ADOLF HITLER and Osama bin Laden "are very similar."

The Invisible HandBarclays’ jacuzzi#14822710/5/06; 20:46:45;jsessionid=OHS00DMTKYSV1QFIQMFSFGGAVCBQ0IV0?xml=/money/2006/10/06/cngold06.xml

"We believe this is actually very bullish for gold because it shows that the sell-off was not driven by investors," said Ms Jacazio.
Philip Klapwijk, chairman of the precious metals group GFMS, said bullion would soon resume its five-year bull market. "The game is not over for gold. We've still got a big dollar devaluation ahead," he said.

It's only small children who ask why.
Because I told you so!

The Invisible HandFor those who didn't know …#14822810/5/06; 20:55:51


The stock-market wobble of May, when many commentators said it presaged the start of another bear market (not this one, I'm pleased to say), now seems but a distant memory as the conviction grows that the world economy is heading for a soft landing, not the hard one widely feared just four months back.

Wasn't it in May that gold peaked at $750 or so?

GoldiloxCreating the North American Union#14822910/5/06; 21:00:47


On June 21, viewers of CNN's Lou Dobbs Tonight heard the alarming introduction to a segment of the program devoted to the future of the United States of America. "The Bush administration's open-borders policy and its decision to ignore the enforcement of this country's immigration laws is part of a broader agenda," Dobbs intoned. "President Bush signed a formal agreement that will end the United States as we know it, and he took the step without approval from either the U.S. Congress or the people of the United States."

The agreement Dobbs was talking about was crafted a year earlier. On March 23, 2005, then-Canadian Prime Minister Paul Martin and Mexican President Vicente Fox met with President Bush in Waco, Texas, to discuss plans for integrating Canada, the United States, and Mexico. During that meeting, the three heads of state argued that the three nations are "mutually dependent and complementary" and need to work together more closely on a range of issues. "In a rapidly changing world, we must develop new avenues of cooperation that will make our open societies safer and more secure, our businesses more competitive, and our economies more resilient," the three leaders said in a joint statement.

The standard diplomatic language was a prelude to a radical proposal calling for the merger of the three nations in several important ways. Under a so-called Security and Prosperity Partnership (SPP), the nations will no longer have separate borders, but will "implement common border-security." The three nations will no longer respond on the national level to emergencies but will have a "common approach to emergency response." And, in a move that has tremendous implications for the growing immigration crisis, the three leaders agreed that the United States' north and south borders would be eliminated. Under the SPP plan, the three nations will "implement a border-facilitation strategy to build capacity and improve the legitimate flow of people and cargo at our shared borders."

This plan is nothing short of revolutionary. As Dobbs put it on his CNN program, it is "an absolute contravention of our law, of our Constitution, every national value." Though the plan sounds like a new innovation, it is not new. It is the next step in a progression of steps that, in a manner very similar to the process used in Europe to supplant individual nations with the European Union, will ultimately lead to the formation of a new government for the United States, the North American Union. If not stopped, the plan for a North American Union will supplant the former independent states of Canada, Mexico, and the United States. And this is not conjecture. The North American Union is official U.S. policy. . .

The SPP also has tremendous implications for immigration. As NAFTA erased most remaining barriers hampering the flow of capital between Canada, Mexico, and the United States, the SPP will look for ways to eliminate bottlenecks hampering the flow of people. According to the official SPP agenda, the new international body will work to "identify measures to facilitate further the movement of business persons."

Specific policies likely to be followed by the SPP can be found in the CFR report entitled Building a North American Community that was released just after the March 23, 2005 SPP meeting in Waco, Texas. In its recommendations, the CFR report suggests, "The three governments should commit themselves to the long-term goal of dramatically diminishing the need for the current intensity of the governments' physical control of cross-border traffic, travel, and trade within North America. A long-term goal for a North American border action plan should be joint screening of travelers from third countries at their first point of entry into North America and the elimination of most controls over the temporary movement of these travelers within North America." This goes a long way toward explaining the maddening lack of urgency that is apparent in Washington concerning the issue of illegal immigration from Mexico. If the SPP follows the CFR template — a virtual certainty — there will no longer be a border to cross illegally. . .

It is incredible, but just four years from now — if the CFR template is followed — the United States may cease to exist as an independent political entity. Its laws, rules, and regulations — including all freedoms guaranteed by the Constitution — will be subject to review and nullification by the North American Union's governing body. Sure, the United States will still be here in name. American soldiers will still fight, mostly, under the U.S. flag. There will be a U.S. president and both houses of Congress will continue to meet and pass legislation. Nevertheless, in very important ways, the United States will become nothing more than a province — albeit an important one — in the emergent North American superstate.


What to do once the dollar is Kaput!

The Invisible HandMeanwhile, in lalala-land …#14823010/5/06; 21:08:19

With the snows approaching in Afghanistan, the Taliban are already looking toward next spring's offensive and the launch of an Islamic intifada that aims to expand, and internationalize, their resistance movement. The man hand-picked by al-Qaeda ideologue Dr Ayman al-Zawahiri to oversee this task is Mullah Mehmood Allah Haq Yar. He explains to Syed Saleem Shahzad just how he will go about "resisting the forces of evil".

The message being sent by "iron-willed, brilliant commander" Kim Jong-il, the greatest of Korea's peerless national heroes, is that war is coming to continental United States and that Pyongyang now has the nuclear weapons to turn America's cities into towering infernos, writes Kim's "unofficial spokesman", Kim Myong Chol.

In a high-profile visit to the Middle East, US Secretary of State Condoleezza Rice is trying to shore up a Sunni Arab front against Iran. Desperate for some kind of achievement in the region, and with precious little to offer in return, Rice will be exploiting the Arabs' traditional Iran-phobia for all it is worth. - Ehsan Ahrari

The Invisible HandThe enemy of my enemy is my friend#14823110/5/06; 21:22:39


Finally, both countries are struggling against the supremacy of the United States in the world system, even though publicly Tehran is more aggressive toward this end than Beijing. The improving relationship between Iran and China does not mean that their long term interests are the same, but it does mean that in the medium term the two states share common aims in the economic and geopolitical spheres.


What will China do if the US of A attacks Iran?
Can you again spell "World War Three"?

DruidGoldilox (10/5/06; 21:00:47MT - msg#: 148229)#14823210/5/06; 22:06:25

"It is incredible, but just four years from now — if the CFR template is followed — the United States may cease to exist as an independent political entity. Its laws, rules, and regulations — including all freedoms guaranteed by the Constitution — will be subject to review and nullification by the North American Union's governing body. Sure, the United States will still be here in name. American soldiers will still fight, mostly, under the U.S. flag. There will be a U.S. president and both houses of Congress will continue to meet and pass legislation. Nevertheless, in very important ways, the United States will become nothing more than a province — albeit an important one — in the emergent North American superstate."

Druid: Goldi, at least they're signaling a time frame for what they must construe as a smooth transition toward an achievable end. As we march toward that four year deadline, it'll be interesting to watch and see, which of the world players throughout the inner sanctum received the latest memo furthering this agenda and are willing to cooperate as to not have anything noteworthy up their collective sleeves that might precipitate hell on earth.

Meanwhile, how about that DOW? Yeah, the hedgies have brought a knife to a market fight that requires, at a minimum, a machine gun. Nice post.

The Invisible HandBundesbank boosts sentiment for gold market#14823310/6/06; 01:37:57,_i_rssPage=0b1ac5a2-30cf-11da-ac1b-00000e2511c8.html

Germany's Bundesbank said on Thursday that it does not plan to sell any gold from its reserves for a third year, giving a significant boost to sentiment in the gold market after recent sharp falls in prices.
This news means that European central banks are unlikely to reach the 500 tonne Central Bank Gold Agreement sales quota for a second year in succession as they re-evaluate the importance of gold's role in their foreign exchange reserves.

The Invisible Handblood in the water ...#14823410/6/06; 02:00:19


Do you (also) feel some panic-stress among the bulliondesk pseudo goldnews-feeders?

Sales of Eurogold (CBGA) and the discrete countering from unsere(our) Bundesbank ...(cfr. FT)

Dollar (pot) blames euro (kettle) for gold price decline...

Read : gold-euro-concept is worthless...because the euro sells all its gold...

Arab leaders are reported to be seeking a summit meeting with US President George W. Bush to persuade him to change course before the whole region goes up in flames.
The real questions are these: Can America change course? Can the structure of political power in Washington allow it? Or must the headlong rush to the abyss continue unchecked?

The Invisible HandRumours of war #14823510/6/06; 03:03:44

As Russia tries to dissuade North Korea from carrying out its proclaimed nuclear test –
North Korea decides to halt the preparations

Russia seems to be able not only to accumulate gold to have soon the control over over 50% of oil and gas (+ pipelines).
It can also keep the North-Korean nuclear pitbull quiet.

Two decisions announced in president Eisenhouwer's February 02, 1953 Message on the State of the Union suggested that the Administration had in mind some drastic tactical changes within the framework of the older policies. The Seventh Fleet would no longer prevent the Chinese nationalists on Formosa from attacking the Chinese Communists on the mainland, and Mutual Security aid to Western Europe would be conditioned upon the earnestness of the efforts of the European states to effect a closer integration. These decisions did not abate the considerable anxiety among the allies of the United States in both the Far East and Europe for a time all of them continued to fear
(Norman D. Palmer and Howard C. Perkins, "International Relations – THE WORLD COMMUNITY IN TRANSITION", Boston: Houghton Mifflin / Cambridge, MA: The Riverside Press, 1957, 2nd ed., p. 710)

The Invisible HandNot Korea, China, stupid!#14823610/6/06; 03:09:49

China has beamed a ground-based laser at U.S. spy satellites over its territory, a U.S. agency said, in an action that exposed the potential vulnerability of space systems that provide crucial data to American troops and consumers around the world.

The Invisible HandThe Build Up To World War III Begins in Shanghai!#14823710/6/06; 03:23:51

The growth of the SCO (Shanghai Cooperation Organisation), particularly the new applications for full membership are creating worldwide tensions similar to the standoff before the First World War.

Paper AvalancheTIH & TownCrier - Euro Gold Sales#14823810/6/06; 05:14:28

Hi TIH and TC, thank you both for your informative posts of late. I am not sure how to reconcile two seemingly credible yet diametrically opposed contentions that you have both made. Namely, is ECB / Euro selling all of its gold or isn't it?

TIH you stated below "Read : gold-euro-concept is worthless...because the euro sells all its gold..."

TC, you routinely post the most recent statistics showing that the percentage share of gold in the ECB's reserves continues to grow each quarter vis-a-vis the relative value of currency reserves as the percentage difference.

Would either of you care to explain which position is correct or, if they are both correct and I am missing something, how the two facts coexist so that I am able to mathematically understand?

Thanks in advance.


spikedogPaper Avalanche - Suspect EU gold sales#14823910/6/06; 06:36:56

Did the EU fulfill its gold sales quota in a mad rush at the end of September, or does someone very badly want you to THINK that they did? By making us think that the EU does not value their gold, how many people can be convinced that gold is worthless? Is it possible that the paper players wanted a convenient scapegoat to explain their shorting shenanigans?

The problem is that we only get half (or less) of the full story. And trying to figure out what is going on in the daily gold market becomes very frustrating.

However, the fundamental situation has not changed on the worldwide stage. And Germany seems to have dug in its heels on any future gold sales......I think I'll follow in their (giants) footsteps.



ThoreaulyNAU and Iran#14824010/6/06; 06:40:47

The way I see it, the NAU will be shoved down our throats as an "emergency measure" under the martial law that will be instituted following an invasion of Iran that may well take place before the November elections. After all, if the Dems take control of one or both houses of Congress, then Bush will face impeachment for war crimes and a likely ouster from office. That won't look very good on his resume, which in turn will play into the Clintons hands, as she looks to become the next US president, while he looks to head up the NAU's "governing body."

God help us all.

TownCrierPaper Avalanche, the reconciliation#14824110/6/06; 07:01:02

What you're missing is the spin intended by The Invisible Hand when he said the bit about the gold-euro concept being worthless from the euro-bloc selling all its gold. In saying that, what he was doing was iterating the scenario as the DOLLAR-bloc wants the world to see it, not as TIH sees it himself.

TIH knows as I do that the limited gold reallocations of the euro-bloc are carefully calculated actions as a necessary means to an end (previously discussed) that will have all of us gold advocates smiling.


USAGOLD / Centennial Precious Metals, Inc.Step inside and shop at your convenience. Open 24/seven.#14824210/6/06; 07:23:07

shop for gold coins
Peculium AurumContest#14824310/6/06; 07:44:45

What a surprise to see such large swings in POG during the last couple of days. And what a wonderful surprise the to win the contest and braging rights.

Thank you MK for hosting this contest, I am a customer for life.

Congratulations to Spikedog and Lothar of the Hill People
on their predictions on the Dec settlement price.

Special Thanks to G.W. at the Nashville P&DC for your views on the Gold markets and for introducing me to this

Thank you Gandalf for managing this contest.

And last but not least, Thanks to all of you who post here on this forum for your views and insights on the inter workings of the Precious Metals markets.

Be prepared, for when the storm hits, because then the markets will be closed!

Nathan BrazilThe New North America#14824410/6/06; 09:45:31

Nevertheless, in very important ways, the United States will become nothing more than a province — albeit an important one — in the emergent North American superstate.


What to do once the dollar is Kaput!
Once again I am amazed there is not rioting in the streets, particularly by the President's own party. Did he not just propose a 700 mile wall?

Yes, as for when the dollar is Kaput, this solves many problems, and NAU makes perfect sense.

The U.S. Federal Govt. with all it's debts and obligations is allowed to simply self-destruct along with the dollar.
The North American Union seamlessly picks up the reins of power but is free of former "entitlements" to U.S. citizens, debts to foreigners, and that out-dated constitution. Congress is properly blamed for the financial debacle and disbanded. NORA joins EURO at the fiat table, and away we go.

Anyone happen to know which country in the Eurozone has the most favorable immigration policy for U.S. expats with a bit of gold?

arbyhOddity #14824510/6/06; 09:50:14

Jobs data was bad; Consumer credit card debt rose in July and August, but POGold goes down as the dollar goes up anyway. WTF and who is stepping in front of that market to push it 180% out of phase with reality?
The talking heads making it sound like it is confidence going forward, instead of people using credit cards to fill their gas tanks every other day to go to work. The media handle the economist talking heads with kid gloves, and the BS rules.
Meanwhile the Republican K Street Project buys our govt. wholesale. Delay was replaced by a another bought and paid for politician...the curruption gets greater and greater along with the subterfuge and blatant BS.
The party of self proclaimed values lies in the dirt with Foley. The President backs the Republican Speaker of the House, even though the Speaker knew of the mess with Foley and did nothing for a number of years. So, When did the President know of Foley's activities?
? When will, or will our govt ever stop being a currupt tool of the Corporations and the wealthy? Is there any hope for the USA?

GoldiloxCorruption and "bought and paid for" Reps#14824610/6/06; 10:17:28

@ arbyh,

It's the old J. Edgar school of control. Know your opponent's dirt and use it to control. Only let it out when they oppose something very dear to "the cause". If it is discovered by another source, disavow any knowledge of it.

Nixon learned this tactic so well, he used it against J. Edgar himself, to get access to FBI "snoop" files on all his opponents' personal lives. Hoover himself was reputed to have had some rather "embarrassing" clandestine episodes in Batista's Mafia-controlled Cuba.

Wilhelm Reich warned us of this in his books and treatises on politics and sexuality in the 1930s. ("Mass Psychology of Fascism", "Invasion of Compulsory Sex-Morality", and "Listen, Little Man") His reward, of course, was death in a US prison for selling his "Orgone Accumulator Boxes" without FDA approval.

Thoreauly@ arbyh & Nathan Brazil#14824710/6/06; 10:31:29

"Is there any hope for the USA?"


"Anyone happen to know which country in the Eurozone has the most favorable immigration policy for U.S. expats with a bit of gold?"

Probably Lichtenstein, but the folks at the Sovereign Society would know for sure.

GoldiloxUSDX#14824810/6/06; 11:08:26

Gold appears to be "holding it's own" while the US dollar continues its "bugger thy neighbor's currency" pre-election resurrection.

Like a half-baked cake, it will take merely a bump to the oven to interrupt its gravitational defiance.

White HillsOddity#14824910/6/06; 13:20:33

Sir Arbyh, You may have some economic points but your political observations couldn't be more biased and wrong. White Hills
Chris PowellThe gold price suppression scheme is being found out#14825010/6/06; 13:51:33

3:38p ET Friday, October 6, 2006

Dear Friend of GATA and Gold:

If you doubt that the central bank scheme to suppress the gold price as part of a policy of rigging currency and bond markets is starting to be found out, take a look at the headline on the Sydney Morning Herald's republication today of yesterday's London Telegraph story by Ambrose Evans-Pritchard about the latest central bank gold sales:

The headline in the Sydney Morning Herald reads: "Banks sneakily dump extra 100 tonnes of gold."

The Telegraph's own headline was only: "Bank of France blamed for gold selloff."

But "sneaky" was the word used in one of yesterday's GATA dispatches about the latest gold sales.

It looks like we're not the only ones to whom that word has occurred. And it looks like Australia is starting to figure out what has been going on.

The bad guys still have their power but they're getting found out, and their scheme, being one of deception, will lose its effectiveness the more it is found out.

Don't look now, but despite all the weeping and teeth gnashing on our side during the last few weeks, we're actually winning.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

YGMUsed to Be...#14825110/6/06; 15:05:15

...that a gold owner a/o advocate could come here and become somewhat enlightened to some degree on varying aspects of Gold & it's inner workings etc. Now it's like coming to the end of world doomers forum, w/ endless negativity. WW3, economic collapse, nuclear wars, end of the US empire, blah blah blah. To all of it I say HOGWASH. I saw my first end of days guy w/ his... "The End is Near" placards in Seattle in 1955. 'What' we're still here and life is good???? Go figure. No wonder 'they' think Gold bugs are nutty for the most part.
SundeckDollar jump??#14825210/6/06; 16:00:16


Michael Woolfolk, a senior currency strategist at the Bank of New York, also pointed out the report showed earnings rising 4 percent year-over-year, the biggest jump in five years. The increase may grab the Federal Reserve's attention as it watches inflation, including wage inflation, to determine the future course of interest rates.

"I think the upward revisions and wage inflation take off the table any chance of a Fed rate cut," Woolfolk said. "That was an immediate dollar positive."

Rising interest rates have boosted the dollar for the past two years as the Fed sought to keep growth from fueling inflation.


Sundeck: I was a little surprised to see the dollar jump so energeticlly and I wondered why? To the extent that there is ANY rationale underneath this thing, perhaps the currency markets were expecting that the Fed might cut rates soon, but the jump in "earnings" has provided a dampener on that expectation???

Not very convincing, you say? Yep! I agree, but the "great" currency strategists do it all the time with little success, so why not lowly Sundeck?

Anyway, gold seems to be bumping hard against the floor and bouncing still, which is probably not surprising when you think of what the REAL state of the dollar is, with record deficits out for as far as imagination can take you...

Ref: Chris Powell's #148250

"Weeping" and "teeth gnashing"? Perhaps, amongst some...but gold is still up $90 since the beginning of the year...that's 19%!! Not that bad, really. (I wish all my assets had done so well.) ;-)

Ref: YGM #148251

Ahhh...yes. Perhaps we need to focus more on "gross national happiness", as they do in Bhutan, and less on "gross national gloom". (All depends what makes you happy, 'though.)

However, I suspect there is a bit of a tendency at the moment for "gross national stupidity" to be surging in a few countries around the world... N. Korea, Iran, Iraq...perhaps a few others, as well.


TopazBonds, Gold etc.#14825310/6/06; 16:51:50

If you look long and hard enough at the accompanying Charts (apart from Oil) you'll define quite a "normal" pattern ....albeit with a rider.
Gold-Bond-Dollar have been acting in sync, the only millstone around Gold is that it is still perceived as an Anti-Dollar.
In all probability we'll see a return to lower Yields next week and I'd be thinking the G-B-D relationship will remain intact.
The public perception of Gold really needs a reset about now!

Thoreauly@ YGM#14825410/6/06; 16:55:22

Used to be that money was money and the state was constrained accordingly. That's no longer the case and hasn't been for almost a century, least of all for the past 35 years of fiat fraud.

Gloom and doom? Yes. But only because The Mother of All Bubbles is bursting, meaning that your rah-rah-rah-life-is-good will crumble as the blah-blah-blah-life-meets-reality has its way.

In Gold We Trust.

HenriWashington Agreement 2 ? Speculation Only...any Thoughts?#14825510/6/06; 17:31:16

Question: Why are these called the Washington Agreements when the USA is not a signatory to either one?

Possible Answer: Could it be that the "agreements" are to swap US gold holdings and put them on the market in the name of various eurozone countries. Both countries hold gold bullion...the tag on the pile in the US that is swapped then reads whichever Eurozone country sold its gold on behalf of the US govt. An equal sized pile of gold in that Eurozone country is put on the market as "agreed".

Perhaps "the agreement" was cast to limit the US swapped sales so as to support the POG for the MTM transition

USAGOLD Daily Market ReportPage Update!#14825610/6/06; 18:11:24">
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FRIDAY Market Excerpts

Gold up on pre-weekend short covering

October 6 (from Reuters) -- The COMEX December gold futures contract settled up $1.30 at $576.80.

It bounced $12 from its low, and added marginally to Thursday's $8.80 gain.

"It appears that pre-weekend short covering, which may have had some emphasis from the Colombus Day holiday (Monday), although markets will be open, lifted precious metals late in the day," said James Steel, senior analyst at HSBC. "The action was particularly volatile and gold still appears hostage to broader commodity prices."

Gold, a hard asset that is expected to hold more value against inflation than the dollar, was down alongside oil most of the day. NYMEX November crude ended down 27 cents at $59.76 a barrel.

It was a choppy week.

On Wednesday, gold hit its low as oil prices plumbed eight-month lows below $58 a barrel and new stock market records siphoned money away from precious metals.

Gold's gains Thursday and Friday came as equities eased back.

A recovery in oil on Thursday helped gold, as the market braced for OPEC production cuts to support crude prices.

"The return of weakness in the oil market is likely to weigh further on gold, and I think will force a re-test of June's $542 low," wrote James Moore at TheBullionDesk.

"As with any trend, a period of correction/consolidation is perfectly normal and is constructive longer term, allowing investors to enter the market at more affordable levels."

---(see url for full news, 24-hr newswire)---

TownCrierHEADLINE: Gold Up Amid Concerns About North Korea#14825710/6/06; 18:18:52

NEW YORK (AP) - Gold futures strengthened Friday in volatile trading, as worries about possible North Korean nuclear tests and short covering helped the market snap back from early weakness.

Gold's recovery came about on concerns about North Korea possibly detonating a nuclear device as soon as this weekend, said Leonard Kaplan, president of Prospector Asset Management.

He added that trading was thin, with big orders hitting the floor. "That's why it moved quickly."

...In energy... OPEC president said he was still consulting with fellow ministers on the need for an emergency meeting.

"A meeting hasn't been called yet, we're still in consultations," OPEC President Edmund Daukoru told Dow Jones Newswires.

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

R PowellYGM#14825810/6/06; 19:13:23

I'll agree with you. Now we can both be lambasted. (G) Once any opinion is formed or position taken, it is human nature to emphasize that news or information that supports that preconception or conclusion and to downplay or ignore that which does not. Defending government policy and political campaigns employ these tactics. Obviously, analysis of any situation, especially one that might require future decisions is hindered by full disclosure. I too have never been convinced that the end of days is near, and I am part of that generation that was taught to hide under our wooden desks in grade school when the air raid alarm sounded.
happy weekend to all.....

R PowellCorrection#14825910/6/06; 19:15:33

....make that "a lack of full disclosure". Sorry, old brain cells misfiring.
But you knew that....

Thoreauly@ R Powell#14826010/6/06; 19:29:26

"I too have never been convinced that the end of days is near, and I am part of that generation that was taught to hide under our wooden desks in grade school when the air raid alarm sounded."

My father is part of that generation that (barely) lived through the Great Depression. He is also part of that generation that (barely, as a Marine) lived through the war that would turn the Great War into World War I.

Me, I was taught to hide under wooden desks too, not knowing then what I do now about who the real enemy is.

Do you?

arbyh3 hour special on major network last night#14826110/6/06; 19:33:48

@ Sir Whitehills
It was all the Tom Delay and Abramhoff (spelling?) corruption. The corruption was laid out in great detail from the forced one party only contributions being channeled through fronts with nice altruistic names, and showing just how politicians were being bought. The K Street Project.... It gave a nasty background check on who replaced Delay. The earmarked funds were discussed. The ethics committees were spoken of on their lack of ethics and desire to minimise disruption to the game. It is a go along to get along system.
Rep Paul also has spelled out much of this greed and wrongdoing in his letters.

Don't say that I'm a negative guy, or not patriotic. That isn't the case at all. I'm a soldier.

HenriFurther Thoughts on WAG2#14826210/6/06; 20:12:52

Perhaps agents of Washington short sold the 100 tons that were never sold by Eurozone assuming that they were already in the pipelune (big whoops) The eurozone no longer wants to swap because it is not so sure that the pile in the US that supposedly has their name on it is really there.

Perhaps that is why Barrick suddenly needs a billion dollars?

Ten BearsBob Chapman, Charley Reese, and Richard Reeves#14826310/6/06; 21:25:51

Comments on current conditions from three seasoned observers:
Bob Chapman
The Army is in its worst readiness condition since the end of Vietnam
Two-thirds of all Army combat units are rated not ready for combat.
The Army just simply does not have sufficient active-duty military personnel to sustain the current level of effort. The entire region of Al-Anbar has been lost, a modern version Beau Geste.
We are sickened by what we see in Iraq and Afghanistan and at the crass incompetent leadership in Washington. All we can see is hopelessness. If these wars are not ended it will not only break our country financially, but spiritually as well.
Charley Reese October 2, 2006
Discussion in Washington is usually carried on at the level of college freshmen after several rounds of beers. The Republican answer to its own fiasco is to say: "OK, you don't like the way the president is handling it. What's your solution?"
The proper answer to that is: "In the first place, bro, I didn't break it. You did, and the only solution is to recognize that there is no solution. Not everything that breaks can be repaired. Our choice is to leave now, with 2,700 dead and 20,000 wounded, or linger on until there are 5,000 dead and 35,000 wounded and then leave."
In the meantime, use your common sense. Ask yourself just what it is that America's young men and women are dying for. To make Iraq a happy place? To make Israel feel safer? To help corporations with insider connections get richer? Not one of those reasons is worth the life of a camel, much less a human being.
Richard Reeves and 09/29/2006 and 10/06/2006

'No question, 9/11 was an act of war,' said Ferguson. Actually, 9/11 was mass murder, and it should have been treated as mainly a challenge for the police and intelligence services. Interpreting the 9/11 attacks as an act of war demanding military reprisal has only helped up the ante of violence throughout the world."
In other words, declaring "War on Terror" was a mistake. A big one. Hurt and angry, we overreacted to 9/11. Leaving aside, for the moment, the invasion of Iraq, which history, in 2031 or 2131, is likely to judge as one of the stupidest presidential decisions of all time, we would have been wiser to treat 9/11 as a crime rather than an attack.
We should have concentrated our power and money, whatever it took, to find the people who did it and treat them as common criminals of the worst kind.

Republicans, controlling both houses of Congress and the White House, are no longer accountable to anyone except a judiciary they essentially control and a press that has been afraid of the mass and momentum of conservative power these last few years. (The same thing could have happened if Democrats were the party with absolute power.)

If the Republicans fall in the November congressional elections, and they almost certainly will, Foley's sins will be only one small part of it. Abuse of power is more of a symptom than an issue in the coming vote. The arrogance of power will have its effect, but will pale beside incompetence in war and peace, blinkered devotion to ideology, right or wrong, and a sense of bias against the economic travail of the great middle class.

The Invisible HandVenezuela, Korea and SCO#14826410/6/06; 22:03:40

State-run oil holding Petr--leos de Venezuela (Pdvsa) discontinued exports of gasoline to the United States due to persisting troubles in its refineries, operators and shipping agents said Friday
"Let us get out of capitalism, which is the path to hell, and let us take the path to socialism, which is the kingdom of happiness." [said Venezuelan President Hugo Chávez Thursday]
SINGAPORE: South Korea's Foreign Minister Ban Ki-Moon, favourite to succeed Kofi Annan as the United Nations Secretary-General, said on Friday he would strive for peace in the Korean peninsula in the context of Pyongyang's intention to test a nuclear weapon.
Now in South Korea, Mr. Ban indicated his preference for a hands-on approach towards North Korea.
Speculation is gaining currency that Mr. Ban might try to put the INTER-KOREAN ETHNIC LINKS to some good effect. South Korean President Roh Moo-hyun had recently said Seoul would be able to firm up military-related confidence-building measures only if the U.S. were to make a gesture. He said Washington must transfer to Seoul the burden of "wartime
The growth of the SCO (Shanghai Cooperation Organisation), particularly the new applications for full membership are creating worldwide tensions similar to the standoff before the First World War.

Norman D. Palmer and Howard C. Perkins, "International Relations – THE WORLD COMMUNITY IN TRANSITION", Boston: Houghton Mifflin / Cambridge, MA: The Riverside Press,, 1957, 2nd ed., p. 215; quoting Sidney B. Fay, "The Origins of the World War", Macmillan, 1929, I, 32-49:

The greatest single underlying cause of the [First World] War was the system of SECRET ALLIANCES which developed after the Franco-Prussian War.

White Hills3 hour special#14826510/6/06; 22:33:56

Sir Arbyh, I didn't say you were a negative guy or that you weren't patriotic. What I did say that your political observations were biased and wrong. I am refering to your statement that"The party of self proclaimed values lies in the dirt with Foley. The President backs the Republican Speaker of the House, even though the Speaker knew of the mess with Foley and did nothing for a number of years. So, When did the President know of Foley's activities?" White Hills
White Hillsthree seasoned observers?#14826610/6/06; 22:52:41

Sir Ten Bears, Three seasoned observers? Maybe, but not neutral ones. The clearly have a left wing bent of the first persuasion. I wish that you would stick to economics and gold in your posts. It is okay with me if you can work your political ideas into some economic or gold related subjects. But just to come on to this forum and post a bunch of left wing crazies and somehow give them this forum to spill propaganda around that is anti everything is taking advantage of a forum that was not created for that kind of dialog. Give us a break! White Hills
GOLD FINGERElections and politics.....#14826710/6/06; 23:12:25

Now, How will the out come effect the POG?

We know what stocks might do...


I did enjoy the Gold guessing contest.

Thanks for allowing me to try~

Since I knew I was not going to win...I purchased some new gold coins for my collection. Now I am happy!!

Ten Bears@Sir White hills:#14826810/6/06; 23:14:44

left wing crazies? Aha,the Argumentum ad Hominem. Perhaps, Sir White hills, you would care to be a bit more specific in your criticism of these senior commentators.
GoldiloxYou modified his "point"#14826910/6/06; 23:45:12

@ White Hills,

Arbyh's point was not that the President was wrong to back the Speaker before he knew of the cover-up, but to back him right now, forgiving his participation in the cover-up.

While I won't single out any particular party for this type of behavior, it is all too rampant in Washington, actually in all gubmint. "Scratch my back, and I'll scratch yours."

Or worse, blow a whistle on corruption and you not only lose your job you spend the next ten years being audited by the IRS and followed by black Suburbans with hi-tech spy gear.

Catherine Austin Fitts, well chronicled here, is the perfect example. For trying to plug a $Trillion dollar HUD sieve, Ms. Fitts endured the IRS and Black Suburbans for over ten years.

It's inappropiate to label someone else's "political opinion" WRONG, unless we're already at the point where free speech is an anachronism, and dissent is illegal - 1100 legitimate reporters who spent the 2004 Republican Convention in "Warehouse Detention" for trying to perform their job might have an opinion on that.

What the "blind faith" advocates are missing is that those who question authoritarian behavior are the ones who respect "checks and balances". Those who "turn their backs" on the under-the-table shenanigans are supporting the corruption and subsequent dismantling of Liberty with their silence.

If arbyh is a member of the US military, I doubly applaud his courage, because stating his opinion is definitely grounds for "official" persecution these days.

The Invisible HandYou don't believe me!#14827010/7/06; 01:18:07

Cold War Shivers": War Preparations in the Middle East and Central Asia
by Michel Chossudovsky

It is essential that people across America and around the World take cognizance of the dangers of a Middle East war directed at Iran and act decisively to challenge the US military agenda and reverse the tide of war.

The World is at the crossroads of the most serious crisis in modern history. The US has embarked on a military adventure, "a long war", which threatens the future of humanity.

The Invisible HandNuke week-end, says; 01:22:36

UNITED NATIONS (Reuters) - The U.N. Security Council on Friday urged North Korea not to carry out a planned nuclear-weapon test and warned Pyongyang of unspecified consequences if it did.

The Invisible HandFrance to partake in uranium enrichment?#14827210/7/06; 06:51:18

TEHRAN (Fars News Agency)- An Iranian MP, noting Tehran's proposal to France for partaking in the uranium enrichment operations inside Iran, advised the EU states to make an optimum use of the Islamic Republic's reconciliatory diplomacy.
The Invisible HandGold has invisibly become the reserve#14827310/7/06; 07:28:45


In the last 12 months
oil decreased from $80 to $60 = minus 25%
gold decreased from $730 to $540 = minus 25%

minus 25% = minus 25%

This means that oil and gold are moving together.

We are talking here about the two most political products there are.

We are thus talking about "political" pricing instead off market-pricing (supply and demand).

Price-optima are being determined within which oil and gold can/must move.

Remember that one of the most important reasons and functions of the dollar-reserves is its oil purchasing power.

But the Holy Dollar Reserve is no more moving with oil and gold.
The USDX did indeed not fall 25%.

Gold has thus invisibly become the reserve, instead of the dollar.

The Invisible HandThere we go!#14827410/7/06; 07:34:04

South Korean troops fire warning shots at North Korean soldiers amid rising tension over nuclear weapon tests.

Chris PowellSo much money and so little real economy to invest it in#14827510/7/06; 09:24:56

Commodity derivatives were invented to soak it
up without raising prices.

* * *

A Kink in Venture Capital's Gold Chain

By Miguel Helft
The New York Times
Saturday, October 7, 2006

The high-risk, high-return venture capital business may have turned into all risk and no return.

That, in a nutshell, is the message that a prominent venture firm delivered yesterday to its investors when it told them that it could not continue to take their money -- at least not for the time being.

"The traditional venture model seems to us to be broken," Steve Dow, a general partner at Sevin Rosen Funds, said in an interview.

Sevin Rosen, a 25-year-old firm that is among the most respected in the industry, was in the process of closing its 10th fund and had received commitments from investors for $250 million to $300 million, Mr. Dow said. But in a letter sent to those investors yesterday, Sevin Rosen said it had decided to abort that process.

"We have decided to take the radical step of returning the commitments you have given us for Fund X," the firm wrote.

Explaining its decision, Sevin Rosen, which has offices in Dallas and Silicon Valley, said that too much money had flooded the venture business and too many companies were being given financing in every conceivable sector.

But excess of capital is only part of the problem, the firm said. In its letter, it bemoaned what it described as "a terribly weak exit environment," a reference to the dearth of initial public offerings and to a market for acquisitions at valuations that it considers too low to deliver the kind of returns that venture investors expect.

At a time when young companies like YouTube and Facebook are said to be entertaining acquisition offers in the $1 billion neighborhood, that pronouncement may seem surprising. But Mr. Dow said those "megadeals" were rare and were not enough to sustain an entire industry.

"While good returns from any given firm's portfolio is certainly a possibility, the statistics have clearly shifted in an unfavorable direction," the firm wrote. "The venture environment has changed so that overall returns for the entire industry are way too low and even the upper-quartile returns have dropped to insufficient levels."

Sevin Rosen's credibility is bolstered by the roster of companies it has helped lead to public offerings in the past, including Compaq, Lotus, and Cypress Semiconductor. It has been describing adverse market conditions, to its investors and to the news media, for at least two years. But it finally decided that it could not be telling investors of a poor market for venture investing while continuing to take their money.

"If we really believe that there are fundamental structural problems in the venture industry, should we raise our fund and just hope that the problems will get better?" the firm wrote. The answer was no.

Many venture capitalists have voiced similar concerns for some time. And over the last few years, many firms have turned away far more money than they raised.

But investors, perhaps hoping for a repeat of the eye-popping returns of the late 1990's, have continued to put money into venture firms. At the end of 2005, venture capitalists had a combined $261 billion under management, more than at any time in the industry's history, though some of it was raised in the Internet boom.

Venture capitalists have given back money to investors before, most significantly after the Internet bubble burst and the appetite for investing in risky technology start-up companies nearly vanished. But experts say this is the first time that a top-tier firm has decided to scrap a sizable fund that was nearly complete.

"I don't know of any other firm that has gone through that process," said Mark Heesen, president of the National Venture Capital Association, an industry group.

In many ways, Sevin Rosen's decision is based not on where the market for public offerings and acquisitions is today, but on where the partners in the firm think it will be in five or more years, the typical life of a venture fund. While Sevin Rosen has concluded that things are unlikely to change, many others disagree, Mr. Heesen said.

"That's where the real debate is, and I can see V.C.'s on both sides of that debate," he said.

Indeed, even as they say they wish there was less money in the business, and hence less competition for deals, many venture capitalists say they remain confident about their ability to make money for their investors.

"My job is to find the best opportunities we can find," said Kevin Compton, an affiliated partner at Kleiner Perkins Caufield & Byers, one of the top Silicon Valley firms. "In our opinion, there continue to be great opportunities."

And sitting on the sidelines is a risk that a firm with a strong reputation can afford to take, Mr. Compton said. If Sevin Rosen changes its mind and decides to raise a new fund, "there are plenty of people who will want to invest in it," Mr. Compton said.

Mitchell Kertzman, a partner at Hummer Winblad, a venture capital firm in San Francisco, said, "It is certainly true that there is a lot of cash in all parts of the venture capital supply chain." But that oversupply mostly affects sectors that are trendy, like the consumer Internet market, he said.

Many firms that have raised large funds have shifted their investments from "two guys in a garage" ventures to more established companies. Those "late-stage" deals typically require larger investments but are considered less risky and offer the promise of quicker returns. As a result, this is "one of the best times to be an early-stage investor," Mr. Kertzman said.

Still, Sevin Rosen is known for investing in early-stage companies. While significant, the firm's decision to kill its latest fund does not mean it is closing shop. Sevin Rosen will continue to invest millions it raised in earlier funds. And Mr. Dow said the firm's partners planned to spend time thinking about new models of investing.

"Maybe there are different financing structures," he said. "Maybe we have to look at fund sizes. Maybe we have to look at only doing deals that are going to take a limited amount of capital."

At least one of Sevin Rosen's investors appears satisfied with the firm's decision.

"I think they are raising the right questions," said Sandra A. Ell, treasurer and chief investment officer at the California Institute of Technology. "It's not that there is a lack of investment opportunities," she said, but rather "a lack of being able to pull out your money" through public offerings or large acquisitions.

While Sevin Rosen may have raised the good questions, Mr. Dow admitted that for now, it lacks any good answers.

"We have properly diagnosed the problem, but haven't figured out for this patient what the therapy is," he said.

GoldiloxMeasuring stick#14827610/7/06; 09:56:56

@ TIH,

But the Holy Dollar Reserve is no more moving with oil and gold.
The USDX did indeed not fall 25%.

Had the dollar moved "down 25%" along with gold and oil, then the outward appearance would have been no movement at all, since it would have reflected a proportional change in the "measuring stick."

GoldiloxPrechter on FSN today#14827710/7/06; 10:29:44

While Jim makes no bones about disagreeing with his outlook, he is interviewing Bob Prechter on the FSN streaming broadcast this morning, for those who would like to hear a more detailed explanation of the deflafla side of the argument.
Clink!@ Chris Powell#14827810/7/06; 11:37:43

You didn't add it as a comment, but too much capital seeking placement sounds a lot like too much money chasing too few real goods i.e. inflation ! So if hedge funds now look a bit iffy, commodities have been bashed, and now VC funds are closing, where is a money manager to park the cash ?


Clink!The pervasive problem of paperization#14827910/7/06; 12:08:46

In the course of my reading over the past day or so, it struck me that there are many areas where the perceived solidity of something is actually a bogus construct of paper. In other words, we have abstracted real value to have the same weight as a promise. Obviously, this is a prime topic of discussion as far as PMs are concerned, but I wonder just how far the "disease" pervades Western society.

For instance, there was one sentence from Ten Bears' post yesterday :-
"The Army just simply does not have sufficient active-duty military personnel to sustain the current level of effort."
Bearing in mind that the USA already spends the same on, er, military endeavors, shall we say, as the rest of the world put together, one would think that that amount of money would lead to an invincible fighting machine. Unfortunately, armies are made up as much by men and women as by machines, and this point has been brought embarrassingly to light of late.

In another field, there was an interview on bubblevision concerning one of the upcoming elections (Normally, that would be the moment to reach for the remote, but I was on a treadmill at the gym at the time, so I was somewhat of a captive viewer). One of the "heads" opined that candidate X had very little chance because his opponent Y had raised twice as much campaign money. If the pen is mightier than the sword, and the sword is mightier than paper (see the previous paragraph), then what happened to ideas winning elections ?

Speaking of winning, I would like to congratulate all the winners of the contest and thank MK & Gandalf for making this possible. I don't often say "I told you so" (I'm not usually right that often !!), but if I might quote from my entry :-

Clink! (9/22/06; 21:09:58MT - msg#: 147681)
$$$$$ 620.0 $$$$$
....... - but I have noticed a very strong correlation in the past between increased market action and the announcement of a POG guessing contest at the Forum. It therefore appears to me from past experience that a/ the volatility will pick up significantly in the next week, and b/ gold will end up nowhere near $620 on Oct 5th (sadly!).

Both a/ and b/ were spot on (sadly ;^[ )

mikalThe Fed "caught between a rock and a hard place"#14828010/7/06; 14:01:30

Two More Reasons a Monetary Crisis Is Inevitable and Gold Is Going to the Moon
By Doug Casey | 06 Oct 2006 at 03:56 PM EDT | STOWE, Vt. (Casey Research Advertorial) -- Excerpt: "Even a casual observer can see that the Fed is now caught between a rock and a hard place. If it lowers interest rates to head off the economic devastation that would come with a collapsed housing bubble—housing is estimated to have, directly and indirectly, contributed 57% of U.S. economic activity over the past 5 years—the Fed risks triggering a wholesale rush by foreigners to dump their trillions of U.S. dollars. But if it raises interest rates to protect the dollar, the Fed risks turning an economic downturn into the most serious recession since the 1930's."

TopazTIH ...Gold Reserve currency.#14828110/7/06; 16:41:21

Agree Mr Hand, I opined as much here: Topaz (10/3/06; 20:18:44MT - msg#: 148138)
Given the action of PoG in all currencies (as per the Galmarley link) we see Gold now responds similarly across the board whereas before (say last September) it ran with all the alt currencies to the exclusion of $usd.

A tectonic shift ...largely gone un-noticed!

SundeckFed's rocky encounter#14828210/7/06; 17:46:27

Ref mikal's #148280

Ahh yes, Sir mikal...this was the thought running through my mind when I was pondering the correlation (see link) between the NAHB Housing Index and the S&P 500, brought to the table by Sir Thoreauly a few days ago.

Even though the correlation does not stand up over time (see my post #147940), the dramatic fall in the NAHB index and the apparent levitation of the S&P 500 is probably sufficient to make many people very cautious concerning the impact of the stalling housing sector upon the US economy and the stock markets.

However, things may not be as gloomy as first appearances may suggest.

1. The European economy appears to be undergoing something of a revival, especially in the east. Even Italy is showing some signs of renewed vigour, having languished for quite a while. Interest rates in Europe are still rising and the fears that Europe would become uncompetitive in the face of a rising Euro appear to be subsiding.

2. Similarly, Japan appears to be shaking off its decade and a half attack of the "black dog".

3. China is still growing rapidly and it is reasonably well known that the government there is keen to see increased domestic consumption and rising living standards spread to its still largely agrarian population...700 million farmers who are seeking modest access to manufactured luxuries that many in the west consider a birth right.

4. As well, India and Russia and much of Latin America is expanding.

5. Hence, it may not be so much of a disaster for the world economy if the US goes into a gentle funk for a while...with demand being made up by growth in the economies mentioned above. The Fed (and the Treasury) will be monitoring the situation very closely to see how things are standing up. If they opt for a reduction in rates to stem a too-rapid decline in housing, then a downward correction in the dollar might be expected.

I don't think they would be too unhappy about this, and I don't think that it is likely to be a drastic fall. Remember that it is not in China's interest (or any other county's interest, if they hold large dollar reserves) to see the dollar plummet. Apart from the unpleasant paper loss incurred, they are unlikely to want to rapidly kill-off their largest customer until they are able to redirect their economic output to other destinations (like Europe, Russia and Latin America).

Meanwhile, a gently falling dollar will help ease the US trade deficit until such times as the dynamic US economy responds to the "new world economic order"...which is indeed going to be an interesting one...

Of course, a continuation of the decline in the dollar against other currencies (arrested, as it has been for the last year or two, during the period of interest rate increases) is likely to be good for gold, and will likely see a continueing upward trend in the prices of many other things.



USAGOLD / Centennial Precious Metals, Inc.Step inside and explore...#14828310/7/06; 20:21:23

shop for gold coins
melda laureNovum Merlinus#14828410/7/06; 22:20:36

@ Topaz #148281

And the corrollary is that dollar reserves become more and more irrelevant. Sir TIH, you said just what I was thinking.

Sir TC, thank you for your kind words of the other day. There is a palpable angst among those who actually work for a living and it is all too easy to find convenient scape goats. Somehow the answer must be more than just taxes and regulation (either more or less), the answer must be revealed at the foundations of the monetary system. The article Sir Powell linked captured perfectly the deep concern and the total confusion about the true causes. I doubt my contribution clarified anything much though.

I am not so sure of the future though. Oil is not a good MTM reserve simply because it is consumed. Gold is a poor choice (except for all the others) for other reasons. It bothers me that so much is now available in print on the transmutation issue. Even if no nukes are used, clearly we must conclude that if China does not get the energy it needs then needs will find another way. Political pricing indeed. Our tri-lateral analysis (gold-oil-dollar) may yet become a quaternion analysis. The markets this week belie a calm unwarranted, nor will we wait long for what comes.

Sir YGM brings up a good point, I (and others) tend towards the apocalyptic over much. And it is true that despite the implosion of the Nasdaq, mass underemployment and other inconveniences, the first world rolls along about the same as ever: derivatives, new paper games and such keep the nasty dollar bear in check: "so much money and so little real economy to invest in". Much now depends on a little industry of drillers. Should they fail (for eventually they must) then can political pricing alone save the day? Can the world accept a world wide semi-permanent oil-induced recession? Rather reminds one of John Christopher's "The Guardians", or "No Blade of Grass", two scenarios that YGM would count in the nutter files.

This poker game will end with six guns. The nukes are out only because of the increasing desperation of a few ill tempered players who want to keep the game going a bit longer, but Mr Ahmadinejad is correct, the age of nukes is over if they cannot prevent what is comming.

My guess, we muddle through, with expensive gold. The US is not Russia.

GoldiloxProgram Strategy for Low-Energy Nuclear Reactions#14828510/7/06; 22:43:07

Chemical reactions between molecules, such as burning, are common. They can generally be initiated using modest temperatures. Reactions between nuclei, which have much greater output energies than chemical reactions, usually require correspondingly greater energies to initiate them. Low-energy nuclear reactions (LENR) have the remarkable characteristic that they can be triggered at ordinary temperatures corresponding to less than one electron volt. But, they still output energies typical of nuclear states, one million electron volts or more. In current fusion research, large Tokamaks or immense laser facilities costing over $1B are required to heat nuclear fuels from room temperature to the mega electron volt levels required to produce significant numbers of nuclear fusion reactions. During LENR, the high density of nuclear reactants in a solid lattice results in high reaction rates, which might lead to useful power outputs.

Early reports of LENR (then known as "cold fusion") were flawed and disagreed violently with known solutions of fusion theory. However, in the past 17 years, numerous experiments have obtained anomalous results with high signal to noise ratios. They have involved many methods to both initiate reactions and to diagnose their results. Excess energy and the appearance of new elements due to transmutations were often reported. These and other measurements have produced a robust body of empirical evidence that LENR occur, even though full understanding is not yet at hand. There are over 1,000 papers in the field, many of very high quality. Much information is available on the internet. Two particularly useful sites are (with a library of articles) and (with an on-line magazine).


While it's difficult to sift through the "signal to noise ratio", there is still legitimate research into alt-nuclear solutions.

melda laureA fascinating game, this poker. China holds all the aces.#14828610/8/06; 00:51:33

@ Sundeck:
SNIPPIT: 3. China is still growing rapidly and it is reasonably well known that the government there is keen to see increased domestic consumption and rising living standards spread to its still largely agrarian population...700 million farmers who are seeking modest access to manufactured luxuries that many in the west consider a birth right.

Methane hydrate is the only "resource" fuel I see in large enough quantities. The attitude of "we already have the alternatives ready to use - solar, wind and biomass." simply ignores the needs of a modern industrial techno-civilisation. The costs per KWHr are incorrect as they all assume a price of coal and oil not too different from yesterdays price. China is fully aware of their limited choices, and time is short.

Time will tell. Engineers are quite clever. On the other hand I have no particular objection to an Amish-level existence, (or even further back). Unfortunately the present day USA is not built for it, nor are Europe's big cities. But that is a problem for the politicians (bwahahahahah! Manaiacal Elven Laughter). You dont suppose the Henry Kissinger's of the world are thinking the world would be better off with fewer humans, and the Global Warming issue provides a convenient excuse?

Well, for the record, I still own some oil stocks, my guess is that a PE of 6-9 represents stupidity and not some great market wisdom. Lately it seems that gold and oil are stuck in a 10:1 ratio. We will see if that holds at all. The "massive crude inventory" will not seem so massive once the minesweepers are chugging about on the Hormuz Strait.

The article linked is old, but it alludes to the general ignorance of monetary and energy issues among environmentalists. The reasons for this indifference are an interesting topic, off topic perhaps, yet the moral question of money is at least as big (or bigger) than the environment, as the former enables the abuse of the latter, (though it predates fiat). Ratzinger is correct, Europe needs a moral foundation for its own sanity, if not in christianity then in its pagan past, and if not there then they had better find it fast. Likewise M. Teresa correctly diagnosed the US as having "unlimited possessions but no love". The US is permanently re-enacting Custer's Last Stand despite the fact that we are the sole remaining super power; like Gene Roddenberry's Star Trek, we are on a perpetual conquest going nowhere. That these national diseases are convenient benefits for our masters is merely cruel irony. We seem to lack the good sense of the Amish to pack home our dragon gold and attend to cultivating our own patch of garden.

That would not be keeping the "pioneer spirit." The call of adventure is too great. Perhaps the indigestion of Iraq will satiate this hunger. Perhaps not. There is a certain element of game theory to choosing gold: Free Gold has been pitched here as a solution that is near-optimal in spreading its benefits. It is also a solution that the inflationists will favor by default of being in the box canyon. Gold is also (as YGM notes) a doomsday solution either in total collapse or in the total-fascist dystopia where a black market will likely emerge.

These are long range scenaria, Gold has been the closest thing to a permanent option on wealth. Until the day we see gold derivatives growing like their interest rate brethren, we can safely assume the transmutation genie is still bottled up.

melda laurePay no attention to the man behind the index.#14828710/8/06; 01:23:23

Another opinion on Goldman Sachs re-formulated commodity index and the gasoline price. I think this is made to sound far more sinister than it really is. This is no different than Comex changing the margin values on a gold contract.

That is to say, it is perfectly legal. Put another way, it is part of the rules of the game. The short term effects will be digested soon enough. However for the overly leveraged, the effects are equally "perfectly lethal".

Goldman Sachs, which runs the largest commodity index, the G.S.C.I., said in early August that it was reducing the index's weighting in gasoline futures significantly. THE ANNOUNCEMENT DID NOT MAKE BIG HEADLINES [ML:my emphasis], but it has reverberated through the markets in the weeks since...

SundeckNew world economic order#14828810/8/06; 06:11:29

@ melda laura Ref #148286


The gas, locked up in ice under high pressure and low temperature, comes from the tissue of phytoplankton that once lived on the sea surface. Microorganisms converted this organic matter to methane gas.

Methane gas hydrates are now estimated to be twice as numerous as the world's known oil, coal and natural gas deposits.

As oil prices rise, methane gas is now being considered as a source of energy on par with coal, hydroelectric power and nuclear energy. Many countries are mounting research projects into gas hydrates because the global deposits may contain enough energy to meet the world's needs for up to 3,500 years.

But extracting gas from undersea hydrates is still tricky to do in a safe economic way, which reduces possible spills, the chance of fire and the release of methane into the atmosphere.

Sundeck: Enough hydrates to fuel the world for 3500! Methane is often touted as a "clean" fuel, which, of course, it is not...not completely, anyway. CO2 and water are produced when it is just a lot "cleaner" than burning coal and oil per unit of output energy... The problem of disposing of the CO2 is less onerous, and there are no nasty sulphides and other contaminates to deal with. Harvesting methane may also be a lot "cleaner", but not always.

True, the modern cities of the west are largely constructed around the delivery/utilisation of "easy energy" in the form of coal and oil. These two energy feed-stock, in addition to their major roles in electricity generation and automotive propulsion, are also crucial for other essential functions of modern industrial society...principally the smelting of steel and petrochemical manufacture.

In principle, all electricity generation could be transferred to burning methane (natural gas, coal-bed methane or methane hydrates), assuming satisfactory methods of harvesting and delivery. "Renewables" such as wind, solar, biomass, geothermal etc can fill niche roles where appropriate. Burning methane for major-load electricity generation slows the global warming problem and buys time for the evolution of the infrastructure and human activity (involving energy consumption) within cities. Vanadium redox batteries, for the first time, provide an effective means of storing large quantities of electricity, removing the need to rigorously match generation capacity with time-fluctuating load. Abundant and relatively clean electricity opens up opportunities for non-petroleum-based automotive transport.

Steel smelting involving the reduction of iron oxides using coke is likely to be around for a long time and I haven't heard any talk of capture of carbon dioxide from that process, but I am sure it can be a price, and perhaps with other sacrifice. But then, if everybody has to do it, then the only consequence is less steel produced per unit time, coupled with the diversion of labour and resources from other activities to that process. "Development" therefore proceeds at a pace less than otherwise may be, but then the result is more environmentally benign...we don't HAVE to proceed at break-neck speed, aimlessly in undefined directions, if we do not wish to. The Amish have a point, even if it is a somewhat arbitrary slice through the spectrum of possibilities for the evolving "human condition".

Of course, environmental discipline "here" may not be matched by similar restraints over "there" (Kyoto), and therein lies the risk of a human grouping (call it a "nation state") falling "behind" or surging "ahead" and becoming either a casualty or an overlord as collective human nature manifests itself in all its gory glory...

And then there is the unrelenting growth in human population, all becoming better connected via the internet, travel, etc, and all wanting their "little pot of gold", so to speak. Cattle men talk of "over-stocking" and "over-grazing" with no qualms, but talk of "too many people on the Earth" arouses all sorts of phobias. Not surprisingly, perhaps, as few people wish to offer their seat to their least not voluntarily, before they "naturally" reach the end of the line.

So many variables, so many unknowns and so many possible outcomes! Undoubtedly it will be misery for some and jubilation for others...only the proportions remain to be determined...

Take care, Sir melda laura...


Druid7-11 SHOWS CITGO THE DOOR#14828910/8/06; 07:34:12


"Could it be that a major distributor of gasoline in the United States is willing to stand up and take notice of the recent "rant" at the United Nations by Venezuelan President Hugo Chávez and take some action? 7-Eleven made the announcement that it would end its 20-year relationship with CITGO, and then it went one step further. 7-Eleven-branded gasoline will be the company's new offering, supplied by three U.S. companies with primarily American reserves. What this means to the consumer is that a previously unidentifiable product, gasoline, can now be traced to its origin. It seems if you want to send a message to Venezuela, support corporate America's stand and buy American, you will support 7-Eleven.

Insisting the change was "unrelated" to Chávez's increasing bombast toward the United States, 7-Eleven announced that CITGO – the American subsidiary of Venezuela's national oil company, PDVSA – will no longer supply gasoline to its 2,100 convenience-store outlets. Still, 7-Eleven used the opportunity to promote patriotism: "We sympathize with many Americans’ concern over derogatory comments about our country and its leadership," the company said in a prepared statement. Honestly, with the American people still smarting from the comments of the Venezuelan president, this could not come at a better time. Americans will put up with just so much rhetoric, and even Democrats came out in opposition to Chávez's statements.

Others have made this move as well. Corpus Christi-based Susser Petroleum, for example, has switched gasoline suppliers from CITGO Petroleum Corp. to Valero Energy Corp., a move that reflects Valero's desire to spread its brand name and CITGO's intent to back away from independent retailers. Valero will provide gasoline to more than 300 of Susser's 324 convenience stores. The 11-year agreement with Valero makes it the number-one retail marketer in Texas, according to Lundberg Survey Inc., an independent market research company focusing on the domestic petroleum market. Susser is the largest gasoline retailer in Texas, and San Antonio-based Valero, which announced the agreement Thursday, is the nation's largest refiner.

However, 7-Eleven is by far the highest-profile company, and one cannot miss the symbolism of 7-Eleven taking a stand against the man and the country that have offended the honor of the United States. Never mind that 7-Eleven is Japanese owned; then again, the Japanese do understand honor and saving face. In addition, the deal makes good business sense for the company, and the creation of 7-Eleven-branded gasoline has been in discussion for some time.

CITGO had already announced major cutbacks here in the United States, claiming that supplying independent stores with CITGO-branded gasoline was bad business. These announcements came mid-July and included Texas, Oklahoma, Denver and other areas not directly serviced by a CITGO refinery.

Those cuts had included some 7-Eleven stores but certainly not all of them. The Dallas-based retail giant told the media that the move to end its 20-year relationship with CITGO had been in the works long before the Venezuelan president called U.S. President George W. Bush an alcoholic and the devil. However, for some time now, Chávez has repeatedly called on the global community not to cater to the United States, and rumors of PDVSA possibly selling CITGO began mid-year of 2005. Consistently, Chávez has been getting noisier.

Retailers of CITGO-branded gasoline likely made their decisions some time ago, but most have remained quiet, perhaps waiting for some leadership they could follow. In August Tim Rogers, president of Tower Energy group, one of the three gasoline suppliers to 7-Eleven, noted that several CITGO dealers in the Midwest and Southeast told the Oil Price Information Service that they blamed Chávez's constant jabs at America and his friendliness with Cuba's Fidel Castro and Iranian President Mahmoud Ahmadinejad for a recent 15 to 25 percent drop in gasoline sales. At the corporate level, 7-Eleven admits that its affiliation with CITGO was becoming "uncomfortable.""

Druid: An excellent article. Trade wars are on the way.

DruidIran, Beijing's key to the Middle East#14829010/8/06; 07:54:51


"Moreover, Iran joined the Shanghai Cooperation Organization as an observer; the organization is largely a Sino-Russian instrument for containing the US presence in Central Asia. Additionally, Central Asia represents an important concern for Iran in its security calculations, thus Tehran prefers the stronger role of China and Russia in the region to that of the United States.

Iran is emerging as a new regional power and it is playing a lead role in the Middle East's diplomatic balance. The recent crisis in Lebanon demonstrated that Iranian capabilities in influencing the regional dynamics are stronger than before. Moreover, in a period in which world energy markets highlight the increasing dependence of industrial powers on petroleum prices, Tehran has an important instrument of geopolitical pressure through its status as a major oil producer and its control of the Strait of Hormuz."

Druid: A tremendous amount of the Hand's posts have been about this and here is an excellent article representing some of his excellent contributions.

GoldiloxCitgo Article#14829110/8/06; 09:05:08


Thanks for the post. It certainly makes more sense than all the blowhards hollaring that 7-11 dumped Citgo because of Chavez' big mouth.

Even the FED "Open Mouth Committee" isn't powerful enough to trump the real business activity, so neither is Chavez' political posturing.

Chris PowellAs miners battle each other, Bolivia may seize inactive mines#14829210/8/06; 10:08:40;_ylt=AiBZLiyHyM7RK6MIBxsT3Uys0NUE;_ylu=X3oDMTA3bGI2aDNqBHNlYwM3NDk-

By Dan Keane
Associated Press
Sunday, October 8, 2006

Bolivia's president said Saturday the government should expropriate mines where private owners have not invested sufficiently, taking aim at the industry after clashes between rival bands of miners left at least 16 dead.

The violence began Thursday morning when the independent miners stormed the state-owned Huanuni mine, 180 miles south of La Paz, which holds Bolivia's richest tin deposits. They were demanding more access to the tin deposits. State-employed miners counterattacked to regain control and the groups exchanged gunshots and threw dynamite, killing at least 16 people and injuring at least 60.

On Friday, Bolivian President Evo Morales replaced his minister of mines and the head of the state mining company.

"Mining concessions where there has not been investment must return to the hands of the Bolivian government," Morales told Indian coca farmers in the central Chapare region on Saturday. He gave no further details about government plans for undeveloped mining concessions.

Morales nationalized the country's petroleum reserves on May 1, giving all foreign oil companies six months to negotiate new contracts that cede majority control of their Bolivian operations to the state or leave the country.

Hundreds of miners belonging to independent cooperatives and state-employed miners have fought each other with gunfire and dynamite over access to the Huanuni mine. Hostilities between the miners ended in a tentative truce Friday after the government sent 700 police to control the mountainside where the mine is located.

Presidential spokesman Alex Contreras said both sides agreed to allow humanitarian aid to enter the town of Huanuni.

"We're only in a truce to give our families a burial," said Roxana Mercado, a leader of the mining cooperatives. "We haven't stopped the fight. Now the government will say if it will have a solution."

