Trail Guide (09/03/00; 22:07:57MT - msg#: 35968)
Buena Fe (09/03/00; 21:24:39MT - msg#: 35964)
(No Subject)
Trail Guide, do you percieve that the fuss over Jerusalem and its holy sites (et al) ??

Buena Fe,

Oh, It's all part of our travels through life. Jerusalem has and will always be a problem. I think it will be many generations before that area is finally worked out.

On your note about Britons and the Euro? Ha! Ha! Life is good! I'm getting closer to winning my dollar bet from Michael K.!

Trail Guide

Trail Guide (09/03/00; 22:13:19MT - msg#: 35971)
(No Subject)
Simply Me (09/03/00; 21:54:04MT - msg#: 35967)

Hello Simply Me,
It just could be that it's being discussed with Mr. Clinton this week.

I have to go now.

Trail Guide

Trail Guide (09/03/00; 22:16:48MT - msg#: 35972)
(No Subject)
law (09/03/00; 22:12:07MT - msg#: 35970)

I'll discuss tomorrow.

Gold Trail Update (09/04/00; 20:23:42MDT - Msg ID:36027)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (09/04/00; 20:23:42MD - msg#35)

Hello again,

On the Veranda for an explanation:

I have a clarification to make concerning our observations during the last hike. Right after it was done, a USAGOLD poster with the handle Mr. Gresham (#35943) pointed out my backward way of presenting Gresham's law. Well, he was very right. My post had a way of reversing the concept.

I thought it would be understood, but after reading it again it was obvious that many would walk away with the wrong impression.

Gresham's law say's that "bad money drives good money out of circulation". In our context, on the trail it was presented from a position that "good money drives bad money into circulation". No, I didn't say that outright, but that was my mindset. You say, you can't read my mind? (smile)

We used this way of presenting the situation because it better illustrated how gold today, has not risen in value against dollars (the bad money). By failing in this process, the stage for a value judgment to take place where people hold gold (the good appreciating money) and spend dollars (the bad money) could not happen. Paper gold prices were not driving dollars into circulation! There is no FreeGold price to judge and convict our fiat currency.

With this mindset, one can take the first part of that last hike again and (hopefully) better see what we were driving at. I have no doubt most of you have never looked at Gresham's law from that angle. Please understand that I often converse with people that also present life's trails in just as difficult a format. I hope this helps you.

On another note: Due to technical problems I could not post several pieces intended for the trails here. Here is a list of those posts as located on the USAGOLD FORUM. While you are there, please consider the works of other guides posting there. Many of them are well worth the time.

[Editor Note: To view an auxiliary page containing these five posts CLICK HERE]
Trail Guide (08/28/00; 20:35:52MT - msg#: 35674) The big trade!

Trail Guide (8/26/2000; 21:44:27MT - msg#: 35584)Reply Hello Henri,

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

Trail Guide (8/25/2000; 6:04:33MT - msg#: 35504)Oh Aristotle

Trail Guide (08/21/00; 21:04:03MT - msg#: 35283)Hello SLF
Trail Guide
Trail Guide (09/04/00; 20:28:59MT - msg#: 36028)
Hello Law,

Your post:

------law (09/03/00; 22:12:07MT - msg#: 35970)
Trail Guide: Questions concerning your recent posts! First of all, a very WELCOME appears you had a most fruitful and enjoyable sojourn.
I too, have had a very busy summer and have not had the available time to continue my previous and consummate lurking and occasional posting...but I'm trying to catch up with the thoughtful and intelligent commentary of the many wonderful posters who frequent here.

My Questions:(08/20/00 msg#30)
You stated, "If this continues further, and now with the blessing of Europe, it's the paper longs that may be had as the shorts are let off the hook as the market is destroyed!"

After having read Howe's excellent commentary and also Murphy's, is it your implication thatDeustch Bank is absorbing the derivatives in order to prevent Euro "bleeding" or is there another context to this statement?

Mr. Law, I fully well believe all the following:

That the Euro and EuroLand's thrust is to have gold compliment that currency in a future context. Buried deep in the trading habits of our ECBs largest bank members are many gold derivatives that were expressly created for Euro cash settlement,,,,,if,,,, and only if the ECB/BIS make good on a
FreeGold based value for gold.

We must understand that the Euro is not bleeding, it is marking time as the markets evolve from political will. My friend, Euro value is a very movable item. Just as oil was worth only $10 heading to $6,,,, and now has been politically placed at $30 heading to $50+,,,,,,,, so too will the Euro be "politically placed".

Further: I think the portion of Deustch's position that is not correlated to FreeGold has no general liability beyond a failing paper gold market. If this world wide arena is inflated into oblivion and politically settled at say $50??,,,,, who is going to hurt? Yes, the very players that were trying to leverage against the odds that Paper gold would keep the dollar going and oil priced in dollars only.
Truly, if our modern paper gold price only went to $400 or $500 that move would maintain the integrity of all the gold industry, save the paper markets at the expense of many big banks,,,,, and save the dollar for another day.

That is not going to happen! We are on the road to super high priced physical gold at the expense of the dollar,,,,, at the expense of the entire way our modern gold market is valued,,,,, and at the expense of the dollar banking system that maintains that market. In the process we will find out that """your wealth, it not what your dollar say it is"""!

Your post:

--Also: (09/03/00 msg#34) Concerning the "two ways (or a combination of both):"..."one or two government and /or private entities to pull the cord"...or..."The price of oil rises until price inflation can no longer be contained."

In the first way: Who would have the INTESTINAL FORTITUDE! IN THE "OPEN"! To
"pull the cord"???-------

Well Sir Law, anyone that begins to perceive that holding official dollar reserves makes no sense in a two currency world. Especially where the dollar maker,,,,USA,,,, is forever running a trade deficit. Indeed, why hold dollars when so many more are always coming your way? Most
especially today (amd this is the major kicker),,,, if oil is going to punch the dollar deficit through the roof at $40,,,,, how can we soak up the flood that's coming with $50 oil?

Truly, rising oil will bring the bid for physical gold and Euros and it will be a worldwide based demand. It will "initially" have nothing to do with perceived (by officials outside)US price inflation and everything to do with our ongoing US dollar inflation. Watch oil,,, it builds INTESTINAL FORTITUDE!

Your post:

---In the second way: Will the oil producers be able to withstand the political pressure that will undoubtedly be placed on them?------

My good man,,,, the pressure is on the US to maintain world dollar oil settlement! The existence of the Euro is the Master Play on this chess board! Please dig through my last posts.

Trail Guide

Trail Guide (09/04/00; 21:33:39MT - msg#: 36029)

Great Job, USAGOLD!
I'm sure CPM is the first.

You know, a "great horse" is always running for the finish line while the "near great" stay in the pack. Just trying to catch the ones in front of them!

And indeed, just like riding gold, smart people will stay with a winner.

USAGOLD (09/04/00; 11:30:26MT - msg#: 35993)
Here's the link for details on the European Delivery Program
Please e-mail your questions and comments. . . . .

Your friend
Trail Guide

And, I add, great timing! (smile)

Gold Trail Update (9/7/2000; 10:54:03MDT - Msg ID:36194)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (9/7/2000; 10:54:02MD - msg#36)
Something to think about before our next walk down the Golden Trail!

Onto my back yard patio, please:

Have a seat and listen for a minute. Are you a hard money advocate and having a rough time with your assets? Do your hard investments need the present quoted gold price to rise for them to have value? Did you buy these hard assets knowing that they were leveraged to gold so they would rise faster than bullion? Do you buy into the view that these items are of the same security as bullion and therefore better than physical because of their leveraged? Are you in mine shares, futures options, share options, futures, not to mention plain old borrowing money from your trader against your physical account?

The one problem with all these positions is that they are also leveraged against you if the "gold price you are watching" falls away! If this current gold price doesn't rise eventually, your assets wither away? Or worse, if the present quoted gold price was to fall further, these leveraged vehicles could have no value at all? Reality dictates that in a "falling gold price situation" none of these investments will survive. So how in the world can they be of the same value as gold? History has proven that bullion retains value and maintains an investor's "staying power" through thick and thin markets.
---------Both manipulated and free!-----------

If you are suffering from not understanding all of the above, then it's because your mind set is running parallel with Western Hard Money Thought. Truly, you are running in the wrong crowd. You are playing a game that the Political Will of this world say's you cannot win! Today, the gold price everyone watches is little more than the influence of paper printing on quoted prices. Because it is not the the REAL reflected value of bullion, it will slowly fall away from too much paper supply.

To better understand and grasp what this means, read the USAGOLD post by Aristotle at:
(09/06/00; 20:34:12MT - msg#: 36150).

He does a wonderful job of laying out what is now waiting for all hard money advocates that have isolated themselves in Western Thought.

Hard money advocates that take a more worldly, political view have already come to understand his meaning. Indeed, most of them did so long ago. With today's politically created paper gold pricing system, they know why being a "Physical Gold Advocate" is the only path for "Protecting Their Wealth" in the long and short run. Watching the current traded gold price is useless to them except to buy more gold at ever cheaper prices. We know how investing in vehicles that demand that paper price to rise "can be disastrous" in this evolving market!

To quote Aristotle:
----To be sure, it is not confidence in physical Gold that is slipping, but is rather a failing of confidence in the inflated supply of paper Gold that is at this time calling the tune and being reflectively priced into Gold by the structure of the marketplace.

Just as it always has before, complete failure of the paper equivalency awaits. The paper portion dies, and only the physical Gold remains to deliver your wealth to the other side.

In a nutshell's nutshell: The price of Gold is falling because we are witnessing the end days of the timeline / lifespan of a "currency system" known as Paper Gold. I expect considerable volatility until the "bitter end." ------------
Nice job Aristotle!

People, I fully well expect that most Western style gold bugs will become more violent and inflammatory as the influence of political will on quoted gold prices increases. More and more the line of difference between Physical Gold Advocates and Hard Money Investors will become a valley as said leveraged gold substitutes wither. Indeed, in the future that valley will mark the difference between haves and have nots in the coming super bull market in physical gold!

Some will ride their paper roller coaster all the way to it's conclusion. Yes, they will be rich, but none of them will collect. I submit that physical gold buyers that can grasp the political nature of this will come out the very best.

As an often repeated example I again explain:

---- Whenever the world gold price threatens to run away, whatever pricing system in use at that time is officially forced to fail. It does so not because the system cannot adjust to the new higher values. It fails because the runaway value exposes the political manipulation of gold inherent in that time frame and system. There will be no difference between officially forced failures of yesterday and today.

The only difference between then and now is in fashion! It's possible that this present Western generation is more interested in being "in style" with their hard money views than with actually coming out ahead in the crisis that awaits.

In 1971, the simple solution to adjusting the over expansion (inflation) of the dollar money supply would have been to simply raise the dollar price of gold to a level where every dollar (a contract for gold) was worth it's equivalent. But this would have exposed the manipulation of the dollar (over printing of contracts) that occurred prior to that happening. Not to mention it would have bankrupted many important players (like Bullion Banks today).

Back then, like today, gold in the form of paper contract dollars, traded in a far higher quantity than the actual physical that was delivered against total contracts (like LBMA, no?). In fact, it was far in excess of all bullion in existence at dollar prices at that time. As $35 was a paper price for gold then,,, so too is $270 or even $50 a paper price today! It had no real contact with the real value of gold. Sound familiar? Is this sinking in?

Today, like yesterday, any rise in the "paper quoted" price of gold, will have the same effects on the dollar contracts written and the major player that create these paper traded gold vehicles. Just as in 71, when official dollar contracts for gold were frozen at $42?? while physical eventually soared overseas,,,,,,, Our current bullion banking system will be officially frozen in US terms while physical soars. ----------- It will do this much much more today because the paper price is even further away from reality. Gold at thousands and thousands an ounce is in our future!

If you can understand Aristotle, then you can grasp where we have been and where we are going. In fact, read all his fine works!

In recognition of our fine host, Mr. Michael Kosares and the CPM people I add this:

In the future, a relationship with a good """ world marketing""" bullion and coin dealer will be more valuable than all the paper gold you could ever own.

Believe it!

FOA/ your Trail Guide
Aristotle (09/06/00; 20:34:12MT - msg#: 36150)
Here's one for you, Cavan Man.
My longish thoughts seem to be making very little headway in leaving a lasting impression in answering the oft' repeated question, "Why isn't the price of Gold rising?" They are either ineffective or incorrect, and therefore the question is asked again and again in search of a valid answer. In the event that my proffered explanations are ignored because the general impression is that they are NOT the correct, I encourage anyone and everyone to please promptly set me straight on the path to a keener understanding.

I'm inclined to think I'm not being met with objections because my position is fundamentally sound, but that I'm failing to provide a suitable and lasting answer to this question because my delivery needs to be reduced to a standard media soundbite. So here it is, in response to the question and consternation that you've articulated on behalf of the free world for hopefully the last time--to be promptly followed by a Gold rush as a million cartoon lightbulbs illuminate over heads. Everyone wants to know--

"Why isn't gold moving? POG is defying every historical precedent where, fundamentals should dictate AT LEAST A MODEST RISE."

IN A NUTSHELL (my own cranium?):
Physical Gold is flying under the radar.
It has been the issue and trading of paper Gold that has called the tune.
It is this paper Gold that is being "priced" by the markets.
The POG that you see falling is actually a representation of the falling price of paper Gold.
So then, why is the market price of paper Gold in decline?
It is falling for the same reason that we have seen ALL national currencies lose value over time--through a combination of 1) inflation of the paper supply, and 2) through dwindling confidence in the paper.

To be sure, it is not confidence in physical Gold that is slipping, but is rather a failing of confidence in the inflated supply of paper Gold that is at this time calling the tune and being reflectively priced into Gold by the structure of the marketplace.

Just as it always has before, complete failure of the paper equivalency awaits. The paper portion dies, and only the physical Gold remains to deliver your wealth to the other side.

In a nutshell's nutshell: The price of Gold is falling because we are witnessing the end days of the timeline/lifespan of a "currency system" known as Paper Gold. I expect considerable volatility until the "bitter end." (If you can in fact call something "bitter" that ushers in the dawn of a new Golden day.)

Gold. Get you some. ---Aristotle

Trail Guide (09/12/00; 20:35:24MT - msg#: 36560)

Strad Master (09/07/00; 23:48:48MT - msg#: 36233)Stratfor's take on the Euro

Hello Strad Master,
First, I'd like to say I'm sorry not to have heard your music the other day. For me, there are too many links in the chain to hear it that way. But, it's no doubt your hand made the experience a step above the rest (smile).

I find that when reading many of these strategic analyst, they look too much at the here and now. Their feel for the game takes on a traders perspective who try's to perform on what the very next step will be. Instead of observing the forces that shape and mold the minds of world players, they
(stratfor as example) try to interpret each act as the whole play. Certainly, being a performer yourself, you know that one note does not make the song. In life, it never has and never will.

From your post they write:
-------After years of driving toward a single economic bloc, bound by a single currency, Europe in stark contrast to the United States is battling severe economic headwinds. -------

You know, aside from oil (which I'll touch on later in this series) that statement flies in the face of Mr. Duisenberg's exceptional speech. All of the Euro bears are trying to make a failure out of each piece of this puzzle, but the chess game just continues on to their dismay. I suggest that every
reader break the US into the same pieces and view it in the very same perspective. Nine times out of ten, simple barn yard logic and reason will prevail in such an exercise, demonstrating which market is really in trouble.

While traders are waiting for something to happen, the president of the ECB lays it all out for everyone to follow. Indeed he has done a fine job of accomplishing all their goals exactly. Let's look at it:

------By lowering transaction costs and enhancing price transparency, the single currency represents a major contribution to fostering competition and efficiency in goods and financial markets across the euro area. --------

In any stretch of the imagination, this is an "ongoing" process. Nowhere did anyone project that this would happen overnight.

--------As such, the introduction of the euro represents a quantum leap towards completing a fully integrated Single Market in the EU and lays a solid basis for the improvement in the living standards of European citizens. ----------

Again, only a few short years ago almost every trader with an opinion was saying how the Euro would never even arrive. Yet, that solid basis for changing Europe has arrived and is in the process of advancing. It all just depends on where you are standing when viewing the process.

It's just like when Wall Mart comes to town, all you hear about is how the small shop owners will suffer. No one talks to loudly about the benefits to everyone. It's the same in Europe. The Western media picks up on every bit of negative change and plays down the eventual positive outcome. As
outsiders, we read it all as an ongoing failure that coming apart like a firestone tire. Strategic Analyst with a Western slant present all this news but fail to mention the same struggles happening in reflection in an American context. Truly, Europe is facing nothing more than the US has come to terms with today and throughout it's short history (compared to Europe).

When living in Europe, my Euros represent nothing more than the living standard I may attain there in the process of normal life. Yes, the ebb and flow of exchange rates do impact that segment of my life that depends on imports. But, what goes around comes around and the US will suffer it's
currency trials in good time. Currency traders that leverage up on Euros are the loudest criers of how that currency will fail. Well, I say it's good practice for their vocal cords because they will need a strong voice for dollars soon enough.

In the mean time Euro trade competition is destroying the profitability of most American and World exporters that go head up with Europe. I make my point from these now old statistics in his speech (Europe exports are no doubt surging now):

-----With almost 20%, the euro area is the world's largest exporter, compared with 15% and 9%in the United States and Japan respectively.------------------


-------While the shares of euro area debt securities (91%) and stock market capitalization (63%) relative to GDP remain clearly below 100%,--------- the figures for the United States are in both cases well above 150% (155% and 172% respectively).----------------

Now I ask you, where are the currency analyst when it comes time to evaluate the future using these figures? I said in one of my recent posts that many major investors now see the US markets and their guiding officials are adopting a "come and get it while you can" mentality.

For us, taking a long term view, it's easy to see beyond the dollar's politically maintained currency value as represented in exchange rates. Using the above part of Mr. D's speech one doesn't have to be very strategic to dodge the coming US currency collapse. Add those 155% and 172% with a good dose of high oil prices ($50+?) and it will eventually wreck havoc in the house of cards currently
built in the US,,,,,,,, long before Europe suffers anything close to the same effect. The coming dollar crisis will make the current French oil problems look like a breath of fresh air!


---------A number of observers have argued that one of the main motivations behind Economic and Monetary Union (EMU) was the development of the euro as a major international currency. This perception, however, is incorrect for a number of reasons.-----

------(1.) First, the "euro project" is to be seen as a further logical step in the Europeanintegration process, which started more than half a century ago, immediately after the Second World War. Its objectives were not - and are still not - purely economic, -------

I completely agree and his single points follow as edited:

-----European integration aims ----- (to) a stable and peaceful Europe. --------- the removal of all barriers to free competition has been the engine of this process.---
-----the completion of the Single Market in Europe-----

Again, this process is ongoing and will take some time to work out. Yet the above thrust is extremely important. The Euro objective is not to amalgamate "Europe's Political Will" but to coordinate it's strengths!

The benefits will be in the form of a world dominate currency built on the needs of a diverse group of nation people. It's strength will come from the competition between these various national viewpoints. Many Euro bears point to this as it's downfall and why it cannot work. I counter that
this view is shortsighted and stems from a thin world exposure that's dominated with Western dollar culture! Too the contrary, a money based on conflicting viewpoints will better regulate a fiat's worst tendencies and become it's most attractive quality. A factor that later endears it to the majority of world investors. In contrast to the current dollar, that currency is built on the needs of one political
house of people and therefore is structured to benefit only that single political will.

For the ECB, their mandate takes the form of making the Euro work for 11 different European cultures "FIRST", in the form of long term internal price stability! Not exchange rate function against the dollar. From his speech:

-------The primary objective of the ECB is to maintain price stability in the euro area.------

It will be easy for this to work "long term" because their economic house is:

---------The euro area represents a large and relatively closed economy.----------

To continue from his speech I repeat his opening:

-------------A number of observers have argued that one of the main motivations behind Economic and Monetary Union (EMU) was the development of the euro as a major international currency. This perception, however, is incorrect for a number of reasons.-----

Having given (1.) above:

------(2.) Second, the international use of the euro is, first and foremost, the outcome of a market-driven process, not to be steered by central banks or by political bodies. The ECB has adopted a neutral stance on the internationalisation of the euro. The ECB intends neither to foster nor to hinder the use of the euro.------------

I don't know how many old time traders are reading this, but it seems that most of them forgot the "dirty float" problems of the 60s, 70s and 80s! Every hard currency and hard money advocate out there cried about the ongoing currency manipulations then. Now, we finally have a fiat that's being
built on a "no intervention" format and they all are asking for it's head? Any fool can clearly see from the above (and it's ongoing management!!!) that the Euro policy is aimed at fostering an entirely different animal from the current dollar system.

For myself, all of this rhetoric is a blinding example that proves a point in one of my posts. It was pointed out how the Western slant has shifted to value a currency more by the ability of it's officials to manipulate it than by the economic background that supports said money. But listen closely when the tide turns for the dollar and the ECB stands with it's hands still. When the dollar reverses
and goes up in flames, the whole hard currency crowd will be crying for the ECB to give in and help! Especially help make the paper gold system whole again so that the mining (and their supporting bullion banking) industry can survive. We shall see.

To further my points:

-----In the past, major countries have, at times, tended to promote the international use of their currency, primarily with a view to potential benefits for their national financial sectors.-----

Was that a shot at the dollar system?

----There have also been cases in which major countries have resisted the internationalisation of their currency, owing to the uncertainties that this process may imply for the conduct of monetary policy.-------

Was that a shot at the Yen system?

To continue from his speech I repeat his opening:

-------------A number of observers have argued that one of the main motivations behind Economic and Monetary Union (EMU) was the development of the euro as a major international currency. This perception, however, is incorrect for a number of reasons.-----

Having given (1.) and (2.) above:

-----(3.) Third-------two basic factors might eventually determine the international role of the euro - size and risk.------

First factor, size:
-----With regard to the size factor, a broad, deep and liquid euro area capital market may lead to a greater use of the euro through lower transaction costs. This may, in turn, facilitate the development of the euro as a vehicle currency for trade and commodity pricing. ----------

How much size are we comparing? From his opening:

---------Given its population of almost 300 million people and its significant weight in the global economy, the euro area is broadly comparable with the United States. ---------- the most striking fact is that the euro area economy has a share of world output of around 16%. -------- significantly higher than that of Japan (8%), while being lower than that of the United States (21%)---------

Second factor, risk:
-------the international use of a currency is determined by risk factors, since investors may use the euro to hedge their risks through diversification across international currencies.-------

-------I should make clear that maintaining price stability ----------- is also a major precondition for a currency to play an international role.-------

-------As regards the private use of the euro, recent trends show that it has mainly been used as a financing currency. ------- The growing use of the euro was mainly mirrored in a decline in the share of US dollar-denominated issues from 58% to 48% between 1998 and 1999. These trends are even more striking if one focuses on the bonds and notes segment of the market. ------

I point out that USAGOLD poster ORO has written extensively on this growing process. Indeed, the above size and risk determinants may point to the Euro becoming replacement for the dollar. For a currency that's about to fail, it sure is progressing one solid step at a time.

As I have said, today's exchange values between dollars and Euros represent a fraud (the dollar) being propped up and a plain man (the Euro) shown as he is. Once the dollar turns from an oil settlement currency to a competing oil settlement currency, it will stand on equal ground with a Euro contender that must eventually be a true international currency. Indeed, as Mr. Duisenberg has presented, the ECB will not manipulate the Euro to international status. Truly, the world will do it for him.

Thanks for your time Strad Master, it was my pleasure

Trail Guide

Trail Guide (09/12/00; 22:04:59MT - msg#: 36569)

Golden Hook (9/10/2000; 11:59:42MT - msg#: 36388) Sirs: FOA and ANOTHER-
When William F. Duiesenberg declared war on curriences, particular the Dollar, Is not this the start of a new world war on all currencies for all the world to hear?
I believe this announcement was more important than the Washington Agreement. I believe now all is left is for ME to make their announcement. Thank you.

Hello Golden Hook,

If you read my recent reply to Strad Master, then it should become apparent that William F. is not declaring war. Rather he is continuing a policy that will allow the US dollar to destroy itself. By inflating the paper gold markets into uselessness, the US has removed the only vehicle that added
enough value to our dollar currency to keep oil prices in check. Now that the Euro is clearly separated from our dollar system and able to make good on it's physical portion (convertible) of gold debt, we are off to the races. Oil will rise until one of the currency systems fail! With the weak nature of the US debt situation, real world price inflation will break the dollar economy first. It will
also break the dollar gold system through physical demand. It will force a dollar cash settlement for failing gold banking contracts in place of physical delivery. This process will create a cascading default that literally shuts down all paper gold markets. In the meantime any perceived weakness in the Euro will be countered in a soaring physical gold price. This sudden strength in Euros will allow
settlement of all optional (physical or non- physical) gold loans in Euro cash instead of dollar cash.

I don't think Mr. Duiesenberg's speech was more important than the WA. Rather it was the next step as this political drama unfolds. Conditions are being created that will allow a reasonable excuse for oil to be partially settled in Euros. I expect Europe will be given a choice of paying for
Arabian oil in either dollars or euros. This will be politically correct but functionally strengthening for
the Euro. We shall see.

Trail Guide

Trail Guide (09/12/00; 22:18:16MT - msg#: 36570)
Hello ORO!

Good to see you back. Nice works. I'll have some comments soon.

Ph in LA,
I saw your post the other day about Euro oil settlements. Could not post then or recently because I'm receiving too much other imput. Am trying to archive as many question posts (and post I want to comment on) as possible.

My goodness, USAGOLD is way up there in the linkage department. I think people would be surprised at who is reading here (smile)!

Be back tomorrow

Trail Guide

Trail Guide (09/13/00; 20:56:42MT - msg#: 36623)
Hello Michael,
Your discussion about LBMA is very good. The trail curves as we lean forward to see what is before us.

Yes, I will try to further refine that post. I'll place some current things aside and call upon the Thoughts of close friends. Will return (not today) to discuss what has evolved .

Trail Guide

Gold Trail Update (09/16/00; 10:02:56MDT - Msg ID:36790)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (09/16/00; 10:02:54MD - msg#37)
Gather Around!
Hello Everyone and New Readers!

On with the packs:

This is a pre-hike post intended create a feel for the gold trail as we have "seen it" and prepare for the next hike. I use the term "as we see it" loosely because much of what has happened and what is coming we (Another, myself and others) prepared for long ago. Our actions were based on an ongoing "real life" evolution in political power structure as it related to currencies and gold. Not some possible outcome as so many attribute these works as referring too. This political evolution we are involved in has been in the thinking process for 30 years and in the actual implementation for perhaps the last 10 to 20 years. The flow of events were correctly expected to pick up steam considerably from 1995 to date. They did and Another began to privately discuss these changes in the early 90s (later through various intermediaries on the internet). All in an attempt to prepare his citizens and friends for the eventual outcome.

Another's style and flavor of writing reflected his background culture and human level of understanding wealth. On this level, gold was a real wealth holding. An asset held in an equal wealth concept to every other real thing we possess. It was something to save and / or eventually spend as needed. During it's accumulation it was understood that gold's current price (over the last 25 years) was something different from this wealth asset value. To say the least, this was a far cry from accepted hard money discussion during this time. Most of which focused on trading the price of gold for what constituted nickels compared to saving real gold for a personal family fortune in the making.

In a Western Style World where "the dollar market system's" trading price was seen as the only real price for anything, investors forgot that when it comes to gold, governments may not control it (physical gold) but they do control "the dollar gold market system". I say forgot but it's doubtful some ever knew. Many still feel to this day that gold was set free in 1971. Today, this same "control" concept that was laughed at only a few years ago, most hard money thinkers have come to agree is true. In the future directly before us, our gold trail is leading around a curve that once again the hard money crowd is laughing at. What they do not know is that Another has already walked the trail our eyes have not seen. Yes, the footprints of Giants are there and easy to follow, he is just ahead, around the next curve.

This current phase of public writing and discussion (last 3 years or so) was implemented by Another so as to concentrate the average investor's thinking on certain aspects of these coming economic changes as they evolved. He always wanted people to see the actual flow of events as creating a background in their minds of the political evolution his directions were pointing to. In other words, use his map, place it over the events as they occur and consider (not accept) the direction. Over and over, he said that in this process, as your understanding grew (changed), events would prove his Thoughts. Events, not his words or mine! To that end, until he decides to write again, following his lead, my seemingly poorly thought, fragmented posts will become more academic. As events unfold and the trail straightens, my clarity will grow with your understanding.

The Common Person's Strategy

Because this currency transition is in a fluid progression, using a price sensitive gold substitute investment during such a dynamic political process was useless. Perhaps dangerous! Just as in the game of chess, for most average investors there are no public, permanent hard facts to cling to. Yes, chess players and even poker players can and do give out signals opposite their intended play. Further, in this political world game a solid move is countered with an opposite move that renders each step to be very short term in nature. For small private investors, only the game's end will have the most long term lasting effect on their wealth. It would also create the most massive gains for anyone that can continue to "stay and hold to the end". Indeed, this meant using a vehicle that history has shown was certain to outlive the chess game. Physical gold value has outlived the battles of many kings and queens during 2,000+ years of chess moves. Truly, in our time, the next very large match is about to be concluded.

Another's posting was done to report where we were located on the political board. Not intended to make a "Market Call" for gold substitute players. To date, his only point was for citizens to buy physical gold for a run of a lifetime. To date (from his beginning posts), any hard money advocate that has left the gold substitute game for a physical position is in a major "wealth ahead" position compared to the pounding paper gold substitutes have taken. Indeed, that accumulated asset value builds and remains to be realized in the final days. To this end, the prize of physical gold in the thousands will make many a gold substitute player sick to see. There is no possible way the current dollar system's "political will" can allow the gold industry or it's gold banking system to experience such a dynamic gain / loss relationship. For many sophisticated players, hooked on an outdated failing concept of saving gold substitutes our currency evolution will be a painful learning experience. Yes, a few gold mining companies will make it and so too will some in the gold banking industry. It's possible they will do extremely well, but the gains will only compare evenly to the gains in physical gold. It's that simple! Truly, it will all be documented and followed on the USAGOLD forum as it unfolds.

Again, the drive behind making these free offerings public was to point the largest number of average citizens to look in the right direction. These changes were (then) about spill out into the open in a piece meal, seemly unrelated fashion. Yet, they were all connected in a way "Western Eyes" were not focused to see.

Without giving specific details, those Thoughts forced people to see our currency evolution in a way few others could or wanted too. In this fashion private citizens had to follow "events" in a different light from accepted media reporting. It is gratifying to see many people (on these forums and privately) acknowledge how his Thoughts had done this. Recently USAGOLD poster SteveH (and many others) said as much. Thanks from Another and myself!

We'll walk quietly to that tree ahead. Then I'll discuss the evolution from my old post as offered in USAGOLD #36622.

FOA/ your Trail Guide
Gold Trail Update (09/16/00; 15:11:27MDT - Msg ID:36806)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (09/16/00; 15:11:26MD - msg#38)
After six miles we arrive at the burial tree!

Everyone here?

I've stopped at this burial tree to have a look at something Michael Kosares found while hiking. It seems he and a USAGOLD poster (Invisible Hand) are examining the "old bones" of a post. That post was written and placed here on 08/10/98. After reviewing it, I agree they are my "old bones" (smile). What do they tell us today?


From 8/10/98 Friend of ANOTHER
Michael Kosares,

It has taken some time to send this, but now I can also offer my thoughts to your questions.

Your statement: (from MK) "As a matter of long term policy, do you believe that ECB will "sell" gold to defend the Euro or "buy" gold to defend the Euro? Each of course would entail a different course of action with respect to reserves of the new national bank. Along these lines, will ECB buy gold from its member treasuries, or will it simply force them to transfer it to ECB coffers if needed to defend the Euro? I am prompted to ask this question in view of your assertion that there will be much selling of Euros to defend the dollar. If the Euro, as you suggested, is being printed to buy dollars isn't this just another manifestation of the U.S. exporting its inflation? It appears to me that the Euro will need to be defended -- and not with dollars -- but with gold! "

Well Michael,

The ECB and Duisenberg have it right.

It's the dollar that's too strong (compared to it's management policy), not the Euro is too weak (compared to it's management policy)!


Under recent circumstances; using the dollar as a trade reserve it was the policy of all CBs to save most of their positive foreign exchange. This was in an ongoing defense of their domestic currencies value. We must grasp that just saving the excess trade reserves constituted active dollar support.

Simply put, when a nation state does a good job of manufacturing and runs a balance of trade surplus they are receiving more dollars in trade. This mandated a dollar surplus in their economy's banking system from where more local moneys were printed against those saved reserves. In other words, if you're trade positive you are supporting dollar values by default. But why save dollars as a reserve?

In the good old days; when our country (USA) printed too much money and that money overflowed it's borders as buying power, the selling of that excess currency by our trading partners (lowering it's value) to balance trade differences would force the printing nation (US) to slow down it's money creation. If they didn't, price inflation in the domestic (US) market would begin to catch up and reflect said overprinting of the money. So far, so good.

Today; if our (USA) trading partners allowed those dollars to flow back into the world markets (actively buying their local currency with dollars) this action raised the exchange value of their currency and penalized the international pricing structure of their goods. Their goods would cost more and slow down their exports. Yet, if your currency management is strong (as the Euro's is) and your people (read that economy) work better than their foreign US competitors, the exchange rate system shouldn't hurt your goods pricing! But, it does. You see, selling these extra dollars today would have the effect of hurting a competitive producer that has good money management. But this is not the way our dollar system was supposed to work!

It's not a situation where your currency should get stronger if you're doing a good job. It's the other currency (dollar) that should get weaker because they are doing a bad job! In this a "Western Style World where "the dollar market system's" trading price was seen as the only real price for anything" (see my last post below),,,,,,,,,, the currency doing a bad job can and is manipulated to higher values than their manage policy should dictate.

But it is the over printer that should have been forced to slow down because of their policy of currency inflation (not the under printer). If you are a "Positive" trading partner of the US, your exports should slow because the US is sending less dollars out to buy things from you internationally. In this dynamic your competitive pricing structure should remain the same even as USA demand for your goods slows.