Bolivian mines once produced more than 30 percent of the world's tin. But production came to almost a complete halt following a collapse of the world metal market in 1985, and national mining company Comibol slashed its work force by about 25,000.

mikalSunday news headline pickings#14829310/8/06; 13:10:11

Fed Officials Signal They're in No Hurry to Cut Interest Rates - Bloomberg (10/5/2006 4:27 PM)
Paulson Aims to Restore Treasury's Clout - AP (10/8/2006 8:29 AM)
A Fed Official Whose Concern Is Sharply Focused on Inflation - WSJ$ (10/6/2006 5:44 AM)
U.S. Falls From Top Spot in Global Competitive Rankings - INC (10/6/2006 5:10 AM)
Six OPEC States Agree to Cut 1 Million Barrels a Day - Bloomberg (10/8/2006 8:29 AM)
A Kink in Venture Capital's Gold Chain - NY Times (10/7/2006 7:05 AM)
Bundesbank boosts sentiment for gold market - FT (10/6/2006 5:39 AM)
Regulator Warns of Lending Risk in Property Sector - WSJ$ (10/6/2006 5:42 AM)
Banks' love affair with hedge funds - CNN/Money (10/5/2006 2:21 PM)
Foreign investors face tighter controls in China - AFP (10/8/2006 8:30 AM)
China's First-Half Current Account Surplus $91.6 Bln - Bloomberg (10/6/2006 5:16 AM)
German Orders Unexpectedly Surge on Overseas, Domestic Demand - Bloomberg (10/6/2006 5:15 AM)
Trichet signals another rise in rates before end of year - FT (10/5/2006 4:32 PM)
China Can't Afford the Risk of Turning Japanese - Pesek, Bloomberg (10/6/2006 5:18 AM)

mikalInvestment triad aims to lure investment capital#14829410/8/06; 13:53:31

Japan, China Agree to Investment Pact Talks | MarketWatch
Last Update: 1:49 PM ET Oct 8, 2006
SAN FRANCISCO (MarketWatch) -- Japanese Prime Minister Shinzo Abe and his Chinese counterpart, Wen Jiabao, agreed in talks Sunday to pursue talks involving their countries and South Korea toward an investment agreement banning discriminatory and unfair practices regarding foreign firms, according to a published report.
A story in the Monday edition of the Nihon Keizai Shimbun reported Wen said he would promote efforts for discussions toward an investment agreement.
Japan, China and South Korea had reached an agreement almost two years ago to elevate talks to the government level, but the talks had stalled until this weekend's discussions.
The three nations are expected to form a consensus at the upcoming Asia-Pacific Economic Cooperation forum of foreign ministers next month to begin talks in earnest, according to the Nikkei report..
Once the negotiations resume, Japan and South Korea are likely to urge that the investment pact include guarantees that foreign companies be allowed to operate under the same conditions as local ones, the Nikkei said."

An interesting development. Their global ambitions such as this and regional ambitions (such as SCO)
could compliment one another if efforts are successful. The timing may take advantage a need for outlets for global investment and capital returns missing elsewhere.
Many corporations and large multinationals are already competitively poised to enter sheltered and subsidized industries and services in Asia and wherever else barriers are eased.
Gold is also positioned to do the same in banking and the financial sector, to enter competitively, efficiently and definitively.

USAGOLD / Centennial Precious Metals, Inc.The Alchemist's Paradise... turn paper and plastic into gold!#14829510/8/06; 16:41:13

shop for gold coins
TownCrierImpure gold rampantly in use, says Assocham#14829610/8/06; 18:33:14

New Delhi October 09, 2006 -- The impurity levels in gold jewelleries sold in major Indian cities are very high, ranging between 13.44 per cent to 44.66 per cent, according to a report released by Industry chamber Assocham.

"The Indian consumer is very often faced with the problem of irregular metal quality. A buyer, for instance, who has bought gold of 22 carats, finds out that it is actually only of 18 carats or less when he goes to sell or exchange it," the report states.

The chamber has putforward the need for hallmarking of gold jewellery to protect consumers and has written to the Ministry of Commerce and Industry, Consumer Affairs and Department of Company Affairs to set up over 50 hallmarking centers throughout the country to curb the sale of impure gold.

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

Seems that the naive Indians are being shorted -- not getting the full amount of physical gold that they are truly paying for.

Imagine the extra pull on the physical market if, indeed, honest business practices routinely gave them the full compensation due.

Ironically, in as much as it is easy for a casual observer to sense that the Indians are being cheated by 13-44 percent (thus offering slight relief to pressures in the physical market), to the same observer it is impossibly difficult to understand how the ploy of paper gold (the spectrum of gold derivatives, unallocated accounts, ETFs, etc) is shorting its naive participants in the rest of the western world by 100% (and thus circumventing the realities of the physical market nearly in total).

Donkeys will fly long before the casual western participant "gets it".

So, do not feel overly distressed for the heedless Indians, for even when cheated at levels of 13-44%, they come out far ahead of the typical westerner who is cheated in full.


Goldilox"Naive Indians"#14829710/8/06; 19:24:26

Is it naive to be cheated in the marketplace or just being victimized?

Unless a customer carries specific gravity testing equipment to every purchase, he is vulnerable. The question is whether they have legal recourse or the Indian government quietly "supports" the theft with inaction.

Not much different than the US government "quietly" supporting gold price suppression, even participating in it through PPT proxies.

Of course, no gold theft is likely to match the level of Roosevelt's "confiscation" and subsequent revaluation after the gold was "safely" in government hands.

The Invisible HandEU to remain dwrarf forever#14829810/8/06; 20:17:20,1518,441107,00.html

SCO to be world's new first power

The Trans-European Waltz
By Uwe Klußmann, Christian Neef and Matthias Schepp
Irritated with the United States, Russian President Vladimir Putin is turning his attention to Germany. But during a planned visit to Germany next week, Putin may discuss proposals with Angela Merkel that she is likely to reject -- including the idea of a European-Russian free trade zone.


No free-trade zone Russia-EU and the EU is kloser to the values of the US of A than to those of Russia.

Translation into common language: the EU kontinues to support the dollar-International Financial and Monetary System (IFMS) instead walking on its own feet and conducting its own policy.

EU kontinues to need big brother, Uncle Sam.

As everybody knows, Europe would be Nazi if there had been no Unkle Sam. Under this viewpoint, it is not surprising that it is precisely a German politician, whose name unfortunately is very similar to mine, who opposes a Russian alliance.

But wait a moment, who were the allies in WW II who, after the war, divided Europe among them?

TIH, stop talking WW II, we're now WW III!

TownCrierHEADLINE: Central Europe cannot afford to delay the euro#14830010/8/06; 21:18:16

(FT) October 8 2006 -- We all had a good laugh at the admission by Ferenc Gyurcsány, the Hungarian prime minister, that he lied morning, noon and night. But it is worth stepping back to look at the story behind the lies, and beyond Hungary. The 10 accession countries enjoyed seemingly miraculous economic runs through the 1990s, which ended at around the time of European Union accession, in 2004. Growth rates are still good and in some cases impressive. However, several of the states are growing at the expense of stability.

According to Lars Christensen of Danske Bank, Hungary's budget deficit will reach 11.3 per cent of gross domestic product this year. Poland is forecast to do better, with 5.4 per cent GDP growth and a budget deficit of 3?per cent. But he says it faces political risks that could eventually translate into economic instability...

The primary reason, in my view, for the stalling central European economic engine has been the reluctance by several governments – including Hungary and Poland and recently the Czech Republic – to embrace monetary union as quickly as possible...

Those that prevaricated may have thought they needed more time for transition. There are indeed some sound economic reasons why countries in transition should not prematurely fix their exchange rates.

However, this should have been an argument against joining the EU, not against delaying membership of the eurozone. Under EU law, the new entrants were legally bound to run their economic policy compatibly with membership of the eurozone.

Central European countries should have followed the example of Italy and Spain in the 1990s. Both countries made adoption of the euro their top priority. While the euro did not solve Italy's structural problems, it certainly led to substantial budgetary reforms that otherwise would not have taken place. Italy may find life inside the eurozone unbearable, but life outside would be far worse.

Hungary could have set itself a firm target for euro membership, say January 1 2009. The Hungarian government would have found it easier to implement responsible fiscal policies under those circumstances and financial markets would have been less inclined to question Hungary's commitment to a stable exchange rate. Poland has benefited from an implicit assumption by investors that it will eventually enter the euro. But this goodwill may be withdrawn in due course, when investors realise that the zloty is there to stay for much longer...

The UK, Sweden and Denmark all did well outside the eurozone. Why should Poland and Hungary be different? The difference is that British mortgages are predominantly denominated in sterling, not euros. Nor do the UK, Sweden and Denmark face an acute current account crisis, run budget deficits of 10 per cent of GDP or have governments that openly flout EU law. When the global financial markets start to panic – and we got a hint of this in May – my prediction is that the UK will be fine, but Hungary will suffer. Big uncertainties lie ahead for Poland. The fundamental lie of central European politics is that there is a good life outside the eurozone, but inside the EU.

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

It's the rare article that discribes the Italian picture without the tint of contra-euro goggles. In fact, sometimes the anti-euro sentiment seen in some articles runs so deeply irrational that it surely is only through miraculous self-restraint that they don't go the extra step to advise dollarization as the preferred alternative to the euro or, God forbid, to the status quo.

Getting back to appearances to the casual observer, it is impossibly difficult for them to understand that at the end of the day it isn't really about the euro currency, per se. It is about the BOOKKEEPING SYSTEM which has been adopted by the participants in the eurosystem. This system can be (and IS BEING) adopted by any given country located anywhere in the world REGARDLESS of eurosystem membership.

The simple key centers around MTM gold reserves (among other assets) which are denominated in the same currency unit as is used for denominating the domestic liabilities. In other words, MTM is all about recognizing the true meaning of balance (stability) and reckoning the domestic value of international assets against the international value of domestic liabilities -- pricing each in the local currency.

From this position, the unmatchable utility of gold will be keenly perceived, and official sanctions of the commercial paperization of gold will be dialed back -- if not completely abandoned. Consistent with this, an important component of each of the European Central Bank Gold Agreements addressed this point specifically. And very likely it was this self-imposed curb on leasing that caused the BOE to balk in 2004 on continued participation for the second 5-year term of the Agreement -- perceiving it to be a hinderance to potential operational support for the upcoming launch of the StreetTRACKS gold ETF -- a product for the New York Stock Exchange with its allocations of gold, curiously, to be gathered in London.

'Tis not too hard to find the consistencies and curiosities, the forces aligning for change for better systemic balance/stability, and those applying the breaks to the pace of this change.

(Congratulations, if you are still reading this, count yourself among the good company of six people in all the world.)


ArmageddonTHE KOREAN NUKE GOES OFF - GOLD and GOLD MINERS DOWN TOMMORRORW!#14830110/8/06; 21:19:45

Well, the North Korean nuke just went off and I predict gold opens stable to down in the American market and gold mining stocks will be down because of margin calls and a general stock market fall. Paulson will be working overtime this week to keep gold down stocks up and the dollar stable. :)
TownCrierTo: The Invisible Hand#14830210/8/06; 21:44:48

RE: The (now) invisible post -- msg#: 148299

Language is a notoriously nettlesome utility. Two words can mean the very same thing, and yet while one may be acceptible for use in polite conversation, the other makes the women faint as the gentlemen hasten to cover the ears of the children and cast disapproving looks upon the offender.

An easy example, available in any language, is the spectrum of choices (ranging from tame to profane) for terms available for naming the eventual by-products of the dog's breakfast.

Unfortunately, the user of second, third, fourth or fifth languages can be vexed when deciphering the location of the customary line among the native population between the terms acceptible and the terms not.

Bottom line: to prevent riots among the native-English world, and to preserve your reputation as a gentleman scholar, I had to invisiblize the referenced post.


GoldiloxBanks dump extra 100 tonnes of gold#14830310/8/06; 21:47:44


Australian Central banks may have dumped far more gold on the markets in the past three weeks than officially reported, accounting for a sudden plunge in prices that has stunned investors.

Barclays Capital said Europe's banks had sold an extra 100 tonnes of bullion from reserves in a rush to meet a quota deadline on September 26 but had done so by selling through forward contracts that disguised the effect.

"We have been able to infer this from trading patterns," said Costanza Jacazio, the bank's gold expert. "It has had a major impact on the markets. We suspect that the Banque de France has been involved."

The huge sales would help explain gold's brutal fall from $US640 per troy ounce in early September to $US559 this week, an effect compounded in recent days by hedge fund liquidation. It was up slightly on Thursday at $US569.75 in New York trading and was $US571.30 in Sydney on Friday.
Gold typically rallies in September in the build-up to the Indian marriage season.

While gold has undoubtedly been hit by the broader fears of a commodity slump, base metals have held up much better.


Another "culprit" story

melda laureKing Canute's comeuppance#14830410/8/06; 21:53:00

If the first vendor cheated, why should we assume the next buyer is telling the truth also? Maybe it is 18ct maybe it is really 22ct and the dealer is trying to pay less than the piece is worth.

Speaking of being on the receiving end, Mr TIH, such language! ;-) Well we've all been guilty of missile metaphor at one time or another. The pull out of citgo is disturbing, one wonders what percent of PDVSA output is represented? Our one consolation is this Iran negotiation phase has lasted so long that perhaps there is a real balance of terror that is cause for hope of some gentlemens solution. We will see. Iraq was largely a paper exercise: paper oil, paper dollars. Iran poses real supply problems that will not be easily papered.

Yes sir sundeck, it smacks of racism. Genocide has many flavors. But stealing and slavery go way back, if I recall, the actual creation of man was an issue of some significant differences of opinion. But I will save those fairy tales for later, enough political theory.

Nigeria and Venezuela announced production cuts recently, and OPEC generally provided moral support to the new members. Yet, oil prices have retreated since the announcement, suggesting that the market does not believe that OPEC can hold to its promise of production cuts at this time.

I find this amusing. Do these analysts not believe that perhaps peak oil is casting all the votes at OPEC meetings? Does Saudi have a choice? OPEC gets no respect?! It seems that geology gets no respect... How does the citgo revelations mesh with Venezuela's OPEC actions? And isn't it convenient (for a geology-limited Oil Field infrastructure) that a recession among the gas guzzling first world is in the works?

Just some thoughts... Probably wrong ones. Perhaps the indian summer in gold prices will last a lot longer than at first expected.

TownCrierGoldilox, that story has already gotten more than its due share of play#14830510/8/06; 21:59:04

One of the reasons it's been important for the gold-supression clique to impress upon us the idea of 100 tonnes coming into the physical pipeline is because it has a slightly better chance of prolonging a price downdraft than would the metal-free alternative recognizing that the recent downdraft was merely a paper phenomenon.


melda laure(No Subject)#14830610/8/06; 22:00:08

Poor Kim Jong Il. His only hope of being respected is to announce a major oil field discovery underneath Pyongyang.
GoldiloxGold Sales Culprit Story#14830710/8/06; 22:58:17


I thought my comment about it being another "culprit story" expressed my disbelief rather obviously, but perhaps not.

TownCrierI grasped the "culprit" bit well enough#14830810/8/06; 23:10:32

The element I was trying to address, basically, was that the soup of this particular article was made from old bones of earlier soup.

In other words, it isn't ANOTHER culprit story but rather a boiled down version of the SAME old culprit story that has already been served to us (with varying headlines) in the bowls of no less than two other media cafes in the past week.

This being a very small point that has already overplayed its significance. Sorry for commenting and adding unnecessarily to the confusion.


GoldiloxNorth Korea Nuke Story#14830910/8/06; 23:21:26

FOX reporters just suggested that the greater fear is not North Korea detonating a nuclear device, but perhaps selling it to an even more "rogue" power, due to their desperate financial condition.

If that is so, why did Rumsfeld and his Swiss partners sell nuclear technology to North Korea in the first place? Were they financially "desperate", as well?

If the Noth Korean actions are "unpardonable", as the Japanese suggest, then where does the act of supplying them fit in?

My suspicion is that it fits somewhere in the same category as supplying Saddam with the helicopters and chemicals to gas the Kurds and Shiite revolutionaries who were trying to do what the US forces had to go in to do TWICE!

Maybe it's time to "Impose Sanctions" on the highly profitable arms and nuclear business that originates this madness!

GoldiloxPoG reaction#14831010/8/06; 23:29:42

@ melda laure,

It took a few hours, but the Access Market is starting to show some more volatility in reaction to the international news.

melda laureDont drink the root beer.#14831110/9/06; 00:11:37

Gets weirder and weirder. First the spinach, now the iftar blue plate special.

Too bad the bond market is closed tommorrow. Looks like gold is bouncing. My guess is this NK incident pulls the debate away from the Foley Circus for a day or two. All to no end as Pyongyang hasn't got enough oil to be worth stealing. Nor is a USN naval blockade likely in the near future as US/China relations are hardly cozy at present.

Well if gold rises dramatically here, the market pundits have a good cover story. We aren't likely to find the culprits, but any scapegoat will do, the less rational, the better.

TownCrierGold price spikes on NKorea nuclear test, eases on China reaction#14831210/9/06; 01:01:42

SYDNEY (XFN-ASIA) -- Gold prices spiked immediately after North Korea was reported to have carried out a nuclear test but eased after China condemned the test, dealers said

They said the price jumped more than 1 pct in Asian trading but volumes were relatively light because of a public holiday in Japan and with the US market closed tonight.

Dealers said the absence of Japanese speculators meant the market lacked liquidity while gains were capped by German selling.

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

"...gains were capped by German selling..." ? ? ? !

Well, I guess it's all been said -- each side of every issue. The upside is that the reader is thus without firm direction, having instead freedom to choose from an assortment of tales to seize upon those that give support to whatever be their preferred course of action.

CONFER the Financial Times story...
HEADLINE: Bundesbank boosts sentiment for gold market
Published: October 5 2006 --

"Germany's Bundesbank said on Thursday that it does not plan to sell any gold from its reserves for a third year..."


TownCrierBank builds reserves, despite weaker rand#14831310/9/06; 01:48:35

SOUTH AFRICA 09 October 2006 -- Gross reserves were up 1,2% last month, indicating that the Reserve Bank continued to accumulate reserves at a steady pace, despite a weaker rand and soft gold prices in the month.

Data released by the Bank on Friday show that gross reserves rose to $24,7bn at the end of last month, up from $24,4bn in August — an increase of $209m.

The Bank said the increase in gross reserves reflected a combination of valuation adjustments and foreign exchange operations for the Bank's own account and on behalf of customers.

The rand's weakness means that reserves accumulation will occur at a slower pace over the coming months, analysts said on Friday.

Net reserves, or the international liquidity position, increased to $21,2bn, from $20,9bn. These are gross reserves less the value of any foreign loans used to build up reserves.

The weaker rand pushed rand-denominated reserves higher, to R191,2bn, from R174bn.

...The rand weakened substantially last month, by about 9%, while the gold price was down on a recovering dollar and a decline in oil prices.

...The average gold price was lower last month, at $601,40/oz, compared with $626,35/oz in August. This meant that the value of dollar denominated gold reserves declined to $2,4bn, from $2,49bn.

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

This should serve as a real-world example of a work-in-progress to take in conjunction with yesterday's msg 148300. Within South Africa, gold ought be considered in terms of rand, not $'s. If you've followed along, you'll see where measurement in the domestic currency unit would in this case help mitigate exposure of those "not-yet-neutral" gold reserves to tumults associated with the dollar- and derivative-centric status quo. You'll also see distinctly that the CB, utilizing MTM accounting, gains a primary disincentive to provide any long-term structural support to the price-suppressive market regime of gold derivatives.

The workout process between the old and the new opposing forces, however, may result in short-term low price opportunities that ought not to be fearfully mistaken for anything of permanence.


TopazThe story moulded to fit the Crime?#14831410/9/06; 02:22:08

USGS reportedly had no seismic indication of the NK test ...then voila! ...a 4.2mag trembler shows up.
If people choose to wait until they're informed by the media as to what's going on, they deserve precisely what they get!

TownCrierAmerican Edmund S. Phelps wins the Nobel Prize in Economic Sciences 2006#14831510/9/06; 08:48:57

Oct 9, 2006 -- The Royal Swedish Academy of Sciences has awarded the Nobel Prize in Economic Sciences 2006 to American Edmund S. Phelps (b. 1933), a professor at New York's Columbia University, "for his analysis of intertemporal tradeoffs in macroeconomic policy."

...The RSAS said that the work of Edmund Phelps has deepened our understanding of the relation between short-run and long-run effects of economic policy. His contributions have had a decisive impact on economic research as well as policy.

Low unemployment and low inflation are central goals of stabilization policy. During the 1950s and 1960s the view of a stable tradeoff between inflation and unemployment was established, the so-called Phillips curve. According to this, the price for reduced unemployment was a one-time increase of the inflation rate.

Phelps challenged this view through a more fundamental analysis of the determination of wages and prices, taking into account problems of information in the economy. Individual agents have incomplete knowledge about the actions of others and must base their decisions on expectations.

Phelps formulated the hypothesis of the expectations-augmented Phillips curve, according to which inflation depends on both unemployment and inflation expectations.

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

Respectfully, this stuff of Nobel Prizes seems of small potatoes against the rich entree represented by the groundbreaking which has been done by the fathers of the MTM freegold reserve paradigm now in its infancy.

Maybe in 20 years this Royal Swedish Academy will finally offer to you the name attached to FOA...???


melda laurethings that go bump in the night.#14831610/9/06; 09:26:33

@ Topaz.

Event: 2006/10/09 01:35:27.0
Description: NORTH KOREA Source: SPYDER®

Welcome, Seismic Monitor user!

Click on the station names below to view seismograms.
Attn WILBER users: dataset requests can be made here.

More to the point, where are all the reporting stations? Apparently we have an earthquake with no reported seismograms (as of this moment). I'm sure there's a simple explanantion. But your point is well taken.

SmeagolDisasters and other important events#14831710/9/06; 11:00:47

sss... we wonders who keeps THIS thing updated!


mikalGold's tremendous trend#14831810/9/06; 12:09:23

Gold Investors Benefit From Long Term View | FMNN | Staff Reports | Oct 9
USAGOLD / Centennial Precious Metals, Inc.Step into the Alchemist's Paradise... where it's easy to turn paper and plastic into gold!#14831910/9/06; 12:34:12

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mikalRecognizing recession after the fact ?#14832010/9/06; 12:50:29,0,3010932.story?coll=chi-business-hed

Risks of Recession Continuing to Rise
Economy is slowing, showing warning flags | Will Deener | Dallas Morning News | October 9, 2006 | Excerpt: "The worry here is that a housing decline will have a disproportionate impact on the American consumer," said Gordon B. Fowler, chief investment officer at Glenmede Trust Co., a Philadelphia money management firm.
"Prices went up so much in recent years that now as they come down, it could have a recessionary impact."
Another warning sign is that new-car sales are down about 5 percent from a year ago. This has happened six times over the past 40 years, and in every instance the economy was either lapsing into recession or already in recession.
Perhaps even more troubling is the so-called inversion of the bond yield curve."
Average investors might not understand this issue because it is a bit technical, but market pros place a lot of significance on the difference between short- and long-term U.S. Treasury yields.
Generally, investors demand a higher interest rate yield on, say, a 10-year U.S. Treasury bond than on the shorter-term bonds, to compensate for the risk of higher inflation and interest rates later.
However, in recent months the yields have inverted. The 10-year Treasury note ended the quarter with a yield of 4.63 percent, with the 2-year note slightly higher with a yield of 4.68 percent.
A recession has followed seven out of the last eight times that the yield curve has inverted.
This is not simply coincidence, Stack said.
An inverted yield curve takes away the incentive for banks to make loans. For example, if a bank is paying 5 percent on a one-year certificate of deposit, it won't have much incentive to lend money long term at 5 percent or less. In other words, because the profit margin is too small for the risks involved, banks reduce lending, and that slows the economy.
The yield curve has been inverted since June.
Again, this does not mean that a recession is assured, but the historical evidence suggests that the risk is rising.
"The yield curve shows an 88 percent probability of a recession beginning sometime between now and the end of next year," Stack said.
Finally, investors should not make too much of the recent rally in the Dow Jones industrial average. Although the Dow set a record high close last week, the Russell 2000 index, the most-watched index of small-cap stocks, has dropped more than 10 percent since May.
In other words, the rally is narrow, not broad-based, and that's typically not a good thing.
"The rally in the Dow is masking subsurface weakness in the Russell 2000," Stack said. "More than a little disturbing is the deterioration in these smaller, secondary stocks."
Market pros like to see broad rallies as confirmation that the bull has stamina. Market and financial experts might differ in their opinions over the probability of a recession and bear market. However, most everyone agrees that the risks are rising."
Mikal - The economy can be measured in as many ways as "recession", "slowdown" and "soft landing" can be defined. But when investing in today's world, there is
more acknowledgement of growing risk. So much, that overlooking the big picture can make the difference between a poor standard of living and an excellent one.

mikalOpportunity knocks...or knocks you over#14832110/9/06; 13:28:56

Schultz Sees High Possibility of October Mischief
Monday October 9 | Peter Brimelow | MarketWatch
Commentary: Newsletter veteran sees high possibility of global mischief
NEW YORK (MarketWatch) - Snippits: "The long-established International Harry Schultz Letter is on a roll right now, ranked third performer over the past 12 months by the Hulbert Financial Digest with a gain of 31.9% vs. 10.4% for the dividend-reinvested Dow Jones Wilshire 5000.
But it's all gold and oil, right? Isn't that cycle over?"

Mikal: Shultz sees trouble in the equities. Very bullish on gold, and has many opinions on the month of October, including this:

"And beyond an October surprise? Schultz says we're "poised between dramatic inflation and shocking deflation (short term?), either of which can come suddenly ... unprecedented debt vs. record-breaking money creation makes the situation explosive, able to go either way almost overnight."
Gold may have one more leg down, he says calmly, but "regardless of a bumpy medium term, I see gold at $1,000 within 18 months."

USAGOLD Daily Market ReportPage Update!#14832210/9/06; 13:51:23">
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

October 9 (from DowJones) -- The combination of more short covering, stronger crude oil and North Korea's claim to have successfully detonated an atomic bomb all enabled gold futures to close higher on Monday, traders and analysts said.

The COMEX December gold contract rose $6 to $582.80.

One "obvious" supportive influence has been North Korea's claim of a nuclear-weapons test, drawing international condemnation, reported Dave Meger, senior metals analyst with Alaron Trading.

The metals have been bouncing since Comex gold hit lows of $563.50 and $564.50 last week, thus holding above the June 14 bottom of $557.10.

"When we made that dip below $570, it brought in some buyers and short covering after the recent sell-off," said Meger, citing a "firmer technical picture" that has evolved since.

He noted the currency market has been subdued, offering little guidance to the metals, due to the Columbus Day holiday.

"One thing you could point to as an outside impetus (supporting metals) would be the higher crude prices," said Meger.

As gold was closing, November crude had surged $1.24 to $61 a barrel.

---(see url for full news, 24-hr newswire)---

mikalBonds or gold?#14832310/9/06; 13:56:33'Open'%20Interest%20in%20US%20Bonds

An "Interesting" Picture of the US Bond Markets
Pinank Mehta | October 6, 2006 | Excerpt:

The points to note are:
The current Long "Open" Interest in 10-year US treasury bond is greater than SIX Standard Deviations (12 SIGMA)!!!!!!! (The odds of a 6-Sigma event are one in 500 million or 1.37 million years, so it will be exponentially higher for a 12 Sigma event.)
This level is unprecedented."

arbyhWhat is your post telling me?#14832410/9/06; 14:30:38

So what does that mean in layman's terms? I'm just a country boy with a degree. Only a minor in Econ, so you got to Keep It Simple Stupid for me.

arbyhsmells rotton in the bond market.#14832510/9/06; 14:53:12

With an inverted yield curve it seems really odd that the long position in the 10 year bond would be greater than the long posion in the 2 year bond. Smells like a manipulation rat to prop the dollar to me.
HenriCould this be the North Korean Nuke?#14832610/9/06; 15:39:35

This seismographic interpretation puts the source at "0" depth. Earlier this morning it was logged at 9 km. Media reports the test was to be conducted in an old mine at about 6000 ft depth. POG not even moving on the news.
GoldiloxSA gold production declining 5% annually#14832710/9/06; 19:11:52


JOHANNESBURG ( --South African gold production fell from 430 tonnes in 2000 to 295 tonnes in 2005 as lower grades of ore are mined and reserves are seen to be being depleted, and the country is soon likely to be overtaken as the world's largest producer of the yellow metal.

Production will see an annual decrease of 5% over the next few years as new projects will not succeed in replacing continued falling production at existing mines, says Alex Conradie, chief economist of gold and platinum group metals at the Department of Minerals and Energy.

The biggest recent drop in South African gold production took place from 2004 to 2005 when output fell by 12%.


With the magic of "compounding", SA can expect its production to drop to 77% of 2005 levels in 2010. Peak gold, anyone?

GoldiloxSebi may let banks act as gold ETF custodians#14832810/9/06; 19:14:59


The Securities and Exchange Board of India (Sebi) plans to allow only those banks holding licence to trade in gold to offer custodial services in gold for the proposed Gold Exchange Traded Funds (GETFs).

The list of banks eligible for such services will include ICICI Bank, Bank of Nova Scotia, State Bank of India, HDFC Bank and a few others.

Sebi is expected to change the custodians’ rules through an amendment to the Sebi Act to enable licensed banks to act as custodians in GETFs. The custodians would keep the bullion gold, the underlying asset in GETF, under safe custody.

GETFs will help small investors invest in gold-backed asset in a simple and cost-effective manner. The physically allocated bullion gold is stored and insured by banks that have the Reserve Bank of India (RBI) nod to deal in gold, sources said.

UTI Mutual Fund and Benchmark ETF, which have filed draft documents for launching GETFs in India, are awaiting the Sebi approval to launch their schemes.

Chairman of Association of Mutual Funds in India (Amfi) A P Kurien said banks which already deal in gold would be ideal candidates to act as custodians for GETFs in India.

"We expect Sebi to come out with an amendment in the custodial rules shortly," he said. Fund houses would be required to appoint only the Sebi-approved entities to act as custodians for their respective GETF schemes, Kurien said.


Once again, the FOX is charged with watching the hen house.

SundeckStatistics ill-applied#14833010/9/06; 20:07:21'Open'%20Interest%20in%20US%20Bonds

Ref mikal's #148323 and arbyh's query #148324

...a few comments, if I may...

The chart of net open interest in 10-year bonds (see link) may not be as alarming as the simple statistical interpretation suggests.

The problem lies in an invalid application of mathematical statistics to the sample of "net open interest" recordings going back from the present to 1993.

The crux of the problem is that the sample is not extracted from a population which is stable over time. That is, the variable being measured ("net open interest" in this case) is subject to systematic changes in the factors giving rise to its value, at a particular time, over the time-spread of the sample.

You can see this merely by looking at the chart. Break the chart into 3-year intervals: 1993-96, 1996-99, 1999-02, 2002-2005, 2005-08. The standard deviations determined from these separate intervals progressively increase.

Thus, if we take the present value of "net open interest" of about 500,000, it represents a much greater departure from the mean, in terms of the standard deviation determined from the 1993-96 data (probably about 100 s.d.), than it does if compared with the standard deviation determined from the interval 2002-05...and probably less again if compared with the current epoch (probably about 1.5 s.d.).

I suspect that the major problem that the authors have failed to adjust for is that the "net" open interest is determined from the difference between the total number of shorts and the total number of longs. The number of longs and shorts were most likely much, much less in 1993 than they are now, with the consequence that the difference (and the variability in the difference) is much greater now than in 1993.

To solve the problem, the authors need to normalise the distribution in some intelligent way. But even if they were to do that there may well be much more subtle variations in the underlying factors that determine the "net open interest" over the period from 1993 to the present that would invalidate any simple statistical treatment like the one shown here.

The upshot? Well, the current net open interest may not be unusual in the context of present circumstances...and certainly not as "unusual" as a 12-sigma event in a truly random sample from a stable population of measurements.

You have to be careful with statistics...


TownCrierSingapore Dollar May Rise; Central Bank Keeps Policy for Gains#14833110/9/06; 20:19:43

Oct. 10 (Bloomberg) -- Singapore's dollar may strengthen after the central bank reiterated its 2 1/2-year policy of seeking a stronger currency to combat inflation.

``The Singapore dollar has a lot of appeal and it certainly helps that the central bank actually wants to see it stronger,'' said Sean Callow, senior currency strategist at Westpac Banking Corp. in Singapore. ``The economy is still looking in good shape, and a stronger currency isn't going to scupper it.''

Singapore's central bank uses the value of the currency to control monetary conditions, instead of interest rates. It seeks to prevent its dollar from rising or falling outside an undisclosed band based on a basket of currencies of its biggest trading partners.

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

With such an accommodative mentality as this, I wouldn't think it shall be long before Singapore joins the league ot those who have adopted MTM gold reserve accounting.

Otherwise, the Monetary Authority will struggle with the value of foreign currency reserves dipping against Singapore's dollar.


mikalInvestors told to beware of "low volatility" and the carry trade#14833210/9/06; 20:36:22 Instant Returns | Buttonwood | | Oct 5
mikal@arbyh, Sundeck#14833310/9/06; 21:02:25

Thank you. Well said. It appears to me that the author,
by qualifying(restricting, conditioning) his statements thusly(from the link), is at least substantially in accord with you:

"Why I Could Be Wrong:
Notwithstanding the odds of a 6-sigma event, we have seen a level of 6-sigma three times in the past two years and there have been no major dislocations in the markets!
The market size has grown and the liquidity is very much higher with bigger and "sophisticated" participants. The game is probably just being escalated to a higher level.

Some of the defensive steps:
Unwind leverage in the portfolio
Get out of long-dated debt preferably into the highest quality / sovereign short-term debt. Do not hold paper you do not intend to hold to maturity.
Pare down exposure to aggressive equities.
Hold investments that you intend to hold for the long term (at least 2 years) only.
5.Temporarily move out of synthetic instruments (structured paper, hedge funds, OTC derivatives, Fund of Funds, etc)"

The author also issues many disclaimers at the bottom of the page including "not investment advice". I agree
with many, not all points of the analysis and recommendations. I hope others find some food for thought, if not action.

DruidThe Emerging Russian Giant Plays its Cards Strategically#14833410/9/06; 21:08:00

"The September 2006 summit in Paris between Russia's Vladimir Putin, French President Jacques Chirac and German Chancellor Angela Merkel, underscored the re-emerging of Russia as a major global power. The new Russia is gaining in influence through a series of strategic moves revolving around its geopolitical assets in energy—most notably its oil and natural gas. It's doing so by shrewdly taking advantage of the strategic follies and major political blunders of Washington. The new Russia also realizes that if it does not act decisively, it soon will be encircled and trumped by a military rival, USA. The battle, largely unspoken, is the highest stakes battle in world politics today. Iran and Syria are seen by Washington strategists as mere steps to this great Russian End Game.

The formal Paris summit agenda included French investment in Russia and the issue of Iran's (Russian-built) nuclear program. Notably, however, it also included the question of future Russian energy supplies to the European Union, notably, Germany. It was an indication of the new strength of Putin's Russia. Putin told the German Chancellor that Russia would ‘possibly’ redirect some of the future natural gas from its giant Shtokman field in the Barents Sea. The $20 billion project is due to come online 2010 and had been slated to provide liquified natural gas to United States terminals.

Since the devastating setbacks two years ago from the US-sponsored ‘color revolutions’ in Georgia, and then Ukraine, Russia has begun to play its strategic energy cards extremely carefully, from nuclear reactors in Iran to military sales to Venezuela and other Latin American states, to strategic market cooperation deals in natural gas with Algeria.

At the same time, the Bush Administration has dug itself deeper into a geopolitical morass, through a foreign policy agenda which has reckless disregard for its allies as well as its foes. That reckless policy has been associated with former Halliburton CEO, Dick Cheney, more than any other figure in Washington.

The ‘Cheney Presidency,’ which is what historians will no doubt dub the George W. Bush years, has been based on a clear strategy. It has often been misunderstood by critics who had overly focused on its most visible component, namely, Iraq, the Middle East and the strident war-hawks around the Vice President and his old crony, Defense Secretary Don Rumsfeld.

The ‘Cheney strategy’ has been a US foreign policy based on securing direct global energy control, control by the Big Four US or US-tied private oil giants-- ChevronTexaco or ExxonMobil, BP or Royal Dutch Shell. Above all, it has aimed at control of all the world's major oil regions, along with the major natural gas fields. That control has moved in tandem with a growing bid by the United States for total military primacy over the one potential threat to its global ambitions—Russia. Cheney is perhaps the ideal person to weave the US military and energy policies together into a coherent strategy of dominance. During the early 1990's under father Bush, Cheney was also Secretary of Defense.

The Cheney-Bush administration has been dominated by a coalition of interests between Big Oil and the top industries of the American military-industrial complex. These private corporate interests exercise their power through control of the government policy of the United States. An aggressive militaristic agenda has been essential to it. It is epitomized by Cheney's former company, Halliburton Inc., at one and the same time the world's largest energy and geophysical services company, and the world's largest constructor of military bases.

To comprehend the policy it's important to look at how Cheney, as Halliburton CEO, viewed the problem of future oil supply on the eve of his becoming Vice President.

‘Where the Prize Ultimately Lies’: Cheney's 1999 London speech

Back in September 1999, a full year before the US elections which made him the most powerful Vice President in history, Cheney gave a revealing speech before his oil industry peers at the London Institute of Petroleum.. In a global review of the outlook for Big Oil, Cheney made the following comment:

By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously controlling about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world‘s oil and the lowest cost, is still where the prize ultimately lies. Even though companies are anxious for greater access there, progress continues to be slow. It is true that technology, privatisation and the opening up of a number of countries have created many new opportunities in areas around the world for various oil companies, but looking back to the early 1990‘s, expectations were that significant amounts of the world‘s new resources would come from such areas as the former Soviet Union and from China. Of course that didn‘t turn out quite as expected. Instead it turned out to be deep water successes that yielded the bonanza of the 1990‘s.

The Cheney remarks are worth a careful reading. He posits a conservative rise in global demand for oil by the end of the present decade, i.e. in about 4 years. He estimates the world will need to find an added 50 million barrels of daily output. Total daily oil production at present hovers around the level of some 83 million barrels oil equivalent. This means that to avert catastrophic shortages and the resultant devastating impact on global economic growth, by Cheney's 1999 estimate, the world must find new oil production equal to more than 50% of the 1999 daily global output, and that, by about 2010. That is the equivalent of five new oil regions equal to today's Saudi Arabian size. That is a whopping amount of new oil.

Given that it can take up to seven years or more to bring a new major oilfield into full production, that's also not much time if a horrendous energy crunch and sky-high oil and gas prices are to be averted. Cheney's estimate was also based on an overly conservative estimate of future oil import demand in China and India, today the two fastest growing oil consumers on the planet.

A second notable point of Cheney's 1999 London comments was his remark that, ‘the Middle East with two thirds of the world‘s oil and the lowest cost, is still where the prize ultimately lies.’ However, as he revealingly remarked, the oil ‘prize’ of the Middle East was in national or government hands, not open to exploitation by the private market, and thus, hard for Cheney's Halliburton and his friends in ExxonMobil or Chevron or Shell or BP to get their hands on.

At that time, Iraq, with the second largest oil reserves after Saudi Arabia in the Middle East, was under the rule of Saddam Hussein. Iran, which has the world's second largest reserves of natural gas, in addition to its huge oil reserves, was ruled by a nationalist theocracy which was not open to US private company oil tenders. The Caspian Sea oil reserves were a subject of bitter geopolitical battle between Washington and Russia."

Druid: Tweaking the physical demand curve throughout the world by using physical supply. There appears to be a major collision course shaping up throughout the world between paper supply/demand and physical supply/demand of commodities. The concepts of scarcity colliding with infinity feeding into more uncertainty, take the mystery out of it, and call upon the good folks here at the castle so that you can have a fighting chance. Enjoy the read.

The Invisible HandGATA vs. Reality#14833510/9/06; 22:19:09


The ultimate bullish case for gold is none other than
the BEARISH CASE FOR FIAT MONEY, the dollar, and central banking,

and NOT on the fact that
CENTRAL BANKS have created what amounts to a LARGE NAKED SHORT POSITION in the gold market using paper derivatives

October 08, 2006
The Myth of the Gold Supply Deficit
by Robert Blumen
Analyses based on annual supply and demand of gold
appear on a daily basis, whether posted to gold web
sites or in the financial media, many of them by the
most respected analysts of gold mining shares. These
articles typically show an imbalance between supply
and demand, suggesting that there is a gold supply
deficit. From there, the conclusion follows that a
much higher gold price is required in order to bring
supply and demand into balance.
Does the non-existence of a supply shortage theory
make the case for gold weaker? I say no. At the
beginning of this article, I stated that there is a
bullish case for gold. If not the mythical shortage of
mined supply, then what is it?

Analysts including Frank Veneroso, Reginald Howe,
Robert Landis, John Embry, and others affiliated with
the GATA organization have shown in a series of
research reports published over the last five years
that central banks have created what amounts to a
large naked short position in the gold market using
paper derivatives. The accumulation of shorts without
any offsetting longs has been a negative for the gold
price, especially during the late 90s.

But the ultimate bullish case for gold is none other
than the bearish case for fiat money, the dollar, and
central banking. Gold is money and while central banks
have the ability to debase fiat money up to a point,
they are in the end limited by the acceptability of
their paper as money. The end game of the paper
monetary system is collapse and its replacement by the
natural monetary order of gold.


Here's a guy who reflects about the essence of the gold market.

On this market there is NO (never any) situation of supply and demand.

60,000 ton of the total 160,000 ton above ground gold is being priced in the way the dollar-International Financial and Monetary System (IFMS)judges it opportune to be priced.

Gold is totally different from all other commodities in that its valuation is 100 % politically driven,

No gold bug is aware of this.

She intuitively follows the gold price containment trends without knowing where those trends come from nor what is the use of the system.

The Invisible HandThe war of civilisations#14833610/9/06; 22:33:34

US of A has chosen "its" UN secretary-general
WW III can now start under UN auspices

Let's hope the SCO can prevent the war
(But were the tensions concerning new SCO applicants not similar to those before WW I?)>
What should Russia do in this situation, whereby an explosive mix of democratic and Islamic messianic beliefs, aggressiveness and appeasement is pushing the world toward a WAR OF CIVILIZATIONS?
[…] it should develop a cooperation and security structure as soon as possible for Central Asia and the Middle East jointly with countries that have not made gross mistakes and are respected worldwide. I am referring specifically to India and China. THE SHANGHAI COOPERATION ORGANIZATION CAN FILL IN THE VACUUM OF MISTRUST and insecurity, and prevent a war of civilizations.
According to Wayne Madsen, Ban Ki-moon, the South Korean diplomat pegged to replace the disgraced Kofi Annan at the lapdog United Nations, is a member of the Unification Church of GOP and Bush
Supporter Sun Myung Moon."
Putin Suggests Creation of Oil Exchange in St. Petersburg
Russian President Vladimir Putin suggested creation of oil and oil product exchange in St. Petersburg.
He made the suggestion on Saturday, Oct. 7, during his meeting with the governor of St. Petersburg Valentina Matvienko.


The dollar military oil complex and its puppet Ban Ki-moon do not want to hear about alternative sources of energy between private investors nor government could any longer make money (as if government could ever "make" money – yes "print", but "make"?)

All talk about peak-oil is bull excrement.

GOLD FINGERGold up as N.Korea test detonates atomic blast#14833710/10/06; 01:07:20

Gold up as N.Korea test detonates atomic blast
October 9 (from DowJones) -- The combination of more short covering, stronger crude oil and North Korea's claim to have successfully detonated an atomic bomb all enabled gold........

This was taken from the "Daily market" report on the front page!

Now, I ask all of you who question the political nature of gold and even talking about it......I say it's all mixed in. Gold reflects the good and the bad. Now remember if you can vote to get rid of the asses that seem bomb happy and put in someone who can really make a difference!!


TopazNukin Gold up? ..don't think so!#14833810/10/06; 01:50:17

We can see on the Chart that prior to the 0135hrs GMT detonation, Gold had advanced and had flatspotted for an hour after the blast ...then it put on a couple of Bucks before retreating a couple of hr's later.
There might have been a bit of "buying the story, selling the fact" here but the nett effect was zilch.

Gold will have it's hands full in the coming weeks imo as UST's once again resume their assault on Zero Nett Yield.

mikalHedge funds: a microcosm of financial services inflexibility#14833910/10/06; 09:36:42,,1891532,00.html

Alarm grows over 'wild west' traders who can blow $5bn in a week | David Teather | Guardian Unlimited | Oct 10
GoldiloxThe "Other" New Orleans#14834010/10/06; 10:38:35


I'm sure if you have been watching TV lately (especially MNF, who hosted the $400M scam by the ex-presidents gang), you've seen the carefully crafted stories about New Orleans and how people there are slowly getting things back to "normal" after last year's disasters. Well, that's the image. Now some gritty reality. Last night a National Guard soldier on patrol in the Big Easy shot and killed a man. Th

Because UrbanSurvival readers are everywhere, we often get emails from readers with relatives in strange places which give us a much different take on events than the MSM talks about. For example:
"Hi George,

Here's what a friend saw when she had to attend a conference in New Orleans:

My niece, Jamie, had to attend a seminar last week that was held in New Orleans. She really didn't want to go but I think good came from it. For one thing, she saw what the media is not discussing. I don't really believe New Orleans will recover from this. I know Houston is is trouble now from the increased crime and it is probable that Houston will soon be a very good place to escape from.

This is her account:

New Orleans is filthy. Definitely divided by the have's and have-not's and most of them are the haven't. I saw the future of America depicted as a third world war zone. There are hundreds living on the streets. The despair in their eyes is heart wrenching.

They immediately tell you to not drink the water - even though we did have to shower in it.

I had a moment where I found myself surrounded by a small group of people and we all just '"connected". I went to high school with one of them. What are the odds on that? One of them and her daughter brought supplies for a community church. The church had had no drinking water for two days. She brought cases. They asked "How did she know?" I shouted, "God directed you to them" and there were smiles all around.

The girls (Regina and Mary) and I did walk-abouts. There is still a national guard and state police presence. I don't think people know how to get out of there - and I know they do not have the funds. At night, there are constant sirens going off - police and EMS. Not many visitors there and the shops are empty.

Not what the media portrays at all, is it?

No, not by a long shot - which is why we offer it as a "reality check" here.

mikalGold bull scents inflation#14834110/10/06; 11:26:04

Gold Prices May Surpass Record High on Weaker Dollar |
By Debarati Roy | Oct. 10 (Bloomberg) -Excerpts: "Gold prices may surpass record-high levels next year as the dollar weakens and economic expansion in China and India spurs demand for jewelry, according to Baker Steel Capital Managers in London."

"Steel isn't alone in forecasting that gold prices may cross its all-time high. Citigroup, the world's biggest financial services company, on Oct. 2 said bullion may test the record. GFMS Ltd., a London-based metals researcher, said April 12 prices may even exceed the all-time high.
Jim Rogers, the former George Soros partner who foresaw the start of the commodity rally in 1999, predicted in April gold would soar to $1,000 an ounce."

mikalThe bane of limitless borrowing#14834210/10/06; 12:14:21

Credit is Suspicion Asleep | Guest Commentary, by Bob Hoye | October 10, 2006
Excerpt: "This old saying sums it up. One day there seems to be endless liquidity and the next day none. Of course, the transition involves more than one day and it is usually accomplished as, one by one, various traders discover a sudden loss of liquidity whereby the bids for the hot games disappear, as does the credit needed to carry a losing position.
The key to the transition has been simple - prices stop going up. More elaborate explanations have been provided by von Mises, who roughly observed that for a boom to peak the commercial banks don't need to call the loans, they just have to become a little concerned and stop making them.
The "Dearth Of Credit" by von Mises follows this article."

GoldiloxSam Adams, age 4, winds up on no-fly list#14834310/10/06; 14:32:06

Not surprising.

Sam Adams' family has a history of opposing tyranny that goes "way back".

GoldenRooOne Dirty Bomb away from Tyranny#14834410/10/06; 15:17:48

A close friend of mine last year spoke to a confidant of US Senators who have told him that once a dirty bomb explodes in the US - goodbye Constitution. "Its only a piece of paper anyway." In comes Military Govt (Oxymoron). Personal freedoms goodbye. Gold only afforded by the very rich. Get some now.

In ten or 15 years you'll not be able to buy it. I can see a day when the rich live on boats with their gold to avoid the anarchy of life on the land. Throw in peak oil, global warming, natural disasters every week and you have a mad max world where poverty is wide spread. For a few Thousand dollars in gold now you can protect your family.

(I'm just an average bloke I dont sell gold for a living)

mikal"Global solution" for hedge fund risk?#14834510/10/06; 15:22:13;_ylt=Auuo3R6vwyPSdBUSXP3wynT2ULEF;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--

ECB President Stresses Risk of Hedge Funds By Ralph Atkins in Frankfurt - Financial Times - 10/10/06 -- Excerpt:
"Jean-Claude Trichet, president of the European Central Bank, hinted strongly last night that he would prefer tougher regulation of hedge funds but said any measures would have to represent "a global solution".
The Frankfurt-based ECB has gone further than other global institutions in stressing the risks of hedge funds and expressing concern about herd instincts and the lack of transparency in the sector.
Financial authorities in general were not "fully satistified" with a regulatory system that relied heavily on supervised banks monitoring the activities of hedge funds, Mr Trichet told the European Parliament.
There were a variety of options that could be taken to increase the transparency of the industry but he believed that a "world wide consensus" was within reach on what might be feasible."

USAGOLD Daily Market ReportPage Update!#14834610/10/06; 17:23:28">
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.

TUESDAY Market Excerpts

October 10 (from Reuters) -- U.S. gold futures prices finished with moderate losses on Tuesday, falling throughout the session with crude oil prices, as speculators cast off long positions, traders said.

In addition to falling crude oil prices, traders said gold and was being pressured by a stronger dollar versus the euro and the yen.

"So you have dollar strength and oil weakness and those two combined are not a good mix for gold right now," said Michael Guido, Societe Generale director of hedge fund marketing.

COMEX December gold futures finished down $6.60 at $576.20. The range spanned $573.0 to $585.50.

The dollar rose broadly for the sixth consecutive session and hit a 2006 peak against the yen, boosted by the view that the U.S. economy may not be as weak as initially thought.

Meanwhile, U.S. crude oil futures fell sharply on Tuesday, as oil markets waited for OPEC to hammer out a formal decision on plans to cut crude oil production in an effort to try to put support under recent falling prices, sources said.

"The gold market is following almost tick for tick the oil market. And what's happening here is that gold has been sold off pretty aggressively since late summer. A lot of length has been washed out of the market and with that a lot of confidence from the spec community," said Guido. He added that a lot of fund traders have not been gold buyers since early September, because many participants who had picked bottoms at levels above current prices had gotten stopped out in the last few weeks.

"The only bids in the market right now seem to be physical bids and they tend to dry up after a while. You're not getting any new speculator activity at these levels," said Guido.

Chartists said they thought December gold was trying to establish a base around $580.

---(see url for full news, 24-hr newswire)---

TownCrierGold as an alpha strategy for hedge funds#14834710/10/06; 17:43:51

"Its gold, I tell ya, gold." A hedge fund manager contemplates how to eliminate beta in a precious metals strategy.

11 October 2006 -- If you're a precious metals investor, then invariably, the profits you want to aim at are those that come from an appreciation in the price of the bullion itself. The beta story is what drives you, and that is precisely what gold bulls get so excited about.

Trevor Steel, CIO and managing partner of Baker Steel Capital Managers, a London- based hedge fund ... raised a more analytic angle to that traditionally espoused, which is that of taking the theme of gold and adapting it to an alpha-generating strategy within a hedge fund

Typical hedge fund strategies lending themselves to gold investment include global macro, sector funds, equity long/short and CTAs, which might involve directional plays and black box style trading.

Baker Steel manages $600 million and offers two metals-oriented funds, Genus Natural Resources, a long/short equity fund launched in 2002 and Genus Dynamic Gold Fund, a long-only fund launched in 2003. If you want active management, alpha with no exposure to the gold price, then the former fits the bill, as opposed to the second, where you are exposed to a rising or falling gold price.

"Long only in commodities is a rollercoaster ride which many investors can't stomach," he observes, attesting to the tendency of commodity prices to swiftly revert to mean, "We strip out the effect of beta leaving the fund exposed to alpha from stock selection."

"Gold mining is not a buy and hold investment," says Steel. "We seek ideally a valuation anomaly together with a catalyst."

Examples of catalysts are accidents like the skip that fell a mile down a shaft at Western Areas gold mine... the stock price still fell 20%. In Mongolia, Ivanhoe Mines was hit in May 2006 by the announcement of a government imposed minerals tax, and its share price plunged. Steel had heard the rumours of such a move and put on a short position.

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

With focus on shares and black box style derivatives trading in the mix, the funds have not just removed "beta" from their "gold investments", they've effectively removed the "wealth" element from their portfolios along with it.

It's easy to see why gold mining shares are not a buy and hold investment, and right along with it you can lump papergold of all other type, as the black boxes render them all into nothing connected to reality.

This is why rational people buy and gold PHYSICAL gold -- wealth grounded in reality, even when the bottom falls out of the black boxes.


Sierra MadreMy take on the present situation:#14834810/10/06; 18:51:30

Stocks are being manipulated to keep them up? (W. St. J. article writer says he is surprised the stock market has not felt the building concern regarding the economy. Question: is he dumb or just playing dumb?)

IMO - Gold is extremely cheap. Just as cheap as it was in 1999, if you take into account the worldwide economic deterioration that has taken place since then.

Gas is cheap – arrangements (temporary) have made it so? Wait till the election is over.

The crash in real estate-housing is going on as we speak. After November, the grim facts will be staring us in the face.

The Open Interest in Bonds shows a startling and very rare peak. Bonds are being bought (500,000 long contracts) in the futures market, to keep the price up (and yield down)?

Dollar is up, in spite of totally catastrophic trade deficit figures. Manipulation?

Gold is pounded relentlessly – shows just how vitally important gold is.

I have a sense of the approaching resolution of all these unsustainable happenings that appear to fly in the face of realities of the world economy.

I may be quite wrong, but I do feel that something sudden is coming to change all this.


MKFor what it's worth#14835010/10/06; 20:14:33

My sources tell me, and they are fairly reliable (but not infallible), that there was not an inordinate amount of gold reaching the London physical market during September. This discounts central bank selling. At the same time, Comex statistics (which should be viewed as a fractal of what is going on in the larger international private contract over the counter market) show massive liquidations of all positions to multi-month open interest lows. This tells us that the downdraft in gold was largely caused by speculative hedge fund liquidations in PAPER to side-step margin calls (read capital depletions), and not by central bank[s] selling PHYSICAL as some have suggested.

To me, this is a very bullish development in the gold market and one that is likely to manifest itself in a strong price reversal once the last remnants of the hedge fund trouble work their way through the market. Those buying physical positions now might be amply rewarded in the future as it becomes more and more apparent that central banks are essentially, and radically, out of this market as sellers. The bullion banks would like you to believe otherwise, but that has everything to do with 'serving the lie' as I posted earlier here, and little to do with the physical gold market reality of limited supply and rapidly burgeoning international demand on the private, institutional and official sector levels.

The Invisible HandThe Halford Mackinder doctrine#14835110/11/06; 02:37:23




International relations is the science of the way in which powerful states devise formulas for living together without the ever-present threat of war>
(Norman D. Palmer and Howard C. Perkins, "International Relations – THE WORLD COMMUNITY IN TRANSITION", Boston: Houghton Mifflin / Cambridge, MA: The Riverside Press, 1957, 2nd ed., p. xi)

Yes, the NEW ECONOMY is the term that was coined in late 1990s to describe the evolution of the United States and other developed countries from an industrial/manufacturing-based economy into a knowledge based economy, arising partly from new developments in technology and partly from globalisation.
The general idea is that a business should focus on those areas of its operation which are critical to its success and where it has a competitive advantage.

The problem is that geopolitics has not disappeared from the scene.

GEOPOLITICS is the study which analyses geography, history and social science with reference to international politics. In other words, it examines the political and strategic significance of geography; in this context, geography is defined in terms of the location, size, and resources of places.
The doctrine of Geopolitics gained attention largely through the work of SIR HALFORD MACKINDER in England and his formulation of the HEARTLAND Theory in 1904. The doctrine involved concepts diametrically opposed to the notion of Alfred Thayer Mahan about the significance of navies (he coined the term sea power) in world conflict. The Heartland theory hypothesized the possibility for a huge empire to be brought into existence in the Heartland, which would not need to use coastal or transoceanic transport to supply its military industrial complex, and that this empire could not be defeated by all the rest of the world coalitioned against it.

Mackinder contended that the so-called "HEARTLAND" dominated the world geographically and could so politically. The "Heartland" being the territory bounded by the Volga River, the Arctic Ocean, the Yangtze River, and the Himalaya Mountains.
(Norman D. Palmer and Howard C. Perkins, "International Relations – THE WORLD COMMUNITY IN TRANSITION", Boston: Houghton Mifflin / Cambridge, MA: The Riverside Press, 1957, 2nd ed., p. 47)

Earlier on p. 47, Palmer and Perkins mention that the beginnings of the "science" [of geopolitics] are lost in the past, but that there is an obvious indebtedness to Immanuel Kant (1724-1804), the father of modern geography.

Palmer and Perkins are wrong saying that Kant was geographer. He was a philosopher WHO CAN BE CRITICISED FOR MANY REASONS and (thus) for his work on perpetual peace.

Kant contended that an essential condition of an enduring condition of peace among states is that all states become republics.
He asserted a connection between justice within the state and peacefulness between the states
and he organised peace as a system for the regulation of conflicts according to the standard of requirements of justice that are acknowledged on all sides.
Perpetual peace, the transformation of all states into peace-loving republics is "of course an unrealisable idea".
(Wolfgang Kersting, "Politics, freedom and order – Kant's political philosophy" in: Paul Guyer (ed.), "The Cambridge Companion to Kant" , Cambridge University Press, 1992, pp. 362 and 363)

As they are both member states of Shanghai Cooperation Organization (SCO), the Russian Federation and China have a lot in common and their interests coincide pretty much. It is therefore politically incorrect to say that China threatens Russia.

Russia and Iran remain however threats vis-à-vis each other.

That's why Russia excluded Iran from Asian Energy Club.

Russia's initiative against Iran, taken 15 September at a high level SCO meeting, was to form an that would deny participation by Iran but which would include China, Kazakhstan, Tajikistan and Uzbekistan. This Asian Energy Club would, among other initiatives, cooperate in planning and investment in Central Asian energy development including pipelines to Europe and Asia (see "Outside View: SCO Mulls Energy Club," UPI, 26 September).

All this seems to frame within the Halford Mackinder doctrine,

By F William Engdahl,
After 2003 Putin and Russian foreign policy, especially energy policy, reverted to their basic response to the ‘Heartland’ GEOPOLITICS OF SIR HALFORD MACKINDER, politics which had been the basis of Soviet Cold War strategy since 1946.
The basic argument of the Mackinder's geopolitics is still relevant: ‘The great geographical realities remain: land power versus sea power, heartland versus rimland, centre versus periphery...’ This Russia understands every bit as much as Washington.

Russian President Vladimir Putin has said he wants to make Germany a gas hub for Europe, following talks with Chancellor Angela Merkel.


The –stan territory, Mackinder's Heartland, which is comprised between China and Russia is strategically very important.

Ideology plays no role. It's only about strategic power factors concerning oil/gas/pipelines.

Hence, the present upheaval in/of the Heartland.

Who has control over what?

Alliances are in the process of being formed.

One of such alliances is the SCO. The tensions relating to these alliances are similar to those preceding World War I.

China, Russia and the US of A will decide who gets what.

In the meantime, North-Korea is playing its nuclear games.

Watch CNN, for the rest :-)

The Invisible HandAn "interesting" Picture of the US Bond Markets#14835210/11/06; 03:16:18'Open'%20Interest%20in%20US%20Bonds

The points to note are:

1. The current Long "Open" Interest in 10-year US treasury bond is greater than SIX Standard Deviations (12 SIGMA)!!!!!!! (The odds of a 6-Sigma event are one in 500 million or 1.37 million years, so it will be exponentially higher for a 12 Sigma event.)

2. This level is unprecedented.

Concerns that North Korea will conduct a second nuclear test have kept nerves on edge as Japan presses for a stern response to Pyongyang's defiance.


The NPT [nuclear Non-Proliferation Treaty] was WRITTEN DURING THE COLD WAR, not in the 21st century, where instability in regions like Asia and the Middle East have led some countries to consider going nuclear.
European Union foreign policy chief Javier Solana, a former physicist, recently told the European Parliament that one reason the NPT had loopholes is that its authors were not experts.
"North Korea has the bomb. It's not too late with Iran," said Mark Fitpatrick, an arms-control expert at the London-based International Institute for Strategic Studies.
But Iran is not the only threat to the NPT.
In Asia, the key task for Washington will be to launch diplomatic efforts aimed at preventing a regional arms race that would be the death-knell for the NPT, analysts said.

SundeckNet long open interest in 10-year bonds#14835310/11/06; 04:11:05'Open'%20Interest%20in%20US%20Bonds

Ref: TIH #148352 and Sierra Madra #148348

Both these posts draw attention to the record net long open interest in 10-year bonds (see link).

I emphasise again that while the net open interest is indeed a record, it is not statistically significant (see post #148330). The claim that the current position is more than six standard deviations from the mean is nonsense and arises from erroneous and a simplistic interpretation of the data on net open interest.

Sorry guys...armageddon may not yet be coming to the bond markets...


GoldiloxUS tightens Cuba trade sanctions#14835410/11/06; 04:14:27


The US government has announced that it will aggressively pursue those who violate the decades-old US trade embargo with Cuba.
A new task force has been set up to police the sanctions and those breaking them will face large fines.

The chief federal prosecutor in Florida said anyone who travelled illegally or traded with Cuba would be punished.

But critics say the move is an attempt to strengthen the Republican Party's vote ahead of congressional elections.

Miami-based US Attorney Alexander Acosta said the measures would allow the US to better enforce its sanctions against Cuba.

"The purpose of the sanctions is to isolate the Castro regime economically and deprive the Castro regime of the US dollars it so desperately seeks," said Mr Acosta.

Tough talk

Miami is the unofficial capital of the Cuban exile community, a key segment of the Republican vote.

The BBC's Emilio San Pedro says such tough talk will be welcomed by the most conservative segments in the community who see the failing health of Cuban President Fidel Castro as an opportunity to bring about political change on the island.

Mr Acosta said anyone convicted of breaking the trade embargo would face the possibility of a 10-year prison sentence and a hefty fine.

The task force will include the FBI and law enforcement units from the Treasury, Homeland Security and Commerce departments.

It represents the latest move to tighten the restrictions on US-Cuba relations.

Limitations were first imposed in the early 1960s and have been expanded since.


The NeoCons are worried about losing their strangle hold on the Florida vote, as more and more Cubans are opening channels to relatives at home.

The idio-logical wars strengthen. "Trade drugs and arms with jackboot South American Third Reich potentates - but not cigars with Cuban Commies!"

But it's cool to run up a $trillion trade deficit with Chinese commies, gutting the entire US manufacturing base, 'cause they buy US war bonds, or to sell nuclear technology to North Korean commies, like Rummy and his Swiss cartel, then blaming the Pakistanis when it "turns nuke".

The hypocrisy is laughable, but starvation over idi-ology is not so funny.

The Invisible HandBe very afraid!#14835510/11/06; 04:31:25


TOKYO (Reuters) - The rest of the world may never know whether North Korea actually carried out the nuclear test it said it conducted this week, the U.S. ambassador to Japan said on Wednesday.

US-Vertreter: Erdbeben war Auslöser von neuen Atomtest-Gerüchten

What is the joke?
Does China want to play or is it the cowboys and their War on Terror schizophrenia?
Does that explain why the POG did not move?
Was it the internet which made up this story?
Facts are no longer important?

Basic realism rests
not only on respect for FACTS of how the world is and how it works
but also on a view to the effect that realism and the CORRESPONDENCE THEORY of the truth are essential presupposition of any sane philosophy, not to mention any sane science.
(Barry Smith, "John Searle: From Speech Acts to Social Reality", in; Barry Smith, (ed.), "John Searle", Cambridge University Press, 2003, 1, p .2)

Others argue that
Up until the beginning of the 1600's, the philosophy of western civilization was the philosophy of Greece and Rome, preserved and developed further by the scholastic school of the Catholic Church.
Along came two thinkers, Francis Bacon (1561-1626) an Englishman, and René Descartes (1596-1650) a Frenchman. Between the two of them, they laid the foundation of a scientific revolution.

Thanks largely to them,

The evaporation of civilization
Hugo Salinas Price
Oct 11, 2006)

Those others are crazy.

Metaphysics is for Aristotle the most noble of the speculative sciences,
Aristotle did not use the term metaphysics
but he spoke of primary philosophy to distinguish this science from the secondary philosophies or the particular sciences.
Object of metaphysics = realities that lie beyond the ken (range of knowledge) of our senses)
in other words,
immaterial realities or at least realities which cannot be perceived by the senses,
but only understood by the intellect
and which, in themselves, depend in no way on sensible things for their existence
(Ignatius Yarza, History of Ancient Philosophy, Manila, Sinag-Tala, 1994, p.141)

If You're Not VERY Afraid
You Haven't Been Paying Attention
In truth, the best way to predict future behavior is by looking at past behavior, and all the Bushco desperation moves appear to lead to Iran. Distraction and diversion play out well in the Karl Rove election strategy book, and saber rattling is part of the game.
Damn, we hope we're wrong on this one. But it had to be said

The Invisible HandOpen interest #14835610/11/06; 05:55:27


You are emphasising again that while the net open interest is indeed a record, it is not statistically significant (see post #148330: the crux of the problem is that the sample is not extracted from a population which is stable over time). The claim that the current position is more than six standard deviations from the mean is nonsense and arises from erroneous and a simplistic interpretation of the data on net open interest

Open interest is he total number of futures contracts or option contracts that have not yet been exercised, expired, or fulfilled by delivery.

Let's assume that the chart referenced in the link of my original message is truthful.

The chart has moved from a slowly inclined slope to a para- or hyperbolic slope.


These days, we are witnessing a huge number of anomalies which together indicate that fundamental changes are occurring.

Due to the huge liquidity masses and their variable rotation speed, those temporary anomalies are being blotted out or sterilised.

This cannot continue because the proliferation of liquidity will destroy the last remnants of credibility.

The influence of an unstable population upon the OI on USTB remains a mystery to me.

CometoseA chart worthy of observation#14835710/11/06; 06:54:12

could be a tell
CometoseA chart#14835810/11/06; 06:56:42$crb&p=D&b=5&g=0&id=0

The Invisible HandWAR - KRIEG - GUERRE#14835910/11/06; 06:58:37
N Korea: sanctions would start war
North Korea has warned that it would treat the imposition of sanctions as an act of war, as the international community ponders how to respond to the communist state's nuclear test.

Japan is to impose a total ban of North Korean imports in the wake of Pyongyang's reported nuclear test, officials announce.
For more details:

The Invisible HandJapan announces N Korea sanctions#14836010/11/06; 07:16:32

Japan is to impose tough new sanctions against North Korea in response to the North's claimed nuclear test.
The new Japanese measures will include banning all North Korean imports and stopping its ships entering Japanese waters, a government spokesman said.

TownCrierEarly word for the early bird...#14836110/11/06; 09:29:32

Here you'll find better than worms, that's for sure.

(And more than enough facial hair to make a nest!)

Use the online shopping cart or call by phone to take advantage of this special offer -- the October Buyers' Group is open to the public.


YGMTC...3 Kings#14836210/11/06; 09:39:01

Beautiful to say the least and the historical background is excellent, but what is the Gold content?...Thnx
YGMTC 3 kings.#14836310/11/06; 09:40:48

Got it now. Missed the link for coin details.
KnallgoldThe secret formula of the black-boxes finally revealed:#14836410/11/06; 09:53:58

"The Frankfurt-based ECB has gone further than other global institutions in stressing the risks of hedge funds and >>>>>expressing concern about herd instincts <<<<<"

And worth repeating from MK's latest:
" it becomes more and more apparent that central banks are essentially, and radically, out of this market as sellers..".

While I'm still expecting more announcements to come (and only after the fact) regarding sell quotas of the new WAG2 year,the numbers like Swedens 10t are so small that they serve only to confirm a major shift in CB policy.Remember,they are not stupid (miner49er once stated this rather strident),and if you believe in the re-distribution theory,at some point you're simply DONE with redistribution.

USAGOLD / Centennial Precious Metals, Inc.(No Subject)#14836610/11/06; 12:10:46

October Buyers' Group
"Three Kings"

Call and Save
1-800-869-5115 (Ext. 100)

mikal"Real people" need "sound investments"#14836710/11/06; 13:20:58

Potential For Abuse of Credit-Default Swaps May Lead to Regulation | Shannon D. Harrington and John Glover | Bloomberg News | October 11, 2006 -- Excerpt:
"Hedge funds account for 32 percent of credit-default swap sellers and 28 percent of buyers, up from 15 percent and 16 percent respectively in 2004, according to a British Bankers' Association report released last month. They are second to banks in each category. Pension funds and mutual funds make up 7 percent of the sellers and 4 percent of the buyers.
"This is a market in which endowment funds and pension funds are investing," Greenberger said. "Real people who need sound investments are being affected by this."
Credit-default swaps based on the debt of more than 3,000 companies trade daily, according to Markit Group in London. They are created by banks rather than sold by companies.
J.P. Morgan Chase, Deutsche Bank and Goldman Sachs Group are the most frequent traders of credit derivatives, according to a Fitch Ratings survey published last month. The top 10 firms accounted for two-thirds of all trades in 2005."

While not advocating hard assets or delineating the
range of risks shadowing the derivative trade,
the article shows some of the
collateral concerns being voiced. Later, recognizition will come to more serious outcomes.

USAGOLD Daily Market ReportPage Update!#14836810/11/06; 15:15:18">
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

October 11 (from MarketWatch) -- Gold futures climbed Wednesday, but closed under $580 an ounce for a second session as traders weighed the precious metal's value as a defensive investment against a backdrop of weaker oil prices and threats of more nuclear tests from North Korea.

North Korea threatened more nuclear tests Wednesday and said additional sanctions on the country would be seen as an act of war, according to the Associated Press.

With international tensions rising, COMEX December gold futures climbed by 30 cents to close at $576.50.

The contract traded as high as $583.40 earlier, after losing $6.60 in the previous session. "If gold does indeed deserve to close out the year on a high(er) note, it will do so only after having proven to its faithful that it does retain its security blanket attributes after all," said Kitco's Jon Nadler, an investment products analyst.

On Wednesday, Edmund Daukoru, president of the Organization of the Petroleum Exporting Countries who also serves as Nigeria's oil minister, said OPEC has agreed to cut its global production by 1 million barrels per day in a move to boost prices, but were still discussing how to share the cut, Dow Jones Newswires reported. After an earlier climb above $59 a barrel, crude futures closed lower.

---(see url for full news, 24-hr newswire)---

TownCrierWatch Out Dollar - China Plans the World's Largest IPO#14836910/11/06; 15:27:30

11 October 2006 -- The Industrial and Commercial Bank of China (ICBC) announced on Monday that it would be moving forward with its initial public offering on both the Hong Kong and Shanghai exchanges by the end of this month. This IPO will be the third of the "big four" institutions that dominate Chinese financial markets to go public since China Construction Bank (CCB) opened the doors in October 2005.

Estimated to be as large as $22 billion, the listing has the potential to set a new record as the world's biggest IPO ever. This makes Hong Kong and Shanghai growing rivals of the US and London stock exchanges in attracting new listings and capital.

The fact that this listing did not occur on an American or London stock exchange, something that just four years ago would have been arguably unheard-of has tremendous implications for the world economy as a whole by shifting the future of flow of funds and investments away from US dollar or British pound denominated investments into Yuan and Hong Kong Dollar denominated investments...

The Chinese Yuan continues to appreciate on the expectation that the IPO will generate significant capital flows.

Last April, Goldman Sachs, Allianz, and American Express paid a combined sum of US$3.8 billion for 8.45 percent of ICBC. Their investments are now worth up to US$9.5 billion. Goldman Sachs is not underwriting the deal, but will probably gain the most. The firm invested $2.6 billion in ICBC and will probably see the value of its investment double over the next few months.

The same is true for Allianz and American Express.

Merrill Lynch, Credit Suisse Group, Deutsche Bank AG and China International Capital Corp are all underwriters on the deal. Large customers of those foreign banks will probably be one of the firsts to get the opportunity to participate in the deal. Expect money to flow out of those countries into Shanghai and Hong Kong.

US Dollar Ramifications

The United States now finds itself at an important crossroad. It famously runs a trade deficit, importing more goods than it exports. This puts considerable downward pressure on the US dollar.

The deficit has not been as problematic in the past because the US was able to remain attractive as an investment destination. As long as foreigners continued to pump more money into the purchase of US financial assets than was leaving as a result of trade, Americans could continue splurging on foreign goods without the gap becoming too much of a burden for the US dollar.

However the funding of the deficit is becoming a growing risk.

If the IPO listing occurred in the US, investors would need to buy dollars to participate, but this is not the case. Instead, investors will be buying the Hong Kong dollar and Chinese Yuan.

Interestingly enough, the US may be comfortable with this since they have been looking for more appreciation in those currencies for some time, but for the US dollar, this is certainly not a positive development.

It is also not a trend that is likely to reverse.

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

Shares from the IPO are scheduled to begin trading Oct. 27th.

If the dollar is heading downward for this reason or that, you should step into a safe harbor with physical gold ownership.


Topazau contrare Hand re: NK.#14837010/11/06; 15:40:28

I doubt the "test" was even an Earthquake.
It truly is a sad reflection on the "times" when respected agencies line up to "confirm" political rumors.
The source of which seems to have been John "cougar" Howard who was raging against the NK Machine in the Oz Parliament not 1 hr after the supposed "test".
No doubt his cat-like terrestrial perceptors sensed a disturbance in the force enough to blurt forth with damnation directed at Bad-Boy Mr KIM.

The Perpetually Cat-Napping Public opened one eye long enough to catch the News @6 where, accompanying all the doom 'n gloom narrative was vision of a sub-terranean detonation.
Of course years ago it was mandatory to identify such file footage as just that ...which dislocated the story with the vision ...not so nowadays and the image percieved is that an early 70's test in wherever was in fact the NK Test.

We live in interesting times!

SundeckThe fickleness of "Value"#14837110/11/06; 17:49:09,20867,20563129-2702,00.html

From time to time on The Forum, the subject of "Value" arises...

Here (see link) is a classic case showing the fickleness of Value in the art world...

A painting, thought to be by Van Gogh and "valued" at Aust$20M, hangs on the gallery wall for 66 years, being ood and rrd over all that time...

Imagine the drop in its "value" if the world authorities on Van Gogh art, after thorough assessment, pronounce it a fake!

Gold today, dust tomorrow...


melda laureDescent into dante's onion.#14837210/11/06; 19:44:04

I have always been fond of the term "the cryptocracy". which of course can mean just about anything you want it to, politically speaking.

Seems George Ure has the same model. It's all too easy to target the soldiers and miss the capo's and the big man, let alone the syndicate BEHIND the syndicate. It is all too easy to blame citibank or GS and JPM because gross positions are made public on OCC reports.

Of course after the run up in POG it would seem easy to expect a 6 to 12 month consolidation period. Is that rational? Was the run up itself rational? Is the bond market futures OI rational? Is building a 700 mile wall (but only authorizing 5% of the funds) rational? It all depends on what the future holds. How does the wall make sense if the SPP is to take effect? Perhaps it is a low priority? Or perhaps there are other higher priorities buried in some classified report on peak oil.

Facts are misleading things, especially when bankers write the syllabus. GATA gold manipulation theory hardly seemed rational to the average investor. Even now, it is only an above average collection of people who even bother about it. Ditto peak oil. Ditto a lot of things.

For example the afghanistan plan... (maybe it is only a pipeline dream anymore) Or for those amenable to francophobia:

And then there's that hilarious little comment by former Secretary of Offence, Bill Cohen about how clever terrorists are trying to set off volcanoes. All very entertaining. Not very edifying, if all you want to know is the gold price.

And then there's a perspective problem: does the large OI on bonds reflect massive intervention against shorts, or massive fear? That's more than I want to try to answer.

Irony is a better defense: "I had no idea bets on paper numbers were so valuable"

SundeckNet open interst in 10-year treasury bonds#14837310/11/06; 19:44:32'Open'%20Interest%20in%20US%20Bonds

Ref: TIH #148356

TIH says: "Let's assume that the chart referenced in the link of my original message is truthful."

Sir TIH, I have no reason to doubt the authenticity of the chart (see link) showing the variation in net open interest in 10-year treasuries.

However, I do dispute the validity of using the standard deviation determined from the entire sample (1993 - 2006) as the "statistical yard-stick" for attaching significance to the present level of approximately 500,000 long net open interest.

Put another way, I believe the chart is "truthful" but that the horizontal broken lines indicating the 3 s.d. levels are not "truthful", in the sense that the authors are using these to blindly characterise the time-series as a whole. In particular, they use the bulk estimate of standard deviation to calculate the probability of a 500,000 value in net open interest occurring.

The implicit assumption here is that the distribution of values of net open interest is a "normal distribution" in which the frequency of occurrence of values is reliably characterised by knowledge of the standard deviation (see just about any book on mathematical statistics).

The point I am trying to make is that the underlying population of values is not fact the dispersion (i.e. the spread) of values is increasing with time. That indicates that the standard deviation is increasing with time and it is therefore a nonesense to use a bulk estimate of the standard deviation, calculated for the time-series as a whole, to determine the probability of a particular value occurring anywhere in the sample.

At the risk of boring the forum silly on this point, supposing we restrict attention to the time interval from 1993 to about August 2000, and recalculate the standard deviation over that period. Adopting the same practice as the authors (at the link), we could again draw in the 3 s.d. broken lines above and below the zero level. Clearly these new lines would be much closer to the zero level than those shown in the link. And also, the net open interest at about August 2000 would be long and way, way above the 3 s.d. fact, probably about 6 s.d.

Perhaps, going bck to the 2000 epoch there was similar commentary in the financial world about the burgeoning long position in 10-year USTs...but look what happened over the next few years.

Sir TIH, I do not doubt that the net open interest in treasuries is at record long levels, and it may or may not be cause for concern, but I am not convinced that this is a "6 sigma event" when rigorously analysed.

Take care Sir TIH...


GoldiloxFinancial Liquidity, Interest Rates & Commodity Prices#14837410/11/06; 20:49:20


The broad stock indexes have struggled in the red throughout the morning with earnings season off to a bumpy start. Alcoa's earnings came in lower than expected yesterday after the bell and this morning Monsanto disappointed with bigger losses than expected following a surprise increase in revenue for the quarter. Revenue for Monsanto grew by 9% to $1.39 billion and analysts expected a loss of 21 cents per share, but the company actually lost 27 cents per share. With the Dow Industrials hitting new highs, the big-cap stocks appear to be priced for perfection. Earnings season is off to a difficult start.

So far today there has been very little in the way of economic news to digest as the markets await the release of the Fed minutes at 2:00pm this afternoon. The energy inventories normally reported on Wednesday by the U.S. Energy Department will be released tomorrow due to the Columbus Day holiday on Monday. We did however hear from the Mortgage Bankers Association to learn that housing is still under some big pressure. The MBA's application index fell 5.5% with the purchase applications down 5.3% and applications to refinance down 5.8% in the week ended October 6th. Overall mortgage applications are down 13.8% from a year ago with purchase applications lower by 18.4% and re-fi's down by 7.4% from one year ago. The 30-year fixed rate increased three basis points to 6.27% and the average one-year ARM also gained three basis points to 5.88%.

Some analysts believe the worst is over for the real estate markets, while many believe this is only the beginning of bigger problems for real estate. My take on the overall situation is that the Fed will use the housing weakness, the bond market rally, the correction in commodity prices, and whatever else they need to FAKE a deflation in the first and second quarters next year. This will give them a green light to open the floodgates of liquidity with lower interest rates and a big increase in the supply of money. They know they must inflate or die! I do not believe our policy makers will allow the deflationary pressures that have persisted in Japan for the last decade. Furthermore, I believe the bond market has been deliberately ramped higher, especially on the long end of the curve to provide a soft landing for the housing markets.


One might think that the GS effort to drive down gasoline prices has been an interesting display of "faked" deflation.

arbyhThe open interest in the 10 year bonds#14837510/11/06; 21:32:24

Correct me if I'm wrong:
Granted that there are positions on the long and short side of the interest in bonds. It appears that a huge position on the long side, correct?

Now here are my thoughts. If the dollar were being propped up by the PPT, and such, through the banking interests, isn't that one position and method they would take? A huge long position on the bonds that support the dollar, while simultaneously having Goldman Sachs short gold hugely in the Japanese commodities market - a push-pull technique.

It appears to me that those that prop the dollar see strong gold as a threat to the dollar, perhaps because they know they only have FIAT and don't want the seeds of doubt to grow.
-China already looks poised to diversify about 30% of their reserves.
-The German bank, as I understand it didn't sell as much of the gold as they allotted.
-The price of gas/oil has declined rapidly, and still declined today as OPEC stated 1 million barrels would be reduced in production. The news media has been talking about if the fix is on by the Republican Party for elections. The talking heads wear smiles and say "No, it isn't possible. How could they do it? (Stay ignorant people; don't ask the right questions, not ever.)" Talking heads say it was just over supply, and no hurricanes. The last I checked they said it would take years to repair the damage done to the refineries. So my guess is that it was profit taking by the oil companies, and the evidence will be in tanker ship transport usage.

It all smacks of BS to me. Banks can dollar drive oil down as they dollar drive bonds up, just as they dollar drive gold down in international markets

Maybe I'm wrong, but it appears that you have the subterfuge of countries and central banks on one side of the equation and the logic of the common man on the other. Where do the hedge funds enter in? Seems they have gotten their butt kicked too, for a change.

How about that Lou Dobbs book hitting the shelves? A class war against the middleclass, ripe with conspiracy: illegals = cheap labor, lobbyists buy power and no party represents the middleclass. He suggests we all should register independent, so they can't count their chickens. I have a lot of respect for Lou. It really is time we broke away from the 2 party system, but at this time I do feel the Democratic Party has a little more heart and concern for people over corporations. I'm still pissed about the Republican K street project, crony-capitalism, and tax cuts targeting the wealthy.

The Invisible HandBlack Blade has been vindicated#14837610/11/06; 21:45:06



Throughout his writings, Locke argued that people had the gift of reason, or the ability to think. Locke thought they had the natural ability to govern themselves and to look after the well being of society. He wrote, "The state of nature has a law of nature to govern it, which [treats] everyone [equally]. Reason, which is that law, teaches all mankind... that being all equal and independent, no one ought to harm another in his life, health or possessions."

Law creates order. WAR is the opposite of order.
(Frank van Dun, Rechtsfilosofie,)

The ‘science’ of international relations tries to devise formulas for living together without the ever present threat of WAR
(Norman D. Palmer and Howard C. Perkins, "International Relations – THE WORLD COMMUNITY IN TRANSITION", Boston: Houghton Mifflin / Cambridge, MA: The Riverside Press, 1957, 2nd ed., p. xi)

On Tuesday, Merkel received a poisoned gift from Putin.

Germany divided over cozy affair with Russia
BEWARE of former KGB spymasters bearing gifts.
That was the motto again in Dresden yesterday as President Putin of Russia dangled the offer of a suspiciously lucrative gas-fuelled "strategic partnership" in front of the German Government.,,13130-2397753,00.html

Today, Wednesday, she's therefore arguing for a mentality change

Mentality change
Ms Merkel also said Germany planned to emphasise job creation, and increasing economic competitiveness as well as a "change in mentality" to reduce bureaucracy.
It was important to introduce more competition into Europe's energy markets, and to "integrate the issue of energy into our foreign policy".
Her comments came a day after she held talks focusing on energy with Russian President Vladimir Putin.

But that's not enough for Merkel.
Since, as Sundeck points out, the underlying population of values is not stable,
a declaration of the EU's values could be made in the middle of the German presidency, in March 2007, when the EU celebrates its 50th birthday


Merkel errs when she wants to create a catalogue of values.
She is however right when she stresses the need for a change of mentality.
There must be more political convergence within Europe (and that includes non-EU members like Russia) in order to achieve autonomy/independence from the US of A.
Whether the rejected and re-proposed EU-Konstitution will achieve this objective if it is accepted, is Another matter.

mikalBritish coin collecter's listed fund#14837710/11/06; 21:45:37

Gold Slot for Coin Collectors | Ellen Kelleher | Oct 12 / Managed funds / Daily fund focus
Good news for numismatists and gold holders. The hobby is not only growing, but is gaining in respect and prestige.
Checkout USAGOLD's Oct special. I have all three of the featured coins. The BU Leopold 20 Lira's typically have proof-like surfaces and they all three have different troy weights and splendid coat-of-arms.
I'll post the story link in my next post.

mikalCoin fund story#14837810/11/06; 21:49:17

The Invisible HandThe war may be averted …#14837910/11/06; 22:00:53


Look at this.
From today's (Thursday) Russian daily Kommersant

Iranian President Mahmoud Ahmadinejad is suggesting that the countries of the West take a wholly new look at their relations with Teheran. In his opinion, the West should not impose sanctions against Teheran but should rather seek to befriend Iran. According to information obtained by Kommersant, the Iranian leadership has worked out its own plan to come to a peaceful accord with the West. Teheran has made offers to Russia and the United States that would not only allow the Islamic Republic to keep its nuclear program but also to take control of the entire Near East.

Yesterday Mr. Ahmadinejad gave a strange speech at a rally in the city of Shakhriyare. The Iranian president, who is well known for his threatening stance towards the West, unexpectedly changed his tone and called on the United States and Europe to embrace friendly relations with Iran. "Is it really possible that your frowning and anger towards us over the course of the last 27 years has been of any use to you?" asked President Ahmadinejad. "Doesn't it seem to you that it is time to change your relations with us and to become friendly towards the Iranian nation?"


It is difficult to judge how the United States will react to Iran's new ideas. Most likely, Washington will not be overly enthusiastic, since if the plan is realized, Washington will end up being held hostage by Iran. If the US does accept Iran's help, it will then be wholly dependent on Iran – and in that case, Teheran will become the virtual master of the Near East. And for that Iran will not even need to develop its own nuclear weapons.

Late last night representatives of the foreign ministries of the "group of six" countries (the five permanent members of the UN Security Council, plus Germany) were scheduled to have a teleconference to determine the date for the upcoming discussion of the Iranian question in the Security Council. However, it is possible that the discussion of the Iranian question in the UN, which the members of the Security Council had apparently finally agreed upon at the end of September, is now in doubt. Iran's offer may turn out to be extremely tempting for the Russian diplomat.

SundeckPopulations, stable values and semantics...#14838010/11/06; 22:27:28

Ref TIH #148376

Sir TIH says: "Since, as Sundeck points out, the underlying population of values is not stable,
a declaration of the EU's values could be made in the middle of the German presidency..."

I suspect we are having difficulties with semantics...

Please note that the use of the term "population" in my recent posts regarding net open interest in 10-year USTs is a statistical term used in mathematical statistics to denote a very large sample of any variable under has nothing whatsoever to do with "human populations", be they European or otherwise.

Similarly the term "value" as used by me represents the "numerical value" of the variable under this case, the "net open interest in 10-year USTs". It has nothing to do with human values, nor populations of human values (whatever that may be), be they stable or otherwise...

Thank heavens gold is relatively "stable" in "value"...


SundeckChina targets trade balance by 2010#14838110/11/06; 23:12:26


BEIJING (XFN-ASIA) - China wants to achieve a balance in its foreign trade by 2010 and expects about 10 pct growth a year in imports and exports over the next five years, the commerce ministry said.

Sundeck: Of course, a net trade balance (across all countries) does not necessarily mean a trade balance with the USA.

The article also mentions plans for US$60 billion overseas investment...which sounds fairly modest considering what China's reserves are likely to grow to in the next five years.


The Invisible Handprice-hyper-inflation monster …#14838210/12/06; 03:35:48



Scotiabank Buys Bullion Loans From Bank of America
Oct. 11 (Bloomberg) -- Bank of Nova Scotia, Canada's third- largest bank by assets, bought $900 million in precious metals loans from Bank of America Corp., its largest acquisition in that sector since it bought a precious metals broker in 1997.


One more illustration of the hysterical content of the dollar-Financial Industry (FI) - derivatising, leveraging, swapping etc.

This is the development of a "financial" industry at world level which is playing with an ever-increasing dollar mass of digits.

This non-productive (virtual) industry is being glorified. DEBT instead of CREDIT. At the end of the say, we will lease mama.

The banks call this then "their" financial "products" whereas these imaginary "konstruktions" can in no way be assimilated to "products".

This hyper-frenetic dollar-financial-activity is made possible by the fact that the price-hyper-inflation monster cannot YET be allowed to appear.

The reason is that as long as the alternative euro-system is not being embraced by a significant majority, it seems unacceptable to allow the dollar-destroying price-hyper-inflation to appear on the scene.

In the meantime, the movers able to position themselves in such a way as to be able to sterilise the dollar and to devise a substitute for the dollar-FI.

The Invisible HandPeace in Iran = end of petrodollar#14838310/12/06; 06:35:43,7340,L-3314124,00.html

The dollar-International Financial and Monetary system (IFMS) cannot allow peace.

In times of peace everybody is free to choose. Also free to choose the currency in which she trades. This may result in the demographic repalestinisation of Israel.

Hence (or nevertheless?), link
Olmert urges action against Iran
Prime minister discusses Iranian, North Korean nuclear threat to Israel with top security officials, says he backs plans to impose sanctions against Iran for rejecting compromise by western nations

The Invisible HandGerman hypocrisy#14838410/12/06; 06:50:18



The Russian organizers of that meeting had made what they thought was a good offer to the Germans. They were to sign a sponsorship agreement between Gazprom and Schalke 04 in the presence of Putin and German Chancellor Angela Merkel. Soccer was to be a continuation of the politics of the Green Vault.

However, Merkel flatly refused the offer. The title of savior of Schalke 04 didn't interest her. Later she explained that SHE DIDN'T WANT TO ADVERTISE FOR GAZPROM SO OPENLY, since she has enough trouble already explaining what it is good for and why it is unavoidable for every German. It was explained to her that Gazprom paid rather a lot of money to German soccer and has a right to receive some bonuses for it. Merkel still thought otherwise.

"That's too much," she said patiently.

"And €100 million isn't?" they responded.


Did she have too many bad experiences as an East-German?

The Invisible HandJapanese realism?#14838510/12/06; 07:05:51

United Nations secretary general-designate Ban Ki-moon and his South Korean government have been vociferous in their condemnation of North Korea's latest "intolerable" antics. But the tough talk will lose its impact in the miasma of half-measures likely to be imposed both by Seoul and the UN Security Council. Japan might have the answer in showing them how to rise above the double-talk.
In contrast, Japan's Prime Minister Shinzo Abe, visiting Beijing and Seoul, called the test "unpardonable," promised punishment and delivered.
The contrasting attitudes of China and Japan are showing up in the debate in the United Nations Security Council at which Japan, like the US, favors strong economic sanctions that will drive the North still deeper into isolation. . IT IS THOSE FULL-SCALE SANCTIONS THAT NORTH KOREA SAYS WILL AMOUNT TO A "DECLARATION OF WAR" - a threat the North has been uttering for the past few years - if the debate turned to sanctions.
Now Ban has to rise above the double-talk and try seriously to stop North Korea from forging ahead as a nuclear power. Otherwise, we face an Asian nuclear arms race in which Japan and Taiwan quickly develop their own warheads and China builds up its existing arsenal - all a PRECURSOR TO CARNAGE ON AN UNIMAGINABLE SCALE.


The Invisible Hand (10/11/06; 06:58:37MT - msg#: 148359)
N Korea: sanctions would start war
North Korea has warned that it would treat the imposition of sanctions as an act of war, as the international community ponders how to respond to the communist state's nuclear test.


The Invisible Hand (10/11/06; 07:16:32MT - msg#: 148360)
Japan announces N Korea sanctions
Japan is to impose tough new sanctions against North Korea in response to the North's claimed nuclear test.
The new Japanese measures will include banning all North Korean imports and stopping its ships entering Japanese waters, a government spokesman said.

BoilermakerMarket Manipulation #14838610/12/06; 07:24:14

Here's an interesting natural gas trade that shows how the physical and paper markets can be separated for extra profits;
"According to the two traders, the unusually low-priced trades, which came to an end early this year, strongly suggested a strategy of pushing monthly physical indexes down to increase profits on large financial positions taken up to that point - in effect, big bets that the monthly physical gas index would settle lower than expected by trading counterparties in the swap market and create a larger than expected gap between the two markets to increase the profit on every swap ETC sold.
By selling physical month-ahead gas at lower prices, the traders said, such a strategy would involve taking a relative loss - or less of a gain - on physical deals because a low monthly index price for physical gas would mean more robust profits on a much larger short position in the financial swap market."

I wonder if we could find GS behind the curtain on this scam. Maybe Amaranth got caught in the crossfire?

Thoreauly@ arbyh #148375#14838810/12/06; 07:27:47

I'm with you until you get to (1) preferring one party over another (as they are but two sides of the same increasingly worthless coin) and (2) decrying tax cuts for "the wealthy," as they are already paying so much in taxes that they're leaving the country in droves (see link).

And just wait until 76 million boomers start retiring in less than 18 months.

ThoreaulyIran#14838910/12/06; 07:43:43

It seems to me that the Bush administration has no choice but to (come up with an excuse to) invade Iran, as they can't simply turn over the debacle in Iraq to the next administration and expect history to treat them kindly.

No, history won't treat them kindly in any case, but as desperate times call for desperate measures, I think Bush & Co. will try to pull a rabbit out of the hat, never mind that the hat is a hole that they've been digging for themselves for over three years now.

In other words, insanity will reign as this despicable regime exits the stage.

GoldiloxIsrael has no business criticizing rising Nuclear states#14839010/12/06; 08:44:12

@ TIH,

"Olmert urges action against Iran"


Israel is quick to suggest action against others, while they kept their own nuclear weapon development secret, and jailed the scientist who finally "came clean" for 15 years.

I wonder what "action" he recommends against Israel, who still doesn't acknowledge their 200+ nukes?

"Do as I say, not as I do."

GoldiloxXenophobia rises in Bear Market conditions#14839110/12/06; 09:19:06

Elliot Wave Newsletter - Email


in the latest sick episode, some 200 Croatian fans "formed a human swastika" with their bodies in the stadium stands at a game in Italy this week. We can't re-publish the picture for copyright reasons, but you can easily find it online. It's worth seeing.

(A quick side note. Why is it that irony always seems to escape extremists of every kind? In their day, Nazis used to send Croatians and other Slavs to the gas chamber with the same enthusiasm as they did the Jews. And now these Croatian guys go around forming "human swastikas"?)

You may be surprised to hear this, but the Elliott Wave Principle has a lot to say about racially biased mass behavior. In December 2004, our own European Financial Forecast opined about fans who jeered dark-skinned players: "We see the future for racism in [soccer] this way: It may be time to prepare for the worst. The monkey chants are likely to get worse before they get substantially better."

We made that forecast after comparing the history of racial abuse in football with the long-term trend in the European stock market. Over time, there is a clear pattern: During bull markets, the number of racist incidents seems to decrease, while bear markets see them shoot way up. Why?

The Wave Principle teaches that the trend in a country's stock market reflects the "mood" of that entire society – or "social mood." Rising stocks indicate improving social mood, while falling stocks signal the opposite. When social mood gets depressed (in bear markets) things start to fall apart. That's why xenophobia – in soccer and overall – always flares up during bear markets. Both the declining stocks and xenophobia are just some of the many symptoms of a depressed social mood.

Another major symptom is the overall intolerance towards "people not like us." Surely you've noticed that the number of ethnic clashes and political victories based on appeal to racism and exclusionism have risen noticeably since the year 2000. The latest wave of soccer racism also began around that time. Why 2000? Remember what happened to European stocks that year? That's right, they went into a severe bear market that lasted for almost three years. That was an indication of a strong negative shift in Europe's collective psychology.


It couldn't have anything to do with TPTB finger-pointing, now, could it? Monkey see, monkey do!

MKPhantasmagoria#14839210/12/06; 10:38:03

There is a tendency on the part of some stock market analysts to attempt tying everything together in a nice neat package with a pretty bow so that the reader will believe that something can be drawn out of the general chaos, systemitized and thus, understood. This sort of thing tends to appeal to the engineers among us (or the engineer in all of us), but even there you might find resistance. Obviously to a certain degree, especially as it pertains to the hard sciences, this sort of rigor pays its rewards, but in the soft sciences, economics perhaps being the most preeminent, such phantasmagoria stretch the natural order and should be viewed as nothing more than interesting speculation.

The fact that a group of Croatians formed a swasika on a soccer field has about as much to do with the financial markets in Europe as it does the same in the United States. In other words it is tangential and should be more seen as an effect rather than cause. You will likely see the same in time from the left in the form of massive street demonstrations like the ones which accompanied the French vote on the European constitution. The common cause will be the failures within the European economy to deliver on the European dream, not demonstrators on either side of the political fence; they in essence are casualties of the event, not perpetrators. And by that I don't mean to act as apologist for either.

I have seen the rise of Naziism blamed both on the Weimar hyperinflation and the deflationary collapse which followed. So to point to something like a swastika being formed on a soccer field as a sign that deflation is around the corner serves more as a palliative than anything else. It may be "time to prepare for the worst," but I wouldn't use something as universal and ever present as xenophobia as an indicator. It seems that all the world wants a predictor when a simple understanding of the human condition is all one needs. Once that is reasonably understood, and how it manifests itself in politics, economics and everyday life, the reasons for gold ownership become apparent. That is why I have always recommended physical ownership of gold more as a store of value and and an insurance; the real reason that I have made gold my lifetime career. That is, it covers the negative potential present in every society and in every day life -- the untoward event, the breakdown, or the Fall. When systems breakdown -- wherever they are -- gold comes to the fore.

One is reminded that we are now well into October -- the month when markets go bump in the night. So perhaps thoughts such as these are appropriate for the season. Every year I trot out for public consumption what I believe to be one of the more complete pieces of writing I have ever seen. The beginning passages of Edgar Alan Poe's "The Fall of the House of Usher" with all its sense of foreboding:

"During the whole of a dull, dark, and soundless day in the autumn of the year, when the clouds hung oppressively low in the heavens, I had been passing alone, on horseback, through a singularly dreary tract of country, and at length found myself, as the shades of the evening drew on, within view of the melancholy House of Usher – upon the bleak walls – upon the vacant
eye-like windows – upon a few rank sedges – and upon a few white trunks of decayed trees – with an utter depression of soul which I can compare to no earthly sensation more properly than to the after-dream of the reveller upon opium – the bitter lapse into every-day life – the hideous dropping off of the veil. There was an iciness, a sinking, a sickening of the heart – an unredeemed dreariness of thought which no goading of the imagination could torture into aught of the sublime."

And that's about as much philosophy I can muster for one day. . . .As someone used to say at the end of many passages:

Gold, get you some!

Sierra MadreJapan & China just posturing?#14839310/12/06; 10:46:32

I think about Japan's denouncing North Korea for testing a nuclear device and remember reading - somewhere - that North Korea's action may be actually welcomed by Japan, because it now gives Japan a legitimate reason to arm itself with nuclear weapons.

I think it was a South Korean once mentioned to me that it would not take the South Koreans more than thirty days to begin putting a-bombs together. I would not be surprised if it turns out the Japanese have all the necessary parts to build nuclear bombs and other nuclear weapons, and all they have to do is assemble the parts.

The result of this, would be that a re-armed Japan would be able to say "Goodbye!" to US forces and the US umbrella supposedly "protecting" Japan, and get out from under the US of A, which has had Japan in its pocket since WW II.

Those countries of N.E. Asia are far too experienced with wars to even dream of nuking each other. With the US out of the way, they will, I believe, enter into a program of collaboration without the US.

The visits to the shrine of the World War II Japanese military heroes which are apparently "de rigeur" for the Prime Minister of Japan upon entering into office, perhaps are a reminder that the Japanese HAVE NOT FORGOTTEN HIROSHIMA AND NAGASAKI. Put yourself in a Japanese frame of mind for a moment: Do you really think YOU would forgive that atrocity and just forget it?

There may be payback time a-coming. If anyone is going to get nuked, it's the US of A, and not the N.E. Asia countries among themselves.

Just SIERRA's thoughts and might be quite mistaken.

GoldiloxPhantasmagoria#14839410/12/06; 11:35:37

@ MK,

Golden word, indeed!


1.a shifting series of phantasms, illusions, or deceptive appearances, as in a dream or as created by the imagination.
2.a changing scene made up of many elements. optical illusion produced by a magic lantern or the like in which figures increase or diminish in size, pass into each other, dissolve, etc.

I think all three definitions apply! LOL

While I tend to agree with you, it's interesting that xenophobic publicity seems to rise when times are tough. I guess it's human nature to focus at "them" when in the business of pointing fingers.

Which shell is the marble under, anyway?

Topazalt PoG.#14839510/12/06; 13:36:37

Apart from the $Au and to a lesser extent the $US, we have a nice little upswing in PoG going on here ...hope it lasts!
Another encouraging sign might be the "lurchy" nature of Comex deliveries this Month where 450 contract equivalent Oz's (45,000 Oz's) got done today. Sporatic delivery action this month suggests the physical situation is and continues to be quite dire.

mikalLiving "above laws", lords draw homage#14839610/12/06; 14:01:59

10 Things - What Your Congressman Won't Tell You
By Brigid McMenamin | Published: October 11, 2006 | WSJ
These hidden costs of celebrity patronage hint at larger costs for our future, and future generations.
Sobering reminders of the value of self-reliance and independent financial planning.

melda laureWords, just words.#14839710/12/06; 15:13:02

Intersting sir TIH, mr buchanan seems to agree that the future of east asia is likely an arms race once it is clear that the US nuclear umbrella has been "folded".

There is much talk. But as with NK, so too with the bond market and the US deficits: there are few positive actions to be taken. It is China's mess, they will have to manage it. So too, the dollar is our mess and no amount of phantom futures positions can paper over the fact that payrolls are not keeping up. The eventual impotence of containment will be revealed. There will be a dislocation. Gold will rise, and nations will have to solve their own problems.

What Mr Buchanan does not point out is that should the US stand down, then China will have little use for the North Korean foil; regime change in Pyongyang could come from the east more easily than the west. Well I wont hold my breath.

As usual, there is much talk. But that wont change the fact that the media can sell the war, but cannot conjour up the divisions to fight it. The next battle is for the diplomats. Tehran suspects this. The market will start placing its bets soon.

melda laureOil bottom? whither POG?#14839810/12/06; 15:42:30

Perhaps Boilermaker or some of the others could comment on this. Mr Jas Jain thinks that a world recession could tank oil demand and push down the price. Given that peak oil may already be tanking the supply, it seems to me that a recession would have to hit the demand harder than peak oil hits the aging oilfield portfolio in order to overwhelm and push the price down over the medium term.

Short term, the price is driven by innanities it seems.

It is far from clear to me that peak debt somehow ensures deflation, but that is a harder question: food and fuel are consumable necessities, debt paper is neither. Is the bottom more likely at $50 or at $20? Moreover, is the long term price under $30 or is it "under a kilobuck"?

Mr Barbera's article seems to suggest the latter, (and all that implies for POG).

USAGOLD Daily Market ReportPage Update!#14839910/12/06; 18:53:45">
The Daily Gold Market Report has been updated.

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THURSDAY Market Excerpts

Gold up with record U.S. trade deficit

October 12 (from DowJones) -- The Commerce Department said the nation's trade deficit widened to $69.86 billion in August after the consensus forecast had been for a narrowing to $66.8 billion.

[It was the second consecutive month to tally a new record deficit.]

COMEX December gold futures rose $3.80 to $580.30 on tthe New York Mercantile Exchange.

"The energy markets have rebounded a bit," said Dave Rinehimer, director of futures research at Citigroup Global Markets. "There appears to be limited downside in petroleum markets below the recent lows. That might be helping gold stabilize. Also, the dollar is a little bit softer."

As Comex gold was closing, November crude oil was up 24 cents to $57.83 a barrel but had been as high as $58.40.

"But we're pretty much just moving sideways," Rinehimer continued about the gold and silver trade. "We've been choppy in the gold market, in particular, up one day and down the next."

Indeed, "range trade has been the main theme so far today, although another record U.S. trade gap and a softer final draft of South Africa's Royalty Bill have provided support," said a research note from James Moore, analyst with TheBullionDesk.

Seasonally strong physical demand continues to support gold and should slow any retreat, Moore added.

---(see url for full news, 24-hr newswire)---

GoldiloxTHE FUDGE FACTORY#14840010/12/06; 20:06:45


Today, October 12, 2006, China reported that crude oil imports jumped 24 percent over the same month a year earlier.

China's Oil Imports Surge to Record High
Thursday October 12, 7:23 am ET
By Elaine Kurtenbach, AP Business Writer

China's Oil Imports Surge to Record High As Country Begins Filling Strategic Reserves

SHANGHAI, China (AP) -- China's oil imports surged to a record high 3.3 million barrels a day in September, the government reported Thursday, as the country recently began filling its newly built strategic oil reserves.

Preliminary data from the General Administration of Customs showed crude oil imports jumped 24 percent over the same month a year earlier to 13.5 million metric tons (15 million U.S. tons) in September.

Doing The Math….

Does anyone note the complete and utter disconnect as to how China can be importing 24 % more crude – year over year – in the face of declining output from the world's super giant oil fields [Cantarell – Mexico, Burgan – Kuwait, Ghawar – Saudi Arabia, Prudhoe Bay – Alaska, North Sea etc.]? Never mind the fact that the U.S. Gulf Coast never did recover from lost production of both nat. gas and crude in the wake of Katrina – much of which has NEVER been replaced.

Geepers, if we are to believe government reports, there is so much oil sloshing around in the world – that, Ripley's Believe It or Not - the Strategic Petroleum Reserve was even able to "top up" to the tune of an additional 800,000 barrels thus far in October?

Despite all of this anecdotal evidence, the government's EIA says that oil demand for 2006 is less than 2005 [I can only assume to justify plunging energy prices] due to an unusually warm winter,

"For the first 6 months of 2006, average demand was down 130,000 bbl/d, or 0.6 percent, from the previous year due to mild weather—which reduced heating oil, residual fuel oil, and propane consumption— and rapidly rising prices, which greatly affected motor gasoline and jet fuel demand growth."

It would seem to me that IF the U.S. economy was demanding any meaningful amount LESS energy, for reasons other than climate, on a year over year comparison – this would CATEGORICALLY imply recession – absent an offsetting productivity increase – wouldn't it? Has government economic data reported any sign of a recession?

But On Second Look….

According to Wikipedia,

"distillate usually refers to fuel oils produced through distillation, such as diesel and heating oil. This distinguishes them from the residual fuel oils, which are made from the residue left after distillation."

Now, when we review the EIA's graph below, we can clearly see that DISTILLATE growth [at Oct. 12, 2006] is POSITIVE! What I'd really like to know is what OTHER is – because that is what is making their annual demand projections appear "negative"?

With the above graph CLEARLY demonstrating POSITIVE GROWTH in the consumption of distillates in the U.S. – how could any price decline be attributed to lessening of demand in the same?

The Fudge Factor or, Is Somebody Fibbing?


So, let's try to make some sense of all this….

The explosive growth of derivatives goes far to explain how / why prices are declining. 5.5 TRILLION GROWTH in a derivatives book at one bank [J.P. Morgan Chase] in one quarter should be sounding ALARM BELLS all over the world as to what is really going on.

Does anyone besides me make a connection between the "insanely explosive growth" of J.P. Morgan's derivatives book and plunging energy prices in the face of seemingly structural supply / demand imbalances?

Risk magazine, January 2006

J.P. Morgan was named Risk magazine's Energy derivatives house of the year in their January issue. According to Risk, "J.P. Morgan has emerged as a key player in energy derivatives over the past year." Since 2004, under the guidance of Beau Taylor, global co-head of Energy, the firm has built a leading energy trading practice. Focus has extended from natural gas and crude exotic derivatives to include electricity, coal and emissions trading

Has it occurred to anyone that physical inventory in the Strategic Petroleum Reserve [SPR] is about as easily counted and measured as the GOLD in Ft. Knox or West Point?


The plot thickens!

GoldiloxThe asking prices were more realistic 8 months ago . . .#14840110/12/06; 20:21:39


These formerly hot markets (see article for chart) are cooling off, with lots more homes for sale and prices either down a bit or up less than they were during the bubble. But how reliable is this data? The inventory numbers seem pretty consistent with the tales of woe coming from real estate agents around the country. But the prices look less trustworthy. Shouldn't they be down more if there are twice as many homes for sale?

Of course they should, and in reality they are. The declines just don't show up in the official numbers—yet. Consider this from the Contra Costa Times:

With so many new homes on the market, builders are having to become more creative as they try to stand out -- especially in areas such as East County and parts of Alameda County with a high density of new homes.

"The first thing people say when they enter the sales office is, 'What's your incentive?'" said Burton, whose firm created Waterford at the Lakes and Reflections at the Lakes in Discovery Bay. And Burton doesn't disappoint. He can offer a Discovery Bay Country Club membership with each home purchase (worth $8,920) -- as well as below-market financing, custom upgrades and a break on closing costs.

Other builders also provide tempting offers: Discovery Homes' Brighton Station in Brentwood and Pheasant Meadows in Oakley say the first buyer to close escrow on a home will get a chance at a Mercedes Benz…Pulte Homes' 17 Bay Area locations are giving away a weekly vacation for two to places like Hawaii or New York City…

A $10,000 kitchen upgrade doesn't lower the price of a house, technically, so builders can keep reporting that they're getting their asking prices. But the practice does instantly devalue all the other comparable homes that were sold recently without the upgrades. Today's official numbers don't reflect this. But soon—when last year's new houses come back on the market—they will.

For a sense of what this means, consider a recent condo auction in Boston, as reported by the Boston Herald:

Just how weak is the Boston real estate market?

We got an idea yesterday. And if you're looking to sell your home in the near future, the news isn't good. Brand-new luxury condos downtown saw hundreds of thousands of dollars wiped off their value in the Hub's first public real estate auction in a decade.

The 31 condos up for sale in the Folio building on Broad Street sold on average for 30 percent below their asking prices. Some barely fetched their minimums. Even the building's marketing boss couldn't hide what happened. "I think the buyers got a better value than anybody expected," Paul Gollinger said after the two-hour auction. "But we're satisfied, very satisfied...We hadn't had a sale in the last four months."

The most expensive properties fell hardest. A $1,760,000 penthouse plunged $600,000 to just $1,140,000. A $1,600,000 three-bedroom apartment with a terrace crashed by half a million dollars, selling for less than $1.1 million. Husband and wife Kevin and Daire Starr couldn't believe their luck. They got a 1,910-square foot apartment with three bedrooms and two bathrooms for $837,000 - almost $400,000 below the list price, and just $12,000 over the auction minimum. "It was my wife's birthday this month, and she wanted it," said Starr. "It was the deal of the auction."

Buyer Dennis McCarthy, who got a $480,000 one-bedroom condo for $401,000, said he wasn't surprised to see prices drop. "The asking prices were realistic eight months ago," he said. "But they're unrealistic now."

In total, condos listed for nearly $33 million ended up selling for $24 million. The big losers yesterday? The people who paid full price for the other 65 homes in the building during the last few years. Collinger said the first went up for pre-construction sale four years ago. And they all sold for the asking price.

Think about it: The day before the auction, these condos—none of which had sold in four months—are officially worth x. The day after the auction they're worth x minus 30%. And—the crucial point—so is just about every other condo in the area. With one stroke of an auctioneer's pen the whole market has been devalued.

The poor sucker who put nothing down to buy at the peak is now 30% underwater, and, like any rational economic animal, is thinking of creative ways to get out of paying that extra 30%. Or he's cutting expenses so as to be able to keep paying on his now-wildly-inflated mortgage. Either way, it's bad for the local economy and augurs for more auctions, more instant haircuts, and a real estate bottom that's a lot further out than BusinessWeek and JP Morgan seem to think.

-Rebates, incentives, add-ons . . . all these things create the "hedonic" illusion that prices are stable. Just as they did when transport companies started charging "surcharges" to keep from publishing rate hikes.

Repeat the mantra . . . "there is no bubble".

DruidGoldilox (10/12/06; 20:06:45MT - msg#: 148400)#14840210/12/06; 21:24:31

Druid: Goldi, as usual Kirby, in my opinion, is on to something reference the oil price heading down while physical demand appears to be ratcheting upwards. What gives? At this point in time, Financial/Political engineering is making Economics as some sort of serious study irrelevant no matter how many Noble prizes are awarded.
The Invisible HandWords of wisdom #14840310/12/06; 22:04:56

After the Great Depression the leaders of the world's largest economies (of which America's had become by far the largest) realised a return to a CURRENCY SYSTEM BACKED BY GOLD WOULD REMOVE CATASTROPHIC VOLATILITY FROM THE GLOBAL SYSTEM. This came about after World War II in the form of the Bretton Woods agreement.

Bretton Woods was abandoned after the Vietnam War after it became apparent the US had actually printed more money than existed as gold in the government vaults. As the benchmark currency, the US dollar had enjoyed inequitable value above that of the rising economies of Japan and Germany. Currencies were thereafter officially measured against the US dollar and allowed to "float". A purely fiat system had returned.

GoldiloxRANGEBOUND DOLLAR & GOLD#14840410/12/06; 23:29:05


With a big drop in crude oil over 20%, one would have expected a bigger rise in the USDollar from its tight Petro-Dollar linkage. Not so. The beneficiary was largely the USTreasury Bond, which is the anchor in many hedge fund spread trades. As crude oil positions are sold when under pressure of liquidation, oddly the USTBond benefits oftentimes, since it must be bought back as the anchor. Harken back to the GM and Ford distress in summer 2005. When their debt spread trades were unwound, the USTBond rallied to register 52-week lows on the 10-yr yield.

The Euro Central Bank is predictable. When the euro was flirting with the 129 level over a month ago, the ECB stood firm with no rate hike. With the USDollar buttressed by a strong floor built upon a falling crude oil price, the European perspective has changed. With the euro currency running with a 125 handle, the ECB hiked by 25 basis points to 3.25% last week.

The USDollar has also been assisted by tremendous gold bullion dumping by mindless Western central bankers, who are dead set on unloading that dead weight gold which earns no dividend yield and flimsy leasing interest income. They have not learned how profiting from forward contangos can produce written option call income. They have not learned that holding a tangible stable asset backing a currency is a wise practice. The Germans stand apart as the main country whose central bankers realize that holding gold to fortify currency is an intelligent policy. Barclays points to the Banque of France as a chief culprit in gold bullion dumping before the Sept 26th Washington Accord deadline, from transactional data.

Gold output struggles to respond to higher prices. Against a backdrop of 10% higher mining costs from extraction, a mere 2% has been the output gain in gold ounces. The silver price has held up much better, still over $11 per oz. Gold used to wander in the mid-600's almost all summer long. Gold continues to fight the political battles, while silver simply marches higher, unimpeded by mere mortal actions. One should note that some of the most wealthy old Europeans favor silver as their top asset. Silver remains in technical default, as deliveries are grossly delayed, and games are being played to meet individual sales from national mints.

Gold continues to be treated like a commodity. As the weak USEconomy turns weaker, metal speculative demand will likely decline. However, thinking on gold is badly flawed. With enough economic weakness and housing erosion, THE USFed WILL BE THE LAST ONES TO NOTICE. The USFed will cut interest rates when they finally detect enough economic damage from housing. The result will be a weaker USDollar and a strong gold price, BUILT UPON ECONOMIC WEAKNESS. Why is there so much incorrect gold thinking? Because they do not regard gold as a currency. The weaker crude oil price is in part due to the weaker economy. That lifts the USDollar, even minimally, so as to provide it support. That weakens gold for the time being. The gargantuan trade gap of $69.9 billion again testifies to upcoming USDollar devaluation. We have massive cross currents which will resolve after the elections in November. Then, we will see the dogs of war let loose, south of Turkey, north of Israel.


This is the Gold section of a much more comprehensive article.

GoldiloxAN OBSCENE BREACH OF TRUST#14840510/12/06; 23:35:19


For all those who despair that Congress does nothing positive or useful, the Optimist has good news to share. Congress has crafted a new phrase that will live in infamy throughout the future of the USA.

An obscene breach of trust. What could be a better summation of our nation's financial history over the past century? Consider how precisely that phrase defines the events below:

Congress abdicates its financial responsibilities in 1913 by creating the Federal Reserve (to provide the nation with a safer, more flexible, and more stable monetary and financial system), and then permitting the Fed to systematically demolish the value of the dollar by massive inflation of the money supply;

FDR confiscated the people's gold in 1933, and infected the nation with socialism;

Massive overspending by LBJ on guns (Vietnam) and butter (Great Society and welfare) 40 years ago ignited the great inflation of the following decade;

The 1971 declaration of USA functional bankruptcy when Richard Nixon closed the gold window and thereby asserted that the USA will never again repay its debts with real money;

Ronald Reagan rolled the dice in a "Riverboat Gamble" 24 years ago and turned the mighty USA economy from the biggest creditor nation to the biggest debtor in the world;

G.H.W. Bush (the first) recognized that Reagan's philosophy of cutting taxes and increasing debt was "voodoo economics", and he saw the damage that was being done to the nation's economic strength, but he continued to push the debt pedal to the metal as he raced for reelection;

Clinton's administration suppressed the price of gold, and intensified the process of wholesale transfer of America's manufacturing jobs to Asia;

G.W. Bush (the second) refused to encourage conservation, but instead actively pursued drilling and exploration in previously protected areas so the USA could sustain its love affair with SUVs. The USA continued to ratchet up the temperature of global warming. This President is also the first who could not find a spending bill that was worth a veto;

The CPI once was an acronym for the Consumer Price Index on which we based adjustments to salaries and senior citizens’ income to proudly honor our promises. With the advent of exclusions (energy, food, etc.) and hedonics in recent years, the CPI now stands for Consistent Price Immobility;

Rumors are rampant that our once free markets may have become significantly less volatile (i.e., moderate price increases are OK, but sharp declines are no longer permitted) over the last two administrations due to supportive price assistance provided by the wonderful world of PPT. Although it is thoughtful of our Repubocrat leaders to reduce the risk of losses from market declines, there are also real costs, such as reduced potential for future gains, misallocation of resources, additional increases in government debt, and a more pervasive loss of personal freedom.

In an earlier commentary about responsibility, I posted a table of the debt increases by Presidential Administrations. Another view of that debt increase monstrosity is the chart copied below, but please do not look at it if you are prone to heart problems or fainting spells. (see article for chart)

Repubocrats of all persuasions have consistently expanded the debt level of Americans, and increased the size and power of the government at the expense of individual freedom. The Optimist is confident that readers have taken appropriate action to reduce their personal level of debt and to preserve some of their wealth by purchasing physical (not paper, please!) precious metals.


Not particularly "optimistic", from one who calls himself "the Optimist".

USAGOLD / Centennial Precious Metals, Inc.Wealth that spanned the 1900's canl withstand anything the 2000's will dish out!#14840610/13/06; 02:57:43

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The Invisible HandPlunged into a new dark age?#14840710/13/06; 03:50:06

THE collapse of Amaranth Advisors, in which investors have lost $6.4 billion (£3.45 billion), was "anything but unforeseeable", according to one of London's most respected hedge fund investors.

Currencies float against one another in mid-air. The dollar, the predominant global currency, was weak up to a few weeks back, as the U.S. trade deficit and fiscal deficit looked unsustainable.
And there aren't any regulating institutions in the present global economy which can master the balancing act by allowing free market forces to play their part in determining prices on the one hand, while exerting discipline on the market when enough is enough on the other.
INCREASED VOLATILITY IS a reality in the present financial world, THE RESULT of an unplanned move in the COLLAPSE OF THE BRETTON WOODS SYSTEM. It also follows one of the fundamental laws of thermodynamics -- that entropy can change only by increasing. Entropy means chaos, volatility.

There is no possible way in which the present world monetary-financial system could continue to exist much longer, in its present, hopelessly decadent, teetering, drunken condition. The world's present world monetary system is virtually as good as dead
We have now reached a state of planetary crisis from whose grip we could not escape without qualitative leaps in science-driven increase of the productive powers of labor throughout the planet over the coming half-century. Without bringing to an end the tyranny of attempts as the form of brutish imperialism, known as "globalization," and without a science-driver program of cooperation, within a fixed-exchange-rate system of currencies, credit, and trade, this planet would be PLUNGED NOW INTO A NEW DARK AGE whose bottom lies far below present fair estimates of such a calamity's physical effects on the size and condition of the population and the planet it inhabits.

The GOOD NEWS, we might wish to tell to Gabriel Heatter, is that this planet will probably survive, because we are forced to introduce needed, good changes in policies for the simple reason that continued practise of recent trends would land us all, and our posterity, for generations yet to come, in a certain kind of Hell.

TownCrierHEADLINE: Gold dinar as investment, anyone?#14840810/13/06; 04:43:18

October 13 2006

...Husam, who is also State Public Administration, Economic Planning, Finance and Community Development committee, said the main purpose for the gold dinar was for it to be an alternative savings instrument to other conventional means such as trust funds or fixed deposits.

"Gold is better than paper currency to hedge against inflation. In an economic downturn your paper money will decrease in value but the thing with gold is that the value tends to always appreciate."

Husam himself had bought two gold dinars in Dubai six years ago, worth RM250 each. Today, they are worth about RM370 each.

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

That small mid-portion of the article strikes exactly the right tone.

Unfortunately, much of the concluding portion of the article is dominated by comments of Deputy Finance Minister Datuk Dr Awang Adek Hussin who delivers a hack job of the highest order.


TownCrierGold back in vogue: follow the yellow brick road#14840910/13/06; 05:03:55

13 OCT 06 -- Five hundred years ago, everyone knew that the world was flat. Six years ago, everyone knew that tech stocks would carry on rising making multimillionaires out of anyone who would just 'get in'. Today, many people believe that gold is a yellow metal used in the jewellery industry that doesn't pay a dividend!

...Money is that which is capable of acting as a medium of exchange in non-barter transactions...

Being a store of wealth necessarily requires that the purchasing power ... is maintained.

The paper currencies in circulation today ... cannot act as a store of wealth. Paper currencies can and are printed out of thin air which results in automatic devaluation of the paper currency already in issue. The rise in commodity (real assets) prices and real estate prices since 2001 is proof that paper currencies do not maintain their purchasing power against real assets.

...A glance at the US Federal Census for 1870 shows that immigrants arriving in America carried their wealth in the form of gold and silver coin.

Paper currencies began as gold receipts that acknowledged real deposits of gold and silver coins and bars. It was convenient to carry these paper notes, which could be exchanged back into gold and silver after transactions. These paper receipts eventually evolved into banknotes.

It wasn't long before gold and silver depositories were issuing more receipts for gold and silver than the physical metals that they held and thus began the fiat era. Central banks followed suit and when the US decided to cease redeeming their currency for gold in 1971 the world formally moved from a commodity based gold-standard monetary system to a literally 'faith based' system.

...whenever such ['faith-based'] currencies have arisen, it has been a very brief existence that always ends in financial disaster.

...[Gold] has intrinsic value and requires real resources to produce. It is universally recognised and is uniform and it is virtually indestructible. It cannot be printed at will. The price of goods and services in gold used to be determined by the supply and demand of those goods and services. It was and still is the natural choice as the world's medium of exchange and store of wealth.

...A growing number of Governments are increasing the gold reserves that they hold. Russia is increasing its gold reserves from 5% to 10% of its total reserves. While this is not an enormous amount of paper currency, it is a very large quantity of gold. It actually represents one quarter of the entire annual world production of gold. Russia's foreign currency and gold reserves now stand at around US$250 billion, the fourth largest in the world and are set to rise by around US$100 billion annually as a result of its oil and natural gas exports. 10% of all future increases in Russian reserves will be allocated into gold as well.