Again, the whole reason this all worked backwards stems from the US's ability to manipulate it's dollar value through currency and gold derivatives, even as our dollar has super inflated it over the years. If we (as US citizens) can see this happening, think how foreigners see it? Our interest rates are way under where this money printing should have them. Our domestic economy is swollen fat with hyper spending for any and all forms of ancillary, nonessential goods. Yet the real US prices we all pay comes nowhere close to reflecting this money creation (I'm talking real life pricing today, not the government CPI). Debt creation (the machine of dollar creation) is surging as our domestic economy runs away on goods priced low by foreign exchange rates.

If this is not bad enough, who wants to hold their neighbors debt as a wealth reserve? More from my "old bones":


I believe the most difficult part in understanding the modern gold market is overcome by seeing all the various political factions involved. Essentially and basically, the largest pro gold groups are those who want a world currency that is not subject to the performance of the American economy. At this moment and in this period of economic history, all currency reserves held by foreigners (non-Americans) is a debt of the US Government and by extenuation through tax collection, a debt based on the ability of the American economy to function profitability!

In essence, America has told the world that as long as the business of this country is functioning, your wealth, as represented in Marks, Yen, Pesos, etc. is backed with performing US debt. It's like saying, "as long as your neighbor, next door, does not loses his job, you will not lose all your money! Most people would be surprised at how clear this is, outside the USA sphere of influence. This, the largest of the pro gold group, is largely made up of countries with economies that have no need to sell most of their production to the US. The business of these communities would not totally fail without the American engine. Yes, they would slow down, but not collapse, as trade with other countries would continue. To add what was said before: If your neighbor loses his job, you can still trade with the other people in the town, as long as the currency system is not based on your neighbors debts!

This group, made up of much of Europe and the Middle East, is not looking for a return to the old Gold Standard, but perhaps something far better. They do not see any advantage in holding the currency bonds of one country, as a reserve asset of future payment, over holding physical gold as a reserve asset in full payment. The fact that the debt reserve asset pays interest is little more than a joke in these banking circles. Any paper currency, the dollar included, can fall in exchange value against your local currency far more than the interest received! In today's paper markets, the only true value in exchange reserves, held by a government as currency backing, is found in it's effectiveness for defending the local currency from falling against other currencies. In other words, use the reserves to buy your countries money. But, this is a self defeating action as sooner or later the reserves are used up! This fact is not lost on many, many countries around the world, as they watch their currencies plunge, lacking reserves as defense. Ask them how important the factor of earning interest on reserves is under these conditions.


Looking down the trail:

This is where the ECB is offering a different currency animal to combat our failing monetary order.

By not selling dollars to buy Euros, they are making an end run around the exchange system no other currency has had the option of doing. Think about it. The dollar reserves they hold are really worthless in a new currency system. If their Euro is as Duisenberg puts it, a new reserve for Europe, not the world; they don't need dollars or the buying value they represent. A super hyperinflation can take the dollars value to zero and the ECB will lose nothing. It already has it's dollar reserves in the form of Euros and gold.

Using the logic above; if they don't use reserve dollars to bid the Euro exchange rate above it's domestic pricing structure, the dollar system has no alternative but to slow itself down through competitive default. With nothing to stop it, through such a default the dollar will be force hyper inflated in a real world act. That dynamic will lower it's exchange rates. For good!

So how will the ECB give further backing to it's currency? Back to the burial tree:


On the other hand, buying gold on the open market, using your local currency, works as a far different dynamic from selling foreign bond\reserves. This action takes physical gold off the market, and in doing so increases it's value in dollar terms. Gold is and always has been the chief competitor with the dollar for exchange reserve status. The advantage here comes from the fact that governments do not run out of local currencies to use in buying gold, as opposed to selling foreign currency reserves to buy the local currency on the open market. Of course, the local price of gold goes sky high, however, in this action you are seen as taking in reserves, not selling them off.

Also, as gold begins to rise against the dollar, the local gold reserves are seen as assets of increasing value, backing the local currency. Under these conditions, with a stable currency, citizens will purchase more gold as it is seen as a positive asset. Not unlike a rising stock, everyone wants an increasing investment. Contrast this action against that in Korea, where everyone sold gold as it increased in an unstable currency!


Let's consider

To those that think the ECB lacks the resolve to do this, just have a look at the exchange rates of the German Mark against the dollar. Between 1979 to date, the Mark had one instance where it lost 45% against the dollar. I submit that if the Mark and/or Germany didn't fail from that experience, this Euro and all of Euroland will not fade away from a little 20%+ fall we see today. From a recent Mr.Wim Duisenberg comment; "Weakness of euro is not one of the "exceptional circumstances" that would justify intervention" !

Indeed, it was the US that first initiated the accords in 1985 that broke the dollar's high value. They were worried then but there was no alternative currency to work against them. They are trapped now.

Today, the ECB can use not only it's excess dollars to buy physical gold sold from other banks, they could use Euros printed outright to buy physical spot delivery. If their currency continues to fall before the dollar begins it's terminal phase, this option is wide open to them. Certainly, "Free Gold" is not going to compete against them as it would against the dollar because it's their policy to mark all it's rise to the market. Because Free Gold will not be an official currency, it's wealth building power will compliment the bank's reserves. In addition, national citizens would own gold as a wealth savings, not a currency.

More from our diggings:

Basically, this is the direction the Euro group is taking us. This concept was born with little regard for the economic health of Europe. In the future, any countries money or economy can totally fail and the world currency operation will continue. What is being built is a new currency system, built on a world market price for gold.


This takes us back to his recent large speech, Duisenberg said:
-----"First, the "euro project" is to be seen as a further logical step in the European integration process, which started more than half a century ago, immediately after the Second World War. Its objectives were not - and are still not - purely economic, as European integration aims not only at the creation of a prosperous but also a stable and peaceful Europe. For a large part, trade, economic and financial integration aimed at the removal of all barriers to free competition has been the engine of this process. In this context, the euro is to be seen as a major contribution to the completion of the Single Market in Europe.--------
I repeat, ----Its objectives were not - and are still not - purely economic----

Truly, a new world reserve currency in the making!


The present dollar overprinting (already in the system) is enough to force the US to further print in order to stop a cascading default. Again. this current dollar strength is killing it's trade and exploding the foreign exchange deficit. The final trigger for all this is in the prices of two international goods that are synonymous with real wealth, gold and oil.

Oil now doing it's two part thrust to drive the US into hyper status. Thus ending it's reserve roll for good. High oil prices are forcing the trade deficit to alarming, derivative busting levels. In addition, these same oil prices will completely break the ability of American goods to be priced competitively. At some point our domestic economy will roll over and the above mentioned cascading defaults will begin. Rather than raising local interest rates to slow our dollar flood (as the fed would do in the past) they will, like Japan drive rates to almost zero. All in a mad attempt to save the system and keep the world away from Euros. It will not work.

Contrary to what many hard money advocates expect, In such an atmosphere the dollar / gold market and it's gold banking system will completely fail. As part of the current dollar derivative system, a hyper inflating US price structure will fracture the credibility of paper gold. The paper gold prices we watch every day will go directly to the floor!

Just as in every inflation in history, credibility only goes so far. Then it's time to settle up. Trading volume on the world paper gold market is now falling away just as paper gold derivative supply is driving ahead. Truly, even a corporation cannot continue to get away with issuing more stock privately as public trading dries up. In the same light paper gold derivatives are being inflated as volume slows. In the end it's pricing structure that always fails. Today this paper gold price continues down into market failure. At some point, a full "Free Gold" physical market will appear and it will be used by the ECB to support the Euro Banks with a super high free gold price. This is something Physical Gold Advocates know is coming.

The ECB is going to support gold in a major way. They may be doing so now through the BIS sales of Swiss gold but none of this will break into the open until the dollar begins it's inflation and it's derivatives fail.

As all of this is going on, inflation in Europe will more than likely bring their trade status with the US to an even neutral basis. But by then, the Euro (through comparison) will have become the candidate as a leading reserve currency holding worldwide. Not only will the ECB be buying gold with dollars, so too will any other positive traders with the US. Most everyone will be asked to use Euros to buy oil and the oil producers will be buying gold hand over fist with excess dollars.

Right around here, the ECB will begin buying dollar reserves from other CBs. Of course using Euros. It will be seen as a defense of the dollar, but by then such an action will be just a political ploy.

Ok, let's place this little guy back into the ground under our burial tree. We will meet here next time to see how these oil for gold deals will benefit the further expansion of Euro use.

We do live in exciting times for Physical Gold owners. Exciting times.

FOA/ your Trail Guide
Trail Guide (9/18/2000; 7:22:01MT - msg#: 36881)
Happy B-Day USAGOLD!

This forum has covered a lot of ground during it's time. But in an off take from a famous saying;

---we have miles to go before we sleep--- (smile)

Talk about good words; when reading ORO (9/18/2000; 5:53:59MT - msg#: 36874)

I am reminded of another great thinker that said
---give me a place to stand and I can move the world-----

Of course that original thought was referring to physical leverage. ORO's post is the kind of solid rock from where Another places his wealth building pry - bar. Very few will gain from using such a bar in real life, because one has to have a heap of mass behind it. Oil is that mass that's
moving the paper fraud into the open! ORO, you have said it all in that post.

I am close to distilling a lot of input and am about to start replying to some of the comments and questions sent my way. In today's markets we are trully seeing "leverage in action".

Trail Guide

Gold Trail Update (9/23/2000; 9:26:11MDT - Msg ID:37297)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (9/23/2000; 9:26:10MD - msg#39)

Once again, a big Happy Birthday to Michael Kosares's USAGOLD and welcome to all the new writers there! Also thanks to everyone at CPM and especially TownCrier for "ALL" his fine thoughts.

Another pre hike talk at the trail head (as a warm up)

In my view, the only people that see the Euro as weak are the ones with a clouded Western Perception. I own a large portion of my currency in dollars. But they aren't held for investment, rather just plain old money / risk diversity.

In addition, my Euros once made up almost the same amount of cash held as Dollars Prior to EMU my foreign fiat was in the form of several European moneys and some Yen. After EMU I allowed all of that portion to be slowly converted into Euros. About 1/3 went off initially and the rest followed over time. Once the Euro exchange rate drifted to the .90 area I began shifting more of my dollars to Euros. (of course physical gold is my largest holding along with several other assets) Today, the Euro makes up some 80% of the currency mix.

Why shift into a weak Euro or hold Euros at all?

Well, mostly because I don't see or value these cash assets the way Western traders do. Nor do I hold them in the form of derivatives, looking for a trading profit. As large as these assets may be, I do expect to eventually spend them for something real some day.

With this position and viewpoint I don't have to "buy into" the "Euro is weak" trading talk distributed around various forums and trading houses. I don't have too because I can compare, "first hand" the relative values of these two currencies (or at least others can do it for me). By relative I mean their native buying power . In Europe, prices of a large basket of "LOCAL" goods have not gone up in price the same 30% +/- the Euro exchange rate has changed against the dollar. Conversely, the price of US goods produced natively have not fallen 30% to reflect the dollars gained strength. It's that simple.

Notice how we word this money comparison; it's an exchange rate, not a value comparison rate! Most Western traders consider the exchange rate to be the value, but it's not. Spending the paper money in it's local economy is the value rate.

To continue my logic I repeat an item from our last trail walk:

----- The ECB and Duisenberg have it right. ------- It's the dollar that's too strong (compared to it's management policy), not the Euro is too weak (compared to it's management policy)! --------

OK; with that understanding we can grasp why I am selling dollars (real dollar holdings, not derivatives) for more Euros. The fact is that, for a bunch of reasons the dollar went up in it's exchange rate against the Euro. It did so even though the real value of these currency's "buying power" did not become an issue, rather the manipulated exchange rate did.

This process alone created the gain in my dollar holdings. I see it as no different than buying a stock in America that rises over a year or so. No, the dollar (Euro concept) didn't fall against the stock (dollar concept), it's the stock (dollar concept) that went up in value. So we sell the stock (the dollar) to retain profits! Just as most American tech stock's trading price does not reflect their fundamental worth and value, so too does the Dollar exchange rate not reflect it's true fundamental pricing value.

Further; if an across the board price inflation was raging in Europe and not in the USA, the situation would be different. But it's not.

Also; who is fooling who here with this (Friday) currency intervention? Exactly which currency power block in under the worst stress and pressing for help (in the background)? Our Western Media gives us all the details of Europe's oil and other problems but perhaps 1/10 the coverage is given to the US trade hemorrhage. Any damn fool can see that this trade deficit is the result of a currency being manipulated and squeezed up for reasons that are uneconomic. USAGOLD poster ORO explained this dynamic many times.

Prior to EMU the dollar was expanded (thru debt creation) at levels never before thought allowable or possible. But all of that debt creation in conjunction with it's demands for that future debt service is spiking the dollar "exchange rate" as Euro financing competes with Dollar financing. In other words, on the world stage converting dollar debt into more favorable Euro debt shrinks the dollar liquidity pie. As this happens, our Euro value (in relative local buying power) stay's almost the same even as the dollar exchange rate rises against the Euro.

Again; it's the dollar that's caught in a vice because it's exchange value is rising while it's native buying power is somewhat the same. In order to balance the dollar's strength, native goods prices should be falling. By staying the same, it's effects on our exchange rate process makes the local price of US goods ever more noncompetitive to sell to world markets. I think Intel is but only one large operation that just recently demonstrated how this works against our US economy.

This very dynamic creates a massive demand for Euro priced goods from outside their borders. Left on it's own, such a process would expose the dollar structure to the bankrupt / hyper inflated position it has been in for many years. The US trade deficit would grow until the flow of dollars destroys our dollar reserve system. From where I swim in the ocean (in deep water), this is exactly the unending process we have embarked on. This time it will not reverse.

Better said, the US has been forced into such an inflation by the existence of a new possible reserve currency. Something our money policy has never had to contend with before.


Go back a read the most recent speeches and comments by the ECB president, Mr. Duisenberg. Truly, the ECB is not interested in "crashing" the system, rather let's "transition" the system into a more fair order. If intervention is needed, it's needed to keep the American economy from failing too fast from the coming hyperinflation of it's currency. If the ECB is worried about the "exchange rate" being too far out of whack, it a worry about it's effect in generating a dollar system meltdown from deficit trade. Not a total failure of the Euro as so many report. When the time comes, and it will; the dollar will begin it's fall away from it's own past policy failure. Until that time, for the benefit of oil producers and many others, let's move as far down this Euro / gold trail as possible. Without a breakdown.

The very existence of a Euro today makes oil policy in America as never before. One way or Another oil production control is going to expose the "best" system for future use. The one that most values and allows real wealth pricing in currency terms. The first system that allows the price of physical gold to rise will see it's currency price of oil fall. Yet, a rising physical gold price is something the dollar cannot and will not live with. The American and world gold market trading system is going to fail with this currency transition and that prospect will leave some high profile gold owners high and dry. It will also leave some very smart physical and paper gold traders with a real wealth holding Western traders never will understand. You see, in our day, in our time oil and gold will never flow in the same direction. Both price wise and physical wise.

Many American / Western order proponents will always take a nationalist side when writing about the Dollar's position. I think it's called "spinning" the details. Yet, in today's evolving money system, it's the dollar that under stress from a trade deficit dynamic. We shall see!

Let's hike back to the burial tree we visited last week. There we can re dig some "old bones"!


FOA/ your trail Guide

Trail Guide (9/23/2000; 9:46:15MT - msg#: 37299)
(No Subject)

Hello everyone!

I'm going to be out a little while (few hours) and then return to this board untill very late. Hope to catch up on a number of overdue comments to old posters and new ones (smile). Great ongoing work Black Blade.

Trail Guide (09/23/00; 16:10:38MT - msg#: 37311)
(No Subject)

Trail Guide (09/23/00; 16:43:33MT - msg#: 37312)
Comment on MK's post

That Mundell is something. When reading his speeches I almost feel like I have talked to him before. (smile)

My take on his latest (in your post) is that the gold coin part is a trial balloon. This isn't the first time we have driven in this direction. So, it's not the real end story. I always knew the Euro concept would eventually contain a gold Euro. But getting it past the crowd would take some doing,

They may try to peg it's value in Euros initially, but the thrust will be to issue it as a Market Gold Euro. Perhaps it's name will be what you, Aristotle and myself would call a "Free Gold" Euro. I know this discussion will fly in the face of every past hard money thinker, but it not only will work, it will happen. We must watch this closely.


Trail Guide (09/23/00; 16:56:28MT - msg#: 37314)
JavaMan (9/23/2000; 9:42:11MT - msg#: 37298)

As I understand it, the SPR draw-down is actually a swap in that at some (undetermined?) time inthe future, the refiners will have to replenish the inventories they took, presumably at the lower prices expected in the future. -------------

Hello JavaMan,

That's the way I read it too. In fact, it almost sounds like some sort of oil lending? Kind of like paper oil? Let's see; the oil is really there in the SPR but only in IOU form ,,,,,, like gold lent from a CB. No?

I can just hear the producers getting all excited at the prospects of us draining our last line of defense. I bet poster "Oldgold" is even wondering why the USA,,,,,, with all his reporting of American influence over the ME oil producers,,,,,, is now resorting to such an obvious weak ploy!