Italy recently announced the conversion of one quarter of its US Dollar currency reserves into British pounds. It has also dumped billions of dollars of US Treasury debt paper. It is one thing for a country like Syria or Iran to be dumping US dollars and debt; it is quite another thing for a G7 country to do so and to this extent.

...It is taking more and more paper currency to buy real goods and no amount of disinformation and cartel selling can hold down the 'price' of gold anymore. Gold like water, is finding its own level.

Hard assets are the best protection against the falling purchasing power of fiat currencies. Gold has actually risen further than property prices since the bubble burst and that from an almost thirty year low in real terms. Global property is in the biggest financial bubble of all time and is currently falling fast in the US and Australia.

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

With a bit of careful editing to simply omit the traditionally off-based elements of monetary rhetoric, we are left with the above excerpts which, happily unencumbered, make for a good read.


maria_baytv#14841010/13/06; 06:17:44

ToolieUS Trade#14841110/13/06; 06:29:56

Snip: The deficit rose to $69.9 billion in August, up 2.7 percent from July's $68 billion deficit, which had also been a record. The sharp deterioration in the deficit in recent months has occurred because soaring global oil prices have pushed America's foreign oil bill to historic highs.
For August, the $2.7 billion rise in exports reflected record sales of American farm products and U.S. consumer goods including artwork and antiques.
[So we've gone from burning the furniture to throwing the Mona Lisa on the fire]
Imports of food products set a record of $6.5 billion in August, topping record U.S. exports of food, which climbed to $6.1 billion. [$400,000,000 deficit in food, for one month – amazing. Will our banks ever allow any productive activity to take place on our shores?] (end snip)

Gold looking spunky this mornin’, it ought to.

The Invisible HandBlah Blah Blah#14841210/13/06; 06:52:39


In 2002, the Iranian government transferred most of its financial reserves into euros, and it is believed that the transfer covered about half of its assets.
On December 7, 2002, North Korea ended its commercial dollar transactions. But this decision has had a limited effect. Furthermore, the dependents of Venezuela (the fourth largest oil producer in the world) on the 12 barter deals it signed with Latin American States has placed considerable pressure on the dollar by removing it from oil transactions.
Unilateral decisions to switch from the dollar to the euro could continue to take place, this time by OPEC member States.

TownCrierThe Invisible Hand's msg#: 148412#14841310/13/06; 07:59:02

"In 2002, the Iranian government transferred most of its financial reserves into euros..."
"Unilateral decisions to switch from the dollar to the euro could continue to take place, this time by OPEC member States."

My comments on those snips.

As the minders of the euro-bloc economies don't want to see their trade balances put out of kilter by an inordinately strengthed euro currency that such a reserve shift would entail on the world stage, we can draw some comfort from the greatest expectations that the framers of the euro architecture will heartily encourage these other players to mimic the eurosystem's own structure for international reserves.

To the uninitiated, they have been deemphasizing the use of the U.S. dollar by trimming the eurosystem's net position in foreign currency -- meanwhile letting their gold reserves fill the void by swelling in value through regularly-scheduled mark-to-market revaluations.

(This paradigm has yet very very much distance to transition and grow. And notably, by definition in fact, the amount of euros held by the eurosystem as int'l forex reserves is NONE.)

Getting back around to the Iranian transition in 2002, I'm sure you'll join me in acknowledging great signficance upon the fact that in that same isolated year the Iranian's were seen tapping the Swiss gold coffers for a one-off haul of gold totalling $2+ billion in value.

It would be a strain upon credibility to try to imagine that these events were unrelated.

Russia has found the expediency to follow this path (openly proclaimed one year ago), and it is only a matter of time before China admits to an adherance to this same wisdom.


Peculium AurumUS MINT#14841410/13/06; 10:09:27

Well it looks like the US Mint has started to sell uncirulated Gold American Eagles along with proof coins.

But at $720.00 an OZ whos going to buy from them when our host CPM is more than 100 less for an American Eagle.

Talk about high Gold coin prices, How about $4K to $6k
for a 2006 Proof one once Gold American Eagle Reverse, selling like hot cakes on EBay, maybe the hand that no one can see was right in the price of gold contest?

spikedogPeculium Aurum and TIH contest guess#14841510/13/06; 11:08:44

Perhaps we are seeing the difference in the paper price and the physical price beginning to manifest in the shrimp tank.

Thanks again to the master of the Castle, Sir MK and his trusted master of Ceremonies, Sir Gandalf. Received my Silver Shiny yesterday.... It is soooooo precioussssssss.


Lothar of the Hill PeopleArrival#14841610/13/06; 11:51:21

Oh glorious day, the promised precious silver today brought shining glory into the dank ancestrial cavern of the my people.

Gratitude again to our generous host.

I am Lothar of the Hill People

mikalJuicing the economy#14841710/13/06; 11:59:12

Ask the expert: The Commodity Bull Market | Financial Times
Published: October 12 2006 14:23 | Last updated: October 13 2006 17:43 | Snippit:
"Jim Rogers has been the most prominent and consistent champion of the commodity bull market. Long before sharp price rises of commodities started to attract headlines, Mr Rogers forecast a long-term bull market for the sector.

With commodity prices showing some recent weakness, Mr Rogers can answer your questions on the future direction of the market - has the commodity bull market burst? Will oil weaken further? Can gold still hit $1000 an ounce as he forecast earlier this year?

Mr Rogers answers your questions below

Since the Fed has stopped giving us M-3 figures and the money supply eventually shows up in commodity prices, do you know a reliable way to estimate money supply growth? And do you think that data is useful?
Jack Adamo

Jim Rogers: The Fed clearly has something to hide. I recently saw someone who had figured out a way to determine the number independently. His conclusion was that M-3 is now even higher than before. I do not remember who he was nor do I know a way to determine it myself bur I do think the numbers are useful.

Only a few weeks back, we were hearing analysts talking about oil hitting the 80s or the 100 mark. At the same time we heard about gold hitting advancing well above 700, especially in September / October. Apart from any likely or unlikely geo-political issues is there any reason to anticipate the sharp (or mild) plummeting in such markets to continue, or are they likely to reverse dramatically? What may be the major reasons for such dramatic recent reversals in the recently and highly anticipated bull oil and gold markets?
Brennan Kabrabjc

Jim Rogers: Oil did hit $78 spot and several contracts were over $80. Gold did sell over $700. Both are correcting now as always happens in all bull markets. A lot of people built up large inventories of oil during the run-up and these are now being worked off.

I have no idea how long the corrections will last or how deep they will be but I do think the secular bull market has years to go.

I would like to know your opinion about the Goldman Sachs Commodity Index? What do you think - can it turn up or will the decrease continue? The index consists mostly from energy (74 per cent) and therefore the coming development of crude oil prices is for me very important.
Klestinec Michal

Jim Rogers: I talk about it in my book. I find it not a very good index which is why I had to develop my own index for my money. The energy concentration is only one of its problems."

Clearly Jim Rogers has had outstanding success investing his way. But "there's more than one way to skin a cat" -
we may not always see eye to eye on gold and paper investments. But there is much insight and encouragement here from Rogers, and from his questioners.

mikalSigns and smoke signals#14841810/13/06; 12:35:09

Getting a Grip on Hedge Fund Risk - Economists See Risk to Financial Markets And Say More Regulation Is Warranted
By PHIL IZZO | Wall Street Journal | October 13, 2006; Page C3 - Excerpts:
"Hedge funds present a risk to the financial markets and tighter regulations are needed, a majority of private economists said in a new survey.
Survey conducted Oct. 6-10. More than half of respondents in the latest economic survey -- 23 out of 41 who answered the question -- said regulation and supervision of hedge funds is too light; 16 economists said it was "just right" and two said it was "too tough." About 60% said hedge funds pose a risk to financial markets. "We just don't know if they're dangerous," said Diane Swonk at Mesirow Financial, and when it comes to financial markets the "unknown is unacceptable."

The explosive growth of hedge funds and their aggressive use of borrowed money have raised alarms about whether a financial crisis could set off a chain reaction of hedge-fund failures that could cause chaos in the financial system. Hedge funds, investment pools for wealthy investors that make big bets on stocks, interest rates and other markets, have roughly $1.2 trillion in assets, twice the level of five years ago."

""Amaranth is a small example of what happens under macroeconomic stress," said Allen Sinai of Decision Economics Inc., who warned a larger economic event could have catastrophic effects. "Amaranth is just the tip of the iceberg.""

""When the beast gets big enough so that it has the potential to be a systemic threat, then I want to be ahead of the curve not behind it," said Mr. Sinai.""
Mikal - Allen Sinai, a familiar name with government experience, sounds as though he's well versed in the ways of Washington. Likely he knows gold has the global reach of the dollar, but with a much more tangible imprint...

MKmikal#14841910/13/06; 13:39:47

Two great finds. Thanks.

Sinai is right when he says "tip of the iceberg."

A prediction:

My own take is that in all probability we will not see meaningful regulation of the hedge funds until after some kind of financial disaster, even though some central bankers have come around to acknowledging the amount of systemic risk they impose. The word "panic" may once again become part of the financial lexicon. Students of financial history will recall that it was just over 100 years ago that successive panics led to regulation of the banking industry and the founding of the Federal Reserve. I would not be surprised at a similar chain of events ushering in this century -- only this time revolving around hedge funds and other massive capital pools. The institutions brought forth will have an international regulatory scope. Those who own gold will have enough of their assets remaining to be concerned about the viability of the new regime. Those who do not will wish they had.

By the way I can remember posting here several years ago that hedge funds and the derivative markets needed to be regulated and being booed in some quarters, both here and at other sites. Alan Greenspan was, and I suppose, still is opposed to regulation despite what we have seen. And I don't mean simply in the rules as to who can invest in hedge funds, but how those hedge funds are operated. To me allowing the hedge funds to go unregulated is like playing football without rules. One team is going to come away a winner but you had better back-up the ambulances.

Rogers might be thinking Adrian van Eck who devised a correlation between M2 and M3 and now uses M2 as his primary money supply measuring stick. The Fed still publishes M2 statistics. Leave it to the wily, long-time Fed Watcher AvE to discover an effective end run around the Fed's decision to dump M3. Others will follow. He says, by the way, that the money supply is in an explosive growth phase.

BoilermakerMelda Laure msg#: 148398#14842010/13/06; 14:41:02,0,6161247.story?coll=chi-business-hed

In your linked article Jas Jain says…"During the coming global depression, within this decade, the price of crude oil should fall below $25 a barrel and there will be glut due to sharply falling demand."…….

He predicts the US will have a deflationary depression after this period of peak debt. He does not discuss what will happen to the $ vis-à-vis other currencies, its reserve status, and the likelihood of government sponsored programs to maintain jobs and income. Real asset and commodity prices and certainly gold will be determined by a world market that suddenly sees a need to convert trillions of paper $ holdings into real things. This will drive the $ down, increase the $ prices of real assets, increase the cost of imports to American consumers and increase American exports. US wages will stagnate and the standard of living for Americans will revert/decline to the productive capacity of the country which is where it should be. IMHO.

The price of oil (POO) is very complex and is being constantly pulled up and down from short and long-term factors such as;
- growth rates in consumption in China, US and the rest of the world
- rates of decline in major producing areas
- OPEC's discipline in controlling output and their ability to find new reserves
- Saudi Arabia's continued allegiance to US oil needs and their own geopolitical agenda
- Russia's direction in increasing their production and export (oil and gas)
- Price and availability of substitute fuels, primarily natural gas in the US and Europe
- Price and availability of alternative liquid fuels such as ethanol
- Price manipulation via derivative markets
- Hurricane effects on production
- Weather effects on consumption
- The high cost of developing new deep water reservoirs
- Environmental restrictions on drilling

We have recently experienced a huge reversal in NG prices that has likely spilled over into the oil market. This NG volatility was sparked by fundamentally strong market fundamentals last year exacerbated by hurricane shut-ins and then manipulated by traders. In the short run the POO, particularly West Texas Intermediate (WTI), can be manipulated but the oil market is global and its distribution is more flexible than NG distribution. Another item to note is that since oil's decline from the $70 range the WTI has led the market down. I say this because the WTI normally trades at a $1 or $2 premium over Brent crude but during the recent decline the WTI has been generally below Brent. I suspect traders have been the main influence on this market for the past year, both in the run-up and now on the decline.

As for the longer term "equilibrium price" I expect that it will trend upwards. Saudi Arabia and the rest of OPEC have probably used up nearly all of their production margins and production in the rest of the world (with the possible exception of Russia) is peaking or declining. OPEC probably will not let oil prices fall precipitously because they will be measuring oil's value in terms of gold not the US$. This leads me to conclude that the POO along with many other natural resources are going to disconnect from the $ and follow gold. Gold will become the new yardstick for measuring the value of real things. In the likely event of a recession or depression that curtails oil consumption I expect that OPEC will adjust production to maintain its price relationship with gold. If you accept this relationship for the POO we only need to predict the POG and the ratio between them.

The historic ratio between POG(oz) and POO(bbl) has been about 1/15. Today the ratio is about 1/10. I believe the POO is likely to return to a ratio near 1/15 but only if and when gold escapes the shackles of suppression vis-à-vis the $. The POO has been freed and has gone up faster than gold primarily because the demand for oil has finally caught up with productive capacity. Gold will play catch-up with oil when it is freed from the $. In the future I can envision the case where even non-OPEC producers may curtail production from their declining reserves when faced with low oil prices in relation to gold.

Having said all this, the Saudi's still have their own agenda as evidenced by the linked article.

melda laureHalf empty half full, a little of both and you have confusion.#14842110/13/06; 17:03:13

Thank you for your comments. It did seem his thoughts about a $20 POO at a POG:POO of 10 was a tad bit implausible given the constraints. A US recession does not imply a world wide "asian crisis" slump in oil demand at this stage of the game. Also interesting is the silly notion of the past regarding the Saudi's "market share" need to stifle other oil players. Once the reserves are looking thin, attitudes about dollar profits might well change to a more comprehensive value judgement.
melda laure(No Subject)#14842210/13/06; 17:14:31

But the commodity markets are the second biggest in the world after currencies so the effect has not been too great....

These are huge markets. In fact oil alone trades more in a day than all the stock markets in the world. Remember oil trades $6 thousand billion a day and when you throw in all the other commodities, the numbers are gigantic...

It is hard for met to blame the hedgies for taking advantage of a corrupt system.

It is hard for the Queen to blame Pirates when she is handing out letters of marque. Successive panics led to the foxes writing more rules for the henhouse.

It's a big henhouse too. They're going to need a bigger fox.

CoBra(too)Hedge Funds and Derivatives#14842310/13/06; 18:03:45

@ MK - We've coped with LTCM - badly - but we'll never forget the Alamo ... eh, sorry the Amaranth!

Seems that this hedge was just an aberration of a 6.5 billion Dollar bet on nat. gas. ... No prob, says a potent counter "better" party ... after all I do control the major commodity indices for ever!

After all my renowned GSCI has been around almost forever and if we feel that a single commodity is distorting the overall performance we do feel compelled to rectify the situation.

Unfortunately, Alamo - eh, Amaranth didn't cope with the fact that we had to reduce the Natgas position in our GSCI index by roughly two thirds over (night) time... and these turds went broke? What a joke - so we had to pick up their positions - of course we've also invited other contenders as JPM and now it's our position.

Dear friends, don't worry we'll make a fortune on our position of always being the last resort counter party - oh, at least in totally inflated ... Fiat Currency - any fiat currency.

Gold - may not be available at all - maybe tomorrow - get you some now! cb2

GoldiloxGlobal oil demand#14842410/13/06; 18:49:38

@ Melda laure,

I wonder what cloud those who tout oil demand destruction are floating on.

With the level of sabre rattling going on, the world looks poised to end the current "recession" with the same flurry of "supply destruction" they used to end the 1930s depression.

One look at the TV listings will confirm the slant of media preparation. No "Ghandi" movies lately, but the WWII epics are headlined every night.

Even if all-out war is averted, sabre rattling itself burns a lot of calories with carrier groups, tank divisions, et al, marking time in far-away locales.

mikalMacroeconomic meringue pie takes flight#14842510/13/06; 18:51:57

Co-ordinated bailouts may no longer be possible
Submitted by cpowell(GATA) - The Credit Business Is More Perilous Than Ever
John Plender | Financial Times, London | Oct 13
Snippits: "Yet whatever the faults of hedge fund managers, the critics are shooting the messenger. If the real worry is systemic risk, a more fundamental threat comes from the change in the structure of banking whereby credit risk is packaged into tradeable IOUs or hedged via credit derivatives and shunted off bank balance sheets."

"Yet there is an immutable law of insurance that says that while hedging can reduce the risk to the individual party taking out the insurance, it increases the risk for the system as a whole because of moral hazard. That is, the mere existence of insurance means people become less risk-averse. And that, complete with the marked decline in risk premiums and in lending standards, is the story of credit markets this decade.
The mechanics of moral hazard in the exponentially growing newer financial markets entail the destruction of the old relationship between banker and borrower. This is because banks no longer retain the credit risk in much of their lending. They originate and distribute; and where the intention is to distribute, the lender is inevitably less bothered about loan quality.
As Raghuram Rajan of the International Monetary Fund argues, bankers now feed rather than restrain the appetite for risk. In a relatively benign monetary policy environment the markets remain stable, leading to an intensification of moral hazard: The longer the market's superstructure proves reliant, the more reliance will be placed on it, even though it has not been tested in really difficult times."

"It is easy enough to share data. Fiscal burden-sharing is another matter. If, for example, an insolvent bank that poses an EU-wide systemic threat has more deposits outside its home country than in, few local politicians will want to spend taxpayers' money on voteless foreigners, including global banking giants in London's financial adventure playground. Lenders of last resort will in future be more elusive. And banking crises will be messy."

The author seems to have broken new ground
in covering areas of global banking and finance that were off limits at FT.
Still, the scope of this FT article essentially obviates the need to cover many of the mechanics of finance such as leverage and almost endless financial minutea, margins, collateral, disclosure etc.
But those are certainly among the things that will keep many others occupied, laboring to resolve insolvency and "fiscal burden-sharing" in a less than ideal geopolitical environment.

TopazYin and "Clutch-plates"?#14842610/13/06; 19:06:05

I don't want to labor the point but this all-currency PoG has truly developed a life of it's own these last 12 mth's.
I can offer no other explanation than we're witnessing a paradigm shift from Dollar reserve to Gold reserve thus they're able to best manage price containment.

Gold? ...well, NO! To create a balance we must have similar units, so Gold per-se can't be used. What they use is PaperGold to offset Paper Currencies. The Yin and the Yang.

Takes the upward pressure off Buck, takes the upward pressure of US$PoG, perfect? ...right!

Makes for a mighty big discount ...Your-extra-systemic Gold to PaperGold IMO, with all that allocated/unallocated/Bullion "IN" the system now committed to underwriting the P-Gold explosion.

TownCrierThe reluctant DMR#14842710/13/06; 20:44:24

The FTP utility on our server has been stubbornly in lock up, and having been foiled for as long as my patience will bear, I'll simply past today's report to the forum to be done with it for now, even without the associated page update, and will get the updated DMR page fetched over to its proper place at such time as the server utilities find the grace to cooperate again.


FRIDAY Market Excerpts

Gold gains $12 as funds buy

October 13 (from DowJones, Reuters) -- Chart-based and fund buying enabled North American gold futures to surge to their highest levels in 1-1/2 weeks on Friday, analysts said. A firmer tone in crude oil was cited as one of the catalysts.

"There is some new money coming into the market from funds that have been sitting on the sidelines in Europe," said George Gero, vice president with RBC Capital Markets Global Futures.

"And there has been a tremendous amount of buying coming out of India and Dubai."

COMEX December gold settled $12.40 higher at $592.70 on the New York Mercantile Exchange.

"You are seeing a resumption of some investment-fund interest in the market," said Jim Quinn, commodities floor analyst with A.G. Edwards. "The (gold) market held technical support at the $572 to $575 area." The metal has also been supported by market talk of good cash buying lately by India, he added.

"With energy higher, you see a little more commodity fund buying," said Dave Meger, senior metals analyst with Alaron Trading. "We had a nice technical breakout." The buying accelerated as December gold broke up through a series of highs this week from $583 to just above the $585 area, he said.

The gains in gold and silver occurred despite a stronger U.S. dollar, Quinn said. The analyst said he looks for December gold to test $597 early next week.

Mike Guido, commodities head of hedge fund marketing at Societe Generale, said gold's outlook would turn very bullish again if the December contract cleared $605, the downtrend line off the 26-year high at $753 on May 12.

"The big picture, what's driving gold and silver right now, is the oil market. That's giving it an inflation bit," Guido said.

"It's rallying despite a very, very strong dollar. That's very uncharacteristic of gold and shows you there's real buying coming into the market," he said.

The Invisible HandGod bless America!#14842810/13/06; 23:22:15

Bush's Powerful German Booster
[The media in Europe and the rest of the world is near-unanimous anti-Bush] "[Bush's] American critics may quibble over the details, but we Europeans know the truth. We saw it first hand: Ronald Reagan ended the Cold War, freeing half of the German people from nearly 50 years of terror and virtual slavery. And Bush, supported only by the Social Democrat Tony Blair, acting on moral conviction, recognized the danger in the Islamic War against Democracy. His place in history will have to be evaluated after a number of years have passed.
"In the meantime, Europe sits back with charismatic self-confidence in the multicultural corner, instead of defending liberal society's values and being an attractive center of power on the same playing field as the true great powers, America and China.
"FOR HIS POLICIES, BUSH RISKS THE FALL OF THE DOLLAR, huge amounts of additional national debt, and a massive and persistent burden on the American economy – because unlike almost all of Europe, Bush realizes what's at stake – literally everything.


This article is of the most subversive kind and will lead to more war (WW III).

Congratulations to the author for saying that for his policies, Bush risks the fall of the dollar. Or is it because the dollar is kaput that Bush is taking the risk? Is it because the pressure upon the dollar can no longer be contained that George II launched his anti-muslim crusade?

Which brings us back to the riddle: 9/11 - Attack or Self-Inflicted Atrocity?

On Thursday, Oct. 12, France and Germany urged Russia to ratify an international energy charter that would provide the European Union with greater security for its energy supplies.

The Invisible HandPutin creates new axis in Europe to oppose US hegemony#14842910/13/06; 23:46:46

Russian gas giant Gazprom's decision to develop on its own - without foreign companies - the massive Arctic Shtokman field, and to export the bulk of this gas to Europe, and not the US, deals a body-blow to US energy security. President Vladimir Putin has taken a giant step toward creating a "new axis in Europe to oppose US hegemony".

melda laureShackles of debt chafe less than rings of iron.#14843010/14/06; 00:54:05

Is it Star Wars Episode III? Or is it just another messy Custer's Last Stand? Fortunately for the US, the natives here are quite content to watch the euro-americans poison themselves slowly with chemicals and funny money games.

Europe has a different problem, they may not be christians any longer (or only loosely so) but it is obvious that europe's muslims have no intention of becomming atheists/socialists- at least not yet.

The problem is a bit deeper, and I will not be providing any elven wisdom here. Unfortunately for europe, the days when cowboys could just "kill all the indians" are only a bitter memory, perhaps a legend anylonger, to be played at by children as their americans counterparts play cowboys and indians. I suppose the game of "moros y cristianos" has been banned in Spain by now. It seems so far away, implausible, unthinkable, insane. But any welsh, scot or irishman knows it is not, they look at Rwanda and think, "the poor buggars, there but for the grace of God..."

But enough of that fate garbage. Men have evolved far away from stupid fairy squabbles over jewels. We now settle our contests via economics, a civilised game played in the bond pits, and forex counter. Light sabers and six guns are so passe'. Lawyers and Bankers are much less destructive. As Chancellor Palpatine says "then we will have peace..."

Who is left, Sir 'Lox, to play the part of the old wizard at the battle of the five armies? Perhaps more to the point, who will play the part of the goblins? If the enemy is us, (as Pogo says) then any old enemy will do. Our list of allies grows thin: the Pope is recused, the tibetan in exile is biding his time. The remaining spokesmen are too little known to be listened to.

No, something tells me the future is not so. Other than North Korea, few nations have completed any kind of "re-armament" as did France and Germany after 1870. Even China's plan for the US relies more on US stupidity than on scalar weapons systems. Rumours of hidden pre-deployed nukes are just that. Hiroshima and Nagasaki only secured a signed piece of paper. Occupation forces and the words of the emperor to "bear the burden" did the rest. Nukes destroy, the do not conquer. War to tell the truth is little changed from the days when Henry V tried to conquer France. And since Mindanao has little oil it is not on the hit list, nor Pyongyang. Mr Nyquist's observations may well be irrelevant.

Baghdad is the exception, Amaranth is the future.

Where are the weapons, Sir 'Lox? Warren Buffet is right, we're looking at them, weapons of financial mass destruction. Yesterday Argentina, tommorrow the world. And when they kill the archduke we will all be glad to own gold.

North Korea's push for nuclear weapons is part of a larger pattern of belligerence that involves the emergence of a worldwide anti-American coalition, including Iran, Venezuela, Cuba, South Africa and Vietnam (to name a few).

Which is more terrifying? An ageing Jihadista in a cave in Tora Bora, or the enthusiasm of our congress to gutter our constitution and our economy?

I do not know. But I can see the derivatives mess more clearly than I can see the threat from Bin Laden's merry band of anarchists, no wehrmacht indeed. Not even close.

melda laureFrom Nuclear Holocaust to Financial Holocaust.#14843110/14/06; 01:20:10

@ TIH,

my comments below in reference to your last. Sorry I missed the dateline. If the derivatives ever hit the fan we will need a scapegoat I suppose. Perhaps several.

Six-legged banker-roaches will crawl out of the rubble and take your gold as a deposit.

The ashes falling will be paper ones.

The workers in the developed world are usually voters as well, so at some point we expect a loud outcry from workers and demands for protectionism by politicians, far greater than we see at present. Inevitably this will bring politics, [on this issue] head-on with the interests of capitalists.

We do not expect the politicians to roll over and be overwhelmed by commercial interests when it comes to their future votes.

And while I appreciate Julian's point, hasn't the bottom already suffered enough? We'll find out at the polls soon enough. Then again, in an age of homogenized republocrats does it make any difference?

The Invisible HandSeventh Day Adventists and Gazprom#14843210/14/06; 03:43:16

Warning about the systemic risk of POG containment,
of the absence of a freely floating gold price
Complaining about the destabilising effect of systemic dollar inflation and debt


The most all-encompassing warning about systemic risk was officially given in 1971 with the closing of the dollar-gold window.

The vehicle of the dollar-International Financial and Monetary System (IFMS) was in these days (35 years ago) running on flat tires. At that moment, it became clear that at the end of the day the vehicle would run aground due to price-hyper-inflation.

That end of the day is now closely approaching at an increasing speed (dollar-expansion) and a huge overload (dollar-debt).

All accomplices to the gold and oil price-control scheme have up to now kept the debt-laden dollar-IFMS on the right track by keeping the dollar-reserve system relatively price-stable, whereas the dollar-expansion "continues" to disproportionally increase vis-a-vis world GDP.

The implementation of Basel-II and/or a Basel-III (bank-reserve-requirements) will not prevent the running aground of the dollar-IMFS vehicle.

In 1971, THE PRICE OF GOLD WAS NOT ALLOWED TO FREELY FLOAT, the trainloads of warnings notwithstanding.

And in 1980, the dollar-IMFS resolutely opted for further disintegration through dollar-inflation and for further continued destabilisation of the dollar-debt system through contained gold prices.

Today ‘everybody’ is again complaining about still THE SAME destabilising effect of systemic dollar inflation and debt. It being understood that they complain not about the "inflations" as such but about the derivatives which are being applied to try to stabilise these inflations (in the plural).

NOBODY warns however that it is the gold price containment, the absence of the freely floating gold price, which is the main culprit of the systemic dollar inflation and debt.

It is therefore of the utmost urgency to find a way to let the gold price freely float in order that the gold metal wealth reserves could move FREELY in such a way as to be able to balance the permanently devaluing dollar debt reserves.

As long as the dollar-IFMS does not want to allow this free-floating, the risks will continue to systemically increase while everybody will continue with her complaining about the destabilising effect of systemic dollar inflation and debt, whereas nobody will draw the sheeple's attention to the fact that it is the gold price containment, the absence of the freely floating gold price, which is the main culprit of this systemic dollar inflation and debt.

The political gold of the treasuries must at the end of the day also be allowed to float, physically as gold metal and in a free universal valuation.

The present limited (monetary) gold metal redistribution at controlled different gold prices is untenable.

Note that the US Treasury gold hasn't yet given any signal that it is about to move, whereas many other treasuries have made their gold-commitments public.

This UST gold is, by its own blockade, being prevented from moving, while the inflation tsunamis are coming.
The doomsday scenario, so enthusiastically peddled by perennial bears, of a calamitous unwinding of global trade and capital imbalances, plunging much of the world into recession, has failed again to materialise. Like SEVENTH DAY ADVENTISTS miserably left standing around the altar as the awaited hour comes and goes, the doomsters must once more defer the end of the world to another day. And it looked so possible that this time they might have been proved right.,,13130-2397752,00.html
Perhaps Gazprom really does want to be alone. If the utility giant can develop its gas export business without foreign help, then the world of big energy is about to change in a very fundamental way. When SHELL, BP and EXXONMOBIL marched into Siberia half a decade ago, they waved their chequebooks and boasted about their skills. It was assumed that old Soviet oil in fur hats would be supplanted by Texan engineering in tractor caps.
Oil nationalism is resurgent.
President Hugo Chávez can afford to be belligerent. Would Gazprom be so confident if its coffers were not swollen to bursting
WHILE the multinationals fret over the capricious behaviour of the princess from the Baltic, the Saudis are buying up old and discarded bits of petrochemical kit in Western Europe.

The Invisible HandFreegold is an inevitability#14843310/14/06; 04:32:05



The Shift in Economic Power to the East, Part 2
Denial, Crisis and Soaring Gold!
the shift in wealth from West to East is long-term and structural and unlikely to be reversed. At some point in time this shift will lead to economic and political rifts that will heighten global tensions and prompt financial and possibly military responses. The shifting of economic power to the east is well along and unlikely to stop.
When we hear the Chinese express their view on the Yuan, that "when it is in the interests of China the Yuan will be allowed to appreciate", we see it as a warning that the $ will eventually be allowed to fall heavily. The ripples from this change of policy will be felt quickly and painfully. Subsequently, there is a risk that the U.S. economy will face a sharp financial shock and a recession, or an extended period of sluggish growth. But the assumption that the rest of the world will follow the U.S. down should not be quickly taken. America's total imports from the rest of the world last year amounted to only 4% of world G.D.P.


The writers of such stories are forgetting that they are writing about the external US-dollar, the dollar outside US borders.

Such writers are also forgetting that a dollar-unit is a political datum and NOTHING more than that.
A unit, payable to bearer or legal tender, upon which the politicians and thus the bureaucrats have a dramatic grip and which can therefore be submitted to exchange controls, double exchange market (internal and external), devaluation, etc.

It is therefore not so strange that the US Treasury keeps completely quiet about its gold reserves.

If anything would be disclosed about these reserves, the whole world would start questioning the dollar and this would lead to a dollar-panic.

That's also why everybody keeps silent about the alleged 8,000 ton US-gold in Fort Knox and about the obscenely low price of gold vis-à-vis (in proportion to) the exuberant dollar-inflations of the last half century. This then explains why the dollar-paper-industry must be promoted at all costs. This is the real content of the dollar actions which are being organised by a colluding dollar-cartel (the dollar Financial Industry Fraternity).

The dollar-fractions are still unwilling to face their own degeneration COMPLETELY. They think that a partial revaluation of gold can save their dollar-lives and they do not want to hear about an all-encompassing floating Freegold concept.

The dollar fraud has not been set up in such away as to provide for this possibility. Therefore the possibility must NOT be recognised.

GoldiloxState of the Empire#14843410/14/06; 06:54:39

@ melda laure,

The mythology of bin Laden has grown to unimaginable proportions, as the Emperor uses him to explain every crack in the imperial dyke.

Let's examine this just a little. Born in 1957, he organized mujahadeen fighters to harass the Soviet armies in Afghanistan using arms and monies from the CIA funneled through the Pakistani "security service". Post- Afghanistan, he was alleged to have led failed political opposition in Egypt and Algeria, using funds from who knows where. After that fiasco, the CIA stated his followers numbered less than a few thousand scattered among the hills.

Yet, he allegedly managed to organize the Cole bombing, Embassy bombings, 1993 WTC bombing, and 911, even having the "gtound intelligence" to know that the US air space would be vulnerable on that particular day due to large scale "war games" against the FAA. This, from someone who supposedly requires regular dialysis, yet lives in caves with no bank records, cell phones, or internet hookup.

Last week, we heard some story about the arrest of his "webmaster". I'll bet they traced his whereabouts with his registered IP address. Given that no one can get an IP without traceability, that wasn't so hard, now, was it.

This story has taken on such mythical proportions that it now compares with the Xmas Bunny, Santa Claus, and the tooth fairy.

While US Generals are claiming that Iraq cannot be secured with any less than hundreds of thousands of troops (some losing their jobs for their candor), the President continues to tout that he is "listening to his field generals".

All the while, the battles for resource control continue to grow, as Imperial weakness becomes more and more evident world-wide, and smaller empires exert their opportunities.

While I have no doubt that bin Laden railed against US imperial control once his "mission" against the Soviets was complete, his willingness to turn against his original masters is no different from the same actions by Ho Chi Mhin, Castro, Noriega, Pinochet, or hundreds of other "CIA stooges" who used their funding as "Assets of the Empire" to initiate their own fiefdoms.

Yes, the Empire is eroding, but the bin Ladens of the world are but a symptom of much greater cancers within.

Your "state of the empire" message below reminds me of the stories of Atilla, Flavius Aetius, and Valentinian. Once Atilla was vanquished, Valentinian dispensed with Aetius in the typical Roman "retirement ceremony", only to watch the Western Roman Empire crumble at his very feet.

GoldiloxFree gold?#14843510/14/06; 06:57:41


"Free gold" may be inevitable, as you suggest, but will "free men" be a complete anachronism by that point in time?

CometoseCOT#14843610/14/06; 07:09:54

Silver unchanged

Copper since my last look continues longer

and Gold

Up NET 8000 contracts .....

that seems like a big move

KnallgoldFreeGold Men#14843710/14/06; 07:49:44

FreeGold and unfree man is an oxymoron.
GoldiloxAll-time High?#14843810/14/06; 09:03:00


Even if you're not a Peoplenomics subscriber, I'll share this interesting contrast: Since the 2000 all time high, on an unadjusted basis the Dow has done a 105.7% retracement while the NASDAQ Compost-it has retraced only 31.1% of it's decline. Worse? On an inflation adjusted basis, the Dow has retraced 63% and the NASDAQ only 23.6%.


Bubble, bubble, toil, and TROUBLE!

We reach "all-time highs" in the DOW - ONLY by first shrinking the US $ "measuring stick" rather drastically. The "NASDAQ Compost-it" as George so fondly puts it, is still miles from retracement.

Or maybe, as Moose und Squirrel would say:

"Eenie weenie chili beanie, the Spirits are about to speak"

ThoreaulyJim Puplava#14843910/14/06; 10:13:38

I think he's got it right (see link; click on The Big Picture) when he says near the end of this week's program that we are likely to continue to sees new highs in the Dow and generally good results in all asset classes as the Fed pauses until year end, then begins cutting rates in an effort to shore up the weakening housing market and and prop up consumer spending in general.

All this will do, however, is make the Mother of All Bubbles that much bigger and therefore that much worse when it bursts. After all, because the economy can't be saved without destroying the dollar, this will in turn cause foreign holders of US bonds (particularly China) to first slow the purchases thereof, the stop them altogether and start selling them. While the US government will likely intervene and freeze all foreign accounts, this won't prevent the bond market from collapsing and sending bond yields, and thus interest rates in general, through the roof.

That's when economic Armageddon in the form of a hyperinflationary depression arrives and all hell breaks loose, my guess being (as I've said before) that it will take the form of martial law (following an invastion of Iran, which will the Bush cabal will blame for the debacle in Iraq) in the runup to the creation of an EU-style North American Union ( complete with a euro-style currency ( to replace the free-falling dollar.

In Gold We Trust.

MKCobra #14844010/14/06; 11:46:02

I like the concept in the phrase --

"last resort counter party" or "counter party of last resort."

It also introduces some interesting issues in the event of a multi-hedge fund breakdown, doesn't it.

arbyh1 man still locked up from 9/11 sweeps #14844110/14/06; 14:36:18

- Snip -
In a jail cell at an immigration detention center in Arizona sits a man who is not charged with a crime, not suspected of a crime, not considered a danger to society.

Now here is a story that paints the true representation of our Constitutional Freedoms -vs- The Needs of the State.

As you read this story also recall the recent news of our President G.W. admitting there were in fact detention facilities overseas holding unaccountable personnel for indefinite periods of time without charges. He admits that now, after earlier denying the very existence of such facilities. To be swept up in mass and then sorted, or not sorted later. How would that make unfortunates’ family's’ feel?
Consider: The "Bonus Army" and Hooverville; The internment of the Japanese after Pearl Harbor and for the duration of the war; the fact that our prisons are full, and now even private contractors are now having to get in the business of warehousing individuals for crimes in our land of laws. The facts are that our country is very efficient at putting people away and for many reasons.
How far will the Constitution and the Bill of Rights bend? How long before The House, Senate, Executive office, and the Supreme Court in a consolidation of power, cover each others agenda. Hasn't it been said that what the Republican party worries about the most right now is that the Democrats win the House and move to impeach Pres. G.W. Moves are made in legislation now to pardon individuals for wrong doing in advance of this. Is any of this really possible? How could we have suffered entropy to such an extent?

Here is an interesting thought: With the UN and the world opinion only somewhat tolerant of the USA's actions and rhetoric, What if war crimes charges were brought up against persons within our govt.? Would we submit to that scrutiny, or would the whole facade of freedom burst? Would we as a country declare martial law and do a North Korea style stance against the world. The dollar would dump, etc.
Where does gold go in the event of a blatant consolidation of power? I'm sure when Roosevelt took all the gold they asked themselves some of these questions.
The questions of freedom were asked again when the draft was imposed and people were forced to go to war, or go to jail, as well. The volunteers and later conscientious objectors have not faired so well in their Court Marshals.

This whole Political Science governmental thing plaid out over time can be a real mind blower. PolSci states people seek power. How about the way Goldwater was slandered so badly in the press during his election bid. Much of it all reminds me of the CIA motto: "The truth, the half-truth, and the lie."
So many little nastys plaid out within and outside the country. But Mom and Pop Middle America watch for someone to tell them what to think. There is a flag on every pole all across Middle American cities. We love our country...and try to keep the faith. I hope we will be able to continue to do so.

Did anyone read Warfare in the year 2020? It was an interesting trend analysis on developmental changes many levels of geopolitical ties, as well as society changes, and of course technology across time.

geCNN Promotes oil & nat gas futures for mom & pop investor #14844210/14/06; 16:22:28

"Gone are the days when it was relatively easy to see where the oil market was headed. Up until July the trend was definitively upward. Then it was definitively downward."..."Average investors can buy oil contracts on the New York Mercantile Exchange through hundreds of Web sites targeting the mom and pop investor."...
White Hills9/11 sweeps#14844310/14/06; 17:26:03

sir arbyh. I don't see anything in your post that have to do with gold or the economy. You ask us to read a story on yahoo and then give us the benefit of your vast knowledge on what it all means. It is another rant on the bad USA, the bad administration. Everything, to you, in this country seems to be BAD. Move to France, Europe or better yet IRAN or NORTH KOREA where they would certainly eliminate you if you critized their country or president. Give us a break keep your political opinions to yourself. It just shows your ignorance. White Hills
Thoreauly@ White Hills re 9/11 sweeps#14844410/14/06; 18:33:20

Arbyh's post merely speaks to the gross injustice of the security state as it lurches toward outright totalitarianism, with obvious implications (to some of us, at least) for the economy and gold.

Get a grip. And get gold.

GoldiloxIgnorance?#14844510/14/06; 18:47:46

@ White Hills,

I've watched your responses for a long time now, and without ever examining a shred of evidence, you proudly proclaim that "US officials cannot possibly be guilty of crimes, and anyone who suggests it is unpatriotic or ignorant." Does that mean, sir, that you unquestioningly support vile behavior by those who violate our trust, just because they won an election?

Please examine the evidence, and tell us why you believe it is false, because throwing epithets around in the name of "blind patriotism" doesn't impress anyone, and certainly does nothing to protect the citizens from abuse.

I. for one, LOVE this country, and I am ashamed to see that drug dealers, gambling mobsters, and crooked charity sponsors flaunt their flagrant disregard for our Constitution and system of laws and use the booty of their illegal activities to finance their campaigns. Perhaps you believe this has "no bearing on gold", but the type of legal abuse described by ArbyH can easily be turned on gold-bugs to "confiscate" their assets for the benefit of the "state" and "banksters", as it was in 1933.

Emigration is not the answer, as that would be "cut and run" behavior, and even our President has vehemently reminded us that it is not patriotic. The reason we have laws is to limit ALL citizens' behavior, and rendering leaders immune to justice is tatamount to handing them the Pinochet-style dictatorships they support around the world and label "democracy".

God Bless America, but to keep it, we MUST insure that those who abuse our trust are not then given "absolute" power to increase their abuse with impunity.

The Invisible HandYou thought paper gold was no gold?#14844610/14/06; 20:21:14,,1922831,00.html



For millennia, gold has had a hold on the human psyche. The alchemy of transmutation, creating gold from the elements, has obsessed fortune hunters, charlatans and intellectuals alike. Now a small publishing house has uncovered the secret of how to turn paper into gold and is offering to share it with the world.

In recent weeks, hardliners in the Kremlin have cancelled or renegotiated deals with Western firms in order to pursue Russia's national interests - but their plans may backfire

Heather Stewart, economics correspondent
Sunday October 15, 2006
The Observer
Beijing's foreign currency reserves are about to pass an unprecedented $1 trillion as China resists US demands to float its cheap currency and salts away cash for a rainy day;
'It is a bit of a waste of money. That said, sitting on a pot of money that big is not a bad thing - it helps you to withstand shocks.'


The China article does not mention the division of the stash into currencies and gold. Perhaps, Washington is only worried about the gold part?

Gold and paper/digits are indeed very confusing for all MINDS (I didn't say brains) because of the foondamental incompatibility between gold and paper/digits.


This explains why gold has been put in the last ten decades in a contract from – from
dollar-backing (before 1971) to gold price control..

Our masters wanted to make "paper" as good as "gold metal" and this is precisely what must be undone by floating freegold.


This is a golden opportunity for the politicians. Look, they can say, how easy it is to deceive the sheeple!

These days, the press contains many articles advising people how to "invest" "in" gold. Unfortunately, the press supports the masters and continues to advise the buying of paper gold.

Lord, have mercy upon them, they don't realise that they are building their own gin-trap. They are trying to pull their both arms out of the trap. At the end of the day, THEY WILL LOSE BOTH HANDS.

Here's the last hand chopper.

Ten new exchange-traded funds tracking portfolios of dividend-paying companies outside the US are set to start trading on the New York Stock Exchange on Friday.
It underlines the mushrooming popularity of ETFs in the US. The funds can be easily traded like stocks and often carry lower fees.


How "wise" is it to have digits upon digits upon … digits.

How many WISDOM Trees (intelligent indices trackers) will they have to create to neutralise/sterilise all the dollar-inflations?

Only possible because of the well organised digitalisation of the precious gold metal wealth.

How completely absurd it is!

USAGOLD / Centennial Precious Metals, Inc.October's Buyers' Group to be found within...#14844810/14/06; 22:11:15

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GoldiloxGold rallies as festive demand picks up#14845010/14/06; 23:56:02


NEW DELHI: Gold prices zoomed on the bullion market on Saturday on emergence of buying by stockists and retail customers for the coming festive season, amid reports of a firm international trend, recording a gain of Rs 170 at Rs 8,860 per ten gram.

Trading activity picked up with Diwali approaching and was also fuelled by reports of a sharp rise in international gold prices.

Gold in the New York market witnessed the biggest weekly gain since July, as energy costs increased, boosting the appeal of the precious metal as a hedge against inflation.

Gold futures for December delivery rose $12.40, or 2.1 per cent, to $592.70 an ounce in the New York Mercantile Exchange, the biggest percentage gain since September 5.

Traders said a surge in prices of the precious metal in overseas markets remained the major driving force and emergence of buying by retail customers further contributed to the rise in prices.

Silver was in keen demand among silver coins and silver utensil makers.


Let's get really "festive" this week!

DruidRussian energy: Europe's pride, US's envy #14845110/15/06; 00:03:38

"Buried beneath the heaps of hot words on North Korea's nuclear test, the announcement in Moscow on Monday about the Shtokman natural-gas deposit off Russia's Arctic coast almost escaped attention, despite its comparable lethal fallout in world politics.

Undoubtedly, Gazprom's statement shook up the world energy scene - and the calculus of European politics. Gazprom, the Russian gas monopoly, announced that it would develop on its

own without foreign companies the fabulous Shtokman deposit, holding an estimated 3.2 trillion cubic meters of natural gas and 31 million tonnes of gas condensate in the Barents Sea, 360 kilometers off the coast, at a depth of 320 meters.

And most significant, Gazprom also said it would send most of the gas from the giant Arctic Shtokman field to Europe, rather than to the United States.

Shtokman was initially expected to yield 30 billion cubic meters (bcm) of natural gas annually, of which 22-24bcm would be converted into 15 million tons of liquefied natural gas (LNG) to be exported by ship to the US. With design capacity achieved, the field will be able to produce 70-90bcm, which is more than, say, Norway's entire annual output.

It is estimated that the first stage of the project alone requires an investment of US$12 billion to $14 billion. The shortlist of companies competing for the project included Norway's Statoil and Norsk Hydro, France's Total, and US giants Chevron and ConocoPhillips."

Druid: Well, there's that Gazprom in the news again. It's an interesting peril to have so many reserve notes on hand. To be able to spend them in the appropriate way creates the "prisoner's dilemma". Enjoy the read.

GoldiloxA Next-Generation Hydrogen Vehicle#14845210/15/06; 05:10:33


Alt-energy activist Fred Robinson showcases a hydrogen-powered Hummer 2, demonstrating that conversions from today's automobiles to the fuels of tomorrow are in fact possible. Robinson describes details of his alt-fuel conversion, including how it changes vehicle performance, mileage, and fuel capacity.


An opportunity to whittle away at the US' "oil addiction" and the oil-gold strangle hold?

GoldiloxNAU and the North American Energy Policy#14845310/15/06; 05:43:38


In recent decades, with government cooperation, a business-supported bias has enforced use of combustibles as the primary form of energy for transportation, heating and to a large degree, electrical generation as well. When oil prices rose far enough to cause the public to gripe, the government would step in, providing rebates and subsidies – out of the taxpayers’ own money of course.

On this archaic technology we have built an entire system of infrastructure and interconnected business that resists change. In addition to this obvious publicly-known bulwark in favour of the oil industry, there was an undeclared "North American Energy Policy" in effect. To nip in the bud any technologies that might reduce its dominance, certain highly-placed individuals would intervene to ridicule the inventions, and to block even proof-of-concept experiments. (Ref. 1)

In a process underway for decades in secret, and more recently coming to the brink of emergence, the three nations currently occupying the continent of North America are to be merged economically, and, to a greater extent than any of their respective populations yet realize, politically. This is known as the Security and Prosperity Partnership (SPP). On March 23 in 2005, the SPP agreement was signed formally by the three government leaders of Canada, Mexico, and the United States. (Ref. 2)

- Goldilox

Is this why the administration went all the way to the Supreme Court to protect the secrecy of its "energy policy"? It kinda puts "hunting judges" and "protecting the Constitution" into a new perspective, as the admin must have judicial complicity to protect "extra-Constitutional" authority.

This is a rather long, article, but does more to describe the SPP and NAU than anything else I have found.

Rookbeen reading but not posting#14845410/15/06; 06:23:18

Sure is tough to get a global economy up and running for the long term on the first real try.
What a show.

USAGOLD / Centennial Precious Metals, Inc.All are welcome to enjoy our monthly special offers!#14845510/15/06; 07:43:48

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mikal"God's gold" lost or found?#14845610/15/06; 07:44:53

Author Traces Journey of `God´s Gold´ - The Boston Globe - NYTimes - October 15, 2006
History, archaeology, religion and politics. Written from a Judeo-Christian perspective, article touches on the fate of ancient gold relics that may or may not be unearthed.
If lost, perhaps the items in question were melted
then hand pressed or minted into coins we now hold.

GoldiloxGlobe article#14845710/15/06; 10:02:37

@ mikal,

Interesting article, but the author completely skips over the crusading Templars, and their period of plunder in the Mediterranean and ME regions. Philip IV tortured many of them trying to locate captured ME relics, golden and otherwise that mysteriously "disappeared" when he disbanded them forcefully with the support of Pope Clement V?

One thing constant about wars. The victors claim the booty, and if it doesn't match their religious philosophy, or might be confiscated after the war, a LOT gets melted down, a la the Swiss bankers' "management" of Nazi war booty in WWII.

One of the first things "sacked" during the US' latest invasion of Iraq was the Baghdad Museum of History, where electric batteries and other artifacts of the pre-Judeo-family Sumarian civilizations were on display.

TownCrier100 Gold Projects on Track -- Reserves at 300 Tons#14845810/15/06; 12:57:32

TEHRAN, Oct. 15--Some 100 gold exploration projects have been carried out nationwide, announced Iran Geological and Mineral Explorations Organization on Saturday.

..."We are trying to increase national gold production to over five tons a year by the end of the Fourth Plan (2005-2010)," he said, adding that the country's present gold reserves are estimated at 300 tons, of which 39 tons has already been discovered.

He said over 70 billion rials has been spent on gold exploration-related studies on more than 1,000 mineral-rich areas across the country.

...Iran is the world's 57th largest gold producing country. It stands third in Asia in terms of demand for the precious metal. Over 60 percent of the world's total 2,600 tons of annual gold production is used in Asia.

---ALSO from same url:

TEHRAN, Oct. 15--Some $1.6 billion worth of foreign investments were made in Iran in the past 12 months, showing a 13.6-percent rise...

...the Ministry of Industries and Mines managed to improve industrial sector both qualitatively and quantitatively over the past 12 months.

...the ministry constructed eight steel production units in eight provinces last year, increasing the national steel output by 6.4 million tons.

...Foreign companies have reportedly attached great significance to their interest and future activities in Iran's lucrative oil and gas industry.

The Ninth Government has extended huge financial facilities to such projects from the Foreign Exchange Reserve Account.

---ALSO from same url:

TEHRAN, Oct. 15--A senior parliamentarian said here on Sunday that the government is planning to transfer 80 percent of state-controlled entities to private sector in the next 10 years and asked what guarantees this move would provide for the national economy.

"Will there not be the possibility that the private sector will abandon the national economy in the event of an incident or a (certain) development," said Vice Majlis Speaker Mohammad Reza Bahonar.

..."We have to do something about this (state monopoly)," he said, adding that the country's economic situation is expected to improve in the next 2-3 years.

He lauded the 'tireless efforts’ of the Ahmadinejad administration, adding that once the latest readings of Article 44 of the Constitution, which permit large-scale privatizations, are implemented, such efforts will hugely affect the country's economic conditions.

State authorities have said that the government's role in the national economy will decline significantly...

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

"2-3 years"... Another example of goal-oriented ordering of affairs prior to 2010. Some of us are looking at 3 - 3.5 years as the outside timeframe for a fully functioning "freegold" reserve paradigm.

How is your own program to shift paper savings into gold coming along? The calendar waits for no man.


GoldiloxWill gold go higher to $725 or lower to $400 an ounce?#14845910/15/06; 16:33:34


Gold traders are confused. The metal is trading in a closed range with extremely high volatility. Price movements are so volatile that the option premiums have reached extreme levels. When that happens the market normally breaks through in the primary direction of the trend.

The clues to the primary trend in gold prices come from the direction of the economies in the US, China, India and Euro zone. While Japan is coming out of recession and is ready for an extended boom, the rest of the word is in a mode of super accelerated growth at this time. The Chinese and Indian economies are growing close to 10% a year. The US economy is strong on the surface and the Euro zone economies are growing and surprising many economists.

The gold pricing model is complex. This is because it has just become a world currency. The demand in China and India is actually increasing with middle-class demanding the metal for ornaments and safety beyond their own currencies. But Gold price today really represents the worthlessness of world currencies. Interestingly gold rallied with US Dollar. That shows gold now determines the valuation of world currencies.

Given that back drop, the gold price will depend on the perceived value of worldwide currencies. With no slack in demand from India and China, gold market is actually tight. But the whole pricing movement will depend on Central Bank actions of different countries. Other that Japan and some European countries, all other countries are eager to print currency to fund their budget and trade deficit. That is what will push gold prices higher. With economies booming in all countries, the Federal deficit shrinking, the countries are now less eager to print money excessively. Hat shows a possible slack in gold prices.

The gold price may continue to trend slightly higher but stay more or less where it is for the next six months. However, once the economies start showing weaknesses and the central banks resume printing excessive money, you can expect gold price to rise again.


The last line tells the tale. Will it be six months until the FIAT presses are rolling again? The "invisible" M3 suggests that it is already upon us.

mikal@TC#14846010/15/06; 17:11:06

Good points. If I may, I'd like to comment on this:

"A senior parliamentarian said here on Sunday that the government is planning to transfer 80 percent of state-controlled entities to private sector in the next 10 years and asked what guarantees this move would provide for the national economy...
"We have to do something about this (state monopoly)," he said, adding that the country's economic situation is expected to improve in the next 2-3 years."" End snip

The officials also state "the economy will benefit hugely in the next ten years" by the "privatization". If so, then it seems reasonable when they say "the country's economic situation is expected to improve in the next 2-3 years." And I feel that it's also reasnable to conclude that
freegold could also cause this, if it commences at any time from between today, and out to "10 years"(the date given for culminating transfer of "80 percent of state-controlled
entities to private sector).

Clink!Energy alternatives#14846110/15/06; 18:29:47

@ Goldilox.

While I have to applaud anyone who is trying to find a better means to move something from A to B, I find it particularly ludicrous to choose the vehicle which is the epitome of conspicuous consumption as the test bed. Rather than trying to find a better means of moving the automotive equivalent of an elephant, wouldn't it be better to spend one's time in finding a way to tame a lightweight pony ? (I know that you, as a rider of a motorcycle rather than a driver of a Ford Explosion, have already fully embraced this concept). For me, this represents how US industry in general, and the automotive sector in particular, is headed for a rather bloody nose in the face of peak oil.

Me, I prefer the approach of the Loremo team (see link) which George Ure mentioned in today's Peoplenomics piece. While I can have my doubts about some aspects of the car (having the rear seats facing backwards so the passengers can see that Ford Explosion which is about to rearend them is one of them !!) it should be noted that this is a car which weighs just over a thousand pounds, and can get around 140mpg using a 2-cylinder turbodiesel. This is the intelligent application of existing technology which could easily postpone the kind of severe dislocations which will happen in the relatively near future. If anyone doubts that the Loremo figures are too good to be true, I would say that I used to own a car (a Mini Marcos, if anyone troubles to Google) almost 25 years ago which had almost the same dimensions (size and weight) and, using stock parts of cars from the early '70s, managed around 60mpg(US).

This post might be considered a little off-topic for the Forum, but the point I am trying to make is that much of the doom and gloom of peak oil is totally bogus. It's not a question of finding other sources of energy so we can waste as much as at present, but more just not wasting in the first place. The key to how fast economic change happens is a factor of market demand. An example, still on the topic of cars. I bought a new Honda Civic at the end of last year based almost entirely on urban fuel consumption from a conventional (i.e. not hybrid) vehicle. Since then, there have been five other models with equal or better performance introduced in the north American market. And more are on the way.

GoldiloxH2O Hummer and fuel options#14846210/15/06; 19:03:43

@ Clink!,

I think the choice of the Hummer had two concepts in mind.

1) If the "elephant", as you so aptly put it, can be powered successfully, the less rotund vermin can definitely be adapted. While I would recommend the Hummer as the right choice for conversion production, it makes for a powerful demonstration. (Might also be trying to attract military $)

2) The pickup truck still sells very large numbers, especially to those who need to combine utility with basic transportation. Any attempt to change fuels must address them, as well. (personally, I like the biodiesel conversions that run on filtered fry-grease).

As a biker, I am noticing new pushes by motorcycle manufacturers for "middle of the road" vehicles. Even Ducati has a new "retro" GT-1000 that combines performance, rideability, and value ($9995) from a manufacturer known almost singularly for race bikes. Nice move - and selling like hot cakes.

American bikes? - well, you can get a Harley-Davidson, or a Victory (a HD clone). Still not much variety. There is one diesel bike from Hayes in California (a reworked Kawasaki dirt bike), but it is basically a military option and very pricey!

GoldiloxTesla Motors all-electric Roadster#14846310/15/06; 19:25:24

@ Clink!
While their first iteration is a high-performance sports car to attract margin dollars during early growth phase, these guys have some powerful design ideas (in partnership with Lotus) and strong financial support (Google and Microsoft money). They say their next design will be a four door sedan.

They have pre-sold their initial run of a 100 for $10M capital return, and plan to deliver 1000 the first year, and 2000 the second. Not a large sample, but a great start.

Currently advertising 250 miles per charge, a few more years of battery research should put them in the 400 mile range. Add a hydrogen or biodiesel charging engine to hybridize it, and bye-bye gasoline.

If FOA's Oil/Gold equation is still valid, how does a major switch of the personal transport sector play in that scenario?

GoldiloxCorrection#14846410/15/06; 19:32:28

"While I would ___ recommend the Hummer as the right choice for conversion production" add NOT.
Clink!@ Goldilox#14846510/15/06; 20:03:44

I take your point that, at this stage of the game, it is probably more important to demonstrate feasibility than a real product (I went for the MS, not the MBA !!). Your comment about the funding for Tesla Motors is interesting - after all it was Microsoft money (Paul Allen) which facilitated the winning of the X-Prize, so there is obviously a huge amount of capital available from "enlightened techies". Actually, that raises a point about a previous age of incredible industrial wealth - the Gilden Age. Many of the wealthiest became philanthropists (Carnegie, Rockefeller) who have their modern counterparts (Gates, Buffett). Others continued in the same discipline (Morgan), but I wonder how many went on to sow the seeds of innovation in other areas, which subsequently delivered rich rewards. Anyone ?


mikalHedge growth obscures vision, promotes accidents#14846610/15/06; 21:17:56

US Rethink on Hedge Fund Rules | Jeremy Grant in Washington
Published: October 15 2006 22:11 | Last updated: October 15 2006 22:11 | Financial Times - Excerpt:
"Top US policymakers believe fresh regulation of hedge funds may be needed to avoid a catastrophic hedge fund failure and that relying on banks and other counterparties to manage their exposure to the booming industry may no longer be enough.
The development marks a shift in thinking on hedge fund oversight since a US court in June struck down a rule that hedge fund managers register with the Securities and Exchange Commission.

The rest of this article is for subscribers only."

mikalSEC sends out more party invitations#14846710/15/06; 21:44:34

SEC to Ease Margin Rules in Cost-Cut Move | Financial Times
Jeremy Grant in Washington | Oct 15, 2006 | Excerpt:
"The US is set to relax margin rules in force since after the Wall Street crash of 1929 with the approval of a system that will cut securities trading costs and pave the way for multi-asset trading across equities, options and futures.
The move removes a key barrier to the competitiveness of the US capital markets as similar margin rules already exist in Europe, attracting increasing numbers of hedge funds to London.
The rest of this article is for subscribers only."
Mikal- The SEC "evolving with the times", always means it's regressing. This new liberal party serving of custom-made hallucinogenic stimulants = phantasmagoria on steroids leading to organ failures or nervous breakdowns.

GoldiloxInnovation#14846810/15/06; 22:13:50


One of the biggest complaints with funding for "innovation" dates back to the post-Westinghouse Tesla period, where the fear of those who had made big money in the industrial revolution was that innovation would ruin their business niche.

Much of the 20th century energy innovation has experienced both overt and covert resistance from the oil mega-lopolies, but at some point, the work becomes pervasive enough that they see the need to "buy in".

Another "sticky point" is that empirical trials often transcend and sometimes contradict "accepted axioms" of science. The closed "peer review" system has evolved a dogmatic mainstream in place of the investigative attitudes of an earlier "entrepreneurial" age.

Today, an "entrepreneur" is more often a financier than an inventor, thus a much greater "leap of faith" is required. Since he probably has little or NO understanding of the technology, he is much more squeamish about challenging accepted "axioms", and fearful of losing his capital down a dead-end path that is "someone else's" dream.

melda laureNIMBY#14846910/15/06; 22:37:57

Actually quite funny sir 'Lox.

It strikes me that there's a fundamental inconsistency at work here. Most area residents can't stand to be without reliable power; even a short outage is considered unacceptable. Yet those same residents can't accept a power plant located anywhere near their residence.

They dont seem to mind a water heater for hot water. I suppose that's market research. A ZPE power unit about the size of a small water heater would be a welcome addition to any home. The truly fussy can install a backup. Wont happen any time soon. The ironies here can only be appreciated by one who has read enough about free energy to see them.

Ok, Mr White Hills, you see the parallel with gold? Most area residents cant accept a store of value in their own pocket. They want it stored in west point and the value "transmitted" magically via some lossy medium by the FED aether-jockys.

Amazing coal technology, to be sure. But "renting" is not the same as owning your own money tree. And no, Smeagol, I am not telling you where the last scion of Laurelin is planted. We'll have to be content with these here "dried fruit" nuggets.

TownCrierGold May Gain as Fed Pause in Rate Increases Hurts the Dollar#14847010/15/06; 23:06:56

Oct. 16 (Bloomberg) -- Gold may rally for a second straight week on speculation a slowing U.S. economy will prevent the Federal Reserve from raising interest rates anytime soon, eroding the value of the dollar.

"The Fed is walking a very thin line. With inflation still mounting, it's tantamount to a rate cut. That's going to be a positive for gold."

Dollar vs Gold

Gold and the dollar generally move in opposite directions. Gold has gained every year since 2001, and has more that doubled in the past five years. The dollar index rose last year after three consecutive annual declines, as the Fed boosted rates to combat inflation.

The dollar is little changed against a group of six major currencies since the Fed first began raising rates in June 2004, while gold has jumped 47 percent. The dollar index is down 4.4 percent this year, compared with a 14 percent gain in gold.

``All the arguments that took gold from $250 to $700 remain the same,'' said George Milling-Stanley, New York-based manager of market analysis at the producer-funded World Gold Council. ``The dollar seems to be in a secular downward trend. That's been good for gold and we continue to think it'll be good for gold.''

Some investors are betting a weaker dollar will boost gold prices and are increasing their holdings of bullion as a long- term investment, even after gold has declined 19 percent from a 26-year high of $732 on May 12.

Buying Will Resume

``Once gold starts rallying, you're going to get the momentum guys coming back in,'' said Billy Flahive, gold trader and partner at Eagle Futures Inc. in New York.

Gold prices may mirror movements in oil, analysts said. Gold futures reached a record $873 an ounce in January 1980 after oil costs doubled in a year, sparking a surge in inflation.

``Prices could easily go past the $600 level'' should the Organization of Petroleum Exporting Countries reduce production to raise oil prices, said Alex Mathews, head of research at Geojit Financial Services Ltd. in Mumbai...

Gold may rise as physical demand picks up...

Gold has gained in every fourth quarter since 2001.

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

No profound insights here, it's just the latest offering by Bloomberg.


GoldiloxNIMBY#14847110/15/06; 23:15:41

@ melda laure,

That is funny. We had a severe t-storm (for San Diego) Friday night that provided a great pyrotechnic show when our block transformer exploded. Once the show was over, there wasn't much to do but go to bed early and wait for restoration of power.

In the NIMBY category, I am always AMAZED by people who complain that roof-top solar collectors are an eye-sore, but happily accept their neighbors' shake roof fire traps as "beautifully rustic".

I put them in the same category as the bikers who think my BMW is ugly 'cause it doesn't look (or perform, thankfully) like the traditional "cruiser" they are so enamored with.

By the way, I burned up a tankful of $2.60 premium in the mountains today, and required my electric vest and thinsulate gloves to stay cozy. Winter seems to be arriving early on the coast this year. As it moves east, we might see some higher NatGas and heating oil demand numbers. A reversal in energy demand could be just the ticket for a new "gold rush".

arbyhJust a reply#14847210/15/06; 23:20:21

@ clink

- I think trains will play be a bigger role in the transport of people and goods. Turbines are more efficient than turbo-diesel. Might not work for individual customized point A to point B travel, but with more subways to be built in more metropolitan and suburban areas it would also help our society adapt to limited resources. We have lagged far behind both Europe and Asia on the aggregate use of these modes of transport. I liked what I saw in Wash DC though as a model.
- Thomas Edison was pretty dynamic on many fronts, as was Benjamin Franklin earlier, in being innovative and inventive.

melda laurethe POG/Pzpe ratio.#14847310/15/06; 23:38:34

The gold/oil equation has its personal analogue. Goil is inert. Specifically, it is the american, european and arab who are the real actors. If a transport fuel switch occurs then the Arab's ability to bid gold to his purse is over. But we still have the desires of China and India to bid gold into their purses, so we have a "real-goods"/gold ratio. Thats a short answer.

I hope. It is a question that wants serious attention by brains a good deal zippier than mine if we could just get past the laugh factor.

Yes there are too many ZPE devices. Mr Bearden is correct in this general sense: a 5 kilowatt unit might not be any more expensive than a washer-dryer combo, the basic elements are just industrial electronics.

The dollar deficits aren't helped at all.
Chinese labor is still cheaper.
Gold Still Wins (at first... you know what I mean)

Or the Chinese could jump the line. Or even mr Pyongyang Pompadour could build a ZPE fertilizer plant and a ZPE rice paddy dozer. The totalitarians can play this game too.

Black BladeBolivia to Nationalize Mines#14847410/15/06; 23:47:27


LA PAZ, Bolivia (AP) - President Evo Morales said Sunday he will nationalize Bolivia's mines as part of an overhaul of the South American country's mining industry after a violent clash earlier this month between rival miners' groups killed 16 people.Morales nationalized the South American nation's oil and gas reserves on May 1, giving international companies six months to cede majority control of their Bolivian operations to the state or leave the country. However, the process has been delayed by the resignation of key energy officials and a reorganization of Bolivia's own state petroleum company.

"We started with hydrocarbons, and the next step are the minerals," Morales said while giving away tractors to local farmers in the town of Challapata, 120 miles south of the capital La Paz.

Black Blade: It was only a matter of time. I wonder what George soros will do to try to protect Apex Silver as the Las Cristinas project is the "flagship" mine. natural resources found in unstable regions are trully chasing "fools gold". Better off starting with a stash of the "real deal" physical before speculating. "Interesting Times" indeed!

TownCrierChina forex reserves a central bank asset, not for spending -- PBOC vice-governor#14847510/16/06; 00:19:42

Oct. 16; BEIJING (XFN-ASIA) - China's foreign exchange reserves are an asset on the balance sheet of the People's Bank of China (PBOC), and any proposals involving spending them would require purchasing them from the central bank, a senior PBOC official said Saturday.

In the first public central bank comment on a long-standing debate about the best use for China's reserves, vice-governor Wu Xiaoling said Saturday that the currency holdings are a balance sheet item.

"Foreign exchange reserves are an item on the central bank's balance sheet," she told reporters on the sidelines of a forum.

"Whoever wants to use our reserves will have to use (yuan) to buy them from the central bank because we spent money buying them."

Asked about using the reserves to purchase oil or other strategic resources, Wu said: "The central bank can't directly buy those things."

The PBOC said on Friday that China's foreign exchange reserves hit a record 987.9 bln usd at the end of September...

The growth of China's reserves -- a by-product of the central bank's defense of the yuan exchange rate -- has given rise to calls for Beijing to put them to use on bank or corporate sector clean-ups or the purchase of strategic resources.

Xia Bin, an economist with the Development Research Center under the State Council, said on the sidelines of the conference that the Ministry of Finance should take advantage of the low interest rate environment and issue debt to buy some of the reserves from the PBOC.

Xia has called in the past for one third of China's reserve holdings to be more actively managed.

Policy measures have thus far been aimed at slowing the pace of accumulation -- such as through currency appreciation and cuts to export tax rebates -- and allowing increasing amounts of hard currency to flow out of the country via the capital account.

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

This very important article could easily serve as the center point for discussion for an entire week. I wish it would. Such discussion would lead readers to a broader understanding of the following:

CB reserve structure -- form and function;
non-monetary gold;
monetary gold (monetized and unmonetized);
Mark-to-Market vs fixed valuation;
multi-objective policy considerations;
...and several others.

Does anyone care to jump start this with questions or comments?


GoldiloxCBOC#14847610/16/06; 01:12:47

I have a question or three . . .

We've seen the German CB stalemate politicians, and the likelyhood that the US FED acts in concert with politicians, either with "policy" or through PPT actions, BUT . . .

Who actually controls the CBOC?

Are they likely to oppose Beijing?

If we see conflicting "policy statements" from CBOC and PRC higher ups, who really holds the trump cards?

melda laure"Do something Binks! They're stealing our Juice!"#14847710/16/06; 01:15:22

Mr Morales is going to nationalize a collection of drill results? Maybe the two pirates can put their heads together.

Druid the idea of CVX or COP building out that Russian gas field for a fist full of dollars reminds me of the scene in "Trading Places" where Rupert says "There are things more important than just making money!"

Having kited those dollars sucessfully into foreign hands, I can see Rupert looking at a smart young CVX chairman and saying "You dunderhead, you just redeemed a bunch of worthless paper- where's my gas you moron!" then WHACK's him with a rolled up WSJ over the head.

Is Morales dumber than Chevron? Not to put a halo on Mr Morales, but what good is digging in the dirt for minerals you dont need? The longer he's in office, the more the indianness gets sucked out. This all started when he stopped chewing coca leaves and started chewing dollars. Assume for the moment that the leftwing diatribe is correct: that the profits are due to exploitation. Then it follows that he is nationalizing a bad economic decision, the REAL profits are actually quite small or negative even as the socialized costs are already on his books. I think i'm going to be sick.

Goldiloxcorrection#14847810/16/06; 01:16:53

PBOC, not CBOC, but you knew what I meant.
GoldiloxNationalizing resources#14847910/16/06; 01:34:07

@ melda laure,

You are so right! The same game has been played out in the illicit drug trade. When other forces try to cut out the "Intelligence Service" middlemen, they find that penetrating the locked-up distribution market is much more difficult than they imagined. The "competition is NOT above using military force to protect their monopolies. After all, it's been "that way" since the Boxer Rebellion of 1900.

If these "Nationalists" think that the globalist London and NY commodities moguls will give up without a serious street fight, they have another think coming! They aren't called "Energy Czars" just for "kicks".

melda laureI just realized how little I understood the question.#14848010/16/06; 02:05:07

The interest rate is going to eat into the position AND Ministry of finance has to pay storage costs to boot. Oh yeah, they'll be marking to market, every five minutes, as MOF has zero equity (no margin). PBOC achieves zero diversification out of this.

Sounds like MOF has USTreasury ESF-envy. If so, they need to be reminded that UST got its gold through plain old larceny.

TownCrierGoldilox, your mention of the German gold reserve situation can be quite useful if we follow it further...#14848110/16/06; 03:04:00

Almost exactly five years ago, (Oct 18th, 2001) Ernst Welteke talked to the German newspaper FAZ about Germany's accumulated monetary reserves with respect to the balance sheet. Amongs those comments were the following:

"The monetary reserves result from the Bundesbank's monetary policy activities in the past. The corresponding items on the liabilities side of the balance sheet are banknotes in circulation and deposits of credit institutions.

"The monetary reserves therefore cannot simply be extracted from the balance sheet without being replaced by another asset. They are not a kind of treasure trove which can be freely encashed without any counter-obligation.

"However, should they be sold -- against payment of the corresponding price by the purchaser -- the reserves contained in the "revaluation accounts" could be booked as a capital gain and distributed with the Bundesbank's profit. Another point to bear in mind is that monetary reserves still play a key role in reinforcing public confidence in the currency and anchoring the credibility of the national central banks."

Additional perspective-assisting thoughts can found by our own "Ernst Welteke" at the url given above. Look especially at the comments found below the price charts.

Among the several elements of special significance is the commentary regarding "...the holding and managing of the foreign reserves (including GOLD) which were accumulated as a result of years of our past institutional operations."

This provides a good gateway for further discussions on the distinction between monetary gold and non-monetary gold inventory as dictated by IMF conventions. And of utmost importance is reaching an understanding that in today's world those antique conventions have only dubious applicability; the sooner abandoned the better. Under a more rational freegold reserve paradigm there would be no distinction between monetary and non-monetary categories -- that is, ALL gold inventory would potentially be "in play" as suitable for official use (i.e."monetary gold").

From there the remaining question, therefore, would be a matter of serving domestic policy: How much of the freely floating gold value (on a MTM basis) of the officially held reserves shall be actually monetized on the balance sheet against outstanding currency liabilities, versus how much of the value shall simply be left unmonetized against the special "revaluation/capital" liability accounts of the balance sheet. Again, that would be a matter dictated by domestic policy objectives regarding some mix of price stability and/or foreign exchange strength or weakness.


spotlightChina's foreign exchange reserves#14848210/16/06; 04:29:22

It seem to me that with their statement, as it stands, there can be no purchases made of commodities or non monetary assets. However, gold has a history of being a monetary asset. The trouble is that they cannot switch out of a meaningful amount of dollars into gold without driving up the price dramatically. I would think that legislation might be in order to allow the bank to buy monetary (gold) producing mines as sound monetary assets. I dont see why they could not consider a good producing, long life mine, a qualified monetary asset.
Your thoughts...

ToolieNationalizing Resources#14848310/16/06; 04:45:55

melda laure's post regarding the nationalization of Bolivia's mine stirred a thought.

What exactly does nationalization mean? Yes, government control but to what degree? A soft nationalization such as taxing profits? OR disposing of "private" assets with little or no compensation? Just as varying as the degrees of Nationalization that exist, also varying are the methods used to execute it. There is boldfaced seizure of course – using police force to expel the previous "owners". But is this any less effective, less brutal when accomplished through a market place under control of the banking establishment? When a manufacturer succumbs to "market forces" that were created to expand the horizons of the banking establishment, the result is the same is an outright seizure. When the world accepted the unbacked dollar, it also accepted the seizure of its assets.

There is no freedom without property. When banks control the money, freedom and socialism is a distinction without a difference.

Freedom, get ya some!

968@ Towncrier msg#: 148475#14848410/16/06; 05:33:23

Note : these are not my thoughts, but the opinion of a friend.

Let us not forget that the PBOC is not the only CB/nation that is stuck with excess surplus-$ ... to be labelled as -reserve - ... for the time being. There is also Japan, Euroland and a cluster of some smaller $-satellites.

These different stashers of $-reserves all face the same problem : what are we going to do with those inflating $-mountains ?

Europe doesn't need to accumulate eurodollars anymore and ECB-policies can now concentrate on EMU- and europolicies without having to take $-policies into account anymore.

The Japanese already saved more than double the amount of their GDP. They never questioned "what" to do with their inflating $-mountains.

Does China really want to mobilize its systemically growing stash of dollars ... or does China's questions have another purpose ? Is there a possibility for "best use" of these excess dollars (balance sheet item) ? And what exactly does the PBOC means by "best use" ? Serving 100% the China interests ... with or without harming the current dollar reserve system and 'the dollar monetary order' ?

The yuan has been printed to sterilise the inflow of dollars ... and now Wu suggests that those yuans should buy those dollars back from the PBOC. What exactly falls under "strategic resources" to be bought with the excess dollars ? Is that *only* oil and perhaps some other commodities needed for industry ? Why the emphasis on "strategic" ?
Is the PBOC also looking at "other" CBs to see (learn) what they are doing (have been doing) with their $-excesses ?

Is the $-unit, and its future, reliable enough to be used for bank/corporate-sector clean up ? What kind of clean up is it that is done with a foreign ($) currency ?

To issue yuan-debt for the repurchase of dollars (with an interest differential) ... is this going to sterilise the surplus of dollars in another way ? Can China "export" some of its $-surplusses without affecting the yuan-dollar exchange rate ? And who or what is going to absorb those dollars outside the US borders ?

What kind of "active management" for the $300 million (1/3 of $1 trillion) has Xia Bin in mind ? Adding these dollars in the existing inflating $-financial industry ?

"Slowing the pace of $-accumulation" > where are those amounts of hard $-currency (humhum) flowing to, when leaving China ? Same question (no answer) for the other CB $-surplusses.

Heeeelp, our planet doesn't know what to do with the rising $-mountains (surpluss of $ 5 trillion in a global GDP of $ 40 trillion) !? Where to invest productively and in what ?
CBs have come to the point where there are already way too much $-reserves for safe currency-management under any circumstances (high risks) ! We are coming to the point where those $-excesses cannot be sterilized anymore. And it are the productive accumulators of those dollars that are blaimed ... and not the "producer" of those excess $-units.

Shall we call the $-IMF and tell them what could/should be done about this devastating chronic $-inflation !? This $-inflation cannot remain passively "benign" for ever ... can it ?

TownCrierspotlight, some requested thoughts#14848510/16/06; 05:36:16

I think the actual situation is not the closed door your opening sentence suggests it to be. In the Welteke commentary you will find a useful parallel.

In each case, the point is essentially being made that a central bank's holdings of reserve assets (whether they be gold in Germany or dollars in China) cannot simply be spent.

The reason is that these assets are filling a necessary role on the books of the bank; they are balancing an equal value of liabilities -- most likely in the form of domestic currency which has long since been issued and is actively circulating in the economy.

As simple selling of these reserve assets would imply a shrinking of the asset side of the CB's balance sheet, and with it would be an associated contraction of the circulating money supply.

This is what Welteke was suggesting, and what the Chinese vice-governor meant in today's statement that "Foreign exchange reserves are an item on the central bank's balance sheet... Whoever wants to use our reserves will have to use (yuan) to buy them from the central bank because we spent money buying them."

Our U.S. Federal Reserve System finds itself in very much the same position. The 8,000 tonnes of gold owned by our Treasury Department has been pledged as an asset to the Federal Reserve in the form of Gold Certificates at a value of $42.22/oz. Against these reserve assets, the Fed credited the Treasury's checkable account with a corresponding cash value of $11 billion. A similar thing could be said for the issuance of dollars by the Fed against the value of Treasury IOUs (bills, notes, bonds) which have also been acquired on the asset side of the balance sheet.

In all cases, these assets (whether they be foreign reserve assets or merely domestic assets) cannot simply be "sold" without having a corresponding effect to contract the local money supply -- something that doesn't typically serve the CB's goals of economic stability. Therefore, try not to think in terms of outright "sales", per se, but rather in terms of "substitution" -- some combination of acttion that utlimately replaces one type of asset with another type of asset having a matching book value.

Getting back to China specifically, because dollars are a balance sheet item, if it wanted to sell/substitute dollars for Another asset type, that new asset would likewise have to reside on the balance sheet -- or else the contraction occurs. Traditionally, this was easily done on the gold standard in which foreign currency assets could neatly be traded out in exchange for monetary gold assets.

In China's case, however, the CB couldn't acquire gold in this fashion because it's currency wasn't exchangeable via the IMF conventions. This needn't block them from pursuing qold assets as a policy objective, however. Without too much hassle regarding enabling legislation, it would be a simple matter for any given Chinese agency (MInistry of Finance, for example) to acquire gold by any available means on any available market (including locally producing mines), and then simply swap out the unwanted CB assets for replacement by a matching value of this gold as reserves. The Freegold paradigm would suggest this gold be valued at market values. [For the sake of completeness, the Chinese could also choose the American model and do their replacement at any given bogus book value -- such as the $42/oz value used by the U.S. Treasury; but that, obviously, would grossly underutilize the gold.]

To cover this from another angle, it would also be possible (and indeed consistent with prior statements) that China conclude it had more than enough foreign reserves. A quantity of dollar-denominated foreign assets (U.S. dollars and Treasury bonds) could be replaced (substituted) with a matching value of domestic Chinese Government Bonds. That keeps the balance sheet balanced. Subsequently, the U.S. dollars/bonds could be dishoarded on the world stage -- using them to bid on any given stockpile of strategic resources or oil which might themselves not so neatly reside on the balance sheet of the People's Bank.


TownCrierToolie, you're very close here#14848610/16/06; 05:52:49

"There is no freedom without property. When banks control the money, freedom and socialism is a distinction without a difference. Freedom, get ya some!"

In that three-sentence passage, for consistency of thought with the golden bookends you've stated, I would suggest a specific reinterpretation of your middle sentence.

You must think of the socialistic money being managed by the banking system as nothing more than a public utility to be used for your daily economic convenience according to your own free will. If it significantly impacts adversely your freedom or mine, then I would suggest that we are doing something wildly askew and failing in the proper management of our own affairs. Again, we must think of the circulating currency (national money) as nothing more or less than a common utility for our use insofar as we may each find it of economic service to ourselves.

Where freedom is concerned, on the other hand, that is where you are spot on about property. Therefore, limit your exposure to "socialistic" money by choosing instead a form of savings that is consistent with property accumulation. Choose tangible gold.


TownCrier968, Thanks for sharing. I, too, have a friend or two who think quite similarly!#14848710/16/06; 07:21:07

What I like especially about your friend's commentary, particularly in conjuction with my follow-up comments to Goldilox and spotlight, is that to maintain a position of neutrality and credibility I spent much time dwelling on the dry mechanics, leaving the conclusions to the reader. And perhaps more often than not, your general reader really isn't looking to understand the how's, the why's and the wherefore's, but would rather skip all that in favor of the meaning.

(Y)our friend has a good talent for focusing on the conclusion elements that people really want (and need) to hear.

So whereas I will bore us with mechanical potentialities, hint at constraints, and then ultimately understate the implied avenue of action, our friend makes sure the point is not missed by anyone.

For example, after expending much breath for exposition in msg#: 148485, in my concluding remarks I dispassionately state the following:

"A quantity of dollar-denominated foreign assets (U.S. dollars and Treasury bonds) could be replaced (substituted) with a matching value of domestic Chinese Government Bonds. That keeps the balance sheet balanced. Subsequently, the U.S. dollars/bonds could be dishoarded on the world stage -- using them to bid on any given stockpile of strategic resources or oil which might themselves not so neatly reside on the balance sheet of the People's Bank."

The reader, if not yawning in submission, is assumed to still have enough consciousness left to work out the consequences from there.

Our friend provides a better public service by putting it frankly throughout his commentary, even with neat rhetorical questions when useful:

"Can China "export" some of its $-surplusses without affecting the yuan-dollar exchange rate? And who or what is going to absorb those dollars outside the US borders?
Heeeelp, our planet doesn't know what to do with the rising $-mountains (surpluss of $ 5 trillion in a global GDP of $ 40 trillion!? ... CBs have come to the point where there are already way too much $-reserves for safe currency-management under any circumstances (high risks)!"

Exactly! Significant action on this front, were it attempted, with result in pricing consequences -- upward for the limited tangible goods being sought, and downward for the debt-based paper "assets" being dishoarded.

Only very limited progress of reserve diversification can likely be accomplished through conventional avenues. The bulk of the reckoning will be achieved through a sudden act/announcement of policy. A period of volatile transition will be endured until an act/announcement of policy suddenly puts it in the rearview mirror, irrevocable change like water under the bridge.

That's how Nixon handled the dollar crisis -- with a unilateral decision and policy announcement on August 15th, 1971, despite the fact that it had multilateral consequences throughout the world.

With much of the freegold MTM framework already in place internationally, it would certainly be possible for a sizable player like China to pull the lever at any time with an announcement that all foreign reserves and all surplus trade dollars would bid for physical gold. Imagine the derivatives meltdown that would result, giving immediate and lasting pricing support to the paradigm.

How much time we have to accumulate gold before the sheets are rebalanced is anyone's guess, but a modification of the old cliche applies -- it's better to be even a lifetime too early than a single moment too late.


CoBra(too)@ MK - re Counter Party of Last Resort#14848810/16/06; 08:14:27

Is it a mere concept or already a given? Seems as GS & JPM function as the long "strong arm" of the US admin.

LTCM was rescued because its huge physical gold shorts - some physical 300 tons involved! - whereas Amaranth did after all hold some gold miners, though the ploy was to bring down the energy sector via their oversized nat. gas position. Nice to be able to buy positions at basement bairgain prices with the aid of -legally playing around with margin call (mal-?) practise - and while profiting in the longer run paving the way for a far more serene eco picture just in time for the mt elections.

We've been seeing similar breakdowns in other important commodities recently; Nothing seems to be as deadly for the culprit incubents and the PPT as real gold shorts! ... and why has ABX, GF and former PDG never had a margin call? Only Ashanti, Now GF and some smaller entities were taken out while being water - ... mmh, food for thought.

In the final analysis it's physical gold - real money - the legal tender proponents cant cope with. The "legal" raid on Nothaus' Liberty Dollar seems to spring from a similar fear...


mikalRussia diversifies reserves into Yen#14848910/16/06; 08:36:24

CBR Begins Investing Gold, Forex Reserves in Yen - Itar-Tass - 10/16/06
968Crisis of the U.S. Dollar System#14849010/16/06; 09:35:24

by F. William Engdahl

October 14, 2006

Text of author's presentation at an international conference held in Feldkirch, Austria, September 2003.

It's accepted wisdom that the United States, despite recent problems, is still the strongest growth locomotive for the world economy, the pillar of the global system. What if we were to discover that, instead of being the pillar, that the United States was, in fact, the heart of a dysfunctional economic system, which is spreading instability, unemployment, and depression globally?

No other nation on earth comes near to the commanding US military superiority in smart bombs, military IT, or in sheer force capabilities. The US position in the world since 1945, and especially since 1971, has rested on two pillars, however: The superiority of the US military over all, and, the role of the dollar as world reserve currency. That dollar is the Achilles heel of American hegemony today.

In my view, the world has entered a new, highly dangerous phase since the collapse of the US stock market bubble in 2001. I am speaking about the unsustainable basis of the very Dollar System itself. What is that Dollar System?

How the Dollar System works

After 1945, the US emerged from war with the world's gold reserves, the largest industrial base, and a surplus of dollars backed by gold. In the 1950's into the 1960's Cold War, the US could afford to be generous to key allies such as Germany and Japan, to allow the economies of Asia and Western Europe to flourish as a counter to communism. By opening the US to imports from Japan and West Germany, a stability was reached. More importantly, from pure US self-interest, a tight trade area was built which worked also to the advantage of the US.

That held until the late 1960's, when the costly Vietnam war led to a drain of US gold reserves. By 1968 the drain had reached crisis levels, as foreign central banks holding dollars feared the US deficits would make their dollars worthless, and preferred real gold instead.

In August 1971, Nixon finally broke the Bretton Woods agreement, and refused to redeem dollars for gold. He had not enough gold to give. That turn opened a most remarkable phase of world economic history. After 1971 the dollar was fixed not to an ounce of gold, something measurable. It was fixed only to the printing press of the Treasury and Federal Reserve.

The dollar became a political currency—do you have "confidence" in the US as the defender of the Free World? At first Washington did not appreciate what a weapon it had created after it broke from gold. It acted out of necessity, as its gold reserves had got dangerously low. It used its role as the pillar of NATO and free world security to demand allies continue to accept its dollars as before.

Currencies floated up and down against the dollar. Financial markets were slowly deregulated. Controls were lifted. Offshore banking was allowed, with unregulated hedge funds and financial derivatives. All these changes originated from Washington, in coordination with New York banks.

The dollar debt paradox

What soon became clear to US Treasury and Federal Reserve circles after 1971, was that they could exert more global influence via debt, US Treasury debt, than they ever did by running trade surpluses. One man's debt is the other's credit. Because all key commodities, above all, oil, were traded globally in dollars, demand for dollars would continue, even if the US created more dollars than its own economy justified.

Soon, its trade partners held so many dollars that they feared to create a dollar crisis. Instead, they systematically inflated, and actually weakened their own economies to support the Dollar System, fearing a global collapse. The first shock came with the 1973 increase in oil by 400%. Germany, Japan and the world was devastated, unemployment soared. The dollar gained.

This Dollar System is the real source of a global inflation which we have witnessed in Europe and worldwide since 1971. In the years between 1945 and 1965, total supply of dollars grew a total of only some 55%. Those were the golden years of low inflation and stable growth. After Nixon's break with gold, dollars expanded by more than 2,000% between 1970 and 2001!

The dollar is still the only global reserve currency. This means other central banks must hold dollars as reserve to guarantee against currency crises, to back their export trade, to finance oil imports and such. Today, some 67% of all central bank reserves are dollars. Gold is but a tiny share now, and Euros only about 15%. Until creation of the Euro, there was not even a theoretical rival to the dollar reserve currency role.

What is little understood, is how the role of US trade deficits and the Dollar System are connected. The United States has followed a deliberate policy of trade deficits and budget deficits for most of the past two decades, so-called benign neglect, in effect, to lock the rest of the world into dependence on a US money system. So long as the world accepts US dollars as money value, the US enjoys unique advantage as the sole printer of those dollars. The trick is to get the world to accept. The history of the past 30 years is about how this was done, using WTO, IMF, World Bank and George Soros to name a few.

What has evolved is a mechanism more effective than any the British Empire had with India and its colonies under the Gold Standard. So long as the US is the sole military superpower, the world will continue to accept inflated US dollars as payment for its goods. Developing countries like Argentina or Congo or Zambia are forced to get dollars to get the IMF seal of approval. Industrial trading nations are forced to earn dollars to defend their own currencies. The total effect of US financial and political and trade policy has been to maintain the unique role of the dollar in the world economy. It is no accident that the greatest financial center in the world is New York. It's the core of the global Dollar System.

It works so: A German company, say BMW, gets dollars for its car sales in the USA. It turns the dollars over to the Bundesbank or ECB in exchange for Marks or Euros it can use.

The German central bank thus builds up its dollar currency reserves. Since the oil shocks of the 1970's, the need to have dollars to import oil became national security policy for most countries, Germany included. Boosting dollar exports was a national goal. But since the Bundesbank no longer could get gold for their dollars, the issue became what to do with the mountain of dollars their trade earned. They decided to at least earn an interest rate by buying safe, secure US Treasury bonds. So long as the US had a large Budget deficit, there were plenty of bonds to buy.

Today, most foreign central banks hold US Treasury bonds or similar US government assets as their "currency reserves." They in fact hold an estimated $1 trillion to $1.5 trillion of US Government debt. Here is the devil of the system. In effect, the US economy is addicted to foreign borrowing, like a drug addict. It is able to enjoy a far higher living standard than were it to have to use its own savings to finance its consumption. America lives off the borrowed money of the rest of the world in the Dollar System. In effect, the German workers at BMW build the cars and give it away to Americans for free, when the central bank uses the dollars to buy US bonds.

Today, the US trade deficit runs at an unbelievable $500 billion, and the dollar does not collapse. Why? In May and June alone, the Bank of China and Bank of Japan bought $100 billion of US Treasury and other government debt! Even when the value of those bonds was falling. They did it to save their exports by manipulating the Yen to dollar to prevent a rising yen.

Because the world payments system, and most importantly, the world capital markets---stocks, bonds, derivatives—are dollar markets, the dollar overwhelms all others. The European Central Bank could offer an alternative. So far it does not. It only reacts to a dollar world. German banks destroy the German economy as they rush to imitate US banks. The Dollar System is destroying the German industrial base. German national economic policy as well as Bundesbank and now ECB policy is oriented on the far smaller export sector, to maximize trade surplus dollars, or to the big banks, to attract as many dollars as possible.

China plays a key role today

The biggest dollar surplus country today is China. Globalization is in fact just a code word for dollarization. The Chinese Yuan is fixed to the dollar. The US is being flooded with cheap Chinese goods, often outsourced by US multinationals. China today has the largest trade surplus with the US, more than $100 billion a year. Japan is second with $70 billion. Canada with $48 bn, Mexico with $37 bn and Germany with $36 bn make the top 5 trade deficit countries, a total deficit of almost $300 billion of the colossal $480 deficit in 2002. This gives a clue to US foreign policy priorities.

What is perverse about this system is the fact that Washington has succeeded in getting foreign surplus countries to invest their own savings, to be a creditor to the US, buying Treasury bonds. Asian countries like Indonesia export capital to the US instead of the reverse!

The US Treasury and Greenspan are certain that its trade partners will be forced to always buy more US debt to prevent the global monetary system from collapsing, as nearly happened in 1998 with the Russia default and the LTCM hedge fund crisis.

Washington Treasury officials have learned to be masters at the psychology of "monetary chicken." Treasury Secretary Snow used an implied threat of letting the dollar collapse, after the Iraq war, to warn Germany about the risk of trying to be too close to France with the Euro. Some weeks after the dollar had fallen sharply, and German export industry was screaming pain, Snow reversed his stand and the dollar stabilized. Now the dollar again rises as foreign money flows back in.

But debt must be repaid you say? Does it ever? The central banks just keep buying new debt, rolling the old debts over. The debts of the USA are the assets of the rest of the world, the basis of their credit systems!

The second key to the Dollar System deals with poorer debtor countries. Here the US influence is strategic in the key multilateral institutions of finance—World Bank and IMF, WTO. Entire countries like Argentina or Brazil or Indonesia are forced to devalue currencies relative to the dollar, privatize key state industries, cut subsidies, all to repay dollar debt, most often to private US banks. When they resist selling off their best assets, tehy are charged with being corrupt. The growth of offshore money centers in the Caribbean, a key part of the drug money cycle, is also a direct consequence of the decisions in Washington in the 1970's and after, to deregulate financial markets and banks. As long as the dollar is the global currency, the US gains, or at least its big banks.

This is a kind of Dollar Imperialism more slick than anything the British Empire even dreamed of. It is a part of the current America "Empire" debate no one mentions. Instead of the US investing in colonies like England to earn profits on the trade, the money comes from the client states into the US economy. The problem is that Washington has allowed this perverse system to get out of all control to the point today it threatens to bring the entire world to the point of collapse. Had the US instead promoted long-term policy of investing in the economic growth and self-sufficiency of countries like Argentina or Congo, rather than bleeding them in repayment of unpayable dollar debts, the world would look far less unstable today.

The internal debt bomb in the USA

The question is if the Dollar System is reaching its real limits? The Dollar System for the past 30 years has been built on growing dollar debt. What if the rest of the world decides it no longer wants to give its savings to the US Treasury to finance its deficits or its wars? What if China decides that it should diversify its risk by buying Euro debt? Or Japan or Russia? That day may come sooner than we think.

In addition to colossal debts to the rest of the world, the US internal debt burdens have reached alarming levels in the past three decades, especially the past decade.

The total US debt—public and private—has more than doubled since 1995. It is now officially over $34 trillion. It was just over $16 trillion in 1995, and "only" $7 trillion in 1985. Most alarming it has grown faster than income to service it, or GDP.

Since the Asia crisis in 1998, the US debt situation has exploded. The heart of the debt explosion is in US private consumer debt. And the heart of consumer debt is the home mortgage debt growth, helped by two semi-government agencies—Fannie Mae and Freddie Mac. Since 2001 and the collapse of the stock market wealth, the Federal Reserve has cut interest rates 13 times to a 45 year low.

US Households took on new home mortgage debt in the first six months this year at an annual rate of $700 billion, double the debt growth in 2000. Total mortgage debt in the US totals just under $5 trillion, double the debt in 1996. It has grown far faster than personal income per capita. That is larger than the GDP of most nations.

The aim has been to inflate a housing speculation market in order to keep the economy rolling. The cost has been staggering new debt levels. Because it was created with record low interest rates, when rates again rise, millions of Americans will suddenly find the burden impossible, especially as unemployment rises. Fannie Mae and Freddie Mac combined guarantee $3 trillion in US home mortgages. The US banking system holds much of their bonds. When the housing bubble collapses, a new banking crisis is pre-programmed as well, with JP Morgan/Chase, Wells Fargo and BankAmerica the worst.

The US economy has only managed to avoid a severe recession since the collapse of the stock market three years ago, by a record amount of consumer borrowing. "Shop until you drop" is a popular American expression. The Federal Reserve has pushed interest rates down to 1%, the lowest in 45 years. The aim is to keep the cost of the debt low such that families continue to borrow, in order to spend! Some 76% of the US economy GDP today is consumer spending. And most of that is tied to a record boom in home buying.

But the rate of new debt growth among families is rapidly reaching alarm levels, while the overall manufacturing economy continues to stagnate or decline. Today US factories only operate at 74% of capacity, near historic lows. With so much unused capacity, there is little chance companies will soon invest in new factories or jobs. They are going to China.

So Greenspan continues to rely on foreign money to prop up his consumer debt bubble, at low interest rates. Were foreign money to stop propping the US economy, now at some $2.5 billion daily, the Federal Reserve would be forced to raise its interest rates to make dollar investments more attractive. Higher rates would trigger a crisis in consumer debt, mortgage defaults, credit card and car loan failures. Higher rates would plunge the US economy into a depression. This may be about to happen, despite poor George Bush's desires to get reelected.

There is a limit how much debt US families can pay to keep the economy afloat.

There is no US recovery, merely a debt spending boom based on this home buying explosion.

Total US household debt reached a high in June of $8.7 trillion, double that of 1994. Families are agreeing to longer debt payments for basics like homes or cars. The length of new car loans now averages 60.7 months, and the amount of car debt financed increased to $27,920, and the average new home costs $243,000.

With rapidly rising unemployment and a real economy that is not growing, at some point there will come a violent reality clash, as the market for home lending reaches its limit. At that point the danger is the consumer will stop buying, and the manufacturing economy will not be able to create new jobs and a real recovery. The jobs have gone to China!

We might already be at or very close to that point. In the past six weeks, US interest rates have risen sharply, as owners of US bonds have started to sell in panic levels, fearing the bonanza in real estate may be over, and trying to get out with some profit before bond prices collapse. The European Central Bank is advising member banks to not buy any more US Freddie Mac or government agency debts.

The problem is this process of creating debt, domestic and foreign, to keep the US economy going, has gathered so much momentum it risks destroying what remains of the US manufacturing and technology base. Henry Kissinger warned in a conference of Computer Associates in June, that the US risked destroying its own middle class, and its key strategic industries via outsourcing to China, India and other cheap areas. Today only 11% of the total workforce is in manufacturing. In 1970, it was 30%. Post-industrial America is a bubble economy about to pop.

Fed chief Greenspan even warned China about the rate of its trade increase with the US, pressuring China to upvalue the Renminbi to make its goods less competitive in dollar markets, and slow the job loss. But this is dangerous. China holds $340 billion in US Treasury bonds and other reserve assets. The US needs the Chinese dollar savings to finance its soaring deficits.

It is caught in its own web: American jobs, hi-tech jobs as well as factory jobs, are vanishing permanently as US factories source to China, India or other cheap areas. If Washington pressures China and others to cut back exports they risk to kill the goose that lays golden dollar eggs. Who will buy that growing Government dollar debt? Private bond traders are desperately trying to sell their US bonds. Germany can only buy so much dollar debt, also Japan.

The US waged war in Iraq not out of fundamental strength but fundamental weakness. It is economic weakness however, not military.

Oil and food, and money as strategic weapon

The fundamental reason for the Iraq war, beyond agendas of Richard Perle or other hawks, is hence, strategic in my view. US economic hegemony in this distorted Dollar System increasingly depends on a rising rate of support from the rest of the world to sustain US debt levels. Like the old Sorcerers' Apprentice. But the point is past where this can be gotten easily. That is the real significance of the US shift to unilateralism and military threats as foreign policy. Europe can no longer be given a piece of the Third World debt pie as in the 1980's. Japan has to cough up even more, as does China now.

Even ordinary Americans have to give up their pension promises. If the Dollar System is to remain hegemonic, it must find major new sources of support. That spells likely destabilization and wars for the rest of the world.

Could it be that in this context, some long-term thinkers in Washington and elsewhere have devised a strategy of establishing US military control of all strategic sources of oil for the one potential power rival, Eurasia, from Brussels to Berlin to Moscow and Beijing? The dollar vulnerability and debt problems are well known in leading policy circles.

As Henry Kissinger once noted, "Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world."
A very good overview of what is all at stake by a change in reserve-paradigm (of which Randy gave us a superb description today).

mikalBankers blow hot and cold on equity derivatives#14849110/16/06; 12:35:22

Credit Suisse Lost $120 Million in Korean Derivatives Gone Awry by Christine Harper and Jacqueline Simmons - Bloomberg October 16, 2006 -- Excerpts:
"Credit Suisse Group, Switzerland's second-biggest bank, lost about $120 million on South Korean derivatives in the third quarter, an undisclosed stumble by equity traders struggling to catch the leaders in the securities industry."

"``The history of banks losing money in exotic derivatives is a fairly extensive one,'' said Robert Benson, who ran the structured-products group at HSBC Holdings Plc until he left in 2001 to set up Arete in London. ``At the end of the day, there will be a bust-up or a blowup somewhere. You just hope there are enough other things going right that you can absorb that.''
UBS, Credit Suisse's larger Swiss rival, booked a loss of 919 million francs in 1998 when the company said ``dramatic increases in volatility'' forced it to cut the value of some equity-derivative positions. The bank's statement said the positions included ``illiquid concentrations of market and event risks.''
Toronto-Dominion Bank and France's Credit Industriel & Commercial, or CIC, both incurred losses last year from structured-equity derivatives."

"Traders Depart
Dougan told analysts last year that he planned to build up the derivatives business because ``we still have a gap to competitors.'' Defections may be hampering his efforts. Since the beginning of last year, at least half a dozen executives have left Credit Suisse's equity-derivatives unit. Among them, Nick Nassuphis went to Barclays Capital, Emmanuel Girod and Mike Pringle joined Merrill and Rob Mason left for Morgan Stanley."

Mikal - Looks to be a very competitive industry and becoming more so. The frenzied search for returns
here and in other industries will produce many more "surprises" such as those noted above at UBS,
Credit Suisse, Toronto-Dominion Bank and France's Credit Industriel & Commercial(CIC).

mikalNations want more nuclear#14849210/16/06; 13:22:56

Mitsubishi Heavy Industries in Final Nuclear Talks With France's Areva: Report | October 16, 2006 03:39:00 GMT
TOKYO (AFP) - Excerpts: "Japan's Mitsubishi Heavy has entered the final stage of talks with French giant Areva on a tie-up to build nuclear power reactors in the face of growing competition, a report said Monday."

"The tie-up would aim to develop pressurized water reactors (PWR), the technology used in about 70 percent of nuclear power plants around the world. It would cut development costs for an expected rise of orders in the United States and China, the report said."

"Japan depends on nuclear power for 30 percent of its energy needs and expects demand to go up as current reactors need to be replaced. Toshiba also expects an expansion of business in the United States where the government wants to re-launch construction of nuclear reactors in the face of soaring oil prices."

USAGOLD Daily Market ReportPage Update!#14849310/16/06; 14:19:23">
The Daily Gold Market Report has been updated.

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MONDAY Market Excerpts

October 16 (from Reuters) -- U.S. gold futures rose to a 13-day high near $600 an ounce on Monday, helped by steadier crude oil prices as OPEC members debated how to cut crude production to shore up the market.

At the COMEX division of the New York Mercantile Exchange, December gold futures went up $5.80 to settle at $598.50, trading from $592.50 to $598.90, the highest price since Oct. 3.

Dealers said commission houses were seen buying in early open-outcry trade. But overall floor business was quiet, exceeded by turnover in screen trade, where funds are increasing their business.

December gold is up $18 since Friday, when hedge funds and other buyers piled in on the break above $585. Chartists put the next important technical target around $605, the long-term down trend line coming off gold's 26-year high at $753 in May.

Safe-haven buying of gold was mixed in as Washington said Monday an air sample analysis showed that North Korea did conduct an underground nuclear explosion of less than one kiloton a week ago. That was far smaller than the nuclear bomb the United States dropped on Hiroshima, Japan, in 1945, which was about 12.5 kilotons.

Meanwhile, gold has shifted its range up to $590-$595, from $570-$580, a bullion dealer said. The real test of resolve for the new money in the market will be around the psychological $600 level, where resistance is expected to be tough.

---(see url for full news, 24-hr newswire)---

GoldendomeChina loves those dollars.#14849410/16/06; 17:17:11

We here at The Table find it wise to diversify some of our assets out of dollars to protect against currency debasement and worse…default. The Chinese CB, however, is not you and I—private citizen. They are a sovereign bank, into the CB rage of the past thirty years. That being: produce paper—counterfeit your own currency. The Chinese have become a tail on the dollar donkey, fitting in where positioned. Despite rumors to the contrary (that China wanted to diversify their dollar holdings). Possibly, they see any disruption of the paper dollar/paper yuan game, as threatening to overall position of their economy, their currency, and their ranking as a valuable member within the world trade/dollar dominated- world of finance.

We are not accustomed—I don't believe—to refer to Gold as a "strategic resource". We would much prefer to call it, money—real money. Therefore, you and I find it easy to substitute "real money" for paper money on our balance sheets. We would think that the substitution on a CB balance sheet would be of similar ease. Not so fast, we suppose. What happens to the value of those dollars that might be sold for gold—and for that matter—all those that remain as dollar reserves? What happens to the value of the Yuan and the ramifications on trade, surpluses and deficits?

The dollar appears to be succeeding (so far) in a neo-colonialization of the world. The U.S. is in charge. The dollar is the tool used to lord over the vassals. The world's financial chieftains have become so addicted to the pleasant inflationary effects of dollar hegemony, that the thought of withdrawing—even slightly—raises the dark fears of depression within the psyche of the addicted. Therefore, the dollar bubble that has been filling fast over the past 15 years, or so, may continue on indefinitely; it's surface growing tauter as Central Bankers everywhere assist the process along. We can neither know when the dollar bubble will pop nor can we know what will be its needle. We can only assume carnage, tears, and vast adjustment to follow.

There is a way that the Chinese or anyone else with large dollar holdings could lock in and accumulate gold without drawing too much attention in the short run at least. Simply using some of the dollar surplus to buy up staggered futures contracts up to ten years out, then take delivery of the gold at maturity, that would be one method.

CoBra(too)From tonight's MIDAS#14849510/16/06; 17:34:39

Seems to agree with my notions - not notionals, though!

qoute -
From Financial News ONLINE US … Barry Riley is a highly regarding journalist in England, who wrote a column for the FT for many years … word is getting out:

US ponders market manipulation

Barry Riley
16 Oct 2006

Markets have been moving in directions favourable to the Bush regime

Conspiracy theories have become the normal tittle-tattle of the financial markets. But ahead of the US mid-term elections on November 7, the blogging rants and radio phone-in hysteria have reached a pitch of intensity.

Are the commodities and securities markets being manipulated? Pre-election paralysis on the part of the US Federal Reserve is not unusual. Yet you do not require a suspicious mind to wonder whether smoothing and intervention may be happening on a bigger scale than normal.

President George Bush and the Republican Party are under pressure. The US army's body count in Iraq is reaching unacceptable levels, let alone the death toll of locals. At home there are fears the country is heading for a serious recession. If the Republicans lose control of Congress, let alone the Senate, the lame duck tail-end of Bush's second term could be calamitous.

The long-run economic problems are nothing new. Although growth has been excellent, inflation has been running well above target and with the balance of payments deficit being so large, the dollar is in continual danger of tanking. Personal savings are nil and the US is, in effect, being financially supported by China.

Until the summer, the trends appeared ominous. The Fed was raising short rates and inflation was climbing. The price of crude oil stopped short of $80 a barrel. Sales of new homes were dropping off a cliff.

Then, as if by magic, everything changed. The oil price went into reverse, tumbling to under $60 with favourable implications for the Consumer Price Index measure of inflation – although not for the core rate, excluding energy. Similarly, the gold bullion price – an indicator of the potential fragility of the dollar exchange rate – has crashed from its early summer high. The Dow Jones Average two weeks ago advanced to a high, at last beating the bubble top in January 2000.

However, the housing market poses perhaps the biggest threat. On some measures, US residential property inflation has turned negative on a year-on-year basis. The bubble is bursting.

It is hard to see how the American government could manipulate home values. And yet long treasury bond yields have been falling for weeks. This is significant because the 30-year fixed mortgage rate has tumbled 50 basis points since touching a peak of 6.8% in July. Mortgage refinancing, which can revitalise the spending power of US consumers, has begun to pick up in volume. Confident consumers are more likely to vote for the party in power.

However, the pattern is curious. Most markets have been moving in directions favourable to the Bush regime. Perhaps bonds and commodities have been anticipating a recession. But then why has the equity market climbed?

Conspiracy theories have abounded since Hank Paulson, boss of Goldman Sachs, was nominated in May to become treasury secretary. He had no political qualifications but a powerful reputation as a market fixer.

Was he brought in to shore up the financial and commodities markets ahead of the poll? Goldman Sachs has enormous market power: soon after Paulson's transfer to Washington, it achieved annual records for revenues and earnings.

It is big in commodities. Strangely, in August, it cut the weighting of lead-free petrol in its influential GSCI commodities index. Since June, the weighting has been rolled back from 8.7% to 2.3%. Perhaps this was related to questions of market liquidity.

Analysts argued, however, that this reallocation triggered a sale and a sharp price reduction, as index trackers – running $60bn in commodity funds – cut their exposures to the new level.

Other cynical observers ask whether the US has been manipulating its strategic oil reserves stored underground in Louisiana. It ceased to top them up last April but there has been no attempt to dump crude on the markets.

The gold bullion price is controversial. Why has it slumped when global economic growth remains strong and inflation is running above target in Europe as well as the US? Gold bugs are seizing on the public admission this month by Bundesbank president Axel Weber that, although his institution was not a seller of gold, he had been asked by central banks to release reserves through swap deals – presumably so that they can sell borrowed gold and push the price down further.

The Fed, acting on behalf of the US treasury, is regarded as the prime suspect. After all, European central banks are not keen sellers of bullion: they fell more than 100 tonnes short of their 500 tonnes annual selling limit under the Washington Agreement, in the year ended September.

Intervention by governments in markets is not unusual. A "plunge protection team" of top officials has been used occasionally by the US authorities to stabilise securities markets. Governments regard it as normal to manage currencies, including gold, in that category. The US treasury has an Exchange Stabilisation Fund, the activities of which are kept under wraps. It would be irregular, though, if such techniques were to be used to pursue political objectives.

The temptation to put two and two together and make five should be resisted, however. Financial markets often behave abnormally when confronted with an uncertain political outcome. The Bush government may have been drawing on legitimate political favours, such as from the Saudis and possibly the Chinese.

Post-election responses by the markets may tell us something. If the Republicans perform well but markets tumble, we will draw conclusions about intervention.

-unquote -

... and for how long can these kind of shenanigans hope to conquer the main trend? Maybe they achieve their s.t. goal and then ... well, just think about it and buy some more insurance against financial tsunamis.


Happy to observe Hawaii got away without one after a 6.8 - 6.9 quake ...

spikedogFound this little gem about human nature during the last precious metals mania#14849610/16/06; 18:28:51,9171,954529,00.html

To the Melting Pot

Posted Monday, Feb. 4, 1980
They stream in by the thousands lugging shopping bags and suitcases filled with silver spoons, tea sets, candle sticks, gold rings and bracelets—anything that can be sold for its precious metal value and melted down. Almost everywhere, people rush to barter away their gold and silver bullion. In London uniformed guards admit long lines of sellers one or two at a time into the precincts of Johnson Matthey & Co., metal dealers, while tough-looking street traders sidle up to impatient standees. "Are you sellin', luv?" coos one, whipping out brass scales and rolls of pound notes. On Manhattan's West 47th Street signs blossom in jewelers' windows: "We pay the highest. Don't settle for less. Come on in."

Most of the pieces are ordinary silver, ranging from teaspoons to tea sets, but some are antiques worth far more than their weight in bullion. An exquisitely ornamented sterling cup made in 1835 changed hands in London for $272. Jeweler Abraham Lipchitz bought it on the street and quickly turned down an offer of $908 from a competitor. Said Lipchitz: "It's a crime. People are selling fine pieces like this to be melted down."

In the haste to cash in, some dealers are heaving precious pieces into the melting pot. Says John Culme, head of the silver department at Sotheby Belgravia: "People did the same thing during the Great Depression. Really wonderful Victorian centerpieces, tea sets and even 18th century dinner plates were melted down and lost."

Yet not all the fine pieces go to pot. "I absolutely refuse to melt down nice materials," says Jona than Hefferlin, the owner of Jonathons Coin in Los Angeles. From the daily glut, his wife picks out the valuable objects for resale. But at Manhattan's Empire Diamond & Gold Buying Service, where the queues form two hours before the store opens, almost everything goes to the smelter. Says Owner Jack Brod, who bought a Spanish-American War medal for its weight and paid only $75: "We might get more from a collector, but it's not worth looking for one or waiting. We'll melt it."

Many people are selling to avoid rising insurance costs and the risk of robbery, which is epidemic. Burglars increasingly are breaking into churches and synagogues to plunder sacred pieces of silver and gold.

Sellers have discovered that the price their silver fetches as scrap from retail dealers is only a fraction of the spot, or quoted, price for the metal. This spread between scrap and spot prices has been widening because chaotic markets make dealers reluctant to tie up too much cash in expensive inventory. A year ago, when silver was quoted at around $5 an oz., dealers paid customers $3 or $4 an oz., but when silver recently nudged $50, nervous dealers in the Los Angeles area were offering only $10 to $20 an oz. for scrap and sterling flatware.

Dealers pay cash, and then they deliver the scrap to the few smelting companies that have the special furnaces capable of reaching the extraordinarily high temperatures that burn away alloys. Before the dealers are paid, they must wait until the metal is melted down, assayed, and formed into bars by the refiners. In the mean time, dealers take bank loans to finance their inventories. But what used to be a wait of a few weeks for payment has been lengthening to four or five months as the smelters dig out from under growing backlogs. One Manhattan dealer bought so much silver and gold, and will now have to wait so long for payment, that he has been forced to negotiate an emergency line of credit to tide him over. The amount: $25 million.

spikedog - I would guess that most of those family legacies sold for scrap were NOT replaced when the precioussss fell back to much lower prices. So, what will they sell this time when PMs go "to the moon"?

GoldiloxUNDERSTANDING CONFLICTING SIGNALS#14849710/16/06; 21:58:04


There has been much speculation recently in the financial press regarding the health of the Commodities Bull Market that began earlier this decade. Recent setbacks in the price of gold, crude oil, natural gas and gasoline have led many market pundits to speculate that the commodities bull has run its course and we're on the threshold of an economic contraction.

Accompanying the cat calls for an impending recession is the familiar deflationist pleas for the Federal Reserve to begin lowering rates to avert a possible deflationary collapse.

For now, at least, it would appear that the Fed has taken heed of these cat calls – and put monetary tightening on pause.

At Least…..So It Seems

While interest rates govern the demand for credit, the Fed has other "tools" at its disposal which can alter the amount of money [liquidity] in the banking system on a temporary or permanent basis.

While the Fed has been sounding hawkish via the media they have quietly been ADDING liquidity through Open Market Operations [Repos] known colloquially as TOMO [temporary open market operations] and POMO [permanent open market operations].

Without going into a long and drawn out explanation of the difference between TOMO and POMO – let's just say the effects of TOMO are temporary while the effects of POMO are permanent and hence, have a more powerful influence.

The last 10 temporary open market operations are appended below, listing the date of operation, amount injected into the banking system and duration of the injection:

Oct. 16 4.5 B 1 day
Oct. 13 7.0 B 4 days
Oct. 12 8.75 B 1 day
Oct. 12 6.0 B 14 days
Oct. 11 5.5 B 1 day
Oct. 10 9.75 B 2 days
Oct. 06 7.0 B 5 days
Oct. 05 4.75 B 1 day
Oct. 05 9.0 B 14 days
Oct. 04 9.25 B 1 day

These liquidity additions to the banking system have the REVERSE effect of raising interest rates. To make a long story short, some of this "added liquidity" has made its way into the equity markets – propelling stock exchanges, like the DOW, to new record highs. And while certain commodities, mentioned above, have "taken it on the chin" so to speak, others like the base metals – nickel, copper, zinc – to name but a few, have not only held their values but have gone on to all time record "nominal" highs:


As expected, the loss of M3 reporting offers an opportunity to open the flood gates, but those who are watching closely aso see gold inching forward against le deluge.

TownCrierDe-dollarization rate hits $10bln in 9M06 -- official#14849810/17/06; 00:58:43

MOSCOW, October 16 (RIA Novosti) - The rate of de-dollarization in the Russian economy equaled about $10 billion at the end of the third quarter of 2006, the first deputy chairman of the Central Bank of Russia said Monday.

... de-dollarization ... represent[s] a decline in the use of the U.S. currency...

As the Russian economy and its energy sector grows, and the national currency appreciates in real terms in line with rising global oil prices, the U.S. dollar is becoming less attractive as an instrument of savings in Russia. The dollar as a currency of choice has been losing ground in general since the introduction of the euro in 1999, which defied expectations by overtaking the dollar in value.

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

The article indicates the rate of de-dollarization was $5 billion over the first six months of 2006, and it took only another 3 months to hit another $5 billion.

Will the rate of dollarization continue to accelerate like that until the foreign use is gone?

It doesn't bode well for the future value of the greenback.

(thanks for the link, G.)


USAGOLD / Centennial Precious Metals, Inc.A world of gold at your fingertips. Step inside...#14849910/17/06; 01:50:18

shop for gold coins
TownCriera misquote correction#14850010/17/06; 02:15:03

My comment should read:

"Will the rate of DE-dollarization continue to accelerate..."


The Invisible HandTruth reveals itself through Experience#14850110/17/06; 03:05:47


Either you get it, or you don't get it.
If you don't get it, no use explaining it to you.

November 2006:
beginning of the phase of impact of the global systemic crisis
According to the LEAP/E2020 team, the time has come when the motivations of the US Fed in stopping the M3 publication last March will be revealed ; and the consequences of this strategy will « catch on the wrong foot » who naively chose to share the general euphoria built up in the perspective of the US November election. From then on, as explained in GEAB N°8, a brand new story starts. That of the impact phase of the global systemic crisis.

How do I know?

WHAT DOES IT MEAN TO KNOW? Is it "to act" or "to undergo", "to produce" or "to assimilate", "to give" or "to receive"? Or is it something else than all that? Is there a difference between "to know" and "to know oneself"? To know, is it more that "to feel oneself living and changing"?
Is it more than a biological state, a factor in the behaviour of a living being? Up to what point are the "known object" and the "knowing subject" distinct?
(Fernand Van Steenberghen, "Philosophie fondamentale", 1989, (hereafter FVS), p. 58)

How does the duality between subject and object manifest itself? (FVS p. 71)

My knowledge can be described as follows:
an immanent activity through which I perfect myself through the conscious possession of the objective and subjective real.

In this definition, one can distinguish
- the knowing subject: I
- the act of knowledge: immanent activity
- the known object: the objective and subjective real
- the long term finality: I perfect myself

Either you get it, or you don't get it.
If you don't get it, no use explaining it to you.

In the meantime, give me Another beer.
Bier Herr, Bier Herr, oder ich fall’ um!
That's Another Truth I got through experience.

TopazMr Hands Link.#14850210/17/06; 03:49:45

There you go.
The Invisible HandDo you get it?#14850310/17/06; 04:01:56




968 (10/16/06; 09:35:24MT - msg#: 148490)
by F. William Engdahl

For those who still didn't get it.

What is the reason why the POG is so low and why gold is not allowed to move?

If Freegold would for instance be valued at 10 times its current price, all paper in portfolios would blown away.

With overnight Freegold, all stock-markets would collapse through the gold rush.

This explains why, as Engdahl outlines, the gold revaluation must occur gradually and in function of the degeneration of the dollar-International Financial and Monetary System (IFMS). Those who collaborate with the POG increase are enemies of the US of A and its dollar.

As Engdahl shows, the only reason why the dollar-reserves are being piled up is that there is no productive physical economy (large enough) in which those dollars could be invested.
Hence, the systemically increasing dollar-debt-mass continues to wander around in the Financial Industry looking for more return.

This is thus a SYSTEMIC problem and not a problem which will go away with time.

Once Freegold will be allowed to develop, the POG must rise explosively because there will be a brutal battle to physically get hold of the metal. My good friends the bureaucrats will no longer be able to ensure an ordered redistribution as is occurring now among the European System of Central Banks.

The Frankfurt ECB bureaucrats could start the Freegold gold by announcing the plans of the individuals who are telling the said bureaucrats what to do with gold.

As Rand said "Throughout the centuries there were men who took first steps down new roads armed with nothing but their own vision. Their goals differed, but they all had this in common: that the step was the first, the road new, the vision unborrowed"

There are thus individuals who are dictating the ECB's gold policies to the latter's bureaucrats. Unfortunately, I'm not one of them.

This explains also why the whole Freegold-thing always must be discussed invisibly. Nobody is allowed to know what is happening.

Bush Keeps Revising War Justification

Oil is important for the "survival" of the "civilised" world.
That explains also the wars in Yugoslavia and Afghanistan.

Re-read A/FOA and see whether you get it or not.

If you get it, enjoy life! There's more to life than understanding the financial and monetary machinations of our masters. Hug those who are dear to you!

The Invisible HandWhat is Iran doing with those dollars?#14850410/17/06; 05:00:58

AFP - October 17, 2006
"Iran's assets in foreign banks in late July amounted to $52.3 billion, showing an increase by 38.8 percent compared to the same period last year," the report said.
The announcement of the rise in foreign currency assets comes amid intensifying moves led by the United States to impose UN sanctions on the Islamic republic over its disputed nuclear program.
In January, some Iranian officials mooted transferring the country's foreign deposits away from European banks as a precautionary move in case the UN Security Council imposed sanctions targeting Iranian assets abroad.
However it was later denied that such a move was being considered.

Investing them in euros? Yes, but it wants to hurt Europe as a precautionary move in case the UN Security Council imposed sanctions targeting Iranian assets abroad? So what other option?

Iran, Switzerland to discuss Gold reserves
Mar 31, 2006
Iran's Foreign Minister Manouchehr Mottaki is to hold an unofficial meeting with his Swiss Counterpart Micheline Calmy-Rey here Friday and discuss Iran's Gold reserves.

Iran's gold reserves in Swiss withdrawn, mullahs deny
Mullahs' cronies in Central Bank of Iran on Friday denied the news published in a Swiss daily on withdrawal of 250 tons of Iran's gold reserves from that country's Credit Bank.
The Central Bank official, who spoke on condition of anonymity, told the Economy Desk at IRNA Head office in Tehran Desk, "The news published in the Thursday edition of the Bern-based daily Der Bund, on Iran's withdrawal of 250 tons of its gold reserves, worth five billion Swiss francs, and transferring them to Tehran is totally baseless."
Der Bund had added in its story that apparently Iran has ever since last October withdrawn 700 tons of its gold reserves, worth sixteen billion Swiss franks, from various Western monetary funds and transferred them to other unknown destinations.

It's like those Russians concluding gas contracts with Europe?

Reliable energy supplies are set to rival military capability in their contribution to a state's security, Tony Blair said.

Wait until the November elections?

GoldiloxNAFTA trumps the Constitution#14850510/17/06; 05:08:48


Oakland, CA -- Today, Sierra Club and Earthworks, represented by Earthjustice and the Western Mining Action Project, filed a submission opposing the Canadian gold mining company Glamis Gold's efforts to use an international trade panel to force the United States to pay $50 million for mining restrictions that protect the environment and Native American cultural resources.

"This is about a foreign-owned company using a NAFTA trade panel to bully the state of California and the United States into letting them destroy public lands," said Margrete Strand Rangnes, with Sierra Club's Responsible Trade Program. "This case should be a wake-up call to the Bush administration as it negotiates new trade agreements."