My take is that something else is exerting more pressure on our "political will" than the usual arm twisting can overcome. We pointed out on the trail and here that the Euro presence makes pricing concessions the norm. We shall see!


Trail Guide (09/23/00; 17:10:50MT - msg#: 37315)
ET (09/22/00; 22:16:38MT - msg#: 37281)

------"As the meter runs on California's electricity crisis, shock over this summer's price spikes is giving ,,,,,,,,,,,

Geez - what a quandry! The free market is intersecting with our collectivist friends in California.

Hello ET,

Boy, it just goes to show you how quickly a solid contract can be driven into the dirt when "Physical Electricity" is suddenly priced too high (smile). Don't think for a minute that our free market ideals are limited to being only represented by this action in Southern Cal!

Our friend Goldhunter (good poster here) will learn soon enough how a rising physical gold price will make the free market in contract gold fall apart also. People today only honor contracts if they are within accepted bounds. Once things get out of hand, it's time to settle up at the other man's loss!


Trail Guide (09/23/00; 17:17:39MT - msg#: 37316)
(No Subject)
USAGOLD (09/22/00; 20:31:52MT - msg#: 37267)
A Toast. . . I want to thank all of you for making this a memorable celebration.


Well Michael,
I'm having my toast as Starbuck's coffee in one of their stainless steel mugs. For me, this is the usual! (smile) Perhaps a good wine with dinner tomorrow.


Trail Guide (09/23/00; 17:45:28MT - msg#: 37322)
Buena Fe (09/23/00; 17:20:40MT - msg#: 37317)

-----."ride the winds of change with direct "physical gold ownership/possession" to preserve and enhance your wealth!"-----

-----do you for see this process still taking a few years, or is it truly "unpredictable" in its timetable?--


Hello Buena Fe!

I'm happy you are coming to terms with all of this. It's a real broad thing to get one's mind around. Yes, we will all,,,,, in our time "ride these winds of change"!

As in all political conflicts, the actual timing of the event is impossible. The actions can indeed be there and also out of sight,,,,, but the other side must also make a choice to react to these events either in the open or out of sight. Nothing spills into public view until all the jockeying is exhausted.

I personally know the now year old Washington Agreement as an public showing that one part of the contest was now exhausted. In other words, we were as I said then "on the road to high priced gold"! But nothing happened right then. Indeed, that spike was nothing compared to what could
have happened.

We as free agents must take this time frame to prepare for the time when an uncontrollable spike closes the dollar paper gold markets for good. I would say this is in the pipeline but when will it spill out?


Trail Guide (09/23/00; 17:59:50MT - msg#: 37326)
JavaMan (09/23/00; 17:21:25MT - msg#: 37318)

Trail Guide...good to hear from you! You said...

"...the oil is really there in the SPR but only in IOU form."


Ha! Ha! JavaMan I know that oil is there now (as we speak). But, if they start draining it this time, I doubt it will ever, ever be replaced again. The US knows the oil pricing dynamics have and are changing today. Truly, fundamental supply and demand was never the driving force. Real payment
for oil was!

We have made a mistake in deciding to inflate the paper gold currency supply like it was a fiat. Today, without Europe's gold backing, that American portion of paper no longer can control the dollar pricing of oil! Mainly because paper gold is held in the same memory banks of minds that knew 1971. This play will not be performed again!


Trail Guide (09/23/00; 19:58:00MT - msg#: 37329)

I'll reply in order:

USAGOLD (09/23/00; 17:24:27MT - msg#: 37319)
FOA. . .
Your comment: "When reading his speeches I almost feel like I have talked to him before."

Maybe because the logic looks familiar? I've often wondered about the same ideas coming to largenumbers of people at the same time. You see it all the time -- even in considerably soft scienceslike political economy not to speak of the highly disciplined hard sciences. I think it is because
shared knowledge and analysis logically leads people to similar conclusions. Sorry..........I drift .........

I never thought of that as drifting. Sounds more like thinking (smile).
Your post:

If you were to go pure Rothbard (and FOA) on this thing, the coin would not be marked with a currency value, but I always have had trouble with that because, practically speaking, how do you use such a coin in day to day transactions. I can just imagine going to the scooter shop to buy
transportation and having to get a calculator out, call the gold broker, etc. to determine how many ounces of gold it would take to complete the transaction.


Well MK, try thinking of it as a internationally secure asset you don't use for transactions. Consider; how many assets we all hold and think of as our wealth savings? Yet none of us can spend them as a currency? Stocks, real estate, oil reserves, rare pictures, antiques, violins (Strad Master (smile)? You go through life with some idea of how many cars your house could buy,,,,, how many violins
your IBM shares could bring,,,,, but never the exact amount without a quote. Why some people even own millions in 30 year bonds,,,,, an actual currency debt,,,,, but only have an idea of it's tradable worth because of market changes.

All of these items form part of our wealth and are just as much spend able and tradable as any digital currency. But first one must convert a portion (or all) of them into a modern digital transactional currency before spending. So why not hold gold the way it was always intended; not
as an officially denominated currency but as an officially declared savings asset ,,,,,, and be as a part of our real wealth in coin form?

Think further back. Back into the time of your earliest rare coins. These gold coins were the actual currency, but no one knew the street market for gold? When Marcus went into his Roman scooter shop did he know the gold price? Even if these official coins were a "gold coin of the Roman Empire equal to 25 denarii", he did not know the value of a denarius unit. No, he just knew how much weight in gold it would take to make his purchase. This many tiny coins of so much gold
weight. It's tradable value was not in the denarii, rather it was in the scooter.

A gold asset has a moving value whether it's denominated in currency units or not. That's because the value in gold comes from how much weight it takes to trade for anything else,,,,, and in real life everything else is always changing in value from our human demand.

Even deeper; again,,,,, if gold is used as a currency it has no fixed value even if denominated in so many units of the realm,,,,,, because the value of everything is always in a state of change,,,,, Therefore, official Gold value must not be fixed if it is to be worth saving as an asset. Us hard money types always promote the history example of how gold kept everything so stable. Yet, everything was always in a state of value evolution, even in gold terms.

I hope I'm not drifting alone here (smile).

From your post:
But when you go on this line of reasoning, you are confronted with a major question:

What would EU put as a currency value on that one ounce gold coin? Now that's something to think about. . . . . If you do not put a currency value on it, you make exchange risk a factor in every transaction. I don't think that's what Mundell has in mind, though I could easily be wrong on that.

Am I missing something here, FOA? Each method provides its unique advantages and disadvantages.

But Michael, exchange risk is inherent in everything we own. Only a currency system that can recognize and base itself on the flexible nature of gold value can survive in the long run. As a high speed, modern, global trading society we are not going to drive digital currencies away because gold is becoming more valuable. If that were the case we would already be using stock certificates to buy our groceries (grin). FreeGold will allow us to use the timeless traits of gold wealth to protect ourselves from currency inflation.

From your post:
I'm with you all the way on this being a trial balloon. I think there are those in Europe who know what it's going to take to overcome the euro's problems and what better way to float the gold euro idea than through a Nobel Prize winner who happens to know what he's talking about. In the recent
interview of Judy Shelton (another economist I admire) by Robert Novak, she mentioned that gold was going to make a comeback as the international arbiter of value because it is the only true international money -- money without a country, as I have said before. She said gold was perfect
for the direction the world was going -- breaking down international trade barriers, etc.

Yes, I think we are well on the way to using gold as an international free asset in monetary affairs. The difference this time is that the next reserve currency has learned to use gold in the same way we have,,,,,,,, by allowing it to protect their system from political tinkering. Rather than use gold to force responsible currency creation through currency denomination of it's weight (something that
history has shown will always fail),,,,,, FreeGold will make the very best meter to indicate currency inflation. A meter for all to see!

again, your post:

Another thought, FOA. . .

Either way, wouldn't adopting such a proposal virtually put an end to gold sales and leases out of Europe? Perhaps the Washington Agreement was Prelude?? Talk about logic. . .


"The Winds Of Change"!


Trail Guide (09/23/00; 20:29:33MT - msg#: 37330)
beesting (9/22/2000; 13:26:21MT - msg#: 37229)
ORO is Right! The second part of ORO's # 37224 covers "EURO Intervention" today by the U.S. FED, BOJ and ECB.It's Right On!

Well my guess it was to try to show the Group of 7 (G-7) meeting tomorrow in Prague that "We(U.S. FED/BOJ)have things under control." Because, if they(FED) hadn't taken this action today, the G-7 would have devalued the U.S.Dollar by a much larger percentage at the end of their meeting. We watch together.....beesting.


Hello Beesting,

In a way I echoed ORO's nice post in my trail talk today. Truly, it's the dollar that must fall and do it in Euro terms. Our present situation is in no way comparable to past dollar problems. Our US policy must now be one of intervention as raising interest rates to a degree that would work will not be allowed.

This will be the last inflation, my friend. The last and the longest! We will find that in time all our markets will reflect this with rising prices and changing terms of trade.

If we think the G-7 cannot be maneuvered, just look at what they did to the dollar in 1985. Then it was the Yen that was so low it somewhat threatened the US. Yet, the Yen was nothing compared to the Euro Project, especially when one considers that ME oil is what helped shape it. Yes, the political will was Old Europe and BIS to the core, but oil is what made it so.

England recognized this and began making conditions to join EMU even though their public is negative. That's because they only have half the story. Britain is selling it's gold in such a strange format so as to somewhat bail out a few of it's favorite gold players. But only a few will make it.
Most of them will be eaten as the London / American gold markets evaporate. Can you imagine the Brits thinking in Euros? Ha! Ha! I have to live long enough to see this!


Trail Guide (09/23/00; 20:48:26MT - msg#: 37332)
G7 ready for further euro action
Saturday, 23 September, 2000, 19:35 GMT 20:35--- UK

---It was widely reported that Mr Summers had finally agreed to help boost the euro because of the collapse of US company profits in Europe, which has led to a sharp stock market sell-off.

The high value of the dollar against the euro makes US goods more expensive in Europe, and has been hurting their sales. ------------

Did we just talk about this?


Trail Guide (09/23/00; 20:57:18MT - msg#: 37335)
It's just some wood with string on it, no?
Do you mean to tell me a strad is worth over $40,000 now?
(huge grin)


Trail Guide (09/23/00; 21:12:51MT - msg#: 37338)
da2g (09/16/00; 22:12:13MT - msg#: 36813)
Swiss Gold Sales
This question is respectfully asked of FOA, but however I would appreciate anyone who would address it (and perhaps it has been addressed before, if so forgive me). What is the motivation of the Swiss to divest themselves of so much gold?


Hello da2g,

They are also doing some of the same maneuvers as the British (as stated below). But, as I understand it,,,,, that gold is also flowing in a round about way into the ECB system,,,,,, for Euros. The BIS (as the official selling broker) has many ways of moving gold between CBs without it ever being on the books. I think we will all see more of this gold trail once the dollar really begins it's fall.
Then,,,, every official gold owner in the world will be proclaiming their ownership of this bullion that suddenly appeared out of nowhere.

We da2g, must accept that eventually the Swiss will become part of the Euro system. Perhaps they will enter in some two tier market plan? I don't know yet, but they will be very hurt without some form of membership. To this end their gold will best work for them if it's under ECB control in an
EMCB format. We shall see.


Trail Guide (09/23/00; 21:18:42MT - msg#: 37339)
Clint H (09/16/00; 20:48:13MT - msg#: 36811)
FOA (09/16/00; 10:02:54MD - msg#37

**Yes, a few gold mining companies will make it and so too will some in the gold banking industry. It's possible they will do extremely well, but the gains will only compare evenly to the gains in physical gold. It's that simple! **

Powerful!!!! Compares to "nothing can travel faster than the speed of light?"


Hello Clint H,

I think the man that gave us E=Mc2 would also be a gold owner at this time! He understood the speed of light very well (smile).


Also: Hello Aristotle!

Trail Guide (09/23/00; 21:22:12MT - msg#: 37340)
Mr Gresham (09/16/00; 15:40:17MT - msg#: 36807)
FOA -- The Trail
You put the story together, again, all in one place. I'm amazed at your patience in doing so for us, but each time I think a little more sticks to my synapses.

Question: What have the oil producers been doing with their excess dollars since early '99's oil rise? Were they still bought off by paper gold deals? Or, not really in a hurry, they could wait to phase out of those and buy physical longer-term? Or did some of them have dollar debt to work out of first, in the process of paying off now?

How cynical are they? How much pressure is put on them in other ways to give the dollar more time? Why are they so patient, so far?

In other words, why didn't physical get a jolt from them before now?


Mr. G,,,, Hello again:

I'll be conducting a hike on that very question. Next time on the trail.


Trail Guide (09/23/00; 21:33:34MT - msg#: 37344)
Bascom Toadvine (09/20/00; 11:23:35MT - msg#: 37040)
Trail Guide
I think the western bankers left the yellow brick road when they saw the "Emerald City" (Wall Street?) of no inflation and a stock market that goes up forever. But now they have fallen asleep in the fields of poppies surrounding the city. What will they find when Glenda the good witch of the north wakes them up?....or will she? They are definitely not in Kansas anymore!


Hello Bascom Toadvine,

Nice handle. I think the good witch will wake them up. But only after she has found them in a country like Mexico. Truly, America will wish it was in Kansas again.


Trail Guide (09/23/00; 22:12:52MT - msg#: 37346)

PH in LA,

Well, I was just about to post your item. Had copied it from that day. You know, their fuel prices are changing faster than ours so some of that looks wrong. The oldest rates are OK and well before EMU, but overall,,,,,, over time the comparison is good.

But actually, PH,,, because the dollar has risen against the Euro Zone native currencies and the Euro itself, these rates indicate more of a recent uptrend in fuel costs for them (convert it back to Euros at today's rates). This is the only area where local costs have gone up in line with the dollar's appreciation. Yet, if the G-7 is forced to take the dollar back to Euro par, then their total basket will look very good compared to ours.

Their fuel prices are way higher than ours and always have been. I think you know this, your people are in Spain, no? On the surface, we must understand the uproar in Europe over fuel costs is mostly from exchange rate adjustments that are on top of rising dollar crude prices. If oil is settled
in Euros all this will change dramatically!


Trail Guide (09/23/00; 22:37:52MT - msg#: 37349)
Cavan Man (09/23/00; 21:40:44MT - msg#: 37345)
Do you recall your comment about the KRand and stating that because there was no currency value indicated on the coin, "they've already taken care of that"?


Hello Cavan Man

Yes, that is part of the reason. They had to have "thought long and Hard" on that aspect because FreeGold was but a distant Thought then.

The other is the Legal Tender problem we also discussed. While I'm not concerned with official gold confiscation, the US and it's Australian / Canadian partners may call in all their Legal Tender in some form of currency exchange. Most of our modern Western gold is "Legal Tender"! . For this
reason alone, especially when things get rough one should have brought some of the old coins. K-Rands are better than local bullion but a better mix would include a bunch of the old fractional coins. Or at least begin building on them now.

But, as a further point:

I would not suggest to anyone that they wait for the Euro gold coin before buying gold. That would be some mistake, indeed! Gold will most likely be in the thousands before they come out. Even then, a limited manufacturing capacity may limit them to Euro Zone circulation for years. It may truly be a master stroke for MK to be operating in Europe. Looking down the road and thinking out loud,,,,,,,, CPM may be one of the few dealers that could offer these new items back into the US???? You never know how things will turn out.

Thanks for reading Cavan Man


Trail Guide (09/23/00; 23:12:58MT - msg#: 37351)
Last post
Aristotle (09/23/00; 22:13:21MT - msg#: 37347)

----do you see Alan Greenspan agreeing to "play ball" now for the greater global good after having been the beneficiary of many fixed innings? Or does he believe the dollar can yet be salvaged? Or does he have no choice in the matter but to put on a brave face against the inevitable (in which case, again, "playing ball" would seem the appropriate course of action)?-----------


Aristotle, I know he believes in America and all it stood for in the past. But who can fault him for his apathy with all that is going on around him? This nation is changing,,,,, has changed and will never again be the place he knew. How could his policies ever undo all the wrong our debt has brought and paid for and still pay off our debt?

As strong as the Federal Reserve's purpose is/was, we,,,, as a nation have tied their hands with our own doings. Blaming it on the banks and the Fed is a nice way out,,,,, but the fathers of this generation and this generation itself have built our undoing by believing the bookkeeping lies they
were told. A simple person knows we cannot spend ourselves rich, but then we do not think ourselves simple,,,,, do we?

Yes Aristotle, he will play ball now. Just to keep us out of harms way a while longer. No longer is the dollar system something to salvage, it's just become something to manage to a lesser end.

Thank you and everyone here for this time. As Another always said:

"We watch this new gold market together, yes?"


Trail Guide

Trail Guide (09/27/00; 21:42:44MT - msg#: 37721)

Hello Everyone:

You know, it was only a short time ago that the smart money was telling us how the Euro would never be born. It was.