The trade panel, created under the North American Free Trade Agreement (NAFTA), is considering the case involving a series of open pit gold mines in the California desert roughly 45 miles northeast of El Centro, California. The land is sacred to the Quechan Indians, a Colorado River Indian tribe living near the California-Arizona border. The Canadian mining company filed a proposed plan of operations with the federal Bureau of Land Management to mine 1,600 acres in 1994.

"The Glamis project calls for mining and leaching 300 million tons of waste rock and 150 million tons of ore to produce a small amount of gold," said Larry Klaasen of the San Diego Sierra Club chapter. "This would be devastating to the surrounding desert ecosystem."

"International trade agreements like NAFTA, and the US-Peru Free Trade Agreement Congress is set to consider, share a fundamental problem," said Earthjustice attorney Martin Wagner. "They allow private companies to challenge environmental and other protections enacted by both our state and federal governments. International trade agreements should respect the environmental laws of the countries involved."

Western Mining Action Project attorney Roger Flynn said, "The Canadian gold mining company couldn't win in US court, so now it's resorting to NAFTA."


In 2001, Clinton Interior Secretary Bruce Babbitt refused to approve Glamis's mining plan because it would have destroyed the sacred tribal lands. California later passed a law requiring open pit mines to be refilled after mining was completed, a process the company argues is too expensive to make the mine profitable. The Bush administration reversed the Babbitt decision, but still hasn't issued the necessary permits. The California reclamation law is still on the books. However, the company claims the California law and the Babbitt denial violate NAFTA, which provides special protection for the profits of foreign companies.


The US Constitution grants all "rights" not covered in its own sphere to the member states. Since before the Civil War, there have been legal battles over FED vs. local jurisdiction, with the states more lately finding their rights trumped by "loss of funding" as the penalty for "challenging" Federal supremacy. Highway funding is the most well-known example, but many law-enforcement issues are similar, as state and local police forces cannot survive without Federal "grant" money. In a deficit economy, that is usually enough to "force" comformity.

i.e. Follow the Federal guidelines, or lose your "golden eggs"!

Now we're also seeing courts being instructed to hold NAFTA compliance over and above states' rights, virtually granting it powers greater than those of the US Constitution.

NAU is here, folks! As usual, the globalists just don't have to tell you until they haul your butt into court. The America of the founding fathers is dead and buried, with only political orators left to eulogize it.

The Invisible HandIOB only to open when Freegold will be a fact#14850610/17/06; 06:05:47

This from 2004:
The Real Reasons Why Iran is the Next Target:
The Emerging Euro-denominated International Oil Marker
by William Clark
27 October 2004
Considering that Iran has switched to the euro for its oil payments from E.U. and ACU customers

If Iran has switched to sell in euro to Europeans, why is the total still denominated (only) in dollar?

The Invisible Hand (10/17/06; 05:00:58MT - msg#: 148504)
What is Iran doing with those dollars?

Is that perhaps in order not to frighten the US of A? Because the Iranian Oil Bourse (IOB) will do the same and the US of A could not possibly tolerate it? The US of A cannot possibly tolerate that the IOB opens (because it could trade in euro). So let's not frighten the US of A and not make too much publicity about the fact that we are already selling in euro to customers who prefer.

This is Engdahl again:
Iranian oil bourse hits wall
Mar 15, 2006
A full challenge to the U.S." dollar as the world central bank reserve currency, Mr. Engdahl added later," would entail a "de facto declaration of war on the "'full-spectrum dominance'" of the United States today,"" and that is something no country or group of countries is yet willing to launch."

Iran's Oil Exchange Threatens the Greenback
by Mike Whitney
January 24, 2006
The Bush administration will never allow the Iranian government to open an oil exchange (bourse) that trades petroleum in euros. If that were to happen, hundreds of billions of dollars would come flooding back to the United States crushing the greenback and destroying the economy. This is why Bush and Co. is planning to lead the nation to war against Iran. It is straightforward defense of the current global system and the continuing dominance of the reserve currency, the dollar.
Aug 26, 2005
The [Iranian Oil Bourse] could help the euro to become the interim primary reserve currency before China and India rise to the first two slots in the global economic ranking in the next few decades. A decline of the dollar's position in oil trading might also open the floodgates in other commodity markets where the dollar is the medium of exchange but where the US has only a minority market share. A global economy driven by tough efficiency demands in the light of thin profit margins almost everywhere is a good primer for accounting changes in other commodity markets as well. This process could begin in resources like steel and energy and spread to all other resources that are marketed globally. The world outside the US has a lot to gain from it.

I said:
The Invisible Hand (10/17/06; 04:01:56MT - msg#: 148503)




I now add:


Clink!It was just a matter of time .....#14850710/17/06; 06:23:57

Zinc passed the $1.80 mark today, that means the current "penny" has a melt value of $0.0101867. All the coins in your penny jar are worth more than their denomination (except for steel cents made during WW2).

Yep, that commodities bull market is well and truly over - NOT !


The Invisible HandFrom the good old Pravda#14850810/17/06; 06:54:28

Putin creates new axis in Europe to oppose USA's global hegemony
Russia is developing relations with Old Europe against the background of USA's concerns with Moscow's home and foreign policies.
The European axis (Paris-Berlin-Moscow) is a normal reaction of experienced politicians to USA's hegemony. The USA has become a defense machine making its way to global reign. The agreements in France show that "Old Europe" approaches Russia as an independent and attractive center of power.

HuskyEngdahl#14850910/17/06; 07:27:54

Do a Google on Engdahl sometime. The man's writings are unabashedly anti-gold. It is beyond me why anybody would discuss him in a positive light here - he is not a gold bug. In fact he seems to despise them.
The Invisible HandEngdahl#14851010/17/06; 08:00:15

The abusive argumentum ad hominem consists of attacking the arguer if you can attack the argument.
The fallacy here, as with most fallacies of relevance, is that the argument is not treated on its merit..
Arguments should stand or fall by their own qualities.
(Madsen Pirie, "How to Win Every Argument – The Use and Abuse of Logic, Continuum Books, 2006, p. 88)

GoldiloxRussian banker's murder: Three held#14851110/17/06; 09:53:19


Three Ukrainians have been arrested in connection with the murder of a top Russian banker last month.

The Kommersant, a Russian daily newspaper, said in a report on Monday that police had detained the three men on suspicion of carrying out the murder of Andrei Kozlov, the first deputy chairman of Russia's central bank.

The report also said that the police have narrowed their search for those who ordered the contract killing.

"In the course of our investigation ... We have established those connected to organising and carrying out this crime," the general prosecutor's office said in a statement printed by Kommersant, on Monday.

The newspaper, citing sources close to the investigation, said that police were focusing on a number of banks which had come under the threat of losing their licenses about two months before Kozlov was shot dead on September 13.


Kozlov's murder is widely believed to be connected to his campaign against money-laundering and criminality in the banking sector.

The suspects, Alexei Polovinkin, Maxim Proglyad and Alexander Belokopytov, were detained last week and are cooperating with the investigation, Kommersant newspaper said in the report.

Olena Titorchuk, spokeswomen for the Ukrainian interior ministry, said the department had no information on the Ukrainians being detained.

Kozlov, who had been responsible for banking supervision, had withdrawn the licenses of dozens of banks and had overseen an ambitious scheme to reduce criminality and money laundering in Russia.

According to Russian media, the Russian central bank has shut down 90 credit institutions since 1994.


Central Banker seems a rather dangerous occupation in Russia these days.

TownCrierEurosystem reserve adjustments#14851210/17/06; 11:03:34

According to the latest consolidated financial statement, one CB among the Eurosystem last week reallocated another one tonne of gold reserves valued at 15 million euro.

By contrast, the Eurosystem as a whole let its net position in foreign currency dwindle to a greater degree, the dishoarding last week being valued at 500 million euro.

Official gold reserves now stand at EUR 175.3 billion.

Net position in foreign currency now at EUR 152.7 billion.

For context, please recall that at euro-launch nearly eight years ago, the value of eurosystem gold reserves were less than EUR 100 billion, whereas the net position in foreign currency was valued greater than EUR 200 billion.

How things have changed... and continue to do so! All part of an unmistakable shift in the international monetary reserve paradigm.


TownCrierHEADLINE: Gold is still cheap and a great investment#14851310/17/06; 11:51:24

October 17, 2006 -- Diwali being just a few days away, the sale of gold ornaments, coins and bars are already going up. So is the price of gold. However, contrary to popular belief, gold is still a very cheap buy when compared to many other commodities...

India is the largest consumer of gold in the world, consuming around 18 per cent of the total world's production. India has to import around 70 per cent of its total gold consumption, thus imparting a lot of foreign exchange to major gold producing countries.

...Gold provides an effective hedge against inflation. Gold prices are considered to be highly sensitive to inflation and rise accordingly. Gold also provides effective liquidity higher than other forms of real assets like gemstones, land and antiques which require some time to get liquidated.

The only problem that arises with the liquidity of gold is its resale value in the form of jewellery.

The demand for gold also goes up with an increase in oil prices. ... Oil prices have been on a rise and will continue to be on a rise with the increase in demand for fuel, plus, recently Organisation of Petroleum Exporting Countries (OPEC) has given indications that it will curtail the supply of oil.

Women are the majority users of gold ornaments in India. Parents give their daughter gold ornaments during her marriage which is her exclusive property (streedhan) and not to be used by the husband for his personal gain without her permission.

Gold is also a status symbol helpful in asserting the status of a person in the society, especially in India. The importance attached to gold, along with its scarcity in the earth's crust compared to other metals, and its ability to provide a good hedge against inflation, makes it a highly demanded precious metal. The demand ensures that the prices will surely look northwards in the future too.

So, this Diwali, invest in gold without worrying about the prices being too high!

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

Do you have enough highly exclusive, portable, liquid property?


mikalInflation and the economy are about "perception"- smoke and mirrored mirrors#14851410/17/06; 12:49:11

WHAT'S NEXT IN INVESTMENTS? - Staff Reports - Free-Market News Network | Tuesday, October 17, 2006 |
"Commenting on the wild proliferation of investment vehicles now available to investors, Jim Sinclair, gold trader and originator of jsmineset, wonders: "What's next – a derivatives market where traders can gamble on whether or not there will be a new derivatives market? At the rate this is going, before long we will have reached a point where we have forgotten exactly what it is that we are attempting to hedge ourselves from."

Commodities Trader Dan Norcini, in an open posting on Sinclair's website concurs, remarking:
I agree. "This tops it all. I have no idea why anyone goes to a gaming table when, at a spiritual level, casinos exist on every exchange and OTC. The world has lost its mind. Those the Gods wish to destroy are made mad first." - DS"
Mikal- You don't really need to OWN investments per se.
It's imagineering. But I repeat myself.

TownCrierNoyer: ECB Won't Act As Lender Of Last Resort#14851610/17/06; 13:00:01

PARIS -(Dow Jones)- The European Central Bank won't act as a lender of last resort if faced with a sovereign financial crisis within the euro zone, ECB governing council member Christian Noyer said Tuesday.

"The market seems to believe that there will be a bailing out" of euro-zone countries that get into financial difficulties after living above their means, Noyer said.

"That simply cannot happen, and will not happen," he added in an interview with Dow Jones Newswires. "The ECB won't accept as collateral the public debt of any country that is downgraded to non-investment grade, even to BBB."

Banks regularly borrow money from the ECB by bidding at weekly refinancing auctions run by the central bank. Those loans are backed by the securities - including sovereign bonds - which banks deposit with the ECB.

So a government whose bonds were no longer accepted as collateral by the ECB would find that demand for its debt would shrink, increasing the interest rate it would have to pay in order to borrow.

Italy appears to be the major euro-zone borrower that is most at risk of having its credit rating downgraded to the point where its bonds would no longer be accepted by the ECB as collateral...

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

That should go a long way toward helping some folks understand how that system is knitted together.

The long and the short of it has always been that Italy (or any other) would not find relief to budgetary crunches through an (impossible) exit from the eurosystem.

Were an exit accomplished by a country to facilitate its own emission of currency to feed the budget, market participants would instantly recognize the fact and would appropriately discount the value of sovereign bonds, thus punishing the country with oppressively high interest rates to compensate for the national currency inflation.

If a country like Italy, for example, truly needed to "cheat" a little to make fiscal ends meet, it would be far easier (and indeed far less self-destructive) to forego the aforementioned exit strategy and instead find recourse in the occasional default on its issue of euro-denominated bonds. Sure, the creditors take haircuts on the renegotiation, but the country itself (and especially its citizens) wouldn't be as broadly and prevailingly punished by the market. Key in this is that the currency (and domestic pricing/contract structure) remains of stable value, whereas it is specifically the flimsy government bonds in question that suffer and lose value.

And in such a system, it is better still (and in fact it is designed this way for long-term stability) that the citizens find gold to be a form of savings worth gravitating towards. Capiche?


USAGOLD Daily Market ReportPage Update!#14851710/17/06; 14:03:01">
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

October 17 (from DowJones) -- Comex gold futures stalled near the psychologically important $600-an-ounce level on Tuesday at the New York Mercantile Exchange and settled lower on the day.

At settlement, the most-active December gold contract was down $5.00 at $593.50.

During the session the contract pushed to a high of $599.80 after getting as high as $601.60 in overnight trade.

But George Gero of RBC Capital Markets Global Futures said gold faced a "tug-of-war" near the $600 level with producer selling meeting industrial and physical demand.

"Every time Comex gold reaches the $600 mark producer selling from Australia and South America moves in," said Gero.

"You have a conflict at that level but at the same time we see investment and physical demand surface." Gero added that the other surprising feature of the gold market is the recent drop in open interest in gold.

As of close of trading on Monday, gold open interest dropped to 327,580, down 7,262 from the previous session.

Overnight gold found support from steadier oil prices combined with the growing tensions between North Korea and the U.N., which bolstered dealer and fund appetite for gold and the rest of the metal complex, said analysts at TheBulliondesk in a daily comment.

"I still view $608 as being a pivotal level, which if breached could trigger a move back towards $655," said TheBullionDesk analysts.

---(see url for full news, 24-hr newswire)---

HuskyEngdahl#14851810/17/06; 15:17:58

"The fallacy here, as with most fallacies of relevance, is that the argument is not treated on its merit.."

A fine example you set there sir.

I believe I pointed out that the relevant data to support my position on Engdahl was readily available through Google to those who cared enough to lift a finger and make a few mouse clicks. There are reams of it. If that's too much trouble then any debate is with the mirror.

TopazPoG Poor old Gold!#14851910/17/06; 15:37:33

Given the T-Bond action I'd be inclined to think we're in for another dip here.
Gold's upward momentum is pathetic compared to it's downside and Bonds look for all the world like continuing on their merry way to 120.
Gold MAY catch a bid a bit north of $550 as Buck comes under pressure in concert with strengthening Bonds. ...IMHO!

GoldiloxEngdahl#14852010/17/06; 16:05:05


TIH's point was not whether Engdahl was pro- or anti- gold, but whether the argument stood on its on merit. Principles, not personalities.

If we only post the message of those who repetitively "preach to the choir", at some point we are likely to box ourselves in with self-aggrandizement.

spikedogTIH, Euro Freegold and the IOB#14852110/17/06; 16:51:21

What if the Euro does not want to be the next reserve currency and they are holding the Iranians back from opening the OB?

Freegold would not necessarily be Euro Freegold, Dollar Freegold, Yen Freegold, ad infinitum. Freegold is just that.....Free Gold, able to find its level no matter where it is. Dare I say the financial equivalent of water.

Anyway, with respect to Freegold happening before the IOB can open... is this not chicken versus egg? Both are a direct and open challenge to dollar hegemony which is decidedly anti-Freegold. If the IOB opened first (and was not subject to immediate carpet or smart bombing) would this not help support the freegold concept as well?


mikalSouth Africa's ANC to move up "land reforms"#14852210/17/06; 20:39:17

South Africa Hints it May Broaden Land Seizures - CNN - Reuters | Oct 17, 2006
Said to be "too slow" to impliment change,
the ruling ANC debates measures that would finally
achieve it's lofty "black ownership" goals.

mikalInertia or premptive policy-making?#14852310/17/06; 22:20:11,,5-2409304,00.html

Treasury to Review Policing of 'Aggressive' Hedge Funds
Times Online | Gary Duncan and LizChong - October 18, 2006
It's been said that for every action, there is an equal and opposite government program.
This article relates attempts to regulate hedge funds
on an international scale.

mikalVice Premier addresses scientists at energy meeting#14852410/17/06; 22:47:07

Chinese Vice Premier Stresses Nuclear Fusion Development | People's Daily | Xinhua | October 18, 2006
Energy, lots of it, could give new meaning to "sustainable development"

GoldiloxOT, but important to Internet users and Internet commerce#14852510/18/06; 07:55:11


Like the Romans, we Americans have used our technology to build a sprawling infrastructure of ports, railroads and interstates which serves the strength of our economy and the mobility of our society. Yet as significant as these have been, they pale beside the potential of the Internet. Almost overnight, it has made sending and receiving information easier than ever. It has opened a vast new marketplace of ideas, and it is transforming commerce and culture.

It may also revitalize democracy.

"Wait a minute!" you say. "You can't compare the Internet to the Roman empire. There's no electronic Caesar, no center, controlling how the World Wide Web is used."

Right you are—so far. The Internet is revolutionary because it is the most democratic of media. All you need to join the revolution is a computer and a connection. We don't just watch; we participate, collaborate and create. Unlike television, radio and cable, whose hirelings create content aimed at us for their own reasons, with the Internet every citizen is potentially a producer. The conversation of democracy belongs to us.

That wide-open access is the founding principle of the Internet, but it may be slipping through our fingers. How ironic if it should pass irretrievably into history here, at the very dawn of the Internet Age.

The Internet has become the foremost testing ground where the forces of innovation, corporate power, the public interest and government regulation converge. Already, the notion of a level playing field—what's called network neutrality—is under siege by powerful forces trying to tilt the field to their advantage. The Bush majority on the FCC has bowed to the interests of the big cable and telephone companies to strip away, or undo, the Internet's basic DNA of openness and non-discrimination. When some members of Congress set out to restore network neutrality, they were thwarted by the industry's high spending lobbyists. This happened according to the standard practices of a rented Congress—with little public awareness and scarce attention from the press. There had been a similar blackout 10 years ago, when, in the Telecommunications Act of 1996, Congress carved up our media landscape. They drove a dagger in the heart of radio, triggered a wave of consolidation that let the big media companies get bigger, and gave away to rich corporations—for free—public airwaves worth billions.

This time, they couldn't keep secret what they were doing. Word got around that without public participation these changes could lead to unsettling phenomenon—the rise of digital empires that limit, or even destroy, the capabilities of small Internet users. Organizations across the political spectrum—from the Christian Coalition to —rallied in protest, flooding Congress with more than a million letters and petitions to restore network neutrality. Enough politicians have responded to keep the outcome in play.

At the core this is a struggle about the role and dimensions of human freedom and free speech. But it is also a contemporary clash of a centuries-old debate over free-market economics and governmental regulation, one that finds Adam Smith invoked both by advocates for government action to protect the average online wayfarer and by opponents of any regulation at all.

In The Wealth of Nations, Smith argued that only the unfettered dealings of merchants and customers could ensure economic prosperity. But he also warned against the formation of monopolies—mighty behemoths that face little or no competition. Our history brims with his legacy. Consider the explosion of industry and the reign of the robber barons during the first Gilded Age in the last decades of the 19th century. Settlements and cities began to fill the continent, spirited by a crucial technological advance: the railroad. As railroad companies sprang up, they merged into monopolies. Merchants and farmers were often charged outlandish freight prices—until the 1870s, when the Granger Laws and other forms of public regulation provided some protection to customers.

At about the same time, chemist Samuel Andrews—inventor of a new method for refining oil into kerosene—partnered with John D. Rockefeller to create the Standard Oil Company. By century's end Standard Oil had forged a monopoly, controlling a network of pipelines and railways that spanned the country. Competition became practically impossible as the mammoth company manipulated prices and crushed rival after hapless rival. Only with the passage of the Sherman Anti-Trust Act in 1890 did the public have hope of recourse against the overwhelming might of concentrated economic and political power. But, less than a century later a relative handful of large companies would assemble monopolies over broadcasting, newspapers, cable and even the operating system of computers, and their rule would go essentially unchallenged by the U.S. government.

Now we have an Internet infrastructure that is rapidly evolving, in more ways than one. As often occurred on Rome's ancient highways, cyber-sojourners could soon find themselves paying up in order to travel freely. Our new digital monopolists want to use their new power to reverse the way the Internet now works for us: allowing those with the largest bankrolls to route their content on fast lanes, while placing others in a congested thoroughfare. If they succeed in taking a medium that has an essential democratic nature and monetizing every aspect of it, America will divide further between the rich and poor and between those who have access to knowledge and those who do not.

The companies point out that there have been few Internet neutrality violations. Don't mess with something that's been working for everyone, they say; don't add safeguards when none have so far been needed. But the emerging generation, which will inherit the results of this Washington battle, gets it. Writing in The Yale Daily News, Dariush Nothaft, a college junior, after hearing with respect the industry's case, argues that: Nevertheless, the Internet's power as a social force counters these arguments….A non-neutral Internet would discourage competition, thereby costing consumers money and diminishing the benefits of lower subscription prices for Internet access. More importantly, people today pay for Internet access with the understanding that they are accessing a wide, level field of sites where only their preferences will guide them. Non-neutrality changes the very essence of the Internet, thereby making the product provided to users less valuable.

So the Internet is reaching a crucial crossroads in its astonishing evolution. Will we shape it to enlarge democracy in the digital era? Will we assure that commerce is not its only contribution to the American experience?

The monopolists tell us not to worry: They will take care of us, and see to it that the public interest is honored and democracy served by this most remarkable of technologies.

They said the same thing about radio.

And about television.

And about cable.

Will future historians speak of an Internet Golden Age that ended when the 21st century began?

Bill Moyers is host of "The Net At Risk," a documentary special airing Wednesday, October 18 at 9 p.m. on PBS (check local listings).


Internet II has been in design for about 10 years, ever since the public introduction of the Internet. The main question is, will it only be available to the highest bidders?

mikalMore "mixed signals"#14852610/18/06; 08:11:41

US CPI drops on cheaper energy prices, but underlying inflation hits 10-yr high
Barcelona - - October 18, 2006

USAGOLD / Centennial Precious Metals, Inc.Haven't joined the mailing list yet? See what you've been missing right here...#14852710/18/06; 08:56:23">join the newsgroup
mikalDerivatives danger#14852810/18/06; 09:18:38 A Dangerous Game - Forbes - Daniel Fisher - Oct 16
Hedge funds like Amaranth betting on futures seems far less worrisome than credit default derivatives. "There is a close correlation between yield spreads and credit default swap prices."

TownCrierHEADLINE: The Last Days of the Dollar#14852910/18/06; 09:40:43

October 17, 2006 -- In 1966, I was traveling the Pacific aboard a freighter. I was 19 years old at the time and attending the U.S. Merchant Marine Academy at Kings Point, N.Y.

As part of my academy education, I spent a year as a student officer on freighters, passenger liners, oil tankers, and even tugboats. It was a great way to see and study the world...

Back then, the formal exchange rate in the banks was 360 Japanese yen to one U.S. dollar. On the black market in Hong Kong, I could get 366 yen to the dollar.

...In 1971, President Richard Nixon changed everything by removing the U.S. dollar from the gold standard. Suddenly, the dollar was still the world's currency, but now it was backed by nothing. The United States was free to print as much money as it wanted, and the world went along., the United States is perceived to be the richest country in the world. In reality, though, we're the biggest debtor nation in the world. And who are we indebted to? What many consider to be a Third World country: China.

The irony is that many Americans think we're rich and China is poor. Exactly the opposite is true. This is because the removal of gold's backing from paper money has created a virtual explosion in credit and liquidity. The sheer amount of liquidity around the globe is incalculable.

This excess funny money causes people to feel rich and almost everything to be more expensive. Today, stocks, real estate, automobiles, and gasoline become more expensive as the dollar becomes cheaper.

While some people do become richer in this system, funny money actually punishes working people who save money. It devalues the value of your work and your savings, even though you may feel wealthier.

...China and many countries in the world today lend us billions of dollars...

In real-world terms, one of the reasons the U.S. dollar only buys approximately 110 yen instead of 360 yen today is because the Japanese allowed us to continually devalue the dollar -- that is, to pay our debts with cheaper dollars. buying an orange for $1 on credit and then paying him back for it a year later with 80 cents...

Over the years, the yen got stronger and the dollar got weaker simply because we, as a nation, printed more and more money, all the while consuming more and producing less. Japan would lend us money and we would buy their products. Japan's economy boomed, and so did ours.

Game Over?

The problem today is that China isn't willing to play the game the way the Japanese did. If we drop the purchasing power of the dollar, the Chinese, by pegging their currency to the dollar, also drop the value of their currency. The United States then pays back its debt with a cheaper dollar.

The irony is that we accuse China of playing games with their money. It's more honest to say that China just isn't willing to play the game we want to play.

But an even bigger problem is looming: It seems like the rest of the world is less willing to play our money game. That's why the European Union introduced the Euro.

If the oil-producing nations stop accepting the dollar and switch to gold or the Euro, things will definitely get sticky.

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

A very good introductory article for all newcomers.

In making your savings decisions, choose gold.


ThoreaulyAustralian treasury secretary seeks "orderly withdrawal" out of USD#14853010/18/06; 09:48:22

And he want the region's central banks to "telegraph" their intention to do so.
TownCrierA Swap Story: Borrowed From The Bank of England#14853110/18/06; 10:17:09


WASHINGTON (Dow Jones)--U.S. gold exports [25.1 tonnes] rose 55.0% in August from the previous month, and was up 83.0% from the previous year, the Commerce Department reported...

[January - August '06 non-monetary gold exports totaled 144.6 tonnes]

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

Full of juicy bits for those wanting help in imagining the worst.


FlatlinerValue of the Dollar#14853210/18/06; 11:00:45

It seems to me that the value of the dollar is directly connected to its use as the settling currency for international commodity transactions and this functionality is what allows the Fed to balance the value of the dollar on a worldly scale.

It doesn't matter if confidence if lost or gained in the dollar for this force, that would naturally cause the dollar to fall or rise in relative value, can be countered by increasing or decreasing the amount of currency that is available to function in the world economy. Commodity transactions are easy to measure, and predict, thus value in the currency can be maintained through simple forced supply and demand.

For the Chicken Little's in the audience, it seems obvious now that those that ‘manipulate’ their commodities (read: central bank expansion and contraction of their currency supply) know very well that value can be balanced even among outrageous shocks to the system. Even if billions disappear overnight, billions can be made available to continue to provide function for these critical international (and national) transactions. If billions appear overnight (a big trader dumps or attempts to dump dollars) rules and regulations are in place to slow that process. Even in the worse case worst case where cultures clash, the dumping of dollars can be measured as added liquidity into the system that can be countered by the Fed.

The system with which the world works in on a daily basis is fundamentally tied to pricing world commodities in the US dollar. This pricing, IMHO, is a key element, if not the key element to watch as time moves on in favor of the physical gold advocate. The most important thing that this system empowers to the US is the ability to pay off creditors with virtually no cost debt and taxation through inflation in non US citizens.

Ultimately, as long as enough countries (enough economies) use the function of the dollar, the Fed will be able to maintain value.

Even in the face of changing transactions, others can work together to reduce the influence of the US Dollar on a worldly scale. This is most interesting (to me and held my curiosity in the face of The Sky if Falling scenario) and the situation is rather simple if you look outside the box. There is nothing that says someone must sell their commodity through a public market where prices are determined in US Dollars. Contracts are signed all the time where two countries agree on trades where commodities are exchanged in local currencies rather then US Dollars and the information is reported to the world in terms of US dollar equivalents.

Russia is one of the best examples of this understanding today. They have taken an official stand to think of all transaction in their own currency rather then in terms of US Dollars. The little guy may not have confidence in the Ruble, but the political organization does and it appears that they are structuring their energy deals outside the dollar system even though we hear about them in US Dollar equivalents.

Big players do not need public commodity markets. Their deals are conducted by trading asset for asset. IMHO, this is what the Fed fears and this is what the US Political system is fighting to prevent.

Extend you understanding of the public gold market to all public markets. As long as the dollar remains strong through these markets, all big players are forced to play along and ‘give’ their assets away at these ridiculously ‘low’ prices – as long as they use the US Dollar and pay inflation taxes. As long as public use of these markets continues, the dollar will be a force to recon with for years to come.

No one wants to be smart bombed into submission, thus openly rebelling against the system is not an option. On the other hand, forming private trade agreements and reporting them in US Dollar equivalents makes it appear (publicly) that support is still in place for the US dollar when in reality, support is weakening.

Even within this weakening position, the Fed will most likely be able to balance the value of the dollar. At the same time, no one would consciously make the decision to shock the system because of the military instability that it would unleash within the US.

As long as assets flow into the commodity markets in support of the US Dollar, the US Dollar will remain the key currency in the world. If for any reason assets no longer flow into these markets, the pricing scheme of quoting the asset in US Dollars will be meaningless.

As we watch the nationalization of resources around the world, one has to wonder if those resources will come to market priced in US Dollars. If they do not, the function of the US Dollar will diminish.

The shock to the system will be with in the US itself. As others slowly remove their support from markets that trade in US Dollars, the ability of the US government to purchase resources using US Dollars will find its limit. There will be limited resources made available through this avenue, thus private deals will need to be made. Folks, when private deals are made, assets are traded for assets not assets traded for paper that finds little function. The US will be forced to acquire foreign currencies through the action of selling assets.

Gold is a great asset. As US Dollars find fewer assets to buy, the function of that currency will be questioned by all. Gold will make an amazing alternative for it is an asset class of reserve status.

arbyhunattended children#14853310/18/06; 11:46:09

Unattended children
Will be given an
expresso and
a free puppy.

968@ Flatliner#14853410/18/06; 13:28:32


"There could be a run on the dollar not because investors would fear an abandonment of the gold parity, as in the seventies, but because they would fear a plunge in the dollar exchange rate. In other words, Triffin's analysis does not have to rely on the gold-dollar parity to be relevant. Gold or not, the specter of the Triffin dilemma may still be haunting us!"
USDX=80 demarcationline is more than 30 years old (thanks Belgian, I still remember this statement from you).
The fundamental problem remains that the US can export all its dollar-inflation to the rest of the world, and that the US can 'colonize' the rest of the world by means of this dollarhegemony.

melda laureMake mine w/ a shot of amaretto, Arbyh.#14853510/18/06; 13:38:16

Rob Kirby's latest has some interesting rumours on what BOE may have been up to a few years back. I've never heard of the "quality swap" whereby bars of one fineness are swapped for bars of a different fineness.

I'm not sure where else you'd find bars at less than .995 other than UST.

Creepy tales...

TownCriermelda laure, where else to find...?#14853610/18/06; 14:45:29

For one example, how about a stack of dore bars in the queue awaiting processing at the refinery?

And there's no need to limit ourselves to having it be in bar form, either. Recently introduced has been financial products whereby gold jewelery in the mid-East have been able to have their active inventory (complete with RFID tags for assurance) count as collateral for gold loans. The sponsoring bullion bank need merely do a quality swap against the inventory as a mass, and you've suddenly got liquidity coming out of your ears... which is precisely the point of the thing, as you know.


USAGOLD Daily Market ReportPage Update!#14853710/18/06; 14:47:25">
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

October 18 (from Reuters) -- Gold futures turned lower at the close after a buoyant U.S. session on Wednesday, yielding to falling crude oil prices and U.S. data suggesting that the economy remains resilient, with tame inflation.

COMEX December gold was up for most of the session, taking a swing at the $600 level.

It settled 90 cents lower at $592.60, trading from $591.70 to $598.80.

Physical buying in Asia overnight helped prop up gold, following a downturn in crude oil prices. Precious metals spent the morning almost ignoring soft NYMEX crude prices. In the end, the strong correlation linked to the use of gold as an inflation hedge reasserted itself as the November oil contract fell further to end $1.28 lower at $57.65 a barrel.

"Gold is finding it hard to break through upside resistance with crude coming off," said a bullion trader.

Gold wobbled, but stayed on the positive side after the Labor Department said overall U.S. Consumer Price Index fell 0.5 percent in September, the biggest drop since November 2005.

The headline number was pulled down by a sharp drop in energy prices. When energy was factored out along with food costs, the core rate of inflation rose 0.2 percent.

Separately, the Commerce Department said housing starts rose 5.9 percent, hitting an annual pace of 1.772 million units, better than the 1.640 million expected.

---(see url for full news, 24-hr newswire)---

GoldiloxA DOLLAR IS NOT A DOLLAR#14853810/18/06; 19:53:15


Only faith backs the dollar. Therein resides the truth that the powers that be don't want the middle class to know. The government won't lie to you about the paper dollar. In fact, most Americans don't WANT to know. Just look what happened when President G. W. Bush explained that there were only IOUs in the Social Security Trust Fund. Everybody put their hands over their ears! They were so busy with their own entertainment, trendy issues, crowd following behavior, and narrow thinking, that they had no room for anything that questions their previously conceived notions. Educated adults too often stop thinking independently. Not that rich people think any differently. They pay smart financial advisors to do their thinking for them, so that when some crisis erupts, the money can leave the bank/country instantly. Money, like water, always finds an exit. All the feds must do to hide the truth in plain sight is hold a press conference before the crisis erupts.

So, Mr. DiFalco, should I cash out and buy gold and silver? Stop that, I say! Think before you act. Problem is, precious metals can get overextended in price relative to other things (which amazingly can include the paper dollar at times) due to market manias. If you panic and buy in at the wrong time, like 1980, or maybe in another spike a few years from now, you might die before you ever see a profit. Markets can be erratic, illogical, and overcompensating. Knowing the big picture about currency--which is broader than a long term view of a particular market--helps prevent panic buying. Also, gold is less liquid than paper dollars, requires safe storage, and earns no interest since it's only a store of value. That's precisely the point! The idea that paper cash is trash frees me to think of alternatives of which to take advantage when the opportunity presents itself. More than just bullion coins, they include gold exchange traded funds, commodity ETFs, foreign currency CDs, international bond funds, foreign bank accounts, and even 90 day Treasury bills. Derivatives such as options, and equities such as mining stock mutual funds, are different than simply stores of value, and are beyond the scope of this topic. What I'm telling you to do is to reshape your head before you reallocate your portfolio. Why is a more important question than what. Monopoly money does not retain its value.

The average American either refuses to listen to what I'm communicating, or believes I'm unpatriotic for questioning the foundation of the greatest economic engine in the world.

If you want to be patriotic, consider US one ounce gold and silver bullion coins. The "uncirculated," as opposed to the "proof" versions, sell for near the price of the metal and have no numismatic ("collectible") premium. They are real money. As long as there has been civilization, gold and silver coinage has been the foundation of a stable monetary system. The US Mint (ironically part of the US Treasury) has been making "American Eagle" bullion coins for the last 20 years. Where have you been? If you need them, they are right in front of you. The choices in your monetary toolbox are many. Be resourceful. Don't be average.


Nothig really new, but well written!

GoldiloxA SWAP STORY: BORROWED FROM THE BANK OF ENGLAND#14853910/18/06; 20:01:22


This is the real problem we are led by congenital liars, the "quality" of the official figures is massively at question.

We ignore it all and concentrate on the big primary trends, we know the day to day noise is designed to whip dumb money out of there positions and ultimately accounts. You are playing a very heavily loaded dice if you get involved in that game.

A Customer asked me a few years ago what I thought about the City Of London as I am British. I told him to imagine a casino on the outskirts of town, run by the mob, full of dead beats, drunks, con men, hustlers, shysters and particularly rough prostitutes. Where all the cards are marked and the tables bent that is the City Of London. Wall Street is the other lower class establishment that they own.

Unfortunately when it all collapses as it inevitably must the Bankers who own the media and all the politicians will get the Media to turn on the "guilty" politicians. This is what they always do, only when people turn on the real cause of the centuries old problem THE BANKERS with some well timed assassinations and violent extremism will anything change.

What is the point in getting involved in the political process to change anything? That is another loaded dice, violent extremism is what they are afraid of which is why they have the draconian Patriot Act to "deal" with anybody who goes against there system. The Media and Politicians are disposable puppets - it is who controls these puppets that we should all worry about THEY ARE THE REAL ENEMY.

Look at history the Rothschild's lent money to both sides in all the Napoleonic Wars !!!! The Wall Street banks backed Trotsky, The Wall Street Banks many of them Jewish !!!! Backed Hitler into power who then murdered 6 million of there own people !!!

War means massive military spending and reconstruction THE BANKERS CHARGE INTEREST ON EVERY CENT THAT THIS COSTS Quo Bono = Who Benefits? The Military production machine also benefits for example do you think the Carlyle Group and Halliburton are suffering with the Afghanistan or Iraq wars Quo Bono = Who Benefits?

You can go on and on, with example after example.

Ironical [sic] isn't it – how, in the spirit of this article, "swapped" or "borrowed words" from a fellow writer can "substitute" for and stand for exactly the way I feel?

This is an assessment of facts that are non-denominational and instead of dividing any of us – should be galvanizing all of humanity.

And you can all take that to the bank!


A powerful essay by Rob Kirby, one of my financial sense favorites.

The Invisible HandA/FOA proven through experience#14854010/18/06; 20:58:45

The Vienna 15 November 1972 Convention on the Control and Marking of Articles of Precious Metals (without Annexes),
Entered into force on 27 June 1975
Amended on 18 May 1988
PMC/W 1/2003 (Rev)
20 January 2003

The Truth reveals itself through Experience

Either you get it, or you don't get it.
If you don't get it, no use explaining it too you

Goldilox (10/18/06; 20:01:22MT - msg#: 148539)

October 18, 2006
by Rob Kirby
To be honest, until today, I've never heard of a "GOLD QUALITY SWAP". Given the amount of research I've done in this area - I would only offer that this would make a Gold Quality Swap a "rare bird" indeed. But this got me to thinking WHO could possibly be involved in such a transaction if one were to occur.
Why Would The Treasury Keep This So Quiet?
Did The Treasury Act Alone, Or Did The Fed Act As Agent?
Making Sense Of It All...
Could it be that average folks just do not understand that a truly free market in gold [rising prices] has historically put the brakes on money / credit creation in the same way a fire alarm conveys the message - EVACUATE!
As far as I know the US is the ONLY holder of "official" gold that does not meet "good for delivery" quality. There are two reasons why the US must swap this gold to sell into the market. First of all if 400 oz bars show up of less than 0.995 fineness there is only one possible source and so the market would know about it and the gold price suppression scheme would be toast. Secondly, the world's gold refineries are working day and night. There is no spare capacity to be able to reprocess US goldstock. But the real point of interest is the fact that this swap agreement format exists means that the US is using its gold (indirectly) to hold down the price. This means that the Cabal is hitting the wall in terms of available supply. It also puts in context the comment by Axel Weber of the Bundesbank that they were "being asked to enter into gold swap arrangements".


Kirby has diligently studied A/FOA (without quoting them) since he concedes that the USTreasury sells and swaps gold.

This is plausible and concords/agrees with Dubai's new gold refining capacity (25 > 100 ton in 2007)
MENAFN - 12/10/2006

It also concords/agrees with the aim of bringing Indian jewelry gold into bullion form.
New Delhi, Oct. 15 (PTI): The country's gold trade may witness a phenomenal growth if the industry pays more attention towards hallmarking and invests in mining and production activities.
Though Indians are the world's highest per capita consumers of gold, little attention has been paid to ensure purity and quality of this precious metal.

Hallmarking of gold and jewellery products, which comprises stringent checks and controls, could guarantee a bigger market for Indian exporters and a better value for domestic consumers, the industry experts feel.

"Hallmarking is the need of the hour and steps should be taken to ensure that gold consumers are not cheated by adulteration and impurities," the country's largest bullion trader MMTC's Chairman and Managing Director Sanjiv Batra said.
To expand the ambit of benefits from hallmarking, Vienna Convention, a global convention on control and marking of precious metals, could be the next step toward boosting the gold exports.

"Once India becomes a member of Vienna Convention, it would facilitate the Indian exporter to access markets in the member countries of the convention, boost jewellery exports and would ultimately translate into more business volumes," Batra added.

Besides, it could significantly reduce the expenses incurred by Indian exporters through lower costs on testing and marketing, he said.

After India signs the Vienna Convention, there would be no need of re-testing Indian products in the member countries. Marketing costs would also come down since Indian products would then garner greater acceptability in global markets, Batra said.


The shyster in me notices that the

Signed in Vienna on 15 November 1972
Entered into force on 27 June 1975
Amended on 18 May 1988
PMC/W 1/2003 (Rev)
20 January 2003

is being mentioned
The Republic of Austria, the Republic of Finland, the Kingdom of Norway, the Portuguese Republic, the Kingdom of Sweden, the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland; (TIH: Are any of these parties to the Washington Agreement?)
Desiring to facilitate international trade in articles of precious metals while at the same
time maintaining consumer protection justified by the particular nature of these articles;
Have agreed as follows:
Scope and Operation
Legal provisions of a Contracting State which require articles of precious metals
to be assayed by an authorized body and to be marked with official stamps so as to
indicate that they have been satisfactorily assayed, or require such articles to be marked
so as to indicate the sponsor, the nature of the metal or the standard of fineness, shall be
deemed to be satisfied in respect of articles of precious metals imported from the
territory of another Contracting State if such articles have been controlled and marked
in accordance with the provisions of this Convention.
Nothing in this Convention shall require a Contracting State to allow the importation or sale of articles of precious metals which do not fulfil its national minimum standards of fineness. Furthermore, nothing in this Convention shall require a Contracting State which accepts 800 as a standard of fineness for silver to allow the
importation or sale of articles marked with the 830 standard of fineness.


I thus said that Kirby has diligently studied A/FOA (without quoting them) since he concedes that the USTreasury sells and swaps gold and that this is plausible and concords/agrees with Dubai's new gold refining capacity (25 > 100 ton in 2007) and with the aim of bringing Indian jewelry gold into bullion form.

This would also be the answer to the old question: How do we get our yellow iron back from Fort Knox and London – through location and quality swaps.

It is also remarkable that Gold Fields (sp? one word?) (the only gold mine which FOA ever mentioned by name) has acquired Western Deep from Barrick and will henceforward be the largest mine with reserves for much more than 30 year. Gold Fields knows that Barrick has sold forward a large part of Western Deep gold and Gold Fields (sp? one word?) sees no problem in this. FOA is hereby proving that he knew what he was talking about more than five years ago and that he is thus an absolute insider.

This is the news this Wednesday evening
The Dow Jones index of major US shares surpasses 12,000 for the first time but closes just below the landmark level.

This was yesterday, Tuesday:
USAGOLD Daily Market Report (10/17/06; 14:03:01MT - msg#: 148517)
October 17 (from DowJones) -- Comex gold futures stalled near the psychologically important $600-an-ounce level on Tuesday at the New York Mercantile Exchange and settled lower on the day.
At settlement, the most-active December gold contract was down $5.00 at $593.50.

Remember November 07 are the mid-term elections for the Washington kindergarten.

As Rand said "Throughout the centuries there were men who took first steps down new roads armed with nothing but their own vision. Their goals differed, but they all had this in common: that the step was the first, the road new, the vision unborrowed".

The Frankfurt ECB bureaucrats are being advised by Freegold advocates. The Washington toddlers are however being commanded by the Bush Party.

This "Party" cannot possibly admit that gold goes up just before the elections. Hence, $600 must be avoided. (A)

The Dow cannot however be allowed to go up. Hence, the news I just quoted. (B)

A plus B equals ????

Why is it that we don't hear Greenspan anymore these days? Is the work on his memoirs so all-consuming?

The cheaper the price of gold, the faster the UST can be sold.

This explains why the ECB/BIS has collaborated to keep the price of gold "low".

Now the US is stricken in its own web: Rubin/Summers low dollar interest rate + cheap gold.
So they have to mobilise UST-gold because all other gold (held by other central banks and privately held gold) has already been demobilised.
And in the meantime, they cannot let the price of of gold explode because this would make the masses of dollar-gold-positions crash.

Q.E.D. (Quod erat demonstrandum – What had to be proven!)

Wait until Wednesday, November 08!

The Invisible Handerratum - important#14854110/18/06; 21:07:50

The Dow CAN however be allowed to go up (must go up before the elections.) Hence, the news I just quoted. (B)
mikal4 new Pamp certified coins go to 267 Punjab National Bank branches#14854210/18/06; 21:12:53

PNB gold coin scheme | Kamal Nurang | Hindu Business Line | October 18, 2006
These new Pamp of Switzerland certified coins come in 4 sizes, 5gm, 8gm, 10gm and 20gm and will be priced daily based on bullion wholesale London!
Link is in next post.

mikalCoins available at Indian banks#14854310/18/06; 21:18:28

The Hindu Business Line : PNB gold coin scheme
Address: - October 19, 2006
Discounts are available on the London-based prices I mentioned below.

GoldiloxPolitical PoG suppression#14854410/18/06; 21:22:09

@ TIH,

"Wait until Wednesday, November 08!"

The web bots are "predicting" more election challenges than ever, so perhaps we will need to wait a couple more weeks until things are "sorted out".

Then again, election uncertainty itself may stoke the fires even more!

We certainly shall see.

The Invisible HandHow reliable is this assessment?#14854510/19/06; 01:06:44

Even as Iraq verges on splintering into a sectarian civil war, four big oil companies are on the verge of locking up its massive, profitable reserves, known to everyone in the petroleum industry as "the prize."


Has it been proven through experience?

The Invisible HandEuro rivals Dollar in Lebanon #14854610/19/06; 02:03:37Õ

The Euro is starting to dominate the bustling markets in southern Lebanon, especially around Tyre where since September thousands of foreign soldiers from the various contingents of UNIFIL II have been congregating.

The Invisible HandThere is no geo-political order in the world#14854710/19/06; 02:17:06


It may be that so many Europeans now want to inhabit a "post-tragedy" international community largely populated by people who are clones of themselves, both culturally and politically, so that for them "soft power" would seem the perfect means of creating this idyllic world. Or on the contrary, will they decide instead to make Europe a real power so as to avoid becoming completely dependent on the rising powers that will dominate tomorrow's American-Asian world?


As Hayek said in Vol I of "Law, Legislation and Liberty":

Order = a state of affairs in which a multiplicity of elements of various kinds are so related to each other that we may learn from our acquaintance with some spatial or temporal part of the whole to form correct expectations concerning the rest or at least expectations which have a good chance of being correct

Spontaneous order = abstract - they may persist while all the particular elements they comprise and even the number of such elements change

Order will always constitute an adaptation to the multitude of circumstances which are known to all the members of that society taken together, but which are not known as a whole to any one person.

The Invisible HandWHY did it need confirmation?#14854810/19/06; 02:40:29

Staff Report
Dubai: Shaikh Ahmad Bin Mohammad Al Khalifa, Bahraini Minister of Fin-ance, believes "it makes sense for the GCC to peg its currencies to the dollar since the oil market is priced in dollars".

The Invisible HandWorld War Three#14854910/19/06; 02:56:43

A noted Chinese theorist on modern warfare, Chang Mengxiong, compared China's form of fighting to "a Chinese boxer with a keenknowledge of vital body points who can bring an opponent to his knees with a minimum of movements". It is like key acupuncture points in ancient Chinese medicine. Puncture one vital point and the whole anatomy is affected. If America ever goes to war with China, say, over Taiwan, then America should be prepared for the following "acupuncture points" in its anatomy to be "punctured". Each of the vital points can bring America to its knees with a minimum of effort.
So in a major conflict between America and China, isolated America cannot possibly win against a global united front led by China and Russia.

Are there no other ways to achieve a semblance of geo-political order?

The Invisible HandDon't worry …#14855010/19/06; 03:05:19


NEW YORK (Reuters) - Wall Street is likely to see a pullback now that the Dow has pierced 12,000, as investors take profits after three weeks of gains and U.S. economic growth is expected to slow.

The Invisible HandFreegold Trade or Free Gold Trade?#14855110/19/06; 04:20:06,1518,442574,00.html

In the global conflict for wealth, Asia is on the attack using brutal methods. Working conditions are appalling and industry is destroying the environment. Asia's rise is the fall of the West. That is, unless the West can overcome its scruples and defend its interests.

The Invisible HandAnother reason to replace paper with golt#14855210/19/06; 04:40:34

Kazakhstan's central bank is to issue new banknotes despite a spelling error.
The notes bear Kazakh writing in Cyrillic letters, but the word "bank" is misspelt using an alternative Kazakh form of the letter K.
It said: "The mistake... is not just a spelling problem - it has political undertones."

USAGOLD / Centennial Precious Metals, Inc.SECOND EDITION: Written for Today's Market#14855310/19/06; 05:57:55">Gold Investing - Second Edition
GoldiloxTop statistician in China scandal#14855410/19/06; 07:16:26


The head of China's National Bureau of Statistics has become the latest high-profile casualty of the Shanghai pension fund corruption scandal.
Qiu Xiaohua was sacked from his job for suspected "severe violations of discipline", a bureau spokesman said.

The allegations against Mr Qiu centre on the alleged misuse of the city's multi-million dollar pension fund.

Several other top officials and prominent businessmen have also been implicated in the growing scandal.

In a separate case, five senior judges in the southern city of Shenzhen have been either detained or questioned in a wide-ranging bribery investigation there.

Widening inquiry

Mr Qiu is the first official from outside Shanghai to be implicated in the pension fund scandal.

"Relevant departments, when carrying out investigations into the Shanghai social security fund scandal, found out that Qiu was suspected of being involved in severe violations of party discipline," said National Bureau of Statistics spokesman Li Xiaochao.

"The central disciplinary office is now conducting an investigation into his involvement," Mr Li added.

Beijing power play

More than 100 central government investigators have been sent to Shanghai to investigate money that has disappeared from the city's 10 billion yuan ($1.25 billion) social security fund.

The funds were allegedly used to make illegal loans and investments in real estate and other infrastructure deals.

Last month, China's most senior Communist Party official in Shanghai, Chen Liangyu, was sacked in connection with the scandal.

Mr Chen, 60, was accused of seeking benefits for companies and relatives, and protecting people around him "who had seriously violated discipline and law".

On Wednesday, a Shanghai newspaper reported that Yu Zhifei, the head of Shanghai's showcase Formula One motor racing circuit, was also being questioned about the pensions case.

Mr Yu was asked about alleged "illegal operations" at the $240m (£128m ) race track, according to the Shanghai Securities News report.

More than 10 other senior officials have been named in the rapidly widening investigation.

Official corruption is a major problem in China, according the BBC correspondent in Beijing, Daniel Griffiths.

The government has promised action, he says, but these cases are a reminder of the scale of the challenge facing the authorities.


Labour and social security chief, Zhu Junyi, sacked
District governor, Qin Yu, sacked
City's top Communist Party official, Chen Liangyu (pictured) sacked
Municipal committee's vice-secretary general, Sun Luyi, sacked
Head of city's F1 motor racing circuit, Yu Zhifei, questioned
Head of China's National Bureau of Statistics, Qiu Xiaohua, sacked
Many other senior officials and businessmen from state-run firms implicated


The US admin, CONgress, and San Diego Employees Pension Fund Directors should feel right at home with these guys.

GoldiloxChina economy applies the brakes#14855510/19/06; 07:20:54


China's soaring economic growth rate slowed slightly to 10.4% in the three months to September, as government attempts to cool the boom took effect.
The year-on-year growth rate fell back from the record 11.3% growth seen from April to June, official data showed.

The government has raised interest rates twice this year and cut approvals for new business investment as it tries to prevent the economy overheating.

The latest data put inflation at 1.3% and showed industrial output slowing.


Ten percent? Poor things. Next they'll be jumping from windows at the Shanghai Exchange.

GoldiloxEurope diary: The gas man#14855610/19/06; 07:30:42


BBC Europe editor Mark Mardell on the EU's awkward relationship with Russian President Vladimir Putin, and the power Moscow projects through pipelines.

"You know what happens when they get in the same room as Putin. They all drop their trousers and say 'I love you Vladimir'." This is the gloomy and cynical view from a senior EU insider, of the leaders of the European Union's 25 countries. Perhaps it's intended to chivvy rather than insult. But there is no doubt that the EU summit in Finland is a rather odd event. The 25 prime ministers and presidents talk about their policy towards the Russian president over lunch. And at dinner a few hours later their guest of honour is none other than Mr Putin himself.

The European Commission is worried this will mean that unity goes out the window as they all jostle to be the Russian president's best friend. It's not just that Russia is a powerful country and Europe's big neighbour. The leaders all believe in the European values of fraternal solidarity but Vlad has something they value more. Gas.


Nothing much different here, either! Power corrupts, and the power to heat a few million homes . . .

GoldiloxPOG Pattern Reversed#14855710/19/06; 07:33:49

The everyday pattern of up in Asia, down again in NYC is reversed this morning.
The Invisible HandThe gas man#14855810/19/06; 07:40:47

The reading of the reactions which have been posted up to now at enables the "neutral" observer to better understand the positions of the energy proprietors. And to realise that the EU-ers are dwarves who are unable to utter any sensible word.

This western self-complacency must gradually end.

It would be nice if the non-west were allowed to paint a picture of the west as the west is allowed to paint of them,

Perhaps we would be surprised of ourselves.

Belgium, The Netherlands and Sweden all had political murders. The IRA ‘ruled’ for 25 years. We are now plundering and occupying Afghanistan and Iraq.

As I posted before:

In recent weeks, hardliners in the Kremlin have cancelled or renegotiated deals with Western firms in order to pursue Russia's national interests - but their plans may backfire

Reliable energy supplies are set to rival military capability in their contribution to a state's security, Tony Blair said.
Even as Iraq verges on splintering into a sectarian civil war, four big
oil companies are on the verge of locking up its massive, profitable
reserves, known to known to everyone in the petroleum industry as "the prize."

Cicero, "Tusculan Disputations". V, III, 8-9.

"And Leon after wondering at his talent and eloquence asked him to name the art in which he put the most reliance; but Pythagoras said that for his part he had no acquaintance with any art, but was a philosopher. Leon was astonished at the novelty of the term and asked who philosophers were and in what they differed from the rest of the world. Pythagoras, the story continues, replied that the life of man seemed to him to resemble the festival which was celebrated with most magnificent games before a concourse collected from the whole of Greece; for at this festival some men whose bodies had been trained sought to win the glorious distinction of a crown, others were attracted by the prospect of making gain by buying or selling, whilst there was on the other hand a certain class, and that quite the best type of free-born men, who looked neither for applause nor gain, but came for the sake of the spectacle and closely watched what was done and how it was done. So also we, as though we had come from some city to a kind of crowded festival, leaving in like fashion another life and nature of being, entered upon this life, and some were slaves of ambition, some of money; there were a special few who, counting all else as nothing, closely scanned the nature of things; these men gave themselves the name of lovers of wisdom (for that is the meaning of the word philosopher); and just as at the games the men of truest breeding looked on without any self-seeking, so in life the contemplation and discovery of nature far surpassed all other pursuits."

GoldiloxFirst Bounce off 600#14855910/19/06; 07:57:01

Gold is asserting itself this morning.
TownCrierRussia's dollar buying risks inflation -- Greenspan#14856010/19/06; 14:46:44

NEW YORK, Oct 19 (Reuters) - Russia should be wary about the inflationary impact of buying U.S. dollars to insulate its economy from an influx of foreign earnings from oil exports, former Federal Reserve Chairman Alan Greenspan said on Thursday.

Russia, the world's second largest oil exporter, has been earning about $600 million a day from its oil and gas exports, pushing its rouble currency higher and threatening to cause "Dutch Disease".

Dutch Disease refers to the potential negative long-term impact of one explosive sector -- oil, in the case of Russia -- which boosts the value of the currency, making locally produced goods less competitive compared to foreign goods.

Greenspan warned that the standard cure for Dutch Disease -- central bank buying of foreign currencies -- could increase the monetary base without the necessary infrastructure to neutralize the move's impact on inflation...

The Russian central bank has intervened in the foreign exchange market by buying U.S. dollars to slow the rouble's rise. The move, however, fuelled money supply growth of about 45 percent and inflation of around 10.9 percent in 2005.

...Greenspan also discussed the prospects of the rouble as a reserve currency similar to the dollar and euro. ... Greenspan added that for the rouble to be an "external currency" it is important that the "rule of law" prevails.

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

To be sure, Greenspan isn't revealing anything that the Russian's haven't already taken under close consideration.

This article serves a secondary (or primary!?) purpose for the average investor -- to make them feel that the dollar itself is less inflationary than foreign alternatives.

Beyond that, however, the issues discussed (many not excerpted, so you'll have to visit the url, see both pages) are good for you to understand.

A MTM gold reserve paradigm (w/ freegold price discovery) awaits in the wings to restore the balance. And on that developmental front, Russia is already marking its vault of publicly acknowledged gold reserves to market value. Are you prepared for phase two?


USAGOLD Daily Market ReportPage Update!#14856110/19/06; 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.

THURSDAY Market Excerpts

Gold rallies $10 as OPEC looks to curb output

October 19 (from Reuters) -- Gold futures jumped to a 17-day high on Thursday, straining important chart resistance when crude oil rallied after Saudi Arabia said it would support a 1 million barrel per day production cut by OPEC.

The COMEX December gold contract rose to a high of $604, its highest since Oct. 2, after Saudi Oil Minister Ali al-Naimi said the OPEC cuts would be from actual production to balance the market and that the world's top producer had already started reducing output.

Benchmark gold had already steadied from a weaker open before the news, which vaulted it over $600. It ended up $9.90 at $602.50, off a low of $589.20.

"It looked like short covering from the get go," said a desk broker. "They were blaming it on the statement out of Saudi Arabia but it looked to me like we were already starting to rally."

"My guys on the floor when it was unfolding said all the phones just started ringing off the hook," he said.

Al-Naimi's comments came as he arrived for an OPEC meeting in Qatar to finalize production cuts that members had debated for two weeks.

Oil and gold tend to correlate closely due to the use of gold as an inflation hedge.

"To some degree the gold market was powered by the move in oil prices," said Jim Steel, analyst at HSBC.

"I would note that I do not believe that is the only factor, as gold has moved up very powerfully. I also think there's probably been a certain technical component."

---(see url for full news, 24-hr newswire)---

Town CrierFood for thought -- Past > > Present > > > > > Future#14856210/19/06; 16:22:57

gold price
The Invisible HandThe Invisible Hand @ Work#14856310/19/06; 17:38:22

Laissez faire, laissez passer, le monde va de lui-meme. (Mercier de la Riviere)

Either you get it, or you don't get it.
If you don't get it, no use explaining it to you!


If there is war, will that be good or bad for Freegold?

Will the war lead to price-inflation in the dollar regime as in Weimar?

Or will the systemic extremes thing be a sufficient cause for the US to start a war against all logic?

Those who continue piling up deficits cannot do anything against this. However, those who are piling up systemic surpluses can invest/park these in strategic "values".

Ashley Seager, economics correspondent
Thursday October 19, 2006
Guardian Unlimited,,1926611,00.html
Gordon Brown ran into criticism today after new figures showed the public finances suffered their biggest September shortfall on record, confounding his attempts to shrink the deficit

Is it possible for a country to correct systemic misadministration under peace conditions? Is it not easier to blame the war?

FREEGOLD must thus not undertake ANY action. It is an INEVITABILITY.

ToolieTownie's chart#14856410/19/06; 18:22:37

Townie's chart shows gold rising four fold from 1975 through 1980. That was a different time, the US was (or was nearly) self sufficient during that period. We've printed a lot of dollars since then and exported our productive base. We've a lot further to fall now. A four fold increase from $700 puts us at only $2800, we'll do better than that and we wont have to wait 5 years either. In neither of the two peaks shown on the chart, did the dollar lose reserve status. Third time is the charm ;-)
Paper AvalancheA Fist Fight at $600#14856510/19/06; 19:05:33

The day's chart implies that there is a substantial effort by TPTB to keep POG sub $600.

I wonder how much money Golden Slacks is spending at the behest of Paulsen to keep oil low, gold contained and the stock market in euphoria over 12,000 for the next 2-3 weeks leading into the election. Not that it matters anyway as long as the polling stations have Diebold election machines. We may be simply witnessing some contrived political theatre to make the people feel that they have control over the process / outcome.

"Those who cast the votes decide nothing. Those who count the votes decide everything." - Jospeh Stalin

Take care,

GoldiloxFun with Math! - Inflation Calculator#14856610/19/06; 19:14:59

We often calculate potential highs using the inflation calculator (CPI-based), but I thought it would be interesting to run it against TC's chart.

1975 Pre-1980 high = 296, or 734 in today's dollars

We're still 20% below the 1975 high in current "dollar value", with last month's 550 a full 32% lower, but last spring's 730 looks very coincidentally like the 1975 "high". Not the same 50% retracement as '75 to '77, but close, given the fundamental differences.

1980 "gold rush" high = 840, or 2133 in today's dollars

So, IF (a HUGE IF) the next gold run matches the intensity of the 1979-80 run, and taking last month's 550 as the starting point, might we see 2133?

Here's another fun math problem.

Goldcorp currently moves about 1:10 to POG. There are currently 20000 outstanding GG 35 JAN call options. If this run occurred between now and DEC, and GG continued its ratio to POG, they alone would be worth 2.9 $Billion Dollars, and GG's market cap would be $537 Billion. But at that point, food would probably be sold by equal weight of paper dollars, or of course, by weight of PMs.

Not at all likely, but fun numbers to play with.

Paper AvalancheThe Stronger Fighter Just Won#14856710/19/06; 21:58:57

$600 breached for the moment.
GoldiloxCOFE 2006 Overview#14856810/19/06; 22:40:34


"New forms of energy are required. The use of drilling and obtaining cheap oil production has peaked. The U.S. has 745 cars per 1,000 population whereas the Chinese have 3/1,000. If they go to 5/1,000, the Chinese demand for oil doubles and could easily go to $180/barrel." - Keynote Speaker Dennis Bushnell, NASA


While the PTB argue "greehouse gas" theories that couldn't hold water when probed on Venus, we completely ignore the fact that we are flooding the biosphere with ever increasing noxious emissions.

If the Chinese "consumer" ever seriously materializes, the environmental effect of current oil-based manufacturing will be US X 10 or more, and demand with go stratospheric with it.

GOLD FINGERHow odd....#14856910/19/06; 23:41:27

Market up 12,000!

Oil dropping faster than Flys.....

Gold rising and steady....

North Korean leader Kim Jong Il
Sorry for Nuke tests (Yeah right)

Now, who will out last who???

My VOTE goes to GOLD BABE!!


TownCrierChina yuan central parity rate set at new high#14857010/20/06; 00:58:26

BEIJING (XFN-ASIA) - The central bank has set the yuan central parity rate at a new high of 7.8995 to the dollar, according to the National Foreign Exchange Center.

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


TownCrierChina to continue improving yuan exchange rate regime#14857110/20/06; 01:00:31

BEIJING (XFN-ASIA) - China will continue to improve the yuan exchange rate regime, according to a statement published on the website of the State Administration of Foreign Exchange (SAFE).

SAFE said it will also continue to push for reforms to forex reserve management and strengthen the supervision of cross-border capital flows to help better manage China's financial risk.

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

What are YOU doing to better manage YOUR financial risk?


USAGOLD / Centennial Precious Metals, Inc.Especially designed for those who are taking their first step...#14857210/20/06; 01:01:57">gold ownership starter kit
GoldiloxThe Boom that Isn't#14857310/20/06; 09:25:12


Is this the Last Boom (LB)? Certainly looks that way. But it could run a lot further. The reason why is that there's a fair amount of coverage about the Dow Jones closing this week over the 12,000 mark. Now, as I've written to you before, the mark is meaningless when you take six years of inflation into account, but that is not likely to deter people from throwing good money after bad in trying to regain once held profits. David Milstead's article for the Rocky Mountain news is exactly on point headlining that the "Boarder market still climbing out of post-2000 hole." Just so.

My present thinking runs something like this: I will hold my gold and silver positions (both ounces) and wait for the crack up boom to propel the precious metals to new highs. Perhaps $1,200 for gold and $20 for silver, something like that. Not that I would bail then, but I'd think about it, for sure.

Once a good deflationary spanking is in sight, I might roll out of PM's and into a bank that will let me decide which of its portfolio of international currencies I will want funds in. (Won't tell you which bank(s), but they exist where you can roll between currencies in your account). My notion is that if the US dollar - at the end of the boom - is trashed, there may be an opportunity for comparative gain by being in something other than dollars. Swiss francs, Yuan, who knows today.

One reason to be bullish on metals is the inflationary impact of Russia buying US dollars - something that could be inflationary according to ex Fed Boss Alan Greenspan.

And that's if the market doesn't crash next week and the paper-is-money gang figures how to keep the bubble blown up but not blowing up. And that's largely up to the Fed which in turn is largely watching the housing bubble for clues.

GoldiloxHappy Anniversary#14857410/20/06; 09:30:51


Black Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell dramatically, and on which similar enormous drops occurred across the world. By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, the United Kingdom 26.4%, the United States 22.6%, and Canada 22.5%. (The terms Black Monday and Black Tuesday are also applied to October 28 and 29, 1929, which occurred after Black Thursday on October 24, which started the Stock Market Crash of 1929.)

The Black Monday decline was the second largest one-day percentage decline in stock market history. The largest one occurred on Saturday, December 12, 1914, when the DJIA fell 24.39%. However, in that case, the New York market had been closed since July due to the outbreak of WW I. The greatest point loss in DJIA history was on Monday, September 17, 2001, 684.81 points, six days after the terrorist attack on NYC.

A certain degree of mystery is associated with the 1987 crash. Many have noted that no major news or events occurred prior to the Monday of the crash, the decline seeming to have come from nowhere. Important assumptions concerning human rationality, the efficient market hypothesis, and economic equilibrium were brought into question by the event. Debate as to the cause of the crash still continues many years after the event, with no firm conclusions reached.

In the wake of the crash, markets around the world were put on restricted trading primarily because sorting out the orders that had come in was beyond the computer technology of the time. This also gave the Federal Reserve and other central banks time to pump liquidity into the system to prevent a further downdraft. While pessimism reigned, the market bottomed, leading some to label Black Monday a "selling climax", where the excess value was squeezed out of the system.


Stay out from under windows in tall buildings!

ArcticfoxOpec announces production cuts and oil tanks a buck..#14857510/20/06; 10:10:46

go figure..
968@ CP / GATA#14857610/20/06; 10:55:48

Hello Chris,

Can you or GATA please help me out ?

What is the difference and between :

1. monetary gold and non-monetary gold
2. monetized monetary gold en unmonetized monetary gold

What is the bookkeeping difference ?
Can a Central Banks monetary goldreserves disappear from the radarscreen by changing the status of some of these goldreserves to non-monetary gold ?
Are there any IMF-rules on this ?

To what extend is all this investigated by GATA ?

Thanks in advance.

mikalAsia boom fills void of global commerce#14857710/20/06; 12:22:05

Asia and the world economy
The Alternative Engine | Oct 19th 2006 | HONG KONG
From The Economist print edition - Excerpts:
"A sharp slowdown in the American economy could be offset by the growing and largely unrecognised power of Asia's consumers. American consumers have been one of the main engines of global growth for the past decade. But now, as America's housing boom threatens to turn into a bust, many forecasters expect household spending to stall. A few even worry that America could come perilously close to a recession in 2007. Previous American downturns have usually dragged the rest of the world economy down, too. Yet this time its fate will depend largely upon whether China and the other Asian economies can decouple from the slowing American locomotive."

"In sum, if America suffers a slump, the economies of China and the rest of Asia would slow, but they are unlikely to be derailed. However, a slowdown in America could affect Asia indirectly through other channels. Most important and least certain of all would be the impact of an American recession on financial markets. Even if economies can decouple, global financial markets tend to be more tightly linked through the investment strategies of hedge funds and the like. If America's economy hits the buffers, this will surely trigger a rise in risk premiums and a drying up of market liquidity, pushing share prices lower in Asia as well as in America. When America sneezes, the rest of the world's economies may no longer catch a cold; but if Wall Street shivers, global tremors will still be widely felt."

Useful perspectives on global trade and economic relationships.
Besides these, many other opinions will have equal validity until experience proves one of them right. Times are changing quickly as growing interdependence
seeks balance with growing competition. This is an opportunity for individuals, companies and nations
to ride higher or be battered by turbulence.

mikalDerivatives obsession#14857810/20/06; 12:44:36

New Instruments That Call The Tune | Richard Beales in New York | October 19 2006 21:31 | Excerpt: "The pace of financial innovation is quickening. Products that barely existed a few years ago are already multi-billion-dollar markets.
Derivatives and structured instruments have evolved particularly quickly across the capital markets, especially in the worlds of credit, equities and commodities.
Many of these innovations benefit the financial system because they help disperse risk more widely, analysts and regulators say. But there are concerns as they have come at a time of economic growth, low interest rates and low volatility.
"In these circumstances, it is reasonable to wonder whether financial markets might react to less favourable developments in a way that would amplify – rather than dampen – the emerging risks," the International Monetary Fund noted in its global financial stability report last month.
"In particular, concerns have been raised about the potential for illiquidity to emerge in response to unexpected stress in markets for new and complex financial instruments."
Some ideas slow to take off
The appearance of new instruments has coincided and cross-fertilised with another dramatic transformation. Hedge funds, private equity groups and other non-traditional investment firms are now significant and even dominant participants in some parts of the market.
An investment boom in commodities, for example, has spurred investment banks to create new products that help investors to buy into the market. Participation in the markets, once the preserve of a few specialists, has also broadened."

This essay seems to vacillate between applause and fear.
But the end product gives a short overview of derivatives with an emphasis on recent developments and regulatory efforts. My impression is that Halloween would be the only day most of these would be acceptable.

mikalDerivative mutations#14857910/20/06; 12:58:03

Some Derivatives Slow To Take Off | Saskia Scholtes in New York | October 19 2006 - Excerpts: "Of the many ideas thrown at the wall by investment banks eager to develop the latest must-do derivative, not all stick that well.
One product that appears to have been consigned to the derivatives larder for now is the equity default swap.
An EDS uses a similar structure to its more popular cousin the credit default swap – in exchange for regular premium payments over the life of the contract, the buyer received protection against an adverse event at a certain company.
But instead of protecting against the risk of debt default as in a CDS, an equity default swap provides protection against a collapse in the company's share price, typically a minimum fall of 30 per cent."

The article goes on to describe one other derivative:

"Tranchelets are even thinner slices [of tranches] – 0-1 per cent, 1-2 per cent and so on. The idea was to allow banks and investors to fine-tune their positions further. But one credit hedge fund manager suggests that this added level of complexity may have been "one step too far" for broad-based market adoption."

And "one step too far" will be a euphemism for many "far out" derivatives not "too far" in our future IMO. And at the current rate of "broad-based market adoption" in developing countries such as India and the Middle East, there should be a continuous supply of credit cycles sure to please even the most avaricious banker.

TownCrierThis year, gold becomes as good as gold again#14858010/20/06; 14:20:47

MUMBAI: Gold seems to be back in favour this Dhanteras. Dealers across the city have registered up to a 50 per cent increase in demand for the metal, as compared to the same period last year. A large segment of buyers is choosing gold coins over jewellery...

"The buying trend is very healthy this year," said Ashok Jain of the Gold Dealers Association. "There is very good demand for coins and gold bars as investment purchases."

In fact, the industry has discerned a new buying pattern in the increasing number of consumers buying coins rather than jewellery. "It is the better option," said Jain. "Because when you sell it, you don't have to forgo the making charges. And it is much easier to liquidate, as dealers offer a buy-back guarantee."

Some dealers attribute the trend to a rising awareness about the metal as a desirable investment option.

...Corporations, which had abandoned gold for electronic items when prices touched a 17-year-high last year, are going back to basics. Dealers have registered huge corporate orders for gold coins ranging from 1gm to 10gm.

"They make a good corporate gift," said Mukesh Shah, a gold dealer. "We are having a serious problem keeping up with the demand."

"This time round, we have seen sales of gold double over the past 45 days," said Suresh Hundia, president, Bombay Bullion Association.

"During the festive season in Mumbai, the average consumption of the yellow metal is pegged at 200-300kg a day. Over the past 45 days the demand has doubled to 500-800kg a day."

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

This consumption level is staggering(!)... Mumbai alone has been absorbing from half a tonne to nearly one tonne of gold daily.

(Thanks, G.)


USAGOLD Daily Market ReportPage Update!#14858110/20/06; 16:22:03">
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 Excerpt

Gold down on day, up $4 for week

October 20 (from MarketWatch, Reuters) -- Gold futures closed under $600 an ounce Friday, as weakness in oil prices dampened the metal's attractiveness as an inflationary hedge, but the benchmark gold contract still tallied a gain of nearly $4 for the week as a whole.

"If and when prices were to penetrate strongly over the low $600s, the mood would surely improve," said Kitco's Jon Nadler, an investment products analyst. The trouble for gold bulls are "repeated failures and pullbacks we witness at higher levels," he said.

COMEX December gold closed down $6.10 at $596.40, retreating from an intraday high of $602.80. The contract, however, closed near a three-week high on Thursday and ended 0.6% above last week's closing level of $592.70.

Late Thursday, the OPEC finished an emergency meeting in Qatar with an agreement to cut production by 1.2 million barrels a day, about 200,000 barrels more than the size of the reduction that had previously been indicated. The cuts take effect Nov. 1.

The decision sent oil prices initially higher in New York, but doubts about whether the cartel will make good on its pledge sent prices sharply lower.

[Editor note: A pricefall on doubts??? Then why weren't prices already sharply lower before there was ever even any organized thought of production cuts???]

Looking further ahead, Peter Spina, chief investment strategist at GoldSeek said, "we could see oil move easily back to the mid-$60s and this appears to be enough impetus to take gold definitely back above the $600 levels."

He added, "We remain confident that pullbacks in this secular bull market are a buying opportunity for both short- and long-term investors."

Crude is down 27 percent since hitting a record above $78 a barrel in mid July, meaning less demand for gold as inflation insurance. December gold lost 20 percent since hitting 26-year highs in May at $753.

Technical analyst Scott Meyers at Pioneer Futures said gold's bounce off $590 an ounce on Thursday was positive... "It's just part of a commodities play. We're going to see higher volatility. There is going to be big up days and big down days," Meyers predicted.

---(see url for full news, 24-hr newswire)---

TownCrierSpeaking of volatility (DMR quote), if you haven't checked out the NewsGroup, you haven't seen this...#14858210/20/06; 16:24:38

--Special Commentary--

Gold market volatility: Has it changed the fundamental reasons for physical gold ownership?

Jonathan Kosares examines the recent meltdown in the energy sector, initiated by Amaranth Partners, the most prominent of the hedge funds, to take heavy losses over the past month. More importantly, however, his analysis discusses the mounting systemic risk posed by the investment practices of hedge funds.

Tate968 re: Monetary Gold#14858310/20/06; 16:26:53

What is the difference and between :

1. monetary gold and non-monetary gold
2. monetized monetary gold en unmonetized monetary gold
Above contains definition of Monetary Gold.
Happy reading.

GoldiloxDream Homes and Mortgage Nightmares#14858410/20/06; 17:23:33


If members of the Senate Committee on Banking, Housing, and Urban Affairs had any clue, they would be investigating the criminal enterprise known as the Federal Reserve – a privately owned bank legally sanctioned to counterfeit money. Since the founding of the inflation-happy Federal Reserve, in 1913, the U.S. dollar has lost over 95% of its purchasing power. Heck, during the reign of Alan Greenspan, the dollar's value depreciated by over 40%. In the context of the housing/borrowing bubble, the Senate Committee would deduce the following:

- Fiat inflation encourages consumption and debt accumulation while discouraging savings.

- In order to stave off a post-9/11 recession, the Federal Reserve targeted housing as a monetary transmission mechanism – generation-low interest rates saw to that.

- By targeting housing, the Federal Reserve succeeded in seeing to it that trillions of dollars were loaned into existence (via mortgage debt) and, not surprisingly, stimulating the "animal spirits" of Americans to borrow and consume as if there were no tomorrow.

- With trillions of dollars of mortgage debt coming into existence in a compressed time-frame (about 5 years), some housing markets became hotter than others while Americans, from coast to coast, found ways to tap into the mortgage-lending frenzy in order to participate in the real estate party.

After deducing these important points, one would hope that our Senators would seek out information in order to paint a financial picture of the average American household. Martin Weiss, of the Safe Money Report, has done so and discovered the following: "According to Federal Reserve data, the typical American family today has a balance of only $3,800 in cash in the bank, has no retirement account whatsoever, owes $90,000 on their mortgage, and owes $2,200 in credit card debt." In other words, due to the Federal Reserve's harebrained monetary central planning, typical Americans have virtually no savings and are heavily mortgaged. Intelligent Senators – if any exist – would then conclude that the present-day American economy is a debt-laden house of cards built upon the sands of fiat inflation.

Ultimately, the panel of experts completely missed the point in that the housing bubble is most certainly all about debt. Whether or not a local real estate market was hot, a record number of Americans took the real-estate-debt plunge. Houses supplanted and telecom stocks as the next surefire wealth-building "investment." Americans, now, are more deeply in debt than ever. With so little savings to fall back upon, countless American families are one paycheck away from foreclosure and financial ruin. Once again, just look at the horrifying financial profile of the typical American family.

Using the intellectual tools of Austrian economics, there is little doubt that the debt-fueled housing bubble will turn into an economic bust of epoch proportions. Perhaps when the bust becomes painful enough, a superior panel of experts will be summoned by the Senate advocating the abolition of the Federal Reserve…one can always dream…as we are on the cusp of an economic nightmare.

GoldiloxWho had it better: Our parents or us?#14858510/20/06; 17:41:01


Much adieu was made this week about the U.S. population crossing the 300 million mark on Tuesday, Oct. 17. The latest report from the U.S. Census Bureau sparked a flood of news articles on the population debate and not a few discussions on how our present standard of living has changed over the years.

One well-known publication made this statement in response to the census report: "[T]he typical family is doing a whole lot better than their grandparents were in 1967, the year the population first surpassed 200 million." This statement was made in a article which appeared recently on Internet news wires around the country. The article went on to tout the incredible level of economic prosperity our generation enjoys compared to the generation 40 years prior. It was entitled "The Average American: 1967 and Today" and was written to convince today's younger generation that they've never had it so good and should stop their grumbling and be happy about their economic lot. Problem was, the article was extremely superficial and just barely scratched the surface of all the major economic influences that determine whether our current standard of living is higher than that of our parents’ and grandparents’ generation. In other words, it was a propaganda piece in the truest sense.

The Forbes article recognized that there is currently a high level of dissatisfaction among Americans of all ages over their economic lot, principally those in the 25-35 year-old category. As one example, a recent poll found that 22% of U.S. respondents said they had little or nothing left over at the end of the month after paying their bills. Another poll in Parade Magazine found that 48% of Americans believe they're worse off than their parents were (a survey cited in the Forbes article). Also, a study by the GFK-Roper group revealed that 66% of Americans said that their personal situation in the "golden years" of 1950-1980 was better than it is today.

There is a general feeling among countless Americans today that our economic plight is a perilous one compared to that of previous generations. Indeed, as evidenced by the explosive growth in the psychic and fortune telling industry, a growing percentage of Americans are worried about what the future holds for them, especially as it pertains to their financial condition.
So along come our friends at Forbes to assure us that our take on our economic plight compared to that of our parents’ is wrong – things aren't nearly as bad as they seem! After reading one blanket generalization after another I was left with a feeling that my intelligence had just been insulted by the folks at Forbes. Let me share with you some of the more outrageous assertions made in this article.

Forbes starts by noting that "Mr. And Mrs. Median's" annual income today is $46,326, which is 32% higher than that of 40 years ago "even when adjusted for inflation." The article also points out that average American household worth is $465,970, or 83% higher compared to 1965.

Right here is where the Forbes article made its first error. The assumption is that the average American is a homeowner. In fact, most Americans do not own their own homes in the true sense of the word. They either rent, or in the case of those with houses of their own, they have a long-term mortgage. Until the mortgage is paid off they can't truly claim ownership. Even if the value of their home has increased relative from when they first bought it, they don't realize a profit until they actually sell. Then there is the tendency for mortgage owners to take out loans against their mortgage, thereby going deeper into debt. This is an illusory measure of wealth since the money isn't truly theirs.

But along with home ownership comes greater financial responsibility. Forbes doesn't mention that property tax rates have increased manifold over the last 40 years. In some parts of the country, notably along the coast of the Southeastern U.S., property tax rates have risen in excess of 100% in just the last 3-4 years alone! This also doesn't take into account higher property insurance rates in light of extreme weather trends in recent years.

Forbes also talks about cheaper airline travel being one of the hallmarks of our generation compared to 40 years ago. I would disagree with this. If one factors into the equation the opportunity costs of having to wait those extra hours before actually boarding the plane (for baggage, security checks, etc.) not to mention the increase in destination times due to the decrease in direct flights, we're paying more for airline travel than our parents did, as well.

But it's not only the big things that make our lives so expensive compared with those of our parents, it's the little things as well. And the "little things" tend to add up over time a lot more than Forbes assumes.

Take the average telephone bill for instance. In the "good old days" our parents paid a mere fraction of what we're paying in the average month for the "privilege" of having a telephone. I emphasize "privilege" since that's apparently what the phone company considers it. Roughly 80-85% of any given telephone bill is comprised of taxes – local, state and federal taxes...even so-called "universal" taxes! There are hidden fees and surtaxes (taxes on top of taxes) and each year it increases without fail. One recent analysis found that a customer of a major U.S. phone company had an average monthly bill of $70 when the bill should have been closer to $20-$25 based on calls and basic service fees alone! So at the end of each month this person was at least $50 poorer than his parents were 40 years earlier.

One topic which the Forbes article fails to adequately cover is today's level of overall taxation compared with that of 40 years ago. There's no other way of saying it: today's tax rates are fierce compared to the taxation our parents were subjected to. We're not just talking federal, state and local taxes, either. We're talking surtaxes – hidden taxes and taxes on top of taxes on top of taxes. We're also talking about indirect taxes that may not technically fall under the government tax category but which nonetheless qualify as a tax since most of us can't avoid paying it. These stealth taxes can be found in everything from the cost of a gallon of gasoline, to a loaf of bread, to the cost of medical care. More perniciously they take the form of insurance costs. Health- and medical-related costs alone have skyrocketed in recent years thanks to the growth and increasing political power of the insurance industry. The cost of doing business for the average U.S. business has also increased significantly over the last 40 years in terms of local, state and federal taxes. These combined taxes are setbacks our parents didn't have to contend with, at least not to the degree that exists today.

Forbes tried to whitewash the discontent the median American feels today by attributing it to an economic theory of the establishment economist Milton Friedman. He called it "Permanent Income Theory," which assumes economic actors measure their current incomes compared to what they expected to earn a few years ago. In other words, they don't consider what the average income was 40 years ago – they're only concerned with the here-and-now. While there may be some truth in that statement, there is far greater evidence to support the "grumpiness" of the average American from the actual loss of income due to higher rates of taxation and costs of living.

One area that Forbes briefly touched on that actually comes closer to the truth is the "winner take all" phenomenon. This is something that is unique to our generation and something our parents didn't have to deal with. This phenomenon is discussed at length in the modern classic, "Winner Take All Society" written by the economists Robert Frank and Philip Cook. Briefly stated, the winner-take-all economy is characterized by only a relative handful of men and women dominating the highest places in any given economic area, including sports and entertainment, with the top participants commanding huge salaries and leaving everyone else competing for the crumbs. As the authors illustrate, this phenomenon was relatively unknown in our grandparents’ generation and to a lesser degree in our parents’ generation. It has accelerated especially since the 1980s.


Didn't want to post too much, but the rest of thr article is quite good. I remember someone once calculated that during the Reagan years, we went from 10% of the country sharing 90% of the wealth to 5% sharing 95%. Wonder if that's even calculable in today's derivative fantasy world?

If that disparity is so evident in the richest economy in the world, it must be painfully true elsewhere.

Historically, socialism has gained its strongest foothold when the "opportunity" to advance become do statistically nill that people fall into the belief that only the government can properly care for them.

If the only "way out" is to win the lottery, then gambling becomes a way of life, and we all know that gambing is NOT a win-win scenario.

Highr education adulates the aspiring athlete, when only one in a thousand college level players reach a full-time professional level. Would they feel the same if only one in a thousand managed to turn their degree into a serious career?

Sierra MadreSpelling is obsolete?#14858610/20/06; 18:29:49

Got stuck on the first two words:

"Much adieu" - he means, "Much ado..."

And a mucho happy weak-end to all...


GoldiloxSpelling is a lost art#14858710/20/06; 18:34:27

@ Sierra Madre,

then you probably didn't make it to my comments, with even more typos - LOL.

Fridays are just bad typing days, I guess. The fingers are flat worn out, and the brain is too mushed to remember to use the spell-checker!

contrarianMuch Ado About Nuttin--the Forbes Article#14858810/20/06; 19:32:37

Obviously "Well Street" propaganda from the liquidity-addicted paper pushers. Have they completely ignored the fact that it now takes two wage earners to maintain a household versus only one (a father) back in 1967. This glaringly obvious truth is completely ignored I imagine as I haven't yet had the time to stupidify myself and read the original article. Never mind the crazy insanely inflating costs of health care and education. A racket is great if you're the one with the ball! You'll have a ball if you've got a racket!

All we get from mainstream media is superficial babble--never the truth, just hogwash. But everyone lines up at the trough...until the S hits the F. And then perhaps people's eyes will be opened.

The Invisible HandI don't understand Dubai, except if truth is with A/FOA#14858910/20/06; 20:35:25

TownCrier (10/19/06; 14:46:44MT - msg#: 148560)
Russia's dollar buying risks inflation --

To be sure, Greenspan isn't revealing anything that the Russian's haven't already taken under close consideration.

This article serves a secondary (or primary!?) purpose for the average investor -- to make them feel that the dollar itself is less inflationary than foreign alternatives.

Beyond that, however, the issues discussed (many not excerpted, so you'll have to visit the url, see both pages) are good for you to understand.

A MTM gold reserve paradigm (w/ freegold price discovery) awaits in the wings to restore the balance. And on that developmental


Greenspan created the perfect environment for the continued global proliferation of dollar-units (easy money).

Now he is suggesting a dollar-policy to Russia (a dollar-surplus producer): Avoid inflation, don't buy these (easy) dollars.

Methinks Greenspan is taking over from dollar-IMF Rodrigo de Rato...perhaps on holidays ?

Next in line, after China and Russia, for good dollar-policy advice might be India which also wishes to make its rupee currency convertible.

The producers of dollar-deficits and dollar-surplusses might even start a "dialogue" about the globalising dollar-regime/system.

Iraqi insurgents increased their resistance atrocities because of the November 07 US elections,

Arab oil wants to cut the oil-flow to bring their wealth back in line with their pricing policy of the black liquid wealth.

How coincidental are these seemingly unrelated events (actions) ?

Why does Dubai confirm its peg to the dollar (out of the blue)?

Even in space, trade is in dollar.

China, Russia, India, Dubai, Middle East oil states...have something in common : GOLD !

Is there a (significant and/or fundamental) difference between the 1980 goldprice peak and the one that is presently being built? If so, WHAT is the difference?

The Invisible HandWhere is the tangible "wealth" in all this?#14859010/20/06; 20:55:04


Gold Climbs in Asia as Crude Oil's Gain Spurs Inflation Concern
Oct. 20 (Bloomberg) -- Gold gained in Asia as rising oil prices attracted investors seeking a hedge against inflation.
Crude oil in New York rose for a second day after the Organization of Petroleum Exporting Countries increased the size of a planned output cut and said it may reduce production again. Gold has moved mostly in lockstep with oil this year.


How can it be that everybody stays (is forced to stay) in a permanent hedge-status and therefore permanently adds dollar-units to his personal and the global stash of dollar-units that also needs hedging?

If some are succesful hedgers, who are the losers ?

Is this the way that broad wealth should be created (is being created) ?

Or will we all be losers when, at the end of the day, it will be realised that we did permanently hedge the permanent hedgings ?

When oilprices rise, the dollar-revenues must also be hedged against the risk of purchasing power loss. And the purchasing power declines because of all the inflations...

Where does this hedging upon hedging end?

Where is the tangible "wealth" in all this?

mikalMost don't need "credit protector"#14859110/20/06; 21:53:39,,1927745,00.html,,1927745,00.html Guardian Unlimited Money | Credit and debt | Banks told to end the protection racket | Saturday, October 21, 2006
Controversial payment cover has been panned by two major consumer watchdogs, Rupert Jones reports

TownCrierThe Invisible Hand --- wealth#14859210/20/06; 22:04:54

A proper perception of savings, as being the tangible consolidation of ones economic winnings, has become a fine art beyond the self-absorbed grasp of the particular group of this earth's dabbling gamers who, unfortunately, fancy themselves to be masters of a system that is actually quite largely beyond their reckoning. In the west, to be sheltered from financial adversity for so long, has been a mixed blessing for its participants -- it is wonderful WHILE IT LASTS, but during this same time it has engendered a culture-wide moral hazard in which all substantial meaning has been severed from the savings concept.

It will all end in tears, as these things often do, when the widening gap between stormy reality and the illusion of shelter can no longer be mitigated by our social/governmental caretakers with all their paper tools. The paper roof falls in and the paper foundatins wash away, and all that remains with which to rebuild our lives is the tangible wealth-savings of the few who did not allow themselves to become fundamentally dysfunctional (materially dispossessed) by the illusion of paper security.


melda laureThere is no joy in Beijing. woe woe woe.#14859310/20/06; 23:23:52

Speaking of credit protector, I was thinking back to TC's comments regarding PBOC's statement about their reserves that he posted back on monday.

The more I think of it, the more it seems their dollars are really a great worthless albatross around the neck: an indespensible (indespendable) burden.

The only way to get those dollars converted to gold is to make a leveraged currency bet. After much thought I have decided the easiest solution is for the central committee to haul off the entire PBOC directors and staff off to a reeducatement camp. (I'm joking of course, defenestration is cheaper.)

Apparently owning a trillion dollars is more of a burden than any kind of credit protection. Sir TIH, apparently currency "convertibility" is a bit more complicated than I thought. Especially when one nation (the US FED) can dictate all the rules AND play the role of cashier - no other play money has the same "legitimacy". Clearly this is a board game with a great deal of tongue in cheek, perhaps even a canary or two stuffed in the cat's mouth. Convertibility is thus an assymetric struggle.

melda laureThe Coefficient of Laputa.#14859410/20/06; 23:30:33

Is it a fine art, or a lost art? When the most radical book on finance is Robert Kiyosaki's rich dad poor dad, I think it is just about lost. Where does the system lie on the continuum from Buckminster Fuller's definition and the Meriwether Lewis definition of "rich"?

The island does not float on dollars, nor even on words, nor on ignorance. Some work, others eat. And while I am certain that the US will be dethroned, I am less sure that the ring shall be unmade.

melda laureEconomics is too confusing.#14859510/20/06; 23:47:55

My ignorance is excusable I think. I never had to earn my gold, I just paid for it with so many Fed Reserve Notes. Other nations have to export something of value in exchange for their eagles.

Sir 'Lox, if we re-calculated the "real" economy and charted the ownership of real wealth vs % of population that owned it, would the answer be any different? Especially if we backed out the "imaginary" (call it reactive if you like) debts?

Perhaps nothing has changed overmuch except a lot of new debt structure. Of course, China is looking spiffy, and Detroit is, well, not so spiffy. Mr Bill Gates is "worth billions" but that is not the same as your top French Nobleman of the 1300's who might own a whole province (minus a couple of chartered towns).

GoldiloxChina's problem#14859610/21/06; 00:51:12

@ melde laure,

What's the old saying? If you owe the bank $100,000, you have a problem. If you owe the bank $100M, the bank has a problem.

China, the "banker for the US", holding nearly $1Trillion in US debt, definitely qualifies as "having a problem".

Armageddon@Golilox - China's problem#14859710/21/06; 02:23:46

The difference between an individual and a country is that a country also has its own printing press.

If the American dollar were to collapse perhaps the Chinese yuan could become a replacement? China could demand payment for all goods and services made by Chinese companies in China be paid for in Chinese yuan instead of accepting dollars and then having to convert these dollars to yuan. My point is that as long as China has such massive amounts of domestic industrial capacity, the Chinese yuan could be used instead of the dollar to pay for China's imports. It all depends on what kind of payment other people will except in exchange for their goods and services.

GoldiloxWho owes whom?#14859810/21/06; 04:26:32


Ah, but the question is not :what form of payment, but who owes (owns) whom?

While we may balk at China buying Chevron's Asian oil property rights, which was the intent of the Chevron offer, at what point do they decide "If all I can buy with this TP is more 'sovereign debt', what good is there in stockpiling it?

What someone will "except" (I'm sure you mean accept) for payment has much to do with what it can be exchanged for.

How many more blocked Chevron deals will it take before the greenback is considered as worthless as Lincoln's Greenback?

The problem with Nixon's declaration of severance from monetary gold is that the FIAT currency really does rely only on "faith", and a broken promise such as the Chevron deal destroys that faith.

GoldiloxRedeemables#14859910/21/06; 04:45:44

@ armageddon,

Here's another way of looking at it. If I return defective merchandise to a retailer, and receive "store credit", their "marker" is only useful to me at that store or another who will honor it. If I am traveling, and there is no one in my locale who will honor the credit, I am hosed, as it becomes "Monopoly money" outside the boundaries of the game.

China has already found out that attempts to purchase "strategic" resources will likely be blocked, so if the oil suppliers begin demanding euros for payment, as Saddam did in 2000, the Chinese US $ "credits" start to look a lot more like my limited "store credit", or Monopoly money that exists "outside the game".

The claims that the US invaded Iraq to defang OPEC begin to gain credibility in such a scenario.

USAGOLD / Centennial Precious Metals, Inc.Solid savings is just a click away...#14860010/21/06; 08:05:44

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"Three Kings"

Call and Save
1-800-869-5115 (Ext. 100)

Armageddon@Goldilox - Redeemables#14860110/21/06; 08:21:48

You Wrote:
"China has already found out that attempts to purchase "strategic" resources will likely be blocked, so if the oil suppliers begin demanding euros for payment, as Saddam did in 2000, the Chinese US $ "credits" start to look a lot more like my limited "store credit", or Monopoly money that exists "outside the game"."

I understand your point. However, China might be able to get around this problem with full Yuan convertability. I think China understands also the downside of holding such a massive amount of American dollars as well. I think this is the price that China's leaders are willing to pay to build up China's industrial and high tech manufacturing base and provide jobs for Chinese citizens. If and when the American dollar collapses the people of the world will be much more careful as to what paper currencies they hold in reserve and will want to know what is backing the paper besides promises from the government that issues them. China would be able to back the yuan based partly on its manufacturing base and the ability to make internationally tradable goods and services that could be sold to the rest of the world in exchange for Chinese paper currency.

GoldiloxYuan convertability#14860210/21/06; 09:54:17

@ armageddon,

So how does Yuan convertability deal with the fact that the US "owes" China $1 triilion?

If the Yuan is made fully convertable, and rises considerably as some predict, the Chinese still end up eating major losses in conversion.

Do you think they are readying themselves for this?

GoldiloxResources#14860310/21/06; 09:59:28

@ armageddon,

Also, how does convertability of the Yuan "get around" their seeming inability to crack the strangle hold US oil companies have in place on long-term foreign oil development contracts?

Nationalization of these contracts would probably amount to "acts of war" in US gubmint eyes - not on China, per se, but on the resource nation.

Are China and the US ready for more Iraqs?

TownCrierHow to fill a trillion-dollar hole...#14860410/21/06; 10:49:22

This is grossly, almost embarrassingly oversimplified, but probably all the more instructive for it.

#1) On Chinese shores, one-trillion U.S. dollars are effectively meaningless. You might as well imagine a closed vault containing only a slip of paper upon which is written, in crayon, $1,000,000,000. There is not much hope to use it for anything tangible -- it's a mere representation.

#2) Therefore, since we're dealing only on a representational level, if a mouse ate that paper, the Chinese could arrange for implementation of a more permanent, superior representation -- in place of the paper they could set a gold bar behind that closed closed door. And because -- as a consequence of derivatives -- nobody really knows what the price of gold is, who's to argue whether the size of that trillion-dollar bar is or isn't big enough to sufficiently fill the void and foil the mouse.

Initially, this will not set well with you, but for illustrative purposes you must bear in mind the premise of the opening sentence of paragraph #1, and reconcile yourself to the premise in #2 that a quantity of physical gold can achieve a value vastly beyond your current derivative-clouded perception.


Druid@Melda#14860510/21/06; 11:00:08

melda laure (10/20/06; 23:23:52MT - msg#: 148593)
There is no joy in Beijing. woe woe woe.
Speaking of credit protector, I was thinking back to TC's comments regarding PBOC's statement about their reserves that he posted back on monday.

The more I think of it, the more it seems their dollars are really a great worthless albatross around the neck: an indespensible (indespendable) burden.

The only way to get those dollars converted to gold is to make a leveraged currency bet. After much thought I have decided the easiest solution is for the central committee to haul off the entire PBOC directors and staff off to a reeducatement camp. (I'm joking of course, defenestration is cheaper.)

Apparently owning a trillion dollars is more of a burden than any kind of credit protection. Sir TIH, apparently currency "convertibility" is a bit more complicated than I thought. Especially when one nation (the US FED) can dictate all the rules AND play the role of cashier - no other play money has the same "legitimacy". Clearly this is a board game with a great deal of tongue in cheek, perhaps even a canary or two stuffed in the cat's mouth. Convertibility is thus an assymetric struggle.

Druid: I am guessing it all boils down to whether you're a "team" player or not. During Japan's heyday in the sun of delusion, illusion and mythmaking, they spent "invested" here in the USA accordingly not rocking any real boats of value. They were allowed to do this because they understood their role as a cooperative partner. It appears that Iran, Russia and China are in the initial stages of having their roles properly defined and maybe the level of cooperation that say, a Japan(or Europe for that matter) had, is not present with them. It's just my guess.

As for those dollar hoards, the endgame here is to find willing partner(s) business' who continue to revere them so much that they will build you a pipeline, manufacturing plant, road etc...before they recognize the errors of their ways.

Sierra MadreA message from a friend in N.Y. City, yesterday...#14860610/21/06; 11:44:23

My Comment: This information definitely has bearing on gold. We are facing a perilous situation. Stock up, now!


I met last night with xxxxxxx, the former xxxxxxxxxxxxxxxxx, and xxxxxxxx with the CIA for a short time according to my recollection, and if not the latter, sits on security committees with the CIA. He is informed and a very good fellow.

Now, the last time xxxxxxxx and I discussed world events he said that the Middle East was not overly important to the CIA then but rather the controversy between China and Japan as to who controls major offshore oil reserves and the worry of the CIA was that it could kindle conflict. The time before we discussed the ability of the United States to keep open the Straits of Hormuz, and he assured me based on the technology available to the Navy it was not a problem. That meeting was 18 months to 24 months ago.

I was, therefore, astonished to hear him say that the Russians and the Chinese had given the Iranians the most advanced missiles in the world, and that we could very possibly fail to keep the Straits open. There can be nothing more grave than this.

As I wrote before, Turkey is enraged at the Kurds in northern Iraq for the alleged support of terrorism in Turkey as the Kurds seek the creation of greater Kurdistan, and the United States and Israel support for the Kurds is straining relations with Turkey. As it is, the Turkish nation refused rights of transit for our forces to pass through Turkey during the conquest of Iraq. It was the United States goal to have a pincer action. A United States force would invade from Turkey and another through Kuwait. Turkey absolutely refused transit rights. If the Straits are closed, then the supply of the Army in Iraq through the bottleneck of Kuwait will be cut off. If Turkey will not allow transit of supplies, then an airlift would be the only solution to resupply. If Kuwait can hardly supply these forces by their ports, it is doubtful that an air supply might not end any different than the German attempt by Marshall Goering to resupply Stalingrad by air. It failed.

In addition, if the Uniited States were to get into a conflict with Iran, we could expect a much larger insurgency consisting of all Shia forces which may include the Iraqi Goverment forces turning on our forces, and our 140,000 troops could face hundreds of thousands of enemies with resupply rapidly diminishing. This enemy would have sophisticated anti-tank equipment and take over all of the cities which would become battlegrounds. We could easily lose Baghdad. The entire army could be encircled as the British were in Afghanistan in the nineteenth century.

If that were not enough, all of the financial markets would cascade into crashes as seventeen million barrels of oil are cut off unleashing liquidity crises at 1.4 trillion or more of hedge funds scrambling for liquidity owning as they do over 45% of the derivatives consisting of over two to three hundred trillion of nominal and real exposure that would rise with wild fluctuations, and for which these funds can often be counterparties.

When I asked xxxxxxxxxx what the Iwo Jima Expeditionary Strike Force, the USS Eisenhower Strike Group, and the USS Enterprise Strike Group was doing in the Persian Gulf, he said we expected trouble. (Do not forget next week the United Nations Security Council meets to consider sanctions against Iran. Also, the Prime Minister of Israel has threated in dire terms Iran in Moscow, and the President of Iran counterattacked on Friday, that Israel will not exist much longer. Iran also warned the Europeans to stay out. The Media in Iran has been spending a lot of time covering this buildup of Naval forces though the western media almost it seems has blacked it out.) Xxxxxxxxxx added that it was his policy as xxxxxxxxxxxxxxx not to spend time speculating if an attack was or was not to come but to have the forces in place to handle any eventualities.

I asked him if he believe that North Korea was a diversionary proxy of China under their control and he advised that Russia and China were evil, and that China is building 21 advanced submarines a year to our one. In ten years we will be in big trouble.

If you look at the hysteria at, you can see that the Mossad is clearly worried that the Middle East may blow up.

The danger in military buildups is that once the forces are in place, as in the Gulf of Tonkin episode, an attack or an alleged attack can have a combustible effect, and the forces that are put in place to prevent a conflict can create the very self-fulfilling conditions and conflict that they were designed to prevent. As Europe in 1914, the Middle East is a powderkeg about to explode.

Sierra MadreWith regard to my previous post:#14860910/21/06; 12:00:43

My previous post was a copy, sent to me, of a REPLY to the following note, which the sender had received:


seems to me obvious that nkorea is china's military surrogate. china cannot afford to stir up the world and maintain status as world trader. so they use nkorea to do the work.

does anyone really believe nkorea can act independently of china? this whole thing is so naive it is ludicrous. israel remains in grave and worsening peril, especially if the nkorea-china connection is ignored.

MKTC, ALL. . .The New Dollar Syndrome#14861110/21/06; 12:20:32 Your comment reduces China's problem to an essence. China has already put its hands up in defense. They cannot take any more U.S. paper without some sort of quid pro quo giving them access to something tangible. When you read the U.S. press (and I just read a piece in the Wall Street Journal this past week which down-graded China's problem in this regard to the 'what -me-worry?" level) you get the impression that the world is going to keep playing the dollar game ad infinitum. It is doubtful that it will continue in the future as it has in the past. Something has got to give.

When the head of the Chinese central bank states flatly "We have enough [dollar] reserves" that should be enough warning to send anyone/anywhere with a half a brain and a load of dollars to diversify. I see where Russia went late last week to a yen diversification. You are going to see more of this sort of thing. If you have a a first level currency like the yen, the pound, the yuan, the euro, or the swissie, you are going to be penalized and you are going to have a currency problem. The only criteria is not how well the currency is managed, but how large a volume its market can sustain. If it's anything larger than a local market, you are going to be visited with the "demand" problem. So get ready. Here it comes.

Once again, we get back to this problem of international currency inflation, (and potential hyperinflation) sometime down the road, as those nations address the demand by printing more currency of their own in self defence. The dollar becomes diluted in the holdings of the various nation states but paper currencies world wide are likely to inflate in tandem to unheard of levels. So all the central banks accomplish by pursuing this sort of policy is postpone the day of reckoning. This is the New Dollar Syndrome. To my knowledge, the early Austrians (Mises, Hayek, et al) never foresaw a problem like this (at least in terms of scope), so we who take the classical liberal line are pretty much on our own without much of a reference point beyond a few basic philosophical principles.

Increasingly I believe we will see commentators of every description talking about alternative portfolio strategies for the individual under the above-described scenario. It was very interesting to see Former TreasSec Robert Rubin's comments in the last USAGOLD NewsGroup:

""[W]e live in a globalized environment and in a country which has enormous fiscal and external deficits. So you have to figure out some way -- which I have not done I might add -- to protect yourself if we should have a real currency problem here. I'm not saying what the odds are. I have no idea. Maybe the odds are very low, but that is one concern."

When you read between the lines in that Rubin quote, you garner a sense of impending disorder -- verging on international chaos -- that even one of the most brilliant theoretical practioners of our time is at a loss to combat.

I have no problem saying what Rubin leaves unsaid:

Buy gold.

It is the only currency style asset not issued by a nation state and not vulnerable to the developing dollar flight syndrome/money printing scenario described above. It is the only asset that will truly give Mr. Rubin what he is looking for.

----- BY THE WAY IF YOU WOULD LIKE TO SUBSCRIBE to our USAGOLD NewsGroup (this has to be one of the fastest growing news groups on the internet judging from the steady influx of participants) please go to the link above. Your participation is welcome and there's no charge. Through the NewsGroup you will access to article we believe relevant to the contemporary gold owner. The Rubin interview to me is of extreme importance in what it reveals about the limits of U.S. power with regard to the international economy. (You have to read it first, absorb what's being said, then sit back and analyze what's "really" being said.) ------

Meanwhile, a month ago everyone was talking about a "monster" recession and rapidly rising interest rates while at the same time forgeting that China has a huge pile of U.S. Treasuries it is likely to keep feeding into the bond market suppressing interest rates no matter what the Fed does. Our skepticism about a monster recession was also covered in an earlier NewsGroup. The real problem for all of us is how to deal with the coming dollar glut and its related effect on ALL the major currencies. It's no wonder OPEC has decided to attempt solidifying the price of oil at $60 -- once again not because they are greedy, but in self-defence. These trends are not going to run and hide under a rock.

Gold is simply biding its time. Right now you can buy gold, and if you believe in it, you should be taking advantage of this buying opportunity. Down the road, you could be competing with other gold owners worldwide including nation states like China, Japan and Russia who are likely to back-channel their acquisitions and the only sign of it will be the price increases and lack of physical supply. If you don't believe in gold, but you agree with Rubin that you need to "protect yourself should we have a real currency problem here," then I wish you luck. I wouldn't know where to point you to find an easy answer beyond the one I just proposed.

Ten BearsTravels with Charley #14861210/21/06; 12:37:32

Western high country ranches have recently been revalued upward by taxing authorities to a level which force descendents (without very good tax planning) to sell in order to pay death taxes.
Current elderly owners are barely making a living due to increased costs of all business inputs and livestock prices which have not had equal percentage increases. (Oh the joys of the constantly depreciating purchasing power of fiat currency.) The insiders with connections to the money supply creation crowd are buying the land for speculation and subdivision.

Talked to some native people with casino licenses in western states, who freely admit they are fronting for (and profiting from) eastern gambling interest. (The tables are not always honest either).

From the 10/17/06 Denver Post, 83 year old retired physics professor Albert Bartlett comments on the 300 million U.S. population mark; "Growth never pays for itself, by every measure, environmental, economic, quality of life, it is a costly proposition." (Of course perpetual growth in loan amounts is necessary for the Ponzi scheme debt money system, and population increase aids that cause). Bartlett is convinced that the only way to achieve a sustainable society is to have zero population growth.

All throughout the country, unprecedented amounts are being spent on road construction. A similar method of economic stimulus was used in pre WW2 Germany, the principle difference is the autobahn was engineered to last very much longer than the roads here. The money lenders will be able to finance extensive rebuilding of the current construction in less than three decades.
It is also worth noting that the really profitable routes are being privatized and sold to insiders with great kick backs to politicians.

A retired teacher in her tenth decade stated that the current average university graduate had less knowledge of math, science, history, economics, and politics than an average high school graduate in the 1930's. According to her the "dumbing-down" began in the 1960's and has accelerated ever since.

A retired Nevada resident who had acquired a considerable amount of gold during his time observed that he was having a much better (and easier) time giving it away to his grand, and great grand children than he had getting it. Gold "insurance" can be passed to younger tribal members and make their life a little less stressful; after all, that is what it is all about isn't it?

Armageddon@Goldilox - Yuan convertibility and resources#14861310/21/06; 15:03:34

Of course you have a point on China loosing value on their dollar reserves. However, my point is that China could make up for its loss with regard to their dollar holdings by printing more Yuan to pay for imports if and when it becomes fully convertible. This would not neccessarily cause inflation since if the dollar does collapse and the Yuan becomes fully convertible many people who need products made in China for their businesses will hold Yuan as a store of value instead of the American dollar, taking the yuan out of circulation temporarily and lowering price inflation from where it normally would be if all those yuans were in circulation driving up prices. In terms of resources, if the dollar starts to collapse I think alot of American oil companies are going to find it hard to uphold their development contracts since if their foreign workers are paid a set amount of dollars those dollars will decrease in value or their foreign workers are paid a set amount in local currency which probably would rise against the dollar and would thus cost American oil companies more money in dollar terms. I think in general if the dollar does start to collapse most countries would probably prefer non-American companies to develop their natural resources because of the unstable American currency putting at risk the completion of promised oil/gas/etc projects. Thus, China might have a better chance at picking up these projects.
SundeckA trillion dollars#14861410/21/06; 16:25:37

Ref TC's #148604

Perhaps TC's crayon ran out, but I think a trillion dollars should contain twelve zeros, not nine as shown in Townies post...

1 Billion dollars = $1,000,000,000

1 Trillion dollars = $1,000,000,000,000

Scary, isn't it...

Pretty soon we will be talking real money ;-)



GoldiloxPSA "contracts"#14861510/21/06; 16:31:22

@ Armageddon,

Everything I have read about the PSA (Petroleum Service Agreements?) suggest they are not renegotiable, even through administration change, which is why I suggested their upset would likely be treated as an "act of war". I read a great article on the machinations of post-invasion Iraqi oil contracts the other night. It suggests that the current Iraqi "sovereign" government has been pressured into signing these PSAs giving "rights" to western oil companies - even should they experience regime change.

While that might be difficult to uphold, it certainly adds to the legal precident for re-invasion if they default.

Your idea that the Chinese might just "pick up" those contracts is probably much more geopolitically complex than that.

TownCrierThanks, Sundeck#14861610/21/06; 18:20:21

Truth be told, anything past Ten Mil. is alien to me -- the zeros become a total fog. Fortunately, there was scientific notation (i.e., 6.02x10^^23) to help deliver my sorry self through the engineering courses at college.

Thanks for the assist. Help yourself to a Mil. out of petty change...


mikalNew forms of trade always possible#14861710/21/06; 20:18:31,,1928138,00.html

Billions flow down new trade routes
Heather Stewart | Sunday October 22, 2006 | The Observer
Excerpt-- "Developing Countries are bypassing the old economic powers and forging powerful new financial links which are changing the face of global trade.
Research by the United Nations' trade arm, UNCTAD, shows the rising importance of so-called 'south-south' trade, with an increasing proportion of foreign direct investment now happening between one developing country and another.
This flow of cash has opened up new trade routes, including a network of connections between China and Africa dubbed the 'new Silk Road'."

Trade in many parts of the world can appear more
innovative and dynamic, the more we study it.
The will to evolve or change grows once needs are recognized ahead of expectations.
While business models should never be set in stone,
neither should style of governance.
But the core of governance is less a business than an art,
a science, a lifelong endeavor and a dedication to human progeny.

TopazBonds, Gold etc.#14861810/21/06; 22:03:55

The Bond:Gold:Buck Paradigm is loosely behaving itself with 'ol Buck more than ready than Gold is at this point to give it up for a lower yield.
Curiously, the Delivery No's out of Comex belie the fact that now is probably the hottest demand period of the year. 5 odd thousand so far is half the monthly average's hard to get the price to run down if Physical demand is running contrary to "management" wishes, we may still find this market in defecit come Nov 1.

Ultimately physical demand will expose the frailties of the market ...sooner? ...later?, you tell me!

mikalIllinois gold artifacts and sarcophagus study#14861910/21/06; 23:16:41 The Burrows Cave | Nexus Magazine | Sept/Oct 2006 | Phillip Coppens
Suspenseful, persuasive article with photos and links.
Includes good observations on scientific regimentation and human psychology, applicable to alternative science and medicine, politics, gold investment and other facets of modern society.

Cometosecot#14862010/21/06; 23:22:39

Silver fluctuating negatively in the Cot figures

Copper : also a tad negative

Gold : NET LONG another 4400 contracts after being long NET 8000 contracts last week

CometoseCot#14862110/21/06; 23:24:36

Gold Net long 3000 more contracts correct the 4400 number postes
GoldiloxPutin firm on EU energy charter#14862210/22/06; 00:17:10


Russian President Vladimir Putin has resisted EU calls to sign an existing international treaty on investment and trade in energy.
But says he thinks Russia and the EU can agree binding rules.

They begin talks on a new strategic partnership in the next few weeks, and Mr Putin says he is confident it would be possible to find common approaches.

At an EU summit in Finland, Mr Putin also hit out at Georgian leaders, accusing them of building up forces.

The EU has been trying for years to get Russia to sign the Energy Charter Treaty without success.

It now wants to enshrine many of the treaty's principles into the new framework agreement with Russia.

Trade partnership

The aim is to make it easier for European companies to invest in the Russian energy sector, and to use Russian pipelines to export the oil and gas they produce.

The pact would also be designed to ensure that Russia treated all European countries equally, and to lay the basis for a long-term trade partnership.

Russia supplies a quarter of the oil and gas consumed in the EU, and the proportion is set to rise sharply in coming decades.

" I am quite confident that we will be in a position to develop common approaches " - Vladimir Putin

Mr Putin suggested that Russia could agree to most of the charter's principles when negotiations begin.

"We are not against the principles that are included in the charter, but we believe that that certain provisions of the charter should be defined better," he said.

"I am quite confident that we will be in a position to develop common approaches."

Mr Putin echoed European leaders by saying that energy co-operation needed to be rooted in the principles of predictability of energy markets and the mutual interdependence of suppliers and consumers.


The BBC's Jonny Dymond in Lahti says Mr Putin was on a charm offensive, but there was no sign of progress on any of the really difficult issues.

European Commission President Jose Manuel Barroso said the two sides needed to develop mutual trust.

"That requires transparency, the rule of law, reciprocity, non-discrimination, market opening and market access," he said.

The EU wants European investors to have the same access to the Russian energy market as Russian companies have to Europe's market, and the ability to use Russian pipelines to export any gas and oil they produce in Russia.

European governments have recently raised concerns about the treatment of some European energy investors attempting to develop oil and gas resources in Russia.

Energy security became a major priority for the EU after Russia briefly cut off gas to Ukraine in January, in a dispute over payment.

A paper prepared for the summit by the European Commission stressed the importance of increasing energy imports from the Mediterranean, Black Sea, Caspian, Middle East and Gulf regions.

GoldiloxPrudent Bear Quotables#14862310/22/06; 07:09:21


"Every previous major bear market has been accompanied by a bear market in home prices? A home price decline of as little as 20% would put a lot of people in bankruptcy."
- John John Templeton, Equities Magazine, July 2003


Thus, every attempt will be made to continue to derivatize mortgages to the point where it all blows up in our faces.

Investing in a home used to be one of the least risky investments, but 100% and greater mortgages, interest onlys, etc. have put many people at risk whose "assets" in a negative savings environment will not be able to absorb even the slightest shock to their budget.

GoldiloxPresidents and the Federal Debt#14862410/22/06; 07:19:59

The Presidential contributions to the gross federal debt are computed from data available from the White in the Historical Tables, Table 7.1 (PDF), p. 118, for FY 2005. The graph and data are also available in this XLS source file.

For each term in office, the President is responsible for four fiscal year budgets starting Oct. 1 of the year they take office and ending Sept. 30, eight months after they leave office. Table 7.1 gives the gross federal debt as a % of GDP at the end of every fiscal year since 1940. Each President's federal debt contribution was computed by simply subtracting the value at the start of his first FY from the value at the end of his last FY.

All Presidents prior to Reagan contributed to paying off the huge WWII debt. The graph also credits the drop in federal debt as a percent of GDP under Clinton towards repayment of the remaining WWII debt and not towards paying off the Reagan-Bush debt. That would simply hide their impact by making it appear that more of the current federal debt was left over from WWII. Had Reagan-Bush simply managed to break even, the WWII debt would have been as low as it's shown to be.

Debt held by the Federal Reserve System is purchased by printing money; the purpose of these "open market operations" is to put more currency into circulation. The most recent figures used for this part of the federal debt are available from the St. Louis Fed. This was divided by GDP figures provided by the Department of Commerce.

Since all Presidents from Truman on have reduced the gross federal debt except Reagan and the Bushes, the part remaining from WWII is found by subtracting their debt contributions (and the FRS contribution) from the current federal debt total.


Interesting look at each administrations "contribution" to the Federal Debt. No wonder the "real" conservatives decry the NeoCONs as "spendthrifts".

USAGOLD / Centennial Precious Metals, Inc.A world of gold at your fingertips. Step inside and shop around...#14862510/22/06; 07:28:29

shop for gold coins
mikalSEC and CFTC: Birds of a feather flock (and mate)together#14862610/22/06; 09:28:32

Naked Short-Selling? Sounds Sexy, But It's Sketchy | Seattle Times - Business & Technology | Chuck Jaffe | October 22, 2006
Given what we know about these SEC and CFTC official "regulators" turning a blind eye to repeated blatant displays of stock exchange and commodity exchange naked excesses, "oversight" appears more like voyeurism or nesting behavior.

mikalRating risks to the economy#14862710/22/06; 12:13:15

Winds of Change Shake Forecasts | Telegraph | Liam Halligan | October 22, 2006
The UK Society of Investment Professionals
was asked to rate the biggest risks to the global economy. Oil topped the list in this short article.

mikalInvestments dominated by governments#14862810/22/06; 13:25:20 CAFRs Government Control And You - Thomas Paine and Walter Burien - October 22, 2006
CAFR's - Comprehensive Annual Financial Reports
are an integral part of, and the tip of the iceberg.
Makes our case for gold and individual responsibility
most emphatic.

Ned@ Sierra Madre#14862910/22/06; 17:31:43

Thanks for your messages.

Yes the situation in the M-E is at arms length to the POG. I have been closely following this nuclear business in Iran quite closely, moreso as things have heated up in the last year. Gotta wonder how Iran has decided that they are that strong to be so outspoken? So as the Iran affair heats up, we get a brazen event from NK and then an apparent apology but only to China?

It doesn't take much imagination to connect the circle.....war---->oil---->gold. Mix with a helping of politcs, currency dilution & resource competition and gold becomes GOLD !

Question for you. I have been listening to various sources comment on the military build-up in the Gulf. At face value it sounds perilous, sounds like trouble will be arriving in due time. However, an article I read last week dismissed all these rumors, apparently the USS Eisenhower and the USS Enterprise were swapping posts. I forget who was which but one was relieving the other as normal duty, there IS NO build-up.

Any comment on that story?

Nice to hear from you again.

Nedclosely following something closely is...#14863010/22/06; 17:34:32

....following something very closely

Geeesshhhh ! Proof-read man !

ArcticfoxI notice that Ag is being significantly mispriced to the downside #14863110/22/06; 18:24:58

at one of the other sites. The last time this happened, Au and Ag were hammered the next day and Ag actually fell to the level of the previous night misquote..
Clink!Less than ten days away ....#14863210/22/06; 18:32:52

from Halloween, that is. But if you really want to scare yourself, then spend the hour or so at the link. It has been mentioned here at least a couple of times, but it is time well spent. This is a presentation of how naked shorting works, and how the regulatory body (SEC) is doing its level best to hide the dirty. If the GATA argument is hard to swallow, try this for size.

It has always been a problem for me to understand why someone would go short in the face of a rising market. Answer ? By going short without having to borrow the shares. If you a/ know that the policeman is going to ignore you and b/ treat the share market as fractional reserve banking where all the owners are not going to want delivery in the form of "physical" certificates. I wonder how many "extra" shares of GLD and SLV are floating about.

Awesome presentation.

Let's get physical.

Clink!Don't drink and post#14863310/22/06; 18:34:56

You might forget something .....
Druid(No Subject)#14863410/22/06; 18:39:29

PART 1: Striking the US where it hurts

A noted Chinese theorist on modern warfare, Chang Mengxiong, compared China's form of fighting to "a Chinese boxer with a keen
knowledge of vital body points who can bring an opponent to his knees with a minimum of movements". It is like key acupuncture points in ancient Chinese medicine. Puncture one vital point and the whole anatomy is affected. If America ever goes to war with China, say, over Taiwan, then America should be prepared for the following "acupuncture points" in its anatomy to be "punctured". Each of the vital points can bring America to its knees with a minimum of effort.

I Electro-magnetic Pulse (EMP) attack
China and Russia are two potential US adversaries that have the capability for this kind of attack. An EMP attack can either come from an intercontinental ballistic missile (ICBM), a submarine-launched ballistic missile (SLBM), a long-range cruise missile, or an orbiting satellite armed with a nuclear or non-nuclear EMP warhead. A nuclear burst of one (or more) megaton some 400 kilometers over central United States (Omaha, Nebraska) can blanket the whole continental US with electro-magnetic pulse in less than one second.

An EMP attack will damage all electrical grids on the US mainland. It will disable computers and other similar electronic devices with microchips. Most businesses and industries will shut down. The entire US economy will practically grind to a halt. Satellites within line of sight of the EMP burst will also be damaged, adversely affecting military command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR). Land-based intercontinental ballistic missiles will be rendered unserviceable in their silos. Anti-ballistic missile defenses will suffer the same fate. In short – total blackout. And American society as we know it will be thrown back to the Dark Ages.

Of course, the US may decide to strike first, but China and Russia now have the means of striking back with submarine-launched ballistic missiles with the same or even more devastating results. But knowing China's strategy of "active defense", when war with the US becomes imminent, China will surely not allow itself to be targeted first. It will seize the initiative as mandated by its doctrine by striking first.

China has repeatedly announced that it will not be the first to use nuclear weapons. But as an old Chinese saying goes: "There can never be too much deception in war." If it means the survival of the whole Chinese nation that is at stake, China will surely not allow a public statement to tie its hands and prevent it from seizing the initiative. As another saying goes: "All is fair in love and war."

2 Cyber attack
America is the most advanced country in the world in the field of information technology (IT). Practically all of its industries, manufacturing, business and finance, telecommunications, key government services and defense establishment rely heavily on computers and computer networks.

But this heavy dependence on computers is a double-edged sword. It has thrust the US economy and defense establishment ahead of all other countries; but it has also created an Achilles' heel that can potentially bring the superpower to its knees with a few keystrokes on a dozen or so laptops.

China's new concept of a "people's war" includes IT warriors coming, not only from its military more than 2-million strong, but from the general citizenry of some 1.3 billion people. If we add the hackers and information warriors from Russia, Iran, North Korea, Venezuela, Cuba, Syria and other countries sympathetic to China, the cyber attack on the US would be formidable indeed.

So, if a major conflict erupts between China and America, more than a few dozen laptops will be engaged to hack America's military establishment; banking system; stock exchange; defense industries; telecommunication system; power grids; water system; oil and gas pipeline system; air traffic and train traffic control systems; C4ISR system, ballistic missile system, and other systems that prop up the American way of life.

America, on the whole, has not adequately prepared itself for this kind of attack. Neither has it prepared itself for a possible EMP attack. Such attacks can bring a superpower like America to its knees with a minimum of movement.

Druid: I encourage all to read part two in supplementing this read. The Author is no lightweight in these matters.

Cometosesilver#14863510/22/06; 19:26:36

Head fake selling .........

Silver looks like a good buy.........

Not going to be the tail that wags the GOLD DOG....... down 1.10 looks like the (*)&^H

are going to take a stab at another raid here prior to the ELECTION ....

STUPID AND UGLY ............

Cometosesilver#14863610/22/06; 19:37:45

sorry ,

THE sight was showing SILVER DOWN 1.10........