When it was born, it ran to 1.17+/-. Everyone (including the ECB) got real quiet wondering it something was wrong. You see, we now know the ECB just wanted a par (1.00) opening against the dollar. The whole game plan was never to see Euro strength this early on. I expected things may have been worse than we knew then and prepared to be "off to the races". Never the less, to my relief, the Euro soon returned to par as the currency's usage grew over the next many months. We can listen to all the trader types tell us how much it has fallen, but the reality is that price inflation in that group of nations has not justified any exchange rate drop. If anything is striking about all this it's that no one clarifies why a basket of Euro interest rates are always lower than the dollar rates? If indeed the Euro is so weak why does this secaond largest world currency command a lower lending rate? We don't hear anyone working that into the value equation. At .88 today, has the Euro really fallen? It hasn't. The dollar has gone up.

Then the traders were telling us the Euro would never be backed by gold. Or the ECB would never hold and treat gold as a monetary reserve like all the other currencies they own. In fact, today they not only hold gold as a reserve, they mark it to market quarterly. By placing gold in such a
prominent position, it does truly back the Euro every bit as much as any US dollars it holds. But traders don't have a clue what would make this so? Soon after the Euro Project started, the IMF set a new precedent by receiving gold as payment for dollar debt. This very action repositioned the
ECB gold reserve assets for later use. Whether traders think it does or not, gold is backing the Euro today? It does.

Now the Danish vote comes up and it's suddenly neck and neck. Once again the Western trading community was wrong, early on by saying the vote was completely lopsided against EMU. Whether the Danish say yes or no, clearly this Euro cat has nine lives as it's momentum continues to build. But it's a dead currency that can't survive, say the traders! Yep, that's right,,,,, these guys told us that before!

Now out of a clear blue sky, one of the oil producing countries is turning to the Euro for oil payment. Funny how that is coming up right before the big OPEC meeting in South America. Euros, gold, oil,,,,,, almost sounds like these things are tying together. But the traders said this was
all a bunch of bull,,,,,,,, does anyone still listen to the logic of a trading mentality?


From the USAGOLD market report site (link above):

Toyota steers flexible approach to the euro:
Mr Mizushima added: "If British suppliers with whom we've worked for years tell us they will have difficulty using the euro, we do not plan to abandon them but rather to help them move in that direction."

From MK's daily report,,,,, "In recent sessions, gold and the euro have risen in tandem."

Some recent news that says the G-7 intervention was done to save the dollar economy, not the Euro:

------ Lexmark blamed the shortfall on the reduced forecast of inkjet cartridge sales and weakness in European currencies. Shares plunged $14.50, or 28 percent, to $37.50.------

------The company (Kodak) said slumping sales were unable to offset pressures from a rising dollar and increased raw material costs, among others. Shares dropped $14.69 to $44.31.-----

------Intel------(I don't need to repeat that one)

A lot of policy is going to be made over the next month or so. We have said many times, this new gold market is about a war between Dollars and Euros. Watch only as dollars battle gold and you will miss 90% of the action. Our dollar paper gold market is going to lay waste to the assets of a lot
of paper gold players. Listen to the traders and it should be clear,,,,,, they don't see this one either!

Trail Guide

Trail Guide (09/27/00; 21:44:36MT - msg#: 37723)


As I said in some of my other writings, the valley between physical gold owners and paper gold substitute owners is going to grow. In the environment that's coming this is almost a given. As this new gold market evolves and progresses, paper players will fall behind because their leverage will be failing them. This is nothing new and has been in process for some time.

I watched Another's Thoughts tell the paper crowd long ago how they should hold their wealth in this changing market. He received the very same cacophony for paper we hear here today! The same outdated explanations based on using tools engineered from past experience. It's the same call from the wild, "these positions worked then so they should work this time"!

Gold options, futures, mine shares, etc. were all touted as something the smart money could trade in and out of, well ahead of the curve. It seemed to carry a silent message then and now that only the slow, dumb ones brought gold. Dumb indeed!

For the last several years these sharp paper players all used the same outdated tools to read what was quickly becoming a very new market dynamic. Their tools failed to trade then out of harm's way. I watched as most were cleaned out in the mining share game not to mention all the other
leverage plays. No, not everyone lost 50%. It was more like 60% to 70%+! But we don't hear about these slick trades, do we?

When we come to these forums it's important for lurkers to know the difference between our perspectives.

Hard money advocates (such as I) are positioning their assets for preservation. Their reasoning is based on the politics of currency use and it's changing dynamic. Because today's dynamic is so far out of balance, asset preservation in the form I advocate (long term building of physical gold) will also produce massive wealth gains.

Paper gold traders are leveraging their assets to create more wealth. Their reasoning is based on anything that makes their leverage work. Being short as well as long. Often they will promote the same dynamic as hard money advocates and assume it will also work equally in their leveraged
position. They feel they have the power to trade between the news.

For lurkers observing this, I submit that the loses taken by paper gold traders so far are alone enough to discourage new position in their arena. I also point out that in spite of the heavy loses to date, these paper traders will take many others with them on their ride. Mostly because both old
and new investors have not taken the time to learn how this new market is leveraging the paper game into the physical gold owner's favor.

Preservation or Leverage, Physical or Paper,,,,,,, they are not the same in this new game. Events will prove this correct. One side will bring wealth and profits while the other will bring busted leverage and loses. From what mountain will you watch the valley grow wide?

"time will prove all things" Another

Trail Guide

Trail Guide (09/27/00; 22:32:59MT - msg#: 37734)
Hello Megatron,

Here is your post:

--------megatron (09/27/00; 22:04:05MT - msg#: 37725)Anyone? What is 'it' that evokes this visceral hatred of people who make money trading stocks and contracts? -----

OK, let me see if I got this picture right. I'm standing at a poker table looking at several players hands. I whisper to each of them that the game has been rigged for several years and anyone that's been playing hands like their's has lost big. Best to fold and hold hard chips for a while.

Them someone comes up behind me and (after hearing my tip) says:

"What is 'it' that evokes this visceral hatred of people who make money trading jacks and queens?

My reply is: "Knock! Knock! Is anyone home up there (smile)?"

Also you write:

--------megatron (09/27/00; 21:51:02MT - msg#: 37724) trailGuide Sir, thousands of intelligent people made hundreds of millions of dollars in all of the bull gold
markets past and WILL DO SO in the next one. --------------To say otherwise is just plain stupid.

OK, my friend, why will they do so and please don't say anything we will consider stupid (smile)



This post demonstrates how the valley is growing. Losses on leveraged gains do impact civil discourse.

Trail Guide

Trail Guide (09/28/00; 07:22:48MT - msg#: 37750)
Various Comments:

-----The Invisible Hand (09/28/00; 03:46:21MT - msg#: 37741)Marking to market ----------

Hello Invisible Hand,
Ever since the world left the gold exchange standard in 71 the rules covering reserves behind currencies has been changing. Each change has brought us further and further away from using gold as an asset. The ECB has taken a new direction. Their new thrust has not only been to keep gold
as a reserve asset (as allowed by current IMF rules) but to acknowledge it's market value. This is in direct conflict with our dollar policy of marking gold to a fictitious market of $45 to the ounce.

Holding gold "at market" creates a new dynamic that supports the Euro currency as gold rises. This new asset can now be used to pay debts (IMF precident), create more Euros against or hold for further future use. Contrast this against holding a foreign reserve currency (the dollar) that, if it rises in a fashion like
today hurts your import price structure because everything is settled in dollar prices. But gold, unlike fiat currencies is an international world reserve without a country of origin. It can rise in value without the dual conflict of mandatory usage in international trade and reserve storage.

By taking this course, the ECB is staying within the rules and breaking them at the same time. The only way the dollar / gold reserve system can function is by retaining the current price retarding paper gold trading. As we have discussed endlessly, breaking and destroying the IMF / dollar / LBMA price making structure will leave only a physical market. That new market will soar in Euro support leaving the dollar politically trapped in it's current reserve structure.

This is the reason we continue to advance investor understanding of the risk in paper gold. Even though most Western players have built their positions by using all forms of paper leverage, it's this very paper house that's about to fall. Carrying away the dreams of many.


Miner49er,,,, exceptionally fine writing. We must talk. I'll offer my views later.

AUgustAU,,,,,, More of the same, please.

Journeyman and Black Blade,,,,,, I know I never say it but your comments and posts on this board
are wonderful. Nice effort.


I truly do support the gold industry and hope it profits everyone. I do own some shares. It would be my best morning to wake up to find all paper leveraged vehicles soaring with a big gold run. Still, the political game is moving away from just such an action. We shall see.

Trail Guide

Trail Guide (09/28/00; 21:40:18MT - msg#: 37822)
Comment on the news

"Keep your eye on the game, not the ball! "

Sierra Madre,,,,, thanks for asking.
ORO,,,,,,,,, thanks for explaining.
TownCrier,,,, thanks for placing it in order #: 37809

ALL: OPEC is very much together these days. On Wednesday Saudi Arabia offered to pump more but indirectly tied it's offer to reductions in local taxes on crude products. Let's see how the West spins this one?

Thursday September 28 9:19 PM ET

OPEC Blames Rich World Tax for Costly Fuel

By Tom Ashby

CARACAS (Reuters) - OPEC (news - web sites) heads of state laid the blame for high oil prices squarely on industrialized nations on Thursday and said debt was a greater threat to the world's poor than expensive fuel.

Leaders of the Organization of the Petroleum Exporting Countries strongly denied they were endangering world economic growth and pointed the finger instead at fuel taxation in the developed world.

``OPEC is not blackmailing anyone. OPEC is not a cause of poverty in the world,'' said Venezuelan President Hugo Chavez, the host of a summit celebrating the cartel's 40th birthday.

``It is the horrific, diabolical world economic system that is to blame ... The debt burden is a greater hindrance to development than the high oil price.''

The Saudi-dominated exporter group is under pressure from consuming nations across all continents to boost oil supplies and provide some relief to escalating energy bills.

But an OPEC declaration issued as the summit drew to a close said fuel taxes that provide key revenues for Western governments were doing most damage to consumers' pocketbooks.

``Excessive taxation on petroleum products accounts for the highest share of the final price to the consumers in the major consuming countries,'' the so-called Caracas Declaration said.

It said major consuming nations should consider reducing fuel taxes for the benefit of their citizens and world growth.

OPEC would aim to supply oil at fair and stable prices, while boosting cooperation with non-OPEC producers and consuming countries to try to steady the market, said the declaration read by OPEC Secretary-General Rilwanu Lukman.

Chavez, promoting the cartel as a Third World champion, said a recent oil price spike had been driven by financial speculation, problems in the oil refining business and unjust terms of trade.

``We have relaunched OPEC, a united OPEC for all the world to see,'' said Chavez, who helped end a price slump last year by coordinating output with Saudi Arabia and non-OPEC Mexico.

The 11-nation group accounts for two-thirds of internationally traded crude oil and 40 percent of world crude production. It holds the vast majority of world oil reserves.

The declaration made no mention of sanctions, a key concern for members such as Iran, Iraq and Libya, seen by Washington as pariah states for alleged support of what it calls terrorism.

The countries deny the charge and experts argue world oil output could be up to two million barrels per day (bpd) higher were it not for the curbs on their oil industries.

Iraq Wanted Opec To Denounce Sanctions

Iraq had proposed the declaration denounce U.N. sanctions imposed after it invaded fellow-OPEC member Kuwait in 1990.

Delegates have said this was resisted by several OPEC countries including Saudi Arabia, which has been at odds with Baghdad ever since the invasion. A U.S.-led alliance based in Saudi Arabia ejected Iraqi troops from Kuwait in 1991.

OPEC did speak up on the environment and foreign debt, saying it wanted a more coordinated approach in international gatherings to easing the burden of heavily indebted nations.

``The biggest environmental tragedy facing the globe is human poverty,'' it said.

OPEC President Ali Rodriguez of Venezuela said he was expecting contacts with the European Union before a November 17-18 producer-consumer conference in Riyadh which will see high level representation from the U.S. and the EU.

The West's energy watchdog, the International Energy Agency (IEA), has called an emergency meeting of its governing board on October 4 to discuss the world oil market.

The IEA groups 25 industrialized nations and is responsible for coordinating joint steps to meet oil supply emergencies.

France has called for a meeting between OPEC and EU countries hit by protests over high fuel taxes that provide a key revenue source for European governments.

This year's price spike has mainly been driven by fears of fuel shortages in the United States, which consumes a fifth of world oil. U.S. fuel inventories stand near 24-year lows.

Several European countries have consulted each other over the possibility of following Washington's lead and releasing strategic oil reserves to depress high prices.

Saudi Arabia, the world's largest oil producer, on Wednesday offered consumers an olive branch by declaring it stood ready to pump whatever volume would curb rampant prices.

But Saudi Crown Prince Abdullah urged industrialized nations to do their part by lowering taxes and said the cartel was being unjustly blamed for problems in the global economy.

Iraq stepped up verbal attacks on Saudi Arabia and Kuwait in an apparent bid to block a big Kuwaiti Gulf War compensation claim debated this week in Geneva.

On Thursday the five permanent Security Council powers, in approving the Kuwaiti claim for $15.9 billion in compensation from Iraq, also agreed to reduce the rate of reparations Baghdad pays for the invasion.

Some oil traders had anticipated that Iraq might disrupt the market by withholding its crude exports if the Kuwaiti claim went through without any gesture toward Baghdad.

But Iraqi Vice-President Taha Yassin Ramadan said on Thursday Iraq would not do that as it would not be in its own interests.

Iraq has frequently curtailed its own oil exports for at least several weeks between six-monthly phases of a U.N.- monitored Iraqi oil exchange.

Trail Guide (9/30/2000; 20:17:31MT - msg#: 37946)
My Thoughts


I wanted to talk some along the lines of thought in these two posts by miner49er. There is too much to copy so, if you please just read them again for assimilation with my discussion.
-miner49er (09/24/00; msg# 37381)-----
-miner49er (9/22/2000; msg#: 37234)-----

The Greatest Conspiracy; It's Called life

We are planning later this month to have a nice dinner party for a few couples. I chose the wine to be the absolute best for complimenting each course. We spent hours and hours agonizing over the finest combinations of ingredients for our gourmet offering. The music will be perfect, lighting
adjusted just right and great conversation would engross the entire affair. All of this and for what end?

Yes, my wife and I are deep within a great conspiracy. With every intent it is our plan to entertain our guest and friends. With any luck we will pull this off and in the process show these good people an exceptionally fine time. Perhaps they will also leave here with a feeling that the evening was a success. Perhaps they will be happily that we twisted reality, changed the rules and generally created such an illusion for their benefit. I know we will enjoy it (smile)!

Such is this world of people we all are born into and live with today. It's normal and what we do. Humans conspire, plan and interact in an effort to manipulate the outcome of their life and the lives of others. We have been doing it from the beginning and will be doing it long after this present group is gone.

Whether the manipulation is with intent to gain for oneself, give to another or take from others, it is "THE dynamic" in our lives. There is little that any of us do either by ourselves or with a partner without conspiring for a preconceived outcome.

With this picture in mind it's easier for us "simple minded people" (yes I'm in that category) to understand how nothing in this life can be certain. Be it a law, a contract, a promise, an intent or just living life to death with a great deal of purpose; if humans are involved our plans end effects and that impact on others are always uncertain.

To this end I say "there is no such thing as integrity of contract"! From the days of our founding fathers and long before them, our dealings with each other are only as good as the last "settlement"! That's because no one rules the wind.

Most of us look for a "seasoned" mortgage before buying it (lending money?). We look for performance both past and present before entering an agreement (going over the books?). But our demands are in the present while we as people must perform against those requirements in the
future. And the future is always that dark space just ahead.


Hello miner49er,

We want to know who is going to win this game, don't we. Will it be Europe, China, the USA? Or will our oil producers walk away with the gold and then some? You know, it wasn't long ago that anyone even thought to ask questions along these lines (smile).

Do I know? No. I can only see their hands moving to the next chess player. One side places his hand on the knight while the other uses both hands to touch both queen and bishop. I know, that part is illegal. But in international power plays, rules are only good until someone else breaks them.
Then we are suddenly looking backwards at what history says the rules used to be.

What do I think? Well:

First, thanks for the Amen (smile) to my thoughts about Alan Greenspan I agree with you that he and most of our contemporary (American) politicians long ago inherited a lost cause in managing US monetary policy. We read endlessly where investors (and traders) try to explain away our
bankruptcy with something as simple as a change of money policy. Such reasoning usually grows from one's investment position that was taken prior to thinking.

It's like saying "my particular industry or market arena cannot fail, that's why I have an investment in it" (grin).

Using a logic that requires one to walk forward while looking backwards; they quickly gloss over our intense degeneration away from financial integrity. Then, just as quickly they slight the Europeans for such an add hock mix as the Euro Project. Truly, in reading and hearing these public pronouncements we have seen the enemy in ourselves. Our own reasoning becomes the very tools officials use to work the markets against us.

You asked me about gold confiscation. I am thinking that my view is often misconstrued with that of our host (Michael Kosares) on this issue. Actually it's more likely to be on somewhat the same level (that means i'm trying to catch up to him).

This country cannot possibly return to any semblance of a solid financial entity in out lifetime. Wading through all the thinking presented on both the internet and in the homes of major players, one cannot help but be struck by the loss of grasp for the gravity of the issue. It seems everyone is
betting we will have an "almost breakdown" someday in our system and positioning themselves for that occurrence. I think this is grounded in our perception that nothing else could take our place in the world power structure. But the history of fallen powers is all around us. Russia is a fine recent example.

This is the same attitude of "nothing can top us", also prevailed in England when the pound was king. Today, to prepare for anything of greater change than Britain underwent is to be placed in the "doomsday" camp. Yet, doomsday has escaped many countries that experienced these great inflations and power breakdowns.

If one only uses the recent bailouts of major banks and trading houses as an example and extrapolates such an action into a nation wide panic; we can clearly see how a full scale currency crisis could evolve. Something along the lines of a 1930 style banking shutdown is an almost
certainty. In addition, a complete currency recall (or remake if you will) could not be avoided in any twist of reality. We have to remember that this is coming in a context of having had, in the future the largest inflation this nation has ever seen.

I believe that "then", in a 180 degree turn from 1930s when gold was king, they will recognize gold at the value it would be trading at. Perhaps in the many, many thousands of dollars and thousands in Euros. Because the US will be the power experiencing international bankruptcy, the need to tie
gold to their currency would be utmost. In this process, they would call in all Legal Tender moneys for replacement. Modern gold bullion is in that official category. They will reissue both a gold backed fiat and copying Europe, a new gold coin.

Of course, the main agitation here is that the gold value at that time, in our modern eagles would not match what is contained in the new issues being created. Yes, I think most everyone would try to melt them down. But I bet that in that turmoil all sorts of restrictions and rules would be in place that work against an easy transition. Indeed, as I said in a thought appropriate for such a context in the future "I wouldn't have to outrun the government man, just out run you" (smile).

So, as you can see miner49er, my position isn't simply from an academic standpoint. Correct positioning requires that one should "conspire" to place their house of wealth in order today.

To do so is in keeping with the thrust and title of this post; being part of "The Greatest Conspiracy"!

Trail Guide

Trail Guide (9/30/2000; 20:45:42MT - msg#: 37948)

I am writing on your old #37512 and today's 37912. Also the next hike. Will post next day, thanks

Trail Guide

Gold Trail Update (10/02/00; 17:03:29MDT - Msg ID:38056)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/02/00; 17:03:27MD - msg#40)
Show Time!

Hello travelers!

In the world today it's looking more and more like our physical gold trail is the best place to be. Because it takes the "high road" above risk, we can watch the action with little fear of ending up with nothing. Indeed, we may end up with everything!

However, be ware, while hiking the physical trail it's easy for us to be confused with those on that other paper gold trail. When asked, "are you still hurting from exposure to gold substitute paper", I have to reply; "I'm sorry, you must have missed the climbers across the valley". "Yes I say, we can hear their problems over there, even far over on this side, but their gold is not like ours. Indeed, nor is their pain ours!

So often Western observers wonder, "why do so many "Giants" buy physical gold when it's going down"? Well, my friends, I'll use the same example we offered recently about the Euro; it's not that gold is going down so much as the dollar is being driven up in failure, and truly this end drive will be it's very last. We will not have to suffer this play much longer.

Look around the world and place yourself in many of it's other countries. Consider just how many of them have seen the dollar rise over recent years, say at least 30% against their local moneys. Yet, prior to this recent oil run, the actual cost and pricing structure of most American goods has not risen this same 30%+ within it's domestic market. No, I'm not making a case for the US CPI figures being correct, clearly they are not. But, the US has not even begun to enter it's real price inflation phase. A phase that brings to light our price inflation on a world scale.

The point we are making by taking a foreign view is that gold prices are marking the world reserve currency's domestic pricing market, not it's currency's exchange market. Just as in our recent Euro and EuroLand posts, we measure a currencies true values within it's local markets. From these positions it's clear that US goods have not come close to pricing all the dollar expansion of the last 20+ years. A dynamic that would have been exposed long ago if our reserve currency function were threatened as it is now.

Had a large cross segment of foreign nationals owned dollars over the last number of years, they would have watched their purchasing power in the US market gain some 30% or more when comparing to their various local moneys. Yet, US prices did not even drop a little on a productivity basis balancing act that could have evened out the loss on exchange against these foreign moneys. No, the whole world is not so evil or completely wrong in it's currencies and goods pricing values. Nor are we so god given productive. Clearly, the dollar is being driven up in an end time liquidity game that is more like a race between suitors. But this race is exposing our age.

As an example of value justification, had these nationals owned gold in one of these countries at say $400US; the loss of gold purchasing power on the US market would more directly compare to their average (many nations) currency's exchange loses. Take that 30% from $400 gold and you find the range of $280 gold. About where we are now. This recent price is demonstrating the world over that using gold as a real economic value scale, US goods have already been inflated in America today. Yes, our inflation is running 30%+ over these last years, compared to the world's price structure.

(Those of you falling behind, climb hard and take larger steps. We need to get to the top before sunset, so the battle can be seen!)

This is the process that we are now deep into. Our economy cannot adjust to this form of competition using it's normal, from the past currency policy. To sustain our current economic momentum we must resort to a serious outright currency inflation. Only, this time the game will be different than from before! Today, the world's only true modern reserve currency is going to price all fiats on a level playing field. That currency, by the way, "is oil"!

In the time directly before us, this level and in the open competition is going to gut our economy by exploding the US trade deficit before it explodes anyone else's. Eventually, our inability to shut down that deficit will demand a super run in our local US price structure. This dynamic will also be exposed in the "DOLLAR" price of real "physical gold".


So Mr Gresham,
(and also hello, sir (smile))

You ask in your USAGOLD FORUM post #36807: "In other words, why didn't physical get a jolt from them before now?"

Because they and other Giants were buying all the gold our american made paper markets would supply without driving the price above a domestic US price structure comparison. Remember, the question was never "Where" is the gold going, rather always why are we selling it?

This past inflation of paper gold would not only produce circumstances that only strengthen the exchange rate value of our dollars, but somewhat lower the price of gold in relation to our local goods prices instead of against oil. This position generated buying at the constantly lower levels this new ratio generated. Even though gold would later be priced in dollars using oil at 1gm per barrel. Lower gold was good for them (us) but demanded a currency policy above our economic structure's ability to sustain. Even as our true price inflation remained hidden in the dollar's reserve currency status, it was only a matter of time before the system fell apart. If cheap oil could only keep US prices even (not falling) then expensive oil would one day demand at least a strong economy busting exchange rate. It will be to that end (our economy will fail with our reserve currency status) and physical gold will rise from serious bidding to match any future economic supportive price inflation we embark upon. You and I know what the system will provide.

Expose a market dynamic that is delivering in your favor by taking more than can be supplied? You don't! You allow the broken system to expose itself first, then you move on. You see, unlike the boys across the valley, many of us (grin) are buying gold "the currency" not gold "the commodity". There is a world of strategic difference in how and why this is done today compared to yesterday.

The Washington Agreement was a signal as to what side of gold the ECB was on. Now, with all the players at the chess board, the clock has just been punched! All the words I and Another have written is now on the line!

My friend, it's show time!


FOA/ Your Trail Guide

Trail Guide (10/6/2000; 6:27:50MT - msg#: 38379)
The Show Has Begun!
The dollar must fall to help the US continue it's end time march. First move done. Next one is in the pipeline!

Paris, Friday, October 6, 2000

--FRANKFURT - The European Central Bank surprised markets Thursday by raising interest rates--------

---'We see no threat to growth'' from this rate increase, Mr. Duisenberg said. He said the euro-zone economy was at ''cruising altitude.''-----------

-----The move stunned economists----------

------''They keep raising rates into a slowing economy, '-----''It is hard to see why they would have done it today other than to try to prop up the euro.''-------------

------The ECB seems intent on crushing any inflation that stems from high crude oil prices and the weak euro. It cannot afford to appear soft on inflation, analysts said, when its own credibility is on trial and the euro under pressure.------

------Still, Mr. Duisenberg said, ''We had the maximum possible degree of consensus on today's decision.'' ------------

I'll skip the hike this weekend and show up here to discuss and clarify.

Trail Guide

Gold Trail Update (10/07/00; 12:29:11MDT - Msg ID:38470)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/07/00; 12:29:10MD - msg#41)
Checking the view!

Hello everyone,

Before starting my discussion on the main forum today, let me begin the long process of clarifying our ( mine and the Giants I walk behind) views and understandings of the many concepts that drive our position. Indeed, these concepts and positions create and drive "the modern gold markets" of today.

By now many of you can see, that as events have proven, our gold market has indeed evolved. It's become a different sort of animal than the one we knew a few short years ago. Certainly it's response to world events is not even close to it's reply even as far back as fifteen years ago. Whether you follow gold stocks, play the gold paper derivatives or buy bullion itself, your portfolio has been impacted by these important changes in how gold is valued and priced.

Addressing everyone now with this is important, because most every investor in the "gold market" dynamic reads these words and has a perceived failing stake in the game. I also believe the entire system as we know it has reached the end of it's timeline that Another's Thoughts were always pointing to. So, today I'll make the first of many, clear and to the point posts. All done with a purpose of getting everyone into shape for the long hike directly before us.


Dollar currency and paper Gold? ----- both have been inflated ----- both will fail!---

Take a brief moment to look at the dollar as a fiat currency only and forget anything about it's past or present connection to gold. Consider the dollar as being backed by the actual goods it's economy (the USA) produces and how that backing is governed by a stable price for those goods.

In other words let's assume we will allow the USA to print all the currency it wants as long as that amount matches the ability of our economic structure to deliver goods against those dollars. Further, let's say the gauge of whether this is working correctly is read in the price of those goods (in dollars) being stable.

As long as our (USA) society could make goods and deliver then for dollars in a stable price range, it should be fair to say that any and all of us would always own, retain, save and use dollars as a reasonable paper currency. If over any ten or twenty year period, the fiat prices for delivered goods stayed the same, in the minds of everyone (myself included) digital paper dollars would indeed be as good as owning things themselves.

Do you see the thought thrust of the above? By a wide margin, humans want to equate holding dollars as the same as holding goods. Like this fictional account:
### I went to a Ford dealer the other day to see about getting a new SUV explorer. The dealer I went to had a ten year supply of them on hand (he must have been a big dealer - smile) and said they went for $22,000 each. He said that he had so many of them that their price would not vary much at all and they could even fall. Further, he said that I could take my time,,,,,, no rush,,,, come in any time and he was sure the supply would be there. Well,,,,,, I had the $22K in the bank and my old SUV was still working fairly well,,,,,,, so I didn't buy. I just went home, safe in the assumption that my $22K in the bank was as good as a new Ford SUV. In fact,,,, as the weeks went buy I even told my friends I had a "paper SUV" in the bank! All I had to do was "call for delivery"! ###
You see where this is going now, don't you? Over time, America has printed and created various forms of dollars and dollar substitutes while distributing then at home and the world over. The driving force behind this dynamic is in ours and the world's perception that these dollars are paper versions of "real things". This is the bedrock of a fiat currency; that the economic structure of the nation that prints said money can deliver goods against that currency and do it at a stable price.

Our dollar currency system has drifted far, far away from this expectation. Early on, years ago as we began printing more money than the goods we produced could be delivered (sell) against, prices began to rise (price inflation). But we adapted by expecting interest returns on these dollar holdings to make up the price rises. We accepted that if in general, American price inflation was running at say 5% then an 8% return would somewhat cover it. Over time and throughout our up and down price inflation cycles, we progressed further and further into accepting some form of ever increasing extra return on dollar savings as the balancing factor. Today, whether it's the stock market, bonds or whatever, dollar holders rely more and more on trading profits and derivatives to cover the added risk.

So what is wrong with this? Well,,,, our private dollar accounts have been covered because their numbers are increasing. At least if you have done your homework and were a good trader! Truly, there are ever increasing dollars in the world and their increase is helping to reassure dollar holders that their money is still equal to "real things". But, in reality it's the ability of the finite US system to deliver real goods against these ever increasing paper demands for delivery that is in question.

Over time, we have come to think of all of our various dollar substitutes as being easily converted into real things by just calling for delivery. In other words, spending them on something.


This "spending" is the process directly before us that will default the dollar through inflation. This is how a contract system, like our dollar currency begins to fail. Everyone, through trading or just plain old interest on CDs has built up an ever larger holding of "paper delivery notices" in the form of dollar credits. Like my example above, these "paper SUVs" have been inflated even as the ability to supply real goods produced in the US, has stayed the same. In fact, "THE PHYSICAL GOODS" that must be legally delivered against these "dollar legal tender credits" cannot come anywhere close to covering the (fiat) contracts written!

In the days ahead, we will see it as price inflation as Physical goods cannot be delivered against all the outstanding currency calls in the consumer marketplace. In many cases, it's the holders of these "paper SUV" contracts (what we call dollars) that will see their savings value tumble as the underlying physical goods soars in price.

So, this is the classical price inflation that results after a long expansion of a fiat currency. From the beginning the currency is seen as a contract for the delivery of goods sometime in the future. We save it (fiat) instead of spending it because it's convent and logical. Yet, the more that people, and in general the international marketplace relies on this method of holding their goods the more the officials expand the contracts (fiat currency) as a method of creating fictional wealth. This expanded currency is used to buy services, goods and commodities, even oil! But it's timeline has a beginning and an end. Today, we are at the dollar's end!


So do we see any comparison to "paper gold" in the above? You bet we do! Like hand in glove "gold the money" travels the exact same route "dollars the fiat" does in our modern banking system.

For every person that thinks their "paper dollar" holdings can be spent for goods and receive those goods (call for delivery) at near today's price,,,,,,,,,, there are almost as many "paper gold holders" that think the world system will "deliver gold" in the price and amounts they have contracted for. Folks,,,,,, in today's world that's a lot of gold owners!

Yet, the holders of "paper gold" will fair little better than the holders of "paper dollars" in the coming super inflation. Both will lag the price rises of physical goods and physical gold as the inability of the finite supply system to deliver comes into play. One will end up in grocery markets trying to spend those paper dollar contracts and beat rising prices, while the other ends up in court, waiting for the delivery of physical gold that simply does not exist.


Another (and by following him, myself also) has seen this end from long ago. We buy physical gold not for it's commodity dollar value, but rather for it's money value in the coming failure of the entire dollar system. We do not expect the world to fail, rather change. We see a transition where traders see the loss of a infrastructure that blocks their building of wealth. Bullish gold traders detest our view because it denies them their dollar trading profits. Yet, dollar profits were exactly what we were trying to avoid.

To date, Another's view and position has been and is continuing to be right. The dollar paper system is on fire and the gold paper system is failing from continuous supply. The dollar is being forced upward as oil values rise, blocking all efforts of the Fed to raise rates and contract the runaway system. Hyperinflation is directly in our path.

I'll talk more about this and other things on the main forum, today.

Trail Guide
Trail Guide (10/07/00; 15:51:46MT - msg#: 38486)

Trail Guide (10/07/00; 16:53:08MT - msg#: 38490)

Hell everyone,

I wasn't going to add anything to the trail today, but we decided it was time to begin placing things in clear terms. It looks like our political posturing is leaving the "let's talk about this behind the door stage" and entering the "show us your cards stage". This is not just predicated on the recent ECB rate hike alone. Some other things are in the works and with this new climate, it won't be long before we see it on the news.

Certainly, we must talk about SteveH's recent posts. He has made a real effort in trying to unravel the gold value question. In addition ORO has some good reasoning that must be addressed. So before I begin:

Hello Hermit Club, and welcome!

I fully well know just how hard it is to see the prospects of US dollar price inflation right now. Unless one has been following this trail for a long time the present economic momentum seems like an object in motion that must stay in motion. But as I tried to present in the Showtime post, the US domestic price structure is already primed to show it's price inflation dynamic. For the first time we have placed ourselves in an unretractable situation. The dollar is terribly strong from this currency competition that it was forced into. If the Federal reserve tries to raise rates to slow our runaway expansion the dollar will only get more overvalued. That process alone will drive our deficit to the
moon. They will not are not going to allow this much longer. Yet, the fed has little choice but to stand pat or even lower rates in the face of any perceived slowdown. With the current debt and derivative stress built into the dollar system, their only card is currency exchange intervention to
lower the dollar. But we will always hear this as supporting some other currency.

As Giovanni Dioro said in #38437, " but judge them not by their words, but by their actions".

Hello GD, we do judge them by their actions. Just because the Western press, official press releases and various traders say the recent intervention is for the Euro doesn't mean it's true! On one side of the equator the drain water swirls one way while on the other side it goes the other, no? So if the Euro is up the dollar is down? Or is it if the Euro is down the dollar is up? Which perception is right?

We watch the actual local buying power relative to the local currencies to judge which way the water flows. Not only is Euro purchasing power relatively stable, it's basic across the board interest rates are lower than the US. The ECB could just as easily raise their rates to par with the US and the Euro would spike well above the dollar without any intervention at all. But making the Euro "as strong as the dollar right now is not their plan. The dynamic is to lower our over stressed dollar back to a "strong Euro level"! Now that's a different picture when one sees the Euro where it is with it's low financing rates. Rates that are building a solid foundation under their markets. In time here is where we will see who has the power!