It was scare tactics only, I mean incidental fraud

Sierra MadreReply for NED...#14863710/22/06; 20:04:34

I am pleased you read my posts re/Middle East-Iran, and N. Korea.

I have nothing more to add for the moment.

Let us hope that reason prevails, and that those who can unleash war on Iran will think more carefully than they did before they invaded Iraq.

I'm not too optimistic about that, however.


Clink!@ Ned#14863810/22/06; 20:30:42

You said "Gotta wonder how Iran has decided that they are that strong to be so outspoken?"

As I have posted here before, the massive US military has still not taken on board the fact that, in asymmetric warfare, it is NOT an advantage to have a large army - it's a liability (Actually, that is probably grossly unfair - I'm sure that the military is acutely aware of this, but their civilian leaders (with no personal military experience themselves) are still in some fantasy land.) Another, more direct, way of putting that is to think what would happen to the 140,000 potential American hostages in Shia-dominated Iraq if the US attacks Iran ? Remember that Iran has a certain experience of taking Americans hostage .....

and Sierra Madre "Let us hope that reason prevails". Me too, but as it hasn't so far, why should things change now ?


Clink!@ Cometose#14863910/22/06; 20:47:09

Lucky that there are multiple sites around the world to keep one's perspective. Me, I put a lot of faith (and trust) in German reliability !!
PS. Actually, Google returned approx 13,700,000 results for "silver chart". Enough zeroes to confuse a towncrier.

GoldiloxHeadwinds for the US Economy#14864010/22/06; 22:12:56


Indeed, under the Bush administration, a combination of large tax cuts and large increases in military outlays to wage costly wars abroad have stimulated the economy, in a Keynesian way. However, this has also pushed the U.S. budget deficit to record current-dollar levels. In five years, from 2002 to 2006, the cumulative federal budget deficit has exceeded one and a half trillion (1.5 trillion) dollars. —Since the rest of the U.S. economy was also in deficit, the only exit was to borrow abroad the necessary cash. The United States is still borrowing abroad more than $2 billion a day just to keep this binge of expenses going. From whom? Mainly from China, Japan and some oil-rich Middle East countries which hold tons of U.S. dollars.

As a consequence, foreigners own an increasing share of the federal public debt, that share presently being estimated at $2.1 trillion or about 42 percent of all the public debt held outside the government (about $5.0 trillion in a total debt of $8.6 trillion). These foreign holdings represent an amount that is 17 percent of GDP ($12.3 trillion), a share that is increasing fast toward 20 percent of GDP. Keep in mind that this percentage was less than 1.5 percent in 1970 and less than 1 percent in 1946.

What does it all mean for the U.S. dollar? As a reserve currency, there is a built-in demand for the dollar from central banks and from worldwide operators, such as oil traders, who deal in dollars and who are big buyers of U.S. securities. These purchases have the double benefit of shoring up the dollar and of keeping U.S. interest rates low. That is why the foreign demand for U.S. dollars is not going to collapse overnight, even if relative American interest rates were to stay flat for a while. In this sense, it can be said that the U.S dollar has some resilience. This is one of the "seigniorage" benefits that accrue to the United States because its currency is held abroad as a reserve currency. —In the short run, measured in months, the U.S. dollar should continue its rebound against other major currencies, as long as oil and commodities prices are soft and as long as U.S. interest rates remain firm. However, in the longer run, measured in years, the dire external financial situation of the United States should begin to weigh more heavily on the dollar.

One currency against which the U.S. dollar is expected to decline is the Chinese yuan. Since July 2005, the yuan tracks a basket of currencies that includes the yen, the euro, the Hong Kong dollar and the South Korean won. Previously "pegged" to the dollar at the rate of about eight yuans for one dollar, the yuan has begun a slow appreciation toward the dollar and stands at a value of 7.9 yuans for one dollar, or at a price of about 12.6 US¢.

But, at this rate, the yuan is way undervalued and should be revalued substantially more to reflect China's huge external trade surpluses. Indeed, China has accumulated foreign exchange reserves in excess of $950 billion, which are invested roughly three-quarters in U.S. Treasury bills and other dollar-denominated assets, the rest being invested in other currencies. However, the Chinese government has expressed a wish to diversify somewhat its pool of foreign exchange reserves toward the euro or the yen and even increase its strategic stocks of oil.

In 2005, China attempted to spend some of its U.S. dollars to buy an American oil company, Unocal, for about $18.5 billion. However, the Chinese offer was unceremoniously rebuffed by the U.S. Congress.

A similar fate was met by Dubai-owned Dubai Ports World in early 2006, when it bought a British company (Peninsular and Oriental Steam Navigation Co or P&O for $6.8 billion) that happened to manage six U.S. ports. The company was forced to disinvest itself from its American interests by the U.S. Congress. —The message sent to foreign lenders was loud and clear: if you accumulate American dollars, deposit the money in our banks or buy U.S. government securities (Treasury bills), but do not attempt to invest them in income-generating real American industrial assets. How long will that scam last? Nobody knows. But, it most likely won't last forever.

The central question is how long will confidence in the U.S. dollar hold in the face of all these factors. If you add the widespread unpopularity that the Bush administration has bestowed upon the United States around the world, it is more likely than not that the value of the U.S. dollar, after the current show of strength, will continue eroding in the coming years. A lower currency translates into more imported inflation and makes it difficult to maintain low interest rates. The stage would then be set for a bout of stagflation, that is to say creeping higher inflation and slower economic growth.


Can the totalitarian House of Saud be counted on to once again deliver cheap oil and election victories to their House of Bush brothers, or is derivative mastery alone enough to overcome the ravages of fiscal excess long enough to repopulate the legislative bodies with Skull and Bones "connected" insiders.

Of course, if the ballot box fails the "drugs and arms cartel," their final option was outlined by General Franks in Cigar Aficionado - one more "terror event" followed by Martial Law. Thanks to the Patriot Act, the Constitution can be rendered more worthless than the dollar at any moment by a stroke of the executive pen when it suits their ambitions.

White HillsClink#14864110/22/06; 22:26:56

I agree with you about the US Military. What the need is not a large army but one that will fight 21st Century Wars with 21st Century tactics. all the technologies we have developed in warfare are under utilized by using 20th Century tactics. We at present are not even using the lessons we learned in the 20th Centuty. The US Military does know how to fight a war but it also apparent that the civilians in charge do not. And I include both political parties by this critizism. If we had fought WW11 like we are fighting in Iraq we would all be speaking German or Japanese. The present elite should remember that diplomacy is the first step towards war. There can be know success in diplomacy without the threat of War. Take away that creditable threat and you are just blowing into the wind. White Hills
The Invisible HandEU does NOT need a political union#14864210/22/06; 23:21:08



Here's our masters’ view of the euro:
Joshua S. Goldstein and Jon C. Pevehouse, "International Relations 2006-2007 Edition", Pearson Longman, 7th Edition,
p. 387
Monetary union is difficult for both economic and political reasons. In participating states, fundamental economic and financial conditions must be equalized. One state cannot stimulate its economy with low interest rates (for example, because of a recession) while another cools inflation with higher interest rates (because of high economic growth). For example, in 2005 the unemployment rate was 18 percent in Poland but 5 percent in the Netherlands. In an integrated economy that is also politically centralized, the central government can reallocate resources, as the United States might do if Texas were booming and Massachusetts were in recession. But the EU does not have centralized powers of TAXATION or control of NATIONAL BUDGETS. THE SPLIT OF FISCAL AND MONETARY POLICY IS UNUSUAL.

p. 389
The EU faced unchartered waters in actually making a monetary union work over the long term without political unification.
The CREATION OF A EUROPEAN CURRENCY is arguably the largest financial overhaul ever attempted in history, and in its first four years
(TIH: first SIX years – four years for the notes and coins, but six, almost seven now, for the existence)

END OF QUOTES – All capitalisation mine.

The euro has achieved what it has achieved without a European political union.

Here's the latest:
SUBJECT: The impact of global financial imbalances on euro-dollar exchange rates.
SIGNIFICANCE: Discussion of the US current account deficit remains focused on the possibility of a sharp currency adjustment. Should China continue to control the relationship between the renminbi and the dollar, the concern is that the bulk of this adjustment would fall on the euro-dollar exchange rate. There are reasons to believe that such concerns are ill-founded.

As I said, the euro has achieved what it has achieved without a European political union.

The EU is still being referred to by many people as the "common market".

That was its original purpose.

This PURPOSE was not implemented as from the beginning antitrust law, here competition law, was instituted. But let's keep it with the purpose. Now we have a VEHICLE, the euro, which is a success and which could lead to a REAL common market.

As Rand said "Throughout the centuries there were men who took first steps down new roads armed with nothing but their own vision. Their goals differed, but they all had this in common: that the step was the first, the road new, the vision unborrowed".

The Frankfurt ECB bureaucrats are being advised by Freegold advocates.

As Lasok and Bridge put it in the preface to the first edition of their book, "Law and Institutions of the European Communities" (Butterworths, 1972):
At this stage we can speak of the European Community only in general political terms as an organization with LIMITED, MAINLY ECONOMIC OBJECTIVES and a POTENTIAL for development towards a FEDERAL ORGANIZATION..

Unfortunately by 1999, as former Judge at the European Court of Justice, Lord Gordon Slynn of Hadley, put it in the foreword to Lenaerts and Van Nuffel (Bray, ed.), "Constitutional Law of the European Union", (Sweet and Maxwell, 1999),
the concept of COMMON MARKET had been supplanted by that of INTERNAL MARKET.

Nevertheless, Lenaerts and Van Nuffel start the preface to the third revised edition (2003) of their "Europees Recht in Hoofdlijnen" (Antwerpen/Apeldoorn: Maklu)
Since the introduction of the euro, there is no more doubt about the impact of European rules/rule-giving/"regulation" (regulation – not in the technical sense of the EU Treaty), (here after "regelgeving")
Sinds de invoering van de euro bestaat geen twijfel meer over the impact van de Europese regelgeving.

Ladies and Gentlemen, this means that Europe's top specialists on European Law (Lenaerts is now a senior Judge at the European Court of Justice) are not aware of the fact that the euro is Another animal than other currencies nor of the fact that some people are telling the ECB bureaucrats what to do (with gold). Why do Lenaerts and Van Nuffel consider the euro as the result of "regelgeving"? Do they also consider the mark, lire, guilder, franc as the result of German, Italian, Dutch or French "regelgeving"?

No, Lenaerts and Van Nuffel go further and seem argue that precisely because the euro is a success, more "regelgeving" is necessary, at least that "regelgeving" is good because the euro is a success.

Europe's top specialists on European Law are not aware of the fact that the euro is Another animal. And it is precisely because the euro is Another animal that Freegold will be priced in euro.

Here's how Paul Temperton summarises his article "Why is the euro being introduced?" in the book "The euro" of which he edited the 2nd edition in 1998 at John Wiley & Sons:

The answer to the question "Why is the euro being introduced?" has both a political and an economic dimension. The most POLITICAL impetus has been the desire to MAINTAIN PEACE in Europe and it is significant that the foundations of the present arrangements were laid shortly after World War Two. The ECONOMIC reasons for the euro's introduction are seated in the problems of the European economy in the 1970s and 1980s – in particular, low growth and high unemployment. The combination of the single market and the single currency will go a long way towards improving the growth rate of the European union.

The first section of the article is titled "Politics of the euro". It starts by saying "At a fundamental level, the introduction of the euro is a political move with the aim of ensuring PEACE and STABILITY in western Europe."

END OF QUOTES – Again all capitalisation mine.

Some my dear bureaucrats from the European Court of Justice or elsewhere (Van Nuffel is at the European Kommission), please stop talking as if Europe and the euro needed more than a REAL common market in order to ensure PEACE and STABILITY.

Ideas result in actions.
Actions result in changes.

GoldiloxEU#14864310/22/06; 23:51:50

@ TIH,

"But the EU does not have centralized powers of TAXATION or control of NATIONAL BUDGETS. THE SPLIT OF FISCAL AND MONETARY POLICY IS UNUSUAL."

Author's point taken, BUT

1) Do they really lack powers of taxation or do they hold them by "proxy" in another form over the member governments,

2) Then again, with the power of currency "creation", who even needs taxation? Isn't that what Cheney's comment "Deficits don't matter" really means?

GoldiloxThe power of the money press#14864410/23/06; 00:22:20

Learning at least something from the Roman collapse, US PTB have since Washington and Lincoln known they can coerce (conscript and/or bribe) even "free men" with worthless paper notes - especially when those "free men" risk excommunication or incarceration for non-participation in the banksters' slaughter-house games.

Two of the earlier shameful scams of US history are:

1) The "Continental"
2) Lincoln's Greenback

Prior to official invasion, "private security contractors" in the Middle East brought home tax-free triple digit salaries, and operated under immunity from prosecution. The soldiers do not fare as well.

The PTB standard formula is to pay someone else to die for their dominion with debt they default on when their conscripts need it most. All the while they reap enormous profits supplying "war goodies" - usually to BOTH sides!

Unfortunately, it's not unlike the refusal of the VA to acknowledge Agent Orange (and Blue) and the current DU poisons until the wmotionally coerced victims are already dead.

What's that old EY Harburg ditty?

"You're paid to stop a bullet.
It's a soldier's job, they say.

And so you stop the bullet.
And then they stop your pay.

Should I write a letter to my Congressman?

Each Congressman has two ends - a sitting end and a thinking end.
Since his whole success depends upon his seat, why bother, friend?"

USAGOLD / Centennial Precious Metals, Inc.Especially designed for those who are taking their first step...#14864510/23/06; 00:46:28">gold ownership starter kit
mikalWarming up to euro#14864610/23/06; 08:22:11 Euro Trash - Even drug dealers are giving up on the dollar. By Daniel Gross - Moneylog - Oct 23
mikalCorrect date#14864710/23/06; 08:29:07

The money column on euro is dated Dec 28, 2004
TownCrierPetro-dollars lure Gold Fields#14864810/23/06; 08:56:29

23 Oct 2006; [] -- GOLD FIELDS is listing in Dubai [by the end of October] to broaden its shareholder base, tap into a huge pool of capital and to start edging its way into the lucrative Asian markets, CEO Ian Cockerill said on Monday.

..."Twenty to thirty years ago all the capital was in the Western markets. Today and into the future that pool of liquidity is moving rapidly east and it makes sense for Gold Fields to have access to those markets," Cockerill told Miningmx in an interview.

The listing is to raise brand awareness rather than raising capital. "There is an increased uptake in our stock from that part of the world that's why it's an important market for us to be in. It is increasingly going to become a very important market in our sector," he said.

"We have no intention at this stage of going for any capital raising."

It was not critical for Gold Fields to list in Dubai because the company's shares are readily available on other exchanges, said Leon Esterhuizen, a gold analysts with Investec.

"They are trying something new and they are going where the money is, so it makes sense. It's not a negative thing to be chasing petro-dollars," Esterhuizen said.

"We are increasingly seeing people wanting the ability to trade large chunks of stock and do that very quickly. You want the ability to tap into markets where tradability becomes very straight forward," Cockerill said. "Going into a market like this can give us an advantage."

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

To say that the East and Mid-East is "where the money is" is round-about way an indication that New York/London is NOT where the money is. FOA always seemed to feel that although mining companies were a distant second to physical gold ownership, Gold Fields was at least first among its peers. So you've got to figure that his sentiment was a reflection upon the management having progressive market insights as rare and profound as FOA's himself.

And to re-emphasize a distinct point, this drive toward Asian and Mid-Eastern listings is NOT to raise capital, but rather to facilitate stock liquidity.

It would seem that Gold Fields anticipates that ample cashflow will be available through standard operations (mining and selling gold at high prices), whereas as far as shares are concerned there may possibly be an adverse liquidity issue (from hyperinflationary effects(?)) in Western (NY) markets.

This could be yet Another signpost "on the road"...


TownCrierA Dubai tidbit...#14864910/23/06; 09:05:10

(From The Associated Press, Oct 23) --

"Strong domestic demand has pushed Dubai's per capita gold consumption to the highest level in the world. Gold sales accounted for 14 percent, or US$5.8 billion (€4.6 billion), of Dubai's gross domestic product in 2005."
Fourteen percent of GDP... that's some serious dealing in pure wealth.


TownCrierBush to tout economy#14865010/23/06; 12:53:35,0,6049714.story?track=rss

(AP) October 23, 2006, WASHINGTON // With his party facing a difficult midterm election, President Bush is focusing on the positive this week: a growing economy he is using to try to persuade voters to keep Republicans in power in Congress.

White House advisers say Bush is not trying to change the subject from a deteriorating situation in Iraq, and that he will continue to talk about Iraq and the war on terrorism as the Nov. 7 election nears. But Bush advisers said they think the president should get more credit for recent positive economic news.

...Overall, the economy grew at a 2.6 percent pace from April through June, compared with a 5.6 percent pace over the first three months of the year, which was the strongest spurt in 2 1/2 years. Still, voters remain uneasy even though gasoline prices have started dropping, the stock market is hitting record highs and interest rates on credit cards and adjustable mortgages are leveling off.

White House spokesman Tony Fratto said Bush intends to mention how optimism about the economy and rising hopes for strong third-quarter earnings lifted the Dow Jones industrial average past 12,000 for the first time on Wednesday.

...America's voters care deeply about pocketbook issues. Eighty-eight percent of likely voters say the economy is an important issue -- on par with the percentage of people who view the situation in Iraq and terrorism as crucial matters...

...the economy is a key issue in about two dozen House races, including campaigns in Pennsylvania, Minnesota, Ohio and Washington state.

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

Voters are evenly matched between emphasis upon economy and emphasis on military. Therefore, if they can't make an immediate and material impact upon the Iraqi front, should it surprise you to see the State wield whatever economic influence it can muster to "paint the tape" as we head into the final couple weeks before the voters cast their votes?

My motto is: When they've given you a sale on gold, it would be impolite not to act upon it as a way of saying 'Thanks' for their effort.


TownCrierNo other Chancellor has treated pensioners so cruelly#14865110/23/06; 13:10:02

(The Telegraph) 21/10/2006 -- The Financial Assistance Scheme (FAS) is a shameful example of political spin. It is based on false figures and has offered the tens of thousands of people who have lost their final-salary pensions little more than false promises and false hope.

The FAS was established in May 2004, under threat of a backbench revolt by Labour MPs. Gordon Brown has since claimed credit for the scheme, telling the TUC conference last year: "It is morally wrong that when firms go under, workers, through no fault of their own, lose their pensions." So, he said, "for workers cruelly denied the pensions they were due, we have now set aside £400 million".

The truth is the Chancellor had not "set aside" £400 million then - and he hasn't still..

Yet, more than 100,000 people have lost their pensions promises, despite being repeatedly told by this Government that such pensions were "guaranteed"...

It is undeniable that maladministration, lax regulation and false assurances of safety caused this problem. But instead of organising a proper compensation scheme, as the Ombudsman and the PASC recommended, Brown has ploughed on with the FAS - while claiming it will cost taxpayers £2.3 billion over 60 years.

...Despite fine words of sympathy about helping those in urgent need, the facts suggest that Brown has no intention of providing money quickly. The FAS design has ensured that it pays out very slowly. Tragically, many people have died before receiving anything at all, leaving their widows with nothing, too.

...No previous Chancellor has presided over such cruel treatment of pensioners. ... It is the Chancellor who bears responsibility for this debacle, along with the countless pensions ministers who have reported to him on these matters. After his 1997 dividend raid, it became clear that pension schemes had weakened enormously. But he refused to grasp the enormity of this problem.

...How can this be happening in 21st-century Britain? Those who have lost out have worked hard and saved all their lives. They are being punished for believing the Government's false assurances that their pensions were safe. These people have been betrayed. They have been fobbed off with false promises that the Chancellor will "assist" them.

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

How many more practical examples of other people's hardships must you witness before you conclude that you must take matters of saving and personal financial well-being into your own hands?

Under the upcoming strains of baby-boomer retirements, the day shall likely come when the government finds itself so overburdened with a population of financial basket-cases that they will heartily wish that a greater portion of their citizens would have had the foresight to accumulate solid gold savings -- reliable purchasing power with which they can each fend for themself and thus reduce the level of general strain and suffering.

Call Centennial today for a helpful consultation to develop a diversification strategy that's right for you. 1-800-869-5115


GoldiloxBrown and the Blair Witch message#14865210/23/06; 13:49:11

You had a good job, and it left - You're RIGHT!

Hup, two, three, four!

GoldiloxElectioneering Week#14865310/23/06; 14:15:04


As this week begins, the markets are seemingly focused on brining about the decline of gold as the paper money love-fest that is fed by repackaged non-performing debt is expected to continue driving the Dow frenzy further into the 12,000 range. That's high enough for all republicorps to claim "It's the economy, stupid!" and not look like complete morons - unless you know about inflation. As explained here many times, the Dow really needs to be somewhere north of 14,000 to have a legitimate - inflation adjusted - new high on the line. But it isn't there and the other indices are making sucking noises (especially if you managed to buy in at the 2000 top for most). Nevertheless, that won't keep the fraudsters from making grandiose claims. Keep your thinking cap on.

Election Week Covers
There are two magazine covers to ponder this morning as the coffee goes to work (with you presumably following at a safe distance): One is the cover of Rolling Stone which explains how the gang of you-know-whats in the District of Corruption has managed to build a record as the "Worst CONgress Ever - in five easy steps, figures RS.

Another cover to be aware of is Barron's claim today that the republicorp will hang on to both the House and Senate - and this may come as a surprise to many. The free preview of the Barron's article doesn't give nearly as many details as the news services covering the claims.
A lot of sites have popped up around the net in the past few weeks getting behind the idea of voting absentee - like this one, for example. Why vote absentee? There are several cases around the country (click here for a smorgasbord of stories) of republicorps quietly purging registered voters from the rolls for one reason, or another. My own thinking is a little dark on this - figuring that if they can change the voting machine outcome through backdoors in the software, a little thing like losing a paper ballot ought to be easily done, too. Mach nichts. The lessons of Oaxaca aren't that old.


Not that "Barron's" wasn't already being counted on to support "old Royalty". After all, it's not titled "Everyman's".

USAGOLD Daily Market ReportPage Update!#14865410/23/06; 15:02:24">
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

October 23 (from Reuters) -- Profit taking knocked gold futures down 2.3 percent on Monday as inflation fears receded with the price of oil and seasonal demand tapered off with the passing of India's biggest bullion-buying holiday.

Precious metals fell overnight as crude oil prices continued to retreat amid doubts that OPEC would deliver on the production cuts agreed to late last week.

"What you're looking at is profit taking. It started in oil then moved across markets," said Jeffrey Christian, managing director at market advisory firm CPM Group.

The COMEX December gold contract fell $13.50 to settle at $582.90, down from an overnight high in screen trade at $596.40. The contract reached $606 on Friday, before oil prices started to tumble.

NYMEX December crude fell 52 cents on Monday to $58.81 a barrel, undermining the case for gold as an inflation hedge. A rising dollar also turned off foreign gold investors.

"Last week we had a fair bit of bullishness returning to the gold and silver markets. I think that created an environment where people said maybe September's bearishness was overdone," said Christian.

Likewise, he said, Monday's fall has some believing the rally was a temporary blip.

Christian predicted that gold would trade between $575/$580 and $600 for the next couple of weeks, before turning higher again.

Saturday was Diwali in India and the lead-up to the Hindu festival of lights is the traditional period of peak demand in the world's largest gold consumer and brought massive gold buying this year.

The president of the Bombay Bullion Association estimated that gold imports were 156 tonnes in the month before Diwali, versus 70 tonnes in 2005.

---(see url for full news, 24-hr newswire)---

TownCrierPutin swats EU criticism aside#14865510/23/06; 16:00:16

(Financial Times) October 22, 2006 -- Vladimir Putin may have proved himself a combative and provocative dinner guest, but European leaders returned from a summit in Finland believing the Russian president might yet be prepared to offer them a better energy deal.

...Reflecting on the encounter on Sunday, European officials said Mr Putin sent out one important signal amid the bluster and the teasing: that energy would be an integral part of a new EU-Russia partnership deal.

"That wasn't 110 per cent clear before the dinner," said one official at the European Commission, which will prepare the negotiations on the bilateral accord. "We weren't clear if that was Putin's position."

Including energy in the talks is vital for the EU, which hopes to use its economic muscle to extract concessions on energy from the Kremlin: the carrot would be a wide-ranging trade liberalisation deal.

Mr Putin said he hoped the two sides could agree a new "strategic partnership" to replace the existing partnership and co-operation agreement...

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

How much involvement for dollars (seeming a world away) will there be in any subsequent free trade agreements between the Russian and EU sectors?


The Invisible Handint’l cooperation for shorting POG "fading away"#14865610/23/06; 20:26:06




POG = price of gold

In the link, look for "Figure 2: Non-gold reserves at a record high!"

1970 > 2006 : $ 100 billion > $ 4,6 trillion (= x 46)

That's why gold had to be permanently "shorted" by all those who wanted the entire world on the dollar-regime/system.

That's why the gold-shorting had to inflate in sync with dollar-reserve inflation. Look at the date 1999-2001 when dollar-reserve inflation went hyperbolic (euro-birth)!

The fiat money concept (dollar-reserve-system) had - has physical gold "tied-in" with the instrument of "unlimited" gold shorting.

This "concept" (fiat money and gold tie-in) is about to explode.

Fiat money AND gold shall trade "independently" from each other!

We are noticing the very beginning of it "already". POG and dollar-reserve exchange rate diverging and central banks moving away from dollar-reserves.

As soon as the dollar loses its reserve function/status, gold doesn't need shorting anymore as to remain tied-in the dollar-fiat concept.

What we are seeing since 1999-2001 is a gradual change in POG-shorting resulting in a controlled POG rise. A POG moving away from its dollar-reserve tie-in and coming closer to the price of oil (POO) behaviour.

This does NOT mean that the capacity for continued POG shorting (POG governance) has become "limited"!

It's only that the international cooperation for shorting the POG is gradually "fading away".

It doesn't matter that dollars are lost in these POG shorting actions.

The dollar is about to lose its reserve utility anyway and all fiat money concepts will soon live a life without chained gold.


Freegold in the central banks and in private invisible fists will be separated (its link severed) from the fiat reserves in the central bankss and the other private fists.

This is happening VERY silently...for the time being.

Sierra MadreThe PPT is lurking near....#14865710/23/06; 21:45:01

Methinks the PPT will strike tomorrow and hurl the price of gold down $20 to $560 or slightly below.

The fury is violent because the threat is SEVERE.

Pay no attention! Take the opportunity to buy more while the PPT is desperate to smash gold pre-election time.

"Far flung, their navies melt away
On dune and headland sinks the fire.
Lo! all their pomp of yesterday
Is one, with Nineveh and Tyre!"

These times will swiftly pass and be forgotten. Gold and silver will remain, as ever, precious metals sought after by all humanity.


Sierra MadreCorrection to the verse!#14865810/23/06; 21:52:53

"Far-flung OUR navies melt away,
On dune and headland sinks the fire;
Lo! all OUR pomp of yesterday
Is one with Nineveh and Tyre."

From "Recessional" by R. Kipling.

The Brits did NOT appreciate Mr. Kipling for this verse, high, might and arrogant was the Empire in his day.

"Lord God of Hosts, be with us yet,
Lest we forget! Lest we forget!"


melda laureSo jucy sweet, eh Sir Smeagol?#14865910/23/06; 22:24:44

Sir clink and SM, thinking about your Iran/NK comments put me in mind that I suspect that despite the bad press, the US is NOT severely bogged down at present, the "insurgency" is no where near as strong as north vietnam was. Further, (though the US is constrained by its no-conscription policy) it is conceivable that a persian "adventure" might be hazarded "in extremis". TPTB are quite willing to play Serial Checkmate. Checkmate is an option on the table I think, as the price is only a little blood and a lot of paper money. 3000 lives might be thought too high a price by many, but it is a price that Washington has deemed affordable in exchange for far lesser prizes. Soon perhaps Washington will face a hobson's choice- not the nuclear balance, but a dollar vs peak oil calculus?

But speaking of prizes, I recall now an ironic proverb: "when the last tree is felled, the last river poisoned, and the last fish caught, only then will you fools realize that money cannot be eaten." The last words date the proverb somewhat as being a bit older than most of this illustrious gathering; sadly the essence remains the same: credit is NOT economics, merely part of its mechanics- it is a means, not an end. When MK says "things will not be as before, something has to give" he might have said, the former patsies are fed up, someone ELSE has to start giving. The mastery of money forged in the late 19th century and early 20th has wrought an ill managed system in which economic calculation is hopelessly befuddled and amazed. We still reap what we sow, but increasingly we sow less and less, and have become the world's grim reaper- ill-mannered, and an unwelcome guest.

Sir Ten Bears comment (#148612) that "growth doesn't pay for itself" rather puts things in perspective when one realizes that Sir Druid's comment that:

Druid: I am guessing it all boils down to whether you're a "team" player or not. During Japan's heyday in the sun of delusion, illusion and mythmaking, they spent "invested" here in the USA accordingly not rocking any real boats of value. They were allowed to do this because they understood their role as a cooperative partner. It appears that Iran, Russia and China are in the initial stages of having their roles properly defined and maybe the level of cooperation that say, a Japan(or Europe for that matter) had, is not present with them. It's just my guess.

He might as easily said "Russia and China are in the initial stages of having their shackles sized and fitted" as the result is the same. China already KNOWS that "most growth doesn't pay for itself" hence it's often draconian population policies. To put it another way, as Sir TC says:

On chinese shores, a trillion dollars are... meaningless... Imagine a closed vault containing only a slip of paper upon which is written in crayon $1,000,000,000,000. we're dealing only on a representational level, if a mouse ate that paper... they could set a gold bar behind that closed door.

What is being represented? Effectively "this note represents all the widgets we gave the americans so we could monetize the creation of all these spiffy factories that the clueless barbarians built for us."

We have idolized the wrong heroes.

Does it make sense yet? Has the last tree been felled? Or perhaps you were not listening? Does China have enough dollars? Or, rather, is it that they belive they now have enough factories and industrial infrastructure? Perhaps in their opinion they have felled enough of their own trees for our benefit. Their own silver and gold they will mine with our paper, but their metal they will keep. Contrast this with a nation such as Bolivia which finds itself in debt for having dug and pawned off the only things that will matter in the near future. And they too will lack both trees, rivers and fish.

Regardless of their own complicity or Mr Morales ham-handed attempts to disentangle his nation from this derivative mess, one ought to shed a tear or two for Bolivia, if for no other reason that the US finds itself in a like strait- only we are more heavilly drugged and anesthetized. Those of use with a more sober "aesthetic" have chosen the gold antidote.

It is a far from perfect solution for a world fallen far from grace. Regardless, Sir Armageddon and Sir 'Lox, whenever I think about the issue of "Yuan Convertibility" I always think about how china will value its trees rivers and fish. Amusing that in the west we belive communism purged out any environmental sense they had, isn't it?

Na alyei halaliva laurion: but be quick before the illusion fades and the squiggly ones dart out of your grasp and the long wave rolls in.

melda laure@ Sierra.#14866010/23/06; 22:38:50

I suppose Tupper was more popular, totally forgotten now.

Stretch forth stretch forth,
From the south to the north,
dont give a hoot
just grab all the loot.

Good riddance.

The world's true lords want It back, do you think? Other parties may have something to say about that. I ought to print up bumper stickers that say "First Peoples: Rightwing Elven Nationalist." But the dwarves would complain. And in any case, it wasn't ours, so what makes anybody think it's theirs is beyond me. Well, get while the getting's good.

I think I'd better sober up a bit.

YGMGold Latest Drop. (hammering)#14866110/23/06; 23:31:56

Just another bear trap being baited. Same game different price level. They've been playing this game since the Bre-X springboard and they'll be playing this game til the tide goes out, or (not so politely) "the toilet is flushed!" The next scheduled run will see +$650.00 range by Xmas, IMHO.
USAGOLD / Centennial Precious Metals, Inc.Join the NewsGroup for earlier notification! (click link for access to MK's latest)#14866210/24/06; 00:02:00">join the newsgroup
mikalNo accounting imbroglio for gold holders#14866310/24/06; 01:20:29

Jim Sinclair's Commentary -- Snippit:
"Now the cat is not only out of the bag, but there is no basis to argue it away.
"Federal Accounting Standards Board Says Stop Cheating"
This group sets standards for Government Accounting. They set standards for accounting reports. The Board has suggested that the government should CHANGE accounting standards from what they are presently. It is simply an argument of cash accounting and accrual accounting.
The government should now account for future liabilities, which is the accrual method as the cash method hides future obligations. Today the method of government accounting recognizes costs only when the payment is made and no future liabilities are considered accountable.
This change is naturally opposed by the present Administration because it would balloon the Federal Budget deficit by making it more honest than the present method that hides all future obligations, especially social insurance and medical programs.
If this was adopted the government would not be able to lie like troopers and would be required to tell the truth.
The reaction in Washington is akin to putting Raid on a bug."

A nice story and very incisive comments. It seems
I have heard similar entreaties over the years from agencies such as the Accounting Board and the GAO to get the U.S. books in order. Perhaps political and personal agendas have quashed all prior attempts to openly debate this subject.

The Invisible HandWait a moment …#14866410/24/06; 03:10:44


YGM (10/23/06; 23:31:56MT - msg#: 148661)
Gold Latest Drop. (hammering)
Just another bear trap being baited. Same game different price level. They've been playing this game since the Bre-X springboard and they'll be playing this game til the tide goes out, or (not so politely) "the toilet is flushed!" The next scheduled run will see +$650.00 range by Xmas, IMHO.

This is unbelievable.

And the Dow yesterday, at a new record + 1% !

At the end of the day, this lunatic has this qwestion:
What should we think of a financial industry which lets your so-called stock-exchange-wealth increase when it allows you to go voting for its political leader (Bush).

Vote for me and grow rich!

The Invisible HandIf only the "analysts" would understand this …#14866510/24/06; 03:23:54

FOA msg #122 (2001
Of course, the big difference is that Euroland will encourage a physical only market price that, in turn, also floats Euro gold values to the sky. All in an well balanced effort to replace the massive dollar asset base it lost. In this; the Euro will become the first currency block that functions as a local reserve, yet under scores its image with huge non- monetary gold assets. Is it no wonder that EuroLand citizens will be buying gold as much for its prospects to rise as for its ability to be a wealth savings. In this it will hedge the future remains of a dollar failure and its impact on the world system.


NON MONETARY GOLD ASSETS !!! Cfr. Duisenberg : the euro is the first currency which severedthe link with gold (remember-!) .

This is what the DEMONETARISING of euro-gold means.

No virtual fiat-digits but physical gold SEPARATED from the virtual wealth.

If only the "analysts" would understand this. This is what the new girl in town was meant for.

The Invisible HandGeneral derivatisation is the only option#14866610/24/06; 03:57:23

because, as A/FOA explained,
the dollar is so over-extended,
and so leveraged
so as to make any kind of benchmarking impossible.


Benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices.

NEW YORK, Oct 23 (Reuters) - In the wake of the recent meltdown of Amaranth Advisors LLC, hedge fund investor Fauchier Partners says the next pitfall for funds may be the booming credit derivatives market.
Credit derivatives allow investors to protect against a default or bankruptcy by a borrower. The market has grown exponentially since its inception in the 1990s, and issuance has tripled since 2004 to about $26 trillion globally.
"At some point the music will stop," wrote London-based Fauchier Partners, which invests roughly $4.3 billion, in a letter to investors obtained by Reuters last week.

miner49er (11/5/05; 12:27:35MT - msg#: 137601)
Ned @ 137586
And this is the framework that the world is moving towards, as the world increasingly recognizes its asset base is built chiefly on a currency so over-extended, whose value is tenuously in the hands of its external creditors, and so leveraged, and so lost in a monstrous labyrinth of OBSCURE DERIVATIZATION that makes any kind of benchmarking impossible. So many holes in the dike to plug, and always springing new ones. How many fingers does the Fed have left?

The history of "Hot" paper money does show it to "burn easily" from " much heat"! If you read my Thoughts in today's replies, we see much "fuel" in dollar derivatives trading in foreign markets. Much of this trading represents a "claim" on physical gold that may become "a transaction for physical gold" as dollar reserves are displaced. The $6,000 valuation of gold can only be true if currency deflation destroys enough dollars to bring it down to that range. Without deflation, the dollar will be devalued much lower than this (higher gold price)! Once the Euro is created and begins to effect world trade (late 1999 perhaps), the gold market will begin a transition as never before! I think it will be interesting to follow the politics of this change, yes?

It is our view that derivatives have come to have too much impact on our stock market. We suspect that huge amounts of hidden leverage exist through derivative speculations. Certainly, the Dow's run last week to 10,000 was much related to derivative trading and options expiration. It is certainly our belief that derivatives will be a major factor in the coming US stock market decline. Mr. Greenspan was Fed Chairman back in 1987 when portfolio insurance derivative strategies were a major force behind the crash. It is just shocking that he has become such a proponent of derivatives and believes that they actually reduce risk when it is patently obvious that a proliferation of derivative trading only greatly increases systemic risk. With the coming crisis it will become obvious that losses for our financial system and economy will be anything but "a zero sum game"!

The Invisible HandThe derivitisation inevitability#14866710/24/06; 04:42:08



It is not the masses of savers and property owners who wanted to secure/insure everything at all costs with hedging through ever more complex derivative instruments.

Nor is it the general public which wanted to let its classical risk insurances evolve to a vehicle for the financial speculation industry (derivatives).

It were therefore organised cartels which have artificially inflated the normal activity (function) of the stock-market. They could do this by starting from the normal insurance part.

If gold metal in possession is the insurance of your wealth, why should there be above that a derivatives insurance (options-futures-etc)?

The same is true for other forms of wealth "possession" (stocks, bonds, currencies, etc.).

Out of what did the derivatisation need for all these different "assets’ arise?

Is it because all these assets (financial-monetary-tangibles) are being perceived as ever more valueless by the day?

How can deritivatising real wealth (value) create more value?

Is the hypothising of every asset for financial speculative purposes not a devaluing of the asset through the promotion of the non-productive (speculation).

Our masters are now glorifying this process as ‘optimalisation’.


As I said earlier,

general derivatisation is the only option

because, as A/FOA explained, the dollar is so over-extended, and so leveraged
so as to make any kind of benchmarking impossible,



The Invisible HandDerivatives are means to prevent dollar inflation#14866810/24/06; 05:39:02



IFMS = International Financial and Monetary System

Just as the Dow Jones Industrial Average provides a general indication of the value of the US stock market, the US Dollar Index (USDX®) provides a general indication of the international value of the US Dollar. Similar in many respects to the Federals Reserve Board's trade-weighted index, the USDX does this by averaging the exchange rates between the US Dollar and six major world currencies

But a rising Dow and a declining POG should in theory lead to a rising dollar.

What's that November 07 elections thing again?
Russian finance minister Alexei Kudrin dropped a bombshell on the dollar in April 2006, wiping out half of it's gain from the previous year. "The US dollar is not the world's absolute reserve currency. The unsustainable US trade deficit is causing concern, and the international community can hardly be satisfied with this instability," he declared to members of the IMF in Washington

Kudrin's remarks touched off a mini-free fall for the US dollar index to the 84-level, in Q’2, forcing the Fed to hike the fed funds rate by another half-percent to 5.25% in June, to stabilize the dollar. The Russian central bank vexed the Fed for a second time on October 18th, when it vocalized its intention to convert US$ into yen. The Federal Reserve understands that it cannot afford to ease its grip on interest rates in in the fourth quarter, without triggering a speculative attack against the US dollar.
China is speeding up expansion of derivatives to spur development of the capital markets and give companies more tools to hedge risks. The government last month set up the Shanghai-based financial futures exchange to prepare for the introduction of index futures on local-currency shares.


What do people want? How long do they expect to grow rich while sleeping?

They think derivatives are about spreading risk.

But at world level, this spreading becomes very big.

Gold wants to break free from this circus. But they don't understand this.

This Freegold will be useful for the day somebody yells fire in the dollar-circus.

We are now at the stage when there is no more gold available for large buyers.

And the circus continues.

Have you every tried to virtually make love over the telephone or the internet? Or by fax?

Where's the real thing?

The Invisible HandHere's Engdahl again#14866910/24/06; 06:31:24



On October 10, Russian President Vladimir Putin flew to the German city of Dresden for a summit on energy issues with Germany's Chancellor Angela Merkel, including proposed plans to more than double German import of Russian natural gas
A week after his Dresden talks, the Indonesian Navy chief of staff announced a remarkable shift away from that country's traditional purchases of North Atlantic Treaty Organization (NATO) military equipment. Indonesia will buy 12 modern Kilo-Class and Lada-Class Russian submarines. Indonesia cited advantages of cost and reliability over French or German equivalents.
In recent years, major attention has been paid to the emergence of a Chinese economic colossus. What is generally missing in these discussions is the fact that China will not be able to emerge as a truly independent global power over the coming decade unless it is able to solve two strategic vulnerabilities - its growing dependence on energy imports for its economic growth and its inability to pose a credible nuclear deterrence to a US nuclear first strike.
a reorganized Russian state under the presidency of Putin has gone into motion to resist the overtures and overt attempts at deconstruction being promoted by Washington in the name of democracy. How has Putin acted to shore up Russian defenses? In a word: ENERGY.


Hegemony is defined as the holding by one state of a preponderance of power in the international system, so that it can SINGLE-HANDEDLY dominate the rules and arrangements by which international political and economic relations are conducted,
some international relations scholars arguing that regimes are most effective when power in the international system is more concentrated – where there is a hegemon to keep order. This theory is known as the hegemonic stability theory.
(Joshua S. Goldstein and Jon C. Pevehouse, "International Relations 2006-2007 Edition", Pearson Longman, 7th Edition,, pp. 82 and 105)

Engdahl discusses also the Mackinder doctrine. I do vaguely remember a poster who discussed that over here also.

The Invisible HandLa douce France#14867010/24/06; 06:37:51

French President Jacques Chirac has said that forging a France-China partnership is "at the heart of France's foreign affairs," as "EVERYBODY IN HIS COUNTRY KNOWS THAT THE WORLD'S FUTURE LIES GREATLY WITH CHINA." "China is also clear that it can always find in France its partner," he said
"I have confidence in China. As an ancient country, China's experiences will help it establish and realize the concept of harmonious development. And I am sure China will shoulder its long-term responsibilities in the world arena," Chirac said.

What means "greatly" in French?

The Invisible HandThis is the meaning of "great" in French#14867110/24/06; 06:47:13

Le président "est persuadé qu'une partie de l'influence et de la place de la France dans le monde de demain va dépendre de son aptitude à construire avec la Chine une relation particulièrement forte", a souligné son porte-parole, Jérôme Bonnafont.

The president believes that part of the influence of FRANCE in the world of tomorrow will depend on its power to construct a very strong relationship with China, said Chirac's spokesman, Jérôme Bonnafont.

GoldiloxHegemony vs. Competition#14867210/24/06; 06:49:59

@ TIH,

During the Cold War, we were brought up to honor "competition as the fuel of innovation" - Two major powers, two party system, lothing of "monopolies", etc.

Since the tumbling of the Berlin Wall, all that psycho-babble has morphed into "hegemony is the basis of stability". One major power, a two-headed-jackal masquerading as duo-party system, glorification of M&A, etc.

OK, folks which do we really want? Innovation or stability. If one believes the pundits, we can't seem to have both simultaneously. Or maybe, the so-called pundits are just publishing whatever nonsense delivers the most crumbs from Massa's table.

TownCrierHow big will China's foreign exchange reserves get?#14867310/24/06; 14:11:51

(People's Daily Online; Oct23, 2006) -- China's foreign exchange reserves have been growing rapidly. At the end of 1996, China's foreign exchange reserves for the first time exceeded US$100 billion. In the following five years, foreign exchange reserves grew stably....

In 2003, the annual *INCREASE* of foreign exchange reserves exceeded $100 billion, amounting to $136.8 billion.

In 2004, the annual growth of reserves reached $206.7 billion.

The year 2006 will be the third consecutive year foreign exchange reserves have grown by more than $200 billion.

In accordance with the current trend, the total amount of foreign exchange reserves will exceed $1,500 billion in the second quarter of 2008 and $2,000 billion by the end of 2010.

...Undeniably, the high level of foreign exchange reserves implies a strong external payment capacity. But the challenges to the country's ability to guard against financial crisis are more noteworthy.

China needs to set up a new management system for foreign exchange reserves. This framework should encompass some important considerations.

The new management system should dynamically define the modest scale of China's foreign exchange reserves, thus determining an appropriate level of surplus. There are at least three factors that have to be taken into consideration to determine this. The first is the benchmark scale of reserves.

Currently there are several elements working in concert with the benchmark scale:

foreign reserves spent on imports over 5-6 months;
foreign reserves spent on payment of short-term external debt;
foreign reserves spent on medium and long-term external debt;
profits that have been made by foreign enterprises but have not been wired outside China;
scale of direct investment by Chinese enterprises in overseas markets; and
scale of investment in securities market.

The second consideration is the scale of safety of China's foreign exchange reserves, and the third is the dynamic scale of slight growth in the balance of international payments.

Taking into account the rapid growth of China's GDP and the scale of the external economy, the modest scale of reserves will also increase. A generally accepted dynamic growth rate would be between 2 and 3 percent of GDP, which means that in the next three to five years, the scale of reserves would increase by between $50 and 60 billion each year.

The remaining amount of foreign exchange reserves could be included in surplus reserves. If this was done, the current dynamic benchmark scale of foreign exchange reserves would not generally exceed $800 billion.

The rest would be regarded as surplus reserves.

The new framework should also make use of surplus reserves in diversified channels from a strategic perspective. The focus is currently on five different areas:

investing surplus reserves to obtain the bulk of strategic resources important for sustaining national economic development, particularly energy resources and ferrous and nonferrous metals;
investing surplus reserves in the technological transformation of state-owned enterprises;
using surplus reserves to push forward the reform of state-owned financial institutions;
using surplus reserves to bring a group of high quality Chinese scientists from overseas; and
investing surplus reserves in filling the huge gap in social security funds.

....China also needs to manage modest reserves and surplus reserves separately. Since the modest scale of reserves still functions, China could maintain its current management model and SAFE could maintain its authority. As surplus reserves are not directly involved in the financial market and surplus investment is made only as part of specific strategies, another government department needs to take the lead in operation.

...It is by no means a normal phenomenon for a developing country like China to hold over one trillion US dollars of foreign exchange reserves. If China's leaders do not apply a broad strategy on this issue, they not only forfeit the benefits of ongoing reform, but actually sacrifice some of the gains made in the development of the export-oriented economy in the past three decades. Where to channel foreign exchange reserves is a very important issue requiring serious consideration.

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

This is a very good supplement to the Sept 25th Financial Times article that MK parsed in his Special Commentary found here:

It doesn't take too much thought to see how to most easily tie together some of China's alternatives to meet objectives.

Zeroing in on these elements from above:

"China needs to set up a new management system for foreign exchange reserves. This framework should encompass some important considerations."
"The second consideration is the scale of SAFTEY of China's foreign exchange reserves, and the third is the dynamic scale of slight growth in the balance of international payments. ...... A generally accepted dynamic growth rate would be between 2 and 3 percent of GDP ... between $50 and 60 billion each year."
"...investing surplus reserves to obtain the bulk of strategic resources important for sustaining national economic development, particularly energy resources and ferrous and nonferrous metals;"
"...surplus reserves are not directly involved in the financial market..."

It is not hard to see how a policy shift to redirect the surplus reserves into strategic tangibles will meet China's safety objective, and, as these acquisitions (if procured from overseas) will officially be counted among imports on a trade basis, this strategy would also result in providing balance to China's trade to within the target 2-3 percent of GDP.

And among strategic tangibles (such as steel, copper and petroleum), gold alone does not prominently factor into the manufacture of economic staples. Therefore, pricing considerations during the conversion of vast paper surpluses into tangibles will tend to highlight gold the natural choice for absorbing the excess.

That is to say, if the the REAL economy saw the price of everything double (in local currency), for example, it would not be adversely affected in any material way if gold alone (as the specially earmarked trade-balancing utility) were to leap 50x in price. This would not be the case with steel, copper, or oil -- they cannot rise in isolation (as cleanly as gold) without feeding back into pricing pressures in the real economy.

Of course, the above is offered from a perspective outside of the dollar realm. As seen from within the dollar realm, there is simply no getting around the fact that diversification out of dollar reserves will feed back into the inflationary reckoning upon our shores that has been postponed these many years through employment of the dollar as a reserve asset.


TownCrierChina charts next financial reform steps#14867410/24/06; 14:35:08

BEIJING, Oct 24 (Reuters) - China outlined the next stage of its financial reforms on Tuesday, saying it would look to make the yuan more flexible and free up interest rates, while launching stock index futures in early 2007.

"To deepen financial reforms, we must make interest rates more market-orientated and make the exchange rate more flexible," central bank deputy governor Wu Xiaoling told a financial forum.

The People's Bank of China (PBOC) is in the vanguard of reform in an administration where policy is reached by consensus, often after tortuous deliberations, and analysts said other ministries would be opposed to a faster pace of liberalisation.

...Top legislator Cheng Siwei said it would take longer to roll out derivatives linked to interest rates or exchange rates, given the country's managed floating exchange rate regime.

China finds itself in a chicken and egg situation. Which comes first: the derivatives or the currency flexibility?

Because neither the exchange rate nor the yield curve is fully determined by market forces, over-the-counter derivatives are being stifled, chief banking regulator Liu Mingkang said.

By the end of June, the total value of yuan currency swaps was just 24 billion yuan and the total notional value of interest rate swaps was 17 billion yuan, Liu said.

He said the priority must be to help companies learn to use derivatives to manage risk because interest rates and the yuan, though not fully free, were fluctuating more.

But various officials warned of the danger of derivatives, pointing to losses incurred by China's State Reserves Bureau when a gamble on the future price of copper went wrong.

"Derivative products are like a double-edged sword. They can help companies to hedge or transfer risks but they are also a tool for speculators," said Cheng, vice-chairman of the standing committee of the National People's Congress.

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

China is evolving. In a changing world, what is your guarantee on the value of a dollar? Pondering the lack thereof makes a powerful argument for gold ownership.


USAGOLD Daily Market ReportPage Update!#14867510/24/06; 15:29:43">
The Daily Gold Market Report has been updated.

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TUESDAY Market Excerpts

October 24 (from Reuters) -- Gold futures recovered from early losses on Tuesday, whipsawed by oil prices and inflation ambiguity before the Federal Reserve begins talks on whether economic slowing justifies holding interest rates steady.

The Federal Open Market Committee opens a two-day meeting on monetary policy later Tuesday, amid expectations that it will hold the target for the federal funds overnight lending rate between banks at 5.25 percent, for the third straight month, while stressing that inflation risks remain.

"We're not expecting anything. But I think people are still covering some short positions in front of the Fed meeting," said Mike Guido, head of hedge fund marketing for commodities at Societe Generale.

"The choppy price action that we're seeing is only moving people further away from the market."

December gold rallied to $606 on Friday, before crude oil tumbled on doubts that OPEC could deliver on a sizable production cut members agreed to late last week.

It opened quietly then tumbled as oil slid, only to recover in a range of $576.00 to $589.00 after Abu Dhabi, the main United Arab Emirates producer, said it would cut all crude exports by about 5 percent from next month.

The COMEX December gold contract closed $4.70 higher at $587.60.

"Basically, stops were filled in both markets -- under $11.65 in silver and under $582 in gold," said a floor broker, referring to stop-loss sell orders.

"Originally, we were waiting for the Fed today. We opened up really quiet, but after that all hell broke lose."

---(see url for full news, 24-hr newswire)---

TownCrierReasons to choose gold for savings instead of national currencies#14867610/24/06; 15:58:18

HEADLINE: Zimbabwe loses fight to control inflation

REUTERS; 10/25/2006 HARARE -- Zimbabwe's central bank admitted today it was losing the battle against spiralling inflation [1,023 per cent in September], due to political and other factors outside its control.

Reserve Bank of Zimbabwe Governor Gideon Gono said there were several factors that were outside the central bank's control, which made it difficult to rein in inflation.

"Some of those factors are within the governor's control and influence while others such as politics, sanctions, droughts, under-utilisation of farms, disruptions at those farms, rampant corruption, indiscipline, law and order are factors outside the governor's control," he said in an interview with the official Herald newspaper.

The government is battling to put a lid on prices and is this week expected to agree with producers the price of the staple maize-meal, flour and bread, which have been in short supply over pricing...

Analysts have warned of renewed price pressures as manufacturers hike prices, arguing that they are sourcing scarce foreign currency for raw materials on a thriving black market.

The local unit is trading at Z$250 to against the US dollar on the official market but up to six-times that rate on the black market.

"We are seeing cross sector increases in the price of commodities and services, even by municipalities, which will feed into inflation and the result is that we will continue in this inflation spiral," James Jowa, an economist with a Harare financial services firm told Reuters.

Shunned by Western financial donors, Mugabe's government has increasingly relied on the local bank sector for money to plug holes in the national budget, and to import food and farming inputs.

Analysts say this has resulted in excessive government spending, with the central bank admitting to printing money...

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

One of the lessons here is that if you are able to borrow externally (i.e., the U.S. borrowing abroad), the game continues. If you must turn to internal printing presses of the domestic bank, game over.

Choose gold. What goes around comes around.


TownCrierSaudi quashes currency revaluation rumours#14867710/24/06; 20:05:32

RIYADH: The Saudi riyal slipped versus the dollar yesterday after the central bank dismissed as baseless speculation it would revalue the kingdom's currency. The riyal rose to a 5-1/2 month high against the dollar on Monday amid speculation it would be revalued over the Eid holidays.

It traded up to 3.7420 per dollar, its highest since early May as investors bet Saudi Arabia would regrade its currency in line with a move by Kuwait that month.

"There is no intention to change the exchange rate," Saudi Arabian Monetary Agency (Sama) governor Hamad Saud Al Sayyari said.

"The current exchange rate is fair and member states of the GCC are committed to maintain the current exchange rates of (their respective) currencies."

His comments pushed the riyal down to trade near 3.75 against the dollar, the level at which it is pegged to the greenback.

Economists said the main hurdle for revaluation was that it would have to be closely coordinated with other members of the GCC, which plans a regional monetary union in 2010.

""All of the GCC states will keep their currency levels fixed until we have moved closer to the currency union in the Gulf..."

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

According to many signs, the dollar looks to be in for tough sledding in 2010. Plan to have completed your primary gold acquisions well before then.


The Invisible HandHegemony vs. Competition#14867810/24/06; 20:16:10


Hegemony is a POLITICAL term.
Competition is an ECONOMIC term.
Antitrust against private cartels is again a POLITICAL TERM.

The market enforces one kind of thing.
Politics another and through taxation.

If I had accepted evetything I was told in childhood, I would have been dead long ago. And this is no joke.

TownCrierChina vows to strengthen economic cooperation with the Kosares Fatherland#14867910/24/06; 20:19:58

Xinhua; October 25, 2006 -- China's Commerce Minister said Tuesday that China is willing to enhance economic cooperation with Greece, especially in relation to the shipping industry.

Minister of Commerce Bo Xilai said when meeting visiting Greek Minister of Economy and Finance George Alogoskoufis in Beijing that Greece, a giant shipping power, should team up with China whose shipping needs are on the rise. The two nations are complementary, he said.

He added that the trade imbalance between the two countries would gradually ease as bilateral cooperation advanced.

"I notice that Greek ship-owners have placed an order for four oil tankers in Shanghai. Meanwhile, Chinese firms are importing Greek products such as olive oil and marble," Bo said. ...traditional Greek farm produce such as grapes and wine also sell well in China.

Alogoskoufis said Greece could become a significant point of entry for China to expand its trade with Europe...

Greece is listed as a Chinese tourism destination country...

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

The world's players can strive to find ways to trade and play together for mutual benefit, as seen here, or it can mire itself in increasing tensions over pointed efforts at one-upmanship or even more despicable acts toward outright hegemony as seen all too often in other trade and currency squabbles.


GoldiloxPolitical vs. economics#14868010/24/06; 20:55:15

@ TIH,

I don't subscribe to as great a separation between them as you suggest in your response.

Not based on what I was told as a child or taught in school, but hours a day of research since my retirement.

I'm firmly convinced that the "politics" of hegemony was supported by those who control the FIAT purses to marry the two for their convenience.

I'm aware that it's probably NOT the majority opinion here, but I have spelunkered ample evidence to support it as a reasonable probability.

While I don't necessarily support the solutions offered by the "Money Masters" video series, I'm pretty impressed with their assessment of how we got here.

GoldiloxENDLESS CREDIT-CREATION!#14868110/24/06; 21:15:48


In summary, money-supply growth has contracted somewhat due to rising short-term interest-rates, but this has been largely offset by a surge in bank credit, thereby making the monetary tightening ineffective.

It is critical to understand that monetary inflation is now a global phenomenon and over the long-term, the purchasing power of your savings will be confiscated regardless of the "paper" currency you select. Take a look at the latest money-supply growth-rates around the world:-

Australia + 10.4%
Britain + 13.7%
Canada + 6.5%
Denmark + 7.4%
US + 4.9%
Euro zone + 7.4%

So you can see that despite the monetary "tightening" being advertised by the media, over the past year, the supply of money has continued to grow rapidly.

It is interesting to note that the rate of inflation or money-supply growth in the US peaked in 2002 (Figure 1) however, the public only started to get worried about this problem earlier this year when inflation was significantly lower than the previous 4 years. On the contrary, in 2002, when the inflation-rate was extremely high, most people were concerned about deflation! This may seem totally absurd but it begins to make sense when you realise that most people equate rising prices to inflation and falling prices to deflation. The majority fail to understand that rising prices are an effect of inflation (money-supply growth) and falling prices are an effect of deflation (money-supply contraction). So, when asset-prices collapsed in 2002 following the NASDAQ-bust, a "deflation scare" emerged, thus giving the Federal Reserve the perfect excuse to inflate. Figure 1 shows that the US inflation-rate in 2002 rose to a shocking 22%! Back then, as the supply of money (or inflation) soared, its effects (rising asset and commodity prices) only started becoming more visible to the public 4 years later. This is due to the fact that there is a time-lag between inflation (the cause) and rising prices (the effect).

Today, the rate of inflation (money-supply growth) in the US is relatively subdued, commodity prices have taken a beating, real-estate is cooling-off and a "deflation scare" is emerging yet again. If history is any guide, you can be sure that the response of the central banks will be to accelerate the supply of money and credit to unprecedented levels. I suspect that the next bout of inflation is not far away and when it occurs, the current trough in asset-prices will end, setting the stage for the next advance in asset-prices.


It seems the latest round of "dollar strength" may be no more than a reflection of the short-term differences in our old friend "bugger thy neighbor's currency". If the response of all FIAT creators is print at full tilt, the outcome for gold as a relatively "fixed" asset must invariably be an increase when measured against the FIAT flood.

The Invisible HandFind the error in Saville's reasoning!#14868210/25/06; 02:58:57

In summary: long-term trends end after valuations reach extremes and not a moment before, regardless of the attempts of governments to manipulate the trends to their own advantage. Furthermore, the fact that there is so much inflation under the current monetary system has resulted, and will continue to result, in markets reaching even greater valuation extremes prior to major trend reversals taking place.

The Invisible HandOops! The rest of the summary#14868310/25/06; 03:20:44

After the public becomes totally convinced that the future trend is going to be in one direction and bets accordingly the weight of its betting changes the odds to the point where the probability of these bets paying-off becomes exceedingly low. The public's enthusiasm for a particular type of investment or investing strategy therefore paves the way for the cycle to change and for a very different investment type or investing strategy to come to the fore.
The Invisible Handjumping from the logical order to the real order #14868410/25/06; 03:38:28

Could the fallacy be that of jumping from the logical order to the real order?

Logic is the order that the human intellect follows in knowing reality.

The logical order concerns being as known (being secundum quid).
The real order concerns real being (being simpliciter)

Is Saville not jumping from the logical order (people's bets, i.e., what people think the price evolution will be) to the real order (the real/actual price evolution)?

The Invisible HandIs there a fallacy?#14868510/25/06; 04:13:26


Date: Sun Oct 05 1997 21:29


Everyone knows where we have been. Let's see where we are going!
It was once said that "gold and oil can never flow in the same direction". If the current price of oil doesn't change soon we will no doubt run out of gold.

This line of thinking is very real in the world today but it is never discussed openly.


I suppose Another meant that
"If the current price of oil doesn't change soon we will no doubt run out of gold"
is a fallacy.

mikalDissolve dollar dreamscapes, demand gold#14868610/25/06; 12:05:44,1518,440054,00.html

October 25, 2006 | PLAYING WITH FIRE
America and the Dollar Illusion By Gabor Steingart
"The dollar is still the world's reserve currency, even though it hasn't deserved this status for a long time. The devaluation of the dollar can't be stopped -- it can only be deferred. The result could be a world economic crisis.

Editor's Note: The following essay has been excerpted from the German best-seller "World War for Wealth: The Global Grab for Power and Prosperity" by SPIEGEL editor Gabor Steingart. SPIEGEL ONLINE is publishing a series of excerpts from the book.

The two things investors crave most are high yields and high security. Since you can never have both at the same time, the moods of investors are like an emotional roller coaster. They shift constantly from fear to greed and back -- although major investors, like corporations and states, clearly prefer security over fancy returns. Their fear is stronger than their greed. They'll freely relinquish the really fat profits as long as the stability of their billions is guaranteed. They're afraid of political unrest, they loathe overly dramatic changes in currency value and the mere thought of creeping inflation sends them into a state of panic."

TownCrierHong Kong monetary authority to probe report Pinochet stashed gold in HK account#14868710/25/06; 12:13:01

HONG KONG (XFN-ASIA) - The Hong Kong Monetary Authority (HKMA), the sourthern Chinese city's de facto central bank, said it will investigate a report that the deposed Chilean dictator Augusto Pinochet had more than than 1,000 gold ingots in a bank account in the city.

...The report said the government of the Andean nation had requested that the gold -- worth hundreds of millions of dollars -- be secured in Hong Kong to prevent it falling into the disgraced former leader's hands.

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

That a ruthless national dictator, who could choose from the best available, would choose gold... that ought to be enough to convince even the stubbornest sceptic that gold remains THE wor