But Euro weakness is not and never was the problem. The ball is squarely in the US court for them to lower the dollar to save their economy busting trade deficit from blowing them sky high. That will require the US to buy Euros or lower their rates and both those actions will greatly expose the
current built in weakness within the US structure. Yes, indeed, everyone is following the Euro weakness ball, but we are watching the entire dollar game. And that tells us that the recent action is part of a larger gameplan to unseat the dollar.

So, take the strong dollar position if you will, but doing so will place your bet in the right direction, but on the wrong horse. Just like trying to leverage a gold market position using a paper dynamic; good bet, wrong horse.


Trail Guide

Trail Guide (10/07/00; 17:09:35MT - msg#: 38493)

Black Blade,

As a point of trivia: did you know that back in the early to mid 70s a Mcf of top tier (that's heavy) natural gas sold as high as $9.50!! That's when an old friend of mine that owned the Woodlands (in Houston) started cracking it into liquids. FWIW

Trail Guide (10/07/00; 18:05:08MT - msg#: 38501)

ORO (10/6/2000; 14:54:46MT - msg#: 38403)
Trail Guide - ECB rate hike
I take it that the WAR is going out into the open. Is that so?

Hello ORO and thank you for your time here. Your ongoing breakdown of economics is to say the least, expansive! (smile)

Yes, the war is heating up now. There is simply no time left for negotiations. Officials are definitely beginning to play their cards before the betting even comes around. Don't be surprised if the US strongly stomps on the dollar at the same time they lower rates. This will smash the carry markets and probably crunch the dow. Whether they can wait until after the election is now very iffy??

All the posturing in the ME for accepting Euros for oil is having an effect and the higher the oil price goes the greater this effect is becoming. I said in the spring that $45 a barrel was coming and now $30 looks like the bottom. If we allow such a settlement proposition to go by without some action against the dollar to head it off, the eventual drop in dollar strength could be incredible. Let's face it,
the only difference between the dollar and Euros right now is world settlement support for all goods. With our trade deficit where it is, selling dollars for even third tier currencies would crash it.

your post:

Some mention has been made that Eddie is dumping Euro and that the hedgies got a green light to resume shorting the Euro from the Anglo camp. Does this mean the UK has finally decided to go with the dollar camp after Labour stating for years that the EMU membership is "inevitable"? Was this presumed turn of events the cause for the escalation?

No possible way, ORO! That's another example of trader posturing. These guys have been shorting the Euro and Yen from the get go and don't know what's waiting for them. You said it all later in your post "Euro carry has had the door slammed in its face"! Their positions makes good talk, but in reality they are just providing hedge material (making a deep market) for legitimate trade financing in Euros. The shorts are in it for a trade while the big finance is done for many years. If you finance in Euros your risk is in a rising currency, so these shorts create the derivative for you to throw off to them, your risk. Once the perception changes, these billions in shorts will not have a market to cover in. The big international positions will just keep the shorts capitol and then some!

UK is sliding right into EMU whether they like it or not. How can they not? The dollar has hit it's final timeline top and the US fed will see to it it's downhill from here on out. The only escape for the UK is to jump into the relatively closed trading markets in the Euro zone. The EMU group trades with themselves a lot more than with anyone else so being within them during a free for all in the
dollar will prove irresistible. I sold my pounds a long time ago and know they will belong to me once again in the form of Euros. (smile)


Further to comment to your post:

I think we have only begun to hear this talk about Euro oil settlement. Some of it is shifting right now and not saying anything about it. The Russians are selling so little of anything they are a non event right now. But wait, they will follow the leader, especially as we see more of an active stance from the US bringing down the dollar.

Now, for Steve (smile).

Trail Guide

Trail Guide (10/07/00; 20:46:57MT - msg#: 38517)

SteveH, what can I say, you have written so much recently I have a hard time covering it all. Because my system comes on in auto mode and copies the forum at random times,,,,, or someone does it for me,,,,, I don't always catch all the imput. So, I'll try to comment on some of your thrust.

Just looking at 714's post #38448 today one can see that oil prices in gold go way back. It's no secret that in a broad term of valuations 1 gram brought a barrel of oil. We mentioned something to that effect long ago. Truth be told that is where Bunker Hunt got the angle when silver was in the $20 range in the late 70s. Then silver was hitting the old dollar gold targets that gave 1 gram gold for a barrel. He went on and on how one ounce of silver was equal to a barrel of oil.

Well, so much for then. Some producers are striving for a pricing gauge that can peg the value of oil in a modern society. A gauge that is not corrupted by currency inflation (I'm talking about the expansion of currencies not the general price levels such an expansion produces).

If someone is going to print some derivative,,,,, hand it to you in exchange for a finite commodity,,,,,, that's fine as long as you immediately lend it back to them or spend it for something. The problem today is that lending derivatives only brings in more derivatives and that process is made irreversible if the nation you deal with runs a permanent trade deficit. That's because the remedy to said trade deficit, when it is eventually deployed destroys the actual derivative (paper money) you are lending. It doesn't take a nuclear scientist to understand how this will end and how
it will affect your long term wealth. On the other hand, spending the money on something has it's limits when you are trying to build a self-sustaining economy. One that allows your citizens to market their abilities to the world. Neither can you trade your paper dollar wealth for gold wealth if the rest of the world gets wind of it?

In the end you are left to selling some portion of your oil for gold. No it doesn't happen the way our trader boys delight in degrading it; "some truck loaded with gold backs up and dumps bullion bars on the ground as the main man tells his worker bee to turn the valve"! No the oil is turned into bookkeeping currency digits in some bank's computer. Then those digits are traded for the ownership or rights to gold. When someone posted what Another said the figures were, I think that that 20 million of actual bullion in retention represented the tally over some ten years (and was growing).

You see, gold like any currency is also spent. Even Cavan Man (smile) can add up all his pay receipts over ten years and that doesn't equal his savings. That would be nice CMan but it doesn't work that way, does it? The main reason they don't take gold outright, 1 gm per barrel is that "noone" wants to bust the digital system completely. As much as everyone thinks our paper money is all bad, it really works fairly well. I think oil producers are like everyone else and only want a more fair control on the print press. As it is right now, the dollar is done and we are just witnessing
the management of it's transition away from reserve status.

To that end, oil has played the gold paper game with the best of them. No, they don't expect all their paper to return physical gold. But they do expect the gold they now have and a portion that will be sent to them (settling paper) to take over any lost wealth that occurs as the dollar grinds down. Needless to say, gold will have to jump a great deal to do this. It will. In doing this gold's
dollar value will represent all the incoming domestic US price inflation on the horizon plus all the currency inflation left over after the dollar hype's out. Again, that will be a lot. Much, much higher than anyone with Western eyes can now see.

But selling (inflating) paper gold to keep the price down (so oil can flow) had it's draw backs for the dollar system. Yes, it creates a two tier paper market that will send gold to the most favored first (in case of failure). But the left over contracts (held by hedgers both large and small) will have a huge disproportionate impact on the financial structure. Not only will no gold be delivered because
enough doesn't exist, but the price rise of physical against such paper will drain the books of many major financial houses. And at the price levels we are talking about, official intervention will be an absolute. At least until the wipe out is done, then gold will come to the forefront. Further, in today's world of molecular speed trading, all of this initial crisis will happen in a heartbeat. Blink,,,, it's done!


Steve, like I offered in an earlier post today, what perception of value is true? With all the dollars and their derivatives that are around today (80 trillion??) how can we know where the worth of oil is to our modern society? The continuos printing of dollar derivatives and gold derivatives makes the whole question a joke. Even supply and demand cannot answer the question when our supply and demand use dollars to create both sides of the equation. This is where physical gold comes in. It's the only denominator that is money in and of itself and no one can inflate it. We say, OK, one gram per barrel is where we are going. What currency price per barrel will that be? Who can tell? Will that much gold flow in to cover all the barrels produced? Of course not, all of us have bills. But some small portion will be retained and it's that portion that has become the ticking time bomb for the paper gold world!

This is the reason Another said they would eventually burn the paper markets. His implication was if the Euro failed at birth and later if the Euro succeeded. Once the Europeans began their withdrawal in 1999, it would be left to the US to act in it's own best interest. Just as they did in 71,
they will print paper gold currency until it's trading market values it at zero. Going back in time, I remember when the pre 71 dollar was being sold (inter CB trade) for 1/10 it's gold backing because everyone began to expect that no gold would be delivered to settle international trade
balances. I suspect that our present gold markets will do the same thing.

The Europeans have tried to structure their new currency to be prominently displayed as all this unfolds. Any breakdown in the dollar paper gold system will drive people away from dollars and into Euros and physical gold. Because the ECB / BIS is committed to a FreeGold market, the sky will be the limit in dollar terms. I fully expect the ECB to begin it's assault now because as Mr. D has said, our Euro is now mature and can walk into battle. We shall see!

thanks SteveH

Trail Guide

rail Guide (10/07/00; 21:53:36MT - msg#: 38526)

JavaMan (10/07/00; 19:13:20MT - msg#: 38503)

Now THAT doesn't sound good. Please, Trail Guide, for the common man, would you care to expand on "the US fed will see to it it's downhill from here on out"?

JavaMan, Hello!
Well, the US economy is going full blast now even as the dollar is at it's peak. In the past, at this stage the dollar would have already rolled over from the effects of fed / treasury / government intervention to slow the boom. In fact, contrary to everything we read and hear, they have been trying to slow this thing down for some time. We only hear it as; "it's the new computer, highly productive, new wave, next economy that's driving all the money into the US and their markets"! But, in reality something was out there driving the dollar higher even as the brakes were being

Now the government is in a box it's never been in before. It they raise rates or slow reserve creation this will just drive the dollar ever higher while at the top of a boom phase. The explosion in deficit trade balances would at some point cause a crack up from where there is no escape
(deflation?). They can only play the intervention card to lower the dollar and that (because we are the dollar creating entity) will cause an inflationary run. Further, in conjunction with intervention, they could also lower rates. This will have the same effect in this overheated marketplace. Either way, the dollar is going to drop to the level of the Euro.

Note: again, I ask how are we going to know that? It will spin as "the Euro finally rose to dollar par"!

Then and only then will we all have a look at our respective US and European financial structures on a relative even basis. I expect to see the Euro Zone taking off with some price inflation and a declining trade surplus heading toward deficit. All the while the US goes hyper with mountains of
dollars coming home. And I don't mean coming home for investment. I mean coming home to exercise delivery against real US produced goods. I expect that before this is over, we (US) might be forced to use our gold card to help devalue the dollar. That would involve a forced restructuring of. the gold markets so as to make gold rise. A few political heads would roll if this takes place. Believe it!

So, will this all begin before the elections? The fuel certainly is in place. We shall see.

Trail Guide

Trail Guide (10/07/00; 22:10:49MT - msg#: 38529)

beesting (10/07/00; 19:25:14MT - msg#: 38504)

It seems since Sept. 22,2000 the up and down movements of the paper Gold markets close-ly follow the up and down movements of the Euro value on the FOREX markets. Is this movement a coincidence or is there some sort of correlation going on between the (perceived) price of Gold and the value of the Euro?

Hello beasting,

I know that somewhere,,,,,, out there,,,,,,, some smart brains are starting to put a relative value on the Euro using it's relationship to gold. It's only just starting, but it's almost like using Euros in place of what Gold stocks used to be. Indeed, if the Euro becomes established as the premier settlement currency and fully allows gold to price out to whatever level,,,,,, then in dollar terms Euros will return an awful lot. Just look at it like a native holding dollars during one of the Asian meltdowns?

As time goes by gold and Euros will most likely run together. Again, we shall see.

Trail Guide

Trail Guide (10/07/00; 22:26:10MT - msg#: 38532)
Last post.


Your question about oil and it's continued use in this unfolding drama is a whole chapter's worth of replies. Oil will some day be priced very cheaply and this will make an end run around fuel cell technology and what have you. It's not the supply of oil that's been a problem, rather how we pay for it in real money.

Thanks all
Until the next time on the Gold Trail

Trail Guide

Gold Trail Update (10/14/2000; 10:30:04MDT - Msg ID:39008)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/14/2000; 10:30:03MD - msg#42)
Our Position -- Their Position ----- From Which Mountain Will You View The Valley Battle

Hello once again!

I see that our little group of "Western Minded Physical Gold Advocates" is growing by leaps and bounds. I have added Western to the phrase as a way of distinguishing them from most of the world's other physical buyers. It seems that outside our American way of understanding wealth, gold has always been a savings currency for other peoples! Only now has the Western mind begun to see gold as real wealth. Anyway, each week's walk on the trail has more hikers than the last. No doubt the ongoing failure of paper gold substitutes must be taking it's toll.

Many new travelers here once held long term beliefs (myself included) about physical gold and it's relationship with various leveraged paper gold substitutes. I understand how easy it is to consider these relationships to be solid, valued historic perceptions. But today, they are not.

Most of the current gold market and it's industry has only recently matured to the present state of paper sophistication. If I had to venture a guess I would say it all began just 28 +/- years ago, in 1971? An even better estimate would tie it to the early to mid 80s. In any event, this is the period (from then till say 1996) that most gold thinkers use to build value relationships into paper gold from physical gold. In other words, if gold is at "such and such" price then typical, traditional trading has historically valued paper prices (mine stocks, gold options, futures, etc.?) at "such and such" price.

What so many failed to understand was that all of those old dollar gold values and their paper relationships were created during the dollar "near failure" of that time (70s?). Not the dollar failure that's coming (00s?). The great dollar inflation, back then in the USA and it's impact on our world was hardly an inflation by historic readings. Truly, what our Western minds saw as a colossal explosion in gold prices was only a "blip" of size and substance relative to the "blip" of inflation that occurred then! Again, the physical - to - paper context of today uses those same conditions and trading results to reach value conclusions and extrapolates these into our future paper gold substitute's prices. A process that I submit will find our paper gold traders running far behind the real price inflation that's coming. Yes, these paper gold plays may indeed go up, but they will not gain the way bullion does relative to the currency destruction that's ahead.

The only lasting impact the historic 70s dollar price inflation had was to set off a search to create a replacement for the world's greenback reserve system. A "political will" was created to hold this reserve system together at any and all cost and for whatever amount of time was needed to build said replacement. If the "will" was not strong enough or "time" not long enough, it was easy to see that gold would be the fall back reserve. Indeed, that would be quite a fall back, especially for those people (governments included) without gold.

We make the point for physical gold today because today is different! There is a huge difference between controlling an "ongoing price inflation" and battling an ongoing timeline failure of your currency. The first is controlled through printing restraint, while the second is managed to a bitter end. Some would sarcastically say "it's manipulated for it's longest lasting effects".

So, we walk this trail to build an understanding of "gold the savings" not "gold the dollar account multiplier"! Thinking as the "Giants" walking before us think;
"we don't want more dollars as a result of gold gaining permanent long term value that will last a lifetime, we want more gold"!

Our Position -- Their Position ----- From Which Mountain Will You View The Valley Battle

Once again, I'll expand further while we walk so as to make our case more clear.

Last week I closed by saying; " " We do not expect the world to fail, rather (to) change. We see a transition where traders see the loss of an infrastructure (paper gold market place) that blocks their building of wealth." "!

It's a clear choice for anyone walking this trail; use paper gold derivatives to gain more dollars or hold physical gold to gain more wealth?

This is the presentation we offer. This is the wisdom you must decide upon.

Will our dollar show a strong price inflation as it did in the 70s? If it does and does so in a slowly building fashion, then the current paper gold market and pricing system should work. Allowing it's participants a chance to "cash out" into more dollars. Dollars, I might add that should gain somewhat in goods pricing value as the system cycles through one more price inflation phase.To date, this outdated trading strategy is not working, is it?

Truly, this is the race most paper gold players are betting on. They point to the fact that gold bugs have been calling for dollar destruction and hyperinflation for a long, long time. Yet, it never happened! I agree. Indeed, we (modern Physical Gold Advocates) never saw the dollar as ending it's reserve roll then, either. Nor did we figure that the USA or it's dollar empire would fall. We brought and held (long term) some gold, but mostly sold in and out of the cycles as best as possible.

But as time traveled on, dollar debt exploded in a fashion none of us could understand. Over this same period, my relationship with several world thinkers helped me to grasp the changing dynamics of our money system. Placing all of the "Oil for Gold" and "Political Games" in a lesser dimension, I learned where we were headed over the long term. Indeed, ongoing national financial strategies are only something to observe along the trail.

A transition away from our dollar reserve world went a long way to defining the process we witnessed over this last decade. There is simply no possible way the dollar debt load could have been expanded to it's present scale without a massive worldwide helping hand. Yet conversely, to help explode dollar assets was clearly and end time maneuver that would destroy everyone's assets. Unless some other system was on the wind, ready to take over.

This is really where our modern gold trail begins, the early 90s. Mostly because this is when the logic began to leak out from behind closed doors. We can see the influence of "Old World" hard money in this new fiat reserve creation, where gold can be the fall back if the system fails. We can now openly see the slow destruction of our dollar's mainstay in creating it's value illusion; "the dollar based, world paper gold system".

Clearly, this system had full international support for many years as our paper gold pricing helped to maintain dollar demand and use through it's illusion of dollar value. That mirage was always a steady to falling gold price that not only helped price oil, but strengthened dollar savings demand. Starting in the mid 90s, we began to see the very first cracks in this support as it became clear to us that paper gold market support would fall away as the Euro was born and grew. Once established and with the Euro "walking on it's own legs" support for the dollar, in lower gold prices would fall ever more heavily upon our US financial structure. A structure that ironically is heavily built on the British LBMA. Perhaps explaining the struggle to keep England out of EMU for as long as possible.

Knowing full well that they could not sell US treasury gold into a BIS sanctioned currency reserve transition for fear that foreign CBs would simply consume all the gold, they opened the paper gold flood gates in a fashion similar to printing dollars prior to 1971. Today, our old disgraced system of non redeemable 70s dollars backed by insufficient vault gold has been replaced with "commodity market contract gold". Any increase in stress would require Paper gold to flood the markets in ever increasing amounts so as to stifle any rise in the system. A dollar gold paper system that sets the price of physical gold trading. Indeed, as our good poster on the USAGOLD FORUM (SteveH) (hello Steve, smile) notes it, they are using commodity gold markets to influence world monetary gold values and reserves.

Is all of this a surprise? No, at least not to Modern Physical Gold Advocates that have been watching "Events" these last few years, as Another asked. Clearly, this is the guide map for an ending currency system. You explode the currency substitutes (debt?) worldwide, to save your banking system for as long as traders will accept it. When international "political will" begins to walk away from your fiat, you take up the ball of last resort and run with it; "you inflate the gold issuance for all you are worth"! Indeed, you sell it into destruction!

Let's rest a minute and look around!

Now do you see why major players are buying physical gold as carefully as possible out of sight? Now do you see why they are also buying paper gold, in sight so as to make a market and slow it's destruction decent. The longer the system can work, right up to the end, the more small amounts of gold can be brought. Eventually, even a tiny amount of gold will more than balance all the loses in dollar gold contracts.

Further, do you see why even gold mines will suffer such a loss of share value as the paper price descends. Yet, once to it's (gold's) final destruction level (and the share prices follow it), the rise in physical will come in a full scale crisis that demands crisis nationalization of all paper trading. Not Physical trading, just paper contract trading! Paper market shut down for adjustments?

Because the new fiat competitor for our dollar system has based it's strength on a functioning free gold marketplace, every nation will be forced to do the same using bullion. To compete they will have no choice but to free gold for their citizens, even as they lock down in ground reserves with grandfather "windfall profits taxes"! All enacted while share trading and paper bullion trading is halted for months on end.

As I stand here, my view is:

I do not hate gold shares (I own some) or gold derivatives (I own three of those also as an experiment on the main forum).

My only offense to paper gold traders is that;

"I place these gold substitutes in their proper perspective in our changing world". "Another" has challenged you to do the same.

More during our next get together,,,, a fireside chat.
FOA/ Your Trail Guide
Trail Guide (10/17/00; 06:31:36MT - msg#: 39207)

Hello SteveH,

I had time away from gardening this morning, so reading your directives and TownCrier's recent good thoughts gave me something to say.

I read your recent long post that organized (in your own mind) all the goings on in the currency / gold world. It is some mess, isn't it? A lot of the better understanding of all this has been hidden for years as it was covered up with "goldbug" oratorio from the broker / trader camp.

You see, our world of physical gold thinking has been influenced by these Western trader thoughts and convictions for many years. Physical gold advocates didn't know how much the "gold - is - wealth" story was being diluted until only recently.

Now as we watch reality sink in, events are distilling the gold story and burning off all their paper trading theories. Suddenly (for them it's suddenly) gold is not "to the world" what traders wanted it to be or played it for. Leveraged paper gold substitutes and their lot, such as mining shares are no longer as good as physical.

This is a hard truth for most Western hard money thinkers to accept. They predicated their investment position for years (and some still do) on the past record that is; "as long as paper gold multiplied my dollar account in more or equal fashion as bullion, then paper is as good as gold".

But the truth always was that a dollar account will never keep up with physical gold during a currency war where the fiat is defeated. This is the final outcome that hard money advocates have waited for and positioned themselves against for many years. Yet, when the game is at hand, they find themselves having taken a hard money position that advocates more paper trading (instead of riding physical). They
brought the leverage story and it's suddenly become a leverage against them. All the while we knew that the most fantastic leverage available was really in holding physical.
After reviewing some of the posts on other forums it's clear they are drifting now. Traders (such as "uptick"?) entered this paper arena and operated in it most of their hard money lifetime. They analyzed it like it was a stock or commodity. They did this over the recent life of our semi free gold
market since it was born. Sometimes with success and sometimes not, but now that gold is entering it's real explosive stage their game plan cannot read it. Paper trades don't work when this thought comes out into the open; "gold - is - an - international - money - and - manipulated - in - fiat - warfare - just - like - currencies"------.

The gulf between those that have "physical and can stay and master the play" and " those that will be driven out with paper loses to great to bear" is widening now. The once confident trading opinions we all read are being burned out of our gold world and truth is replacing them. In some
ways it's good to have these outdated thoughts still posted because even "new to the game" thinkers can see this is not the way to go. Even though sharfin is not a newcomer, he is smarter than than most. Here is part of his post:

Date: Tue Oct 17 2000 02:32
sharefin (The tent pegs come flyeth undone.....) ID#284255:
Copyright © 2000 sharefin/Kitco Inc. All rights reserved

The comments weren't mine but from the other side. As to your last comment re paper gold.
I think exactly opposite.

There's no way I would touch paper gold till after this coming correction. All the signs are there that paper gold is slowly being destroyed. To commit assets to paper gold in front of a meltdown is a lunacy.

After the washout perchance it will be different. But to do so before is pure gambling.

Our modern gold market is set to bankrupt itself. All the political options have been put in play now and it's showtime. We must grab all the physical possible without disrupting the price setting mechanism. Lean back and watch as the US (our) dollar / gold structure cooks away in it's own stew. "NOONE" is going to grab any gold at the bottom of the turn because it will not be for sale then for an extended workout time. Once the real dollar price emerges (many thousands) only physical will trade. Only at this time, at and after the turn will paper gold be fully discredited in a total default. Don't look for many posts saying this thinking was right, those traders will be too
despondent to even think much less write. I don't feel to badly about saying this as most of these guys were never hard money advocates in the first place. Many of them never stood back and looked at what their actions really entailed. That being; they mostly wanted to use the physical gold
advocate's actions to make some leveraged money for themselves then move on. Owning real wealth was never their philosophy.

So, every investment era has it's beginning and end. We (I assume you are a bullion holder like myself) can stand back and watch this paper gold system dissolve while gold the real international currency moves on. Our wealth in gold , whether large or small will weather this storm and produce
some spectacular gains for our living standard. All because we made the hard choice to stand aside the misguided torrent that was an unavoidable river of Western thought.

To use an illustration from an old Robert Redford movie I state my own verse;

"the land is pure from peak to peak
it is we that must choose our gate
from where to view this nation's thoughts that flow
this river that runs through it will decide our fate"

Trail Guide

Trail Guide (10/17/00; 12:55:38MT - msg#: 39235)
Reply / comment
Knallgold (10/17/00; 08:58:16MT - msg#: 39216)

Hello Knallgold,

I will never finish my fresh herb garden if I continue to read these posts. Good health and a strong spirit from fine wine with food is much better than gold, you know (smile).

Yes, I also own some gold shares. It's quite an amount, even at these prices. But it is in a reasonable proportion to my other assets. Should have never said anything about it because I knew very few people would understand the rational at that time.

Brought the companies for their philosophy, not their current (at that time) share values. This was done with an eye on the future, on the other side of this battle. From the beginning, it was fully well understood that the paper price of gold would fall until some convulsion crushed it's credibility. Where on the dollar gold price range this would occur depended on the players at the chess board. But, the ongoing dollar price was never to be the gauge of success, anyway.

With this in mind, the very best shares were chosen (there are only a few good ones around the world). Both bullion (large amounts, still accumulating) and shares (small amount and one time buy) were brought with an expectation of a zero price in dollars. In other words; we brought shares for
their possible survival and we brought bullion to own ounces outright, not dollars per ounce. This is a far different and stronger mental position than you read from leveraged traders, no? If gold soars tomorrow, good! If it plunges tomorrow, good! I am on this trail for the destination, not the game. Even though, the sights along the way will be incredible to behold.

For better of worse, richer or poorer, in sickness and good health,,,,,, this is the path I follow. After reading that line, you are correct to assume I am married to this position (smile). I can tell you it is a very large ongoing wedding, because none of us ever walk this trail alone.


I have to say that had the mining industry promoted it's product as a wealth holding and pushed for investors to buy gold first, ahead of and in greater quantity than their common shares; there is a good chance the markets would have changed long before now. No different than watching Ford
push their vehicles and ending up with people owning and always buying more of their product. Never hear of anyone saying their ford shares can carry just as much as a new ranger (smile).

But, by promoting paper leverage (of all kinds) as being the same or better in value than what history taught us about gold, trader advocates played themselves and their investors right into the slaughter of open currency warfare.

It would be great if these markets would break, right now. Giving some type of paper run that allowed many regular people time to reallocate. It may, but political will is against it. As it is, many such as yourself (?) are striving mentally to adjust their diminished capitol so as not to risk it all.

By the way,,,,,, the very old investor I mentioned some time ago,,,,, the one that was slowly allocation a decades long ride in the dow into bullion. He is now completely out and in cash and bullion. He trusts gold and knows nothing about oil or the Euro. Yet, still strong in his feelings that a
big inflation may lift the dow further. I don't dare debate him because his record is flawless for some many many years,,,, and his wealth is truly great.

good luck
(now back to my hobby)
Trail Guide

Trail Guide (10/19/2000; 5:48:31MT - msg#: 39387)
(No Subject)

Hello all!

I have a few replies / comments:
HA! HA! This is good! You know, there are only a hand full of people that know I post here and one of them just sent me this comment. I had to share some of it with everyone. It went like this

auspec (10/18/2000; 17:27:06MT - msg#: 39342)
What say you fellow {half} wits??????????
His how his note to me was: What the hell? That auspec has some nerve. I spent years trying to move from 1/4 wit up to the 1/3 wit level! Now I have to orientate my goals to reach his 1/2 mark to enter that select group. Well they can stick it, I won't live long enough to get there!

ALL: this is how some of these brainy people think when they are drinking a little. HA! HA! HA!(laughing hard) (smiling) Here is another one:

Aristotle (10/18/2000; 7:24:11MT - msg#: 39302)
Chimps, Champs, and Chumps

Don't you think he was a little over on the Chimps? Good lord man, Darwin said they were here as part of the natural order of things!

Aristotle, I'm slapping the leg and laughing again. Your post was a good one in more ways than one (smile).

OK. I'm going to comment later on some of the other good posts yesterday.

(smiling) Trail Guide

Trail Guide (10/19/00; 17:48:31MT - msg#: 39425)
(No Subject)

I was going to post again, but am glad to have waited. Many more good items were presented that also deserved comment. I'm reading, thinking, exploring what must be said. I'll reply later.

Nice posts all
Trail Guide

Gold Trail Update (10/20/00; 14:00:09MDT - Msg ID:39500)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/20/00; 14:00:07MD - msg#43)
A Fireside Chat

Let's settle by the outdoor hearth for heat and conversation. I even see Michael Kosares back there with a warm cup. The fire is aglow,,,,,, the talk is about the trail before us:

Aristotle, said this today:
Aristotle (10/19/2000; 5:44:45MT - msg#: 39386)
Do you heed your own advice? Thoughts on Trade deficits--big and small

"""""As for the U.S., we are in a unique but temporary position in which we haven't yet had to pay the full price for our past trade deficits. Until that day arrives (with severe currency devaluation), we might be inclined to stand the old terms on their heads and describe our current trade deficit as a FAVORABLE trade position because we are receiving real goods and services from other countries with partial payment (required in excess of our own exports) made in typically depreciating paper of our own easy creation.""""""


In this post you also made another very good point (see full post) by directing Hard Money Advocates to pursue their own often stated doctrine. I think that perception is a given; that when the crisis hits, everyone the world over will be buying gold for depreciating dollars! Indeed, if your Chimps, Champs and Chumps (see his #39302 on the main forum for definitions) are really forward thinking, they would be wise to follow their own strategy by buying physical gold now. Before the winds blow?

Further to ALL:
Following on Aristotle's above:

The dollar deficit is truly the main money destruction tool being forced to function in our modern "killing fields" of today! In the past we saw this trade deficit function operate for only short periods as it constricted growth in our US economy! Now, they have not only the US economy but also it's currency caught permanently in this long term trap. For the first time since we left the gold standard while making them play by our rules, they now have us. Once before, in 1985 (look at a dollar chart then) we were well on our way to the same problems, but the difference then was that "noone" had a potential alternative reserve currency system to run to when we induced a recession. Today they do and this "waiting in the wings system" is the hatchet tool in the hands of our world markets that will do us in. As the ECB says;
""" it's not the Euro is too low, your dollar is too high ,,,,,,,, so go ahead, make my day and fix it"""! (smile)
Indeed, no intervention by the US now is a stab in the heart of the dollar economy.

The US has had the rest of the world in somewhat of a trap also. For a long, long time. Perhaps from when we told them that the world gold exchange standard bearer would no longer ship gold for dollars. From that point on we (USA, my country) could inflate our money without consequences.

In fact, we had to inflate in this "Darwin" fashion over all these years! Truly, if we did not inflate long term and ship liquidity (created dollars) outside the US, our dollar's value would always soar above other strong currencies. This is because of it's world settlement function. Notice I said soar over their value instead of they would fall away from our value. There is a difference. As in our recent hikes, we saw that the internal basket of goods prices for both dollars and Euros dictated that these currencies are at opposite extremes in value and should reverse. Further; I use Darwin because everyone came to think that our sending money overseas was part of the "natural order of things" (chimps (smile)). They thought and still do think that the world just craves our money! They will have a different opinion later.

We must reconcile with the truth of this process by looking at the dollar world from 1971; the one time the dollar soared too high for too long it began killing off our economy. Forcing us into the same printing policy other lesser nations must employ to keep their exchange rate level. Yes, even the USA must sell overseas to create jobs and profits at home. A huge trade deficit in a reserve currency nation, induced by an overvalued currency like we are seeing now, raises the currency's value even further above other strong fiats. This is the way such a reserve system naturally reacts when there is no local reduction in liquidity to check it.

A regular (non reserve currency) nation's money would suffer a different fate if they inflated the native currency the way we do. It's non trade settlement function begets a falling exchange rate. That in turn drives then into the same policy of hyper inflation but it's effects are felt in higher prices, immediately.

Again, conversely, a reserve currency always rises in exchange function from this forced "liquidity draining" trade settlement. Once on this trend, over time, the higher it's value goes the more people finance in other mediums (yen carry, gold carry, Euro carry, oil carry) This further dries up the fractional reserve created dollar reserves as the demand for dollars grows ever stronger from it's ever higher cost trade settlements. Settlements dictated because IMF / dollar protocols demand dollar use as settlement.

In the past if the system began driving the dollar too high and forcing US trade deficits, the Fed would raise rates to throw us (USA) into an economic recession that broke the vicious deficit trade cycle. Knowing full well that it would be a short recession policy because "noone" would jump the dollar ship before the medicine could work. Looking around back then and we see there was no other reserve currency ship to jump to. We either lose jobs and profits from an "overvalued currency" or from an induced recession. The first can lead to a financial breakdown, the lasts corrects things after only a short while. Naturally, we embark on the quick fix of a fast recession.

This is why our times are so very different now. What the "chimps" came to know over this 20+ year period as a strong America in a high dollar, was always something our money creators were striving to fight against. We truly have always been inflating our currency for these many years in a attempt to keep the natural effects of the IMF reserve system from spiking the currency too high up. Again, if we had a regular currency, our policies would have been reflected in sky high prices for everything. What most of us "smart chimps" know as price inflation reflecting money supply inflation.

OK, let me sip some starbuck's:

Ever since the Euro was seen in by US policy makers as an eventual success, our treasury has tried to put it's best "New York Spin" on the ongoing process. Simply stated; from the early to mid 90s we are in favor of a strong dollar policy. In reality, with the advent of the Euro and the evolving stance of the BIS, this has made our "economy killing" strong dollar unavoidable.

There is no way the Fed can create a new recession now without everyone jumping ship for another currency reserve. There is no possible way the Euro Zone will suffer as big a downfall as the US in another policy induced recession. Just looking at their closed economy and debt structure tells that story by itself. Any US slowdown means a run for the Euro, yet weakness in the Euro means the US must inflate at a torrid rate. We now stand toe to toe and wait to see who will fall first. All the while our world dollar gold markets are caught in the cross fire!

This is where we have been for the last decade. This explains why the DOW and all it's paper cousins have enjoyed the effects of a massive, ongoing dollar expansion worldwide without any official policy interference. Right when we were to the point of changing policy to slow things down, the Euro was to be introduced in a year or two and risked taking away or sharing the dollar's standard.

The "lesser chimps", lost in Western thought keep waiting for the fed to induce their deflationary policy. (I was monkey - ing around in this area for a while myself) (grin) It is not coming. To do so now would commit the dollar to non reserve status in a hurry and produce a massive price inflation at home (right now) as all these unneeded dollar reserves come racing home. Remember, the ECB does not need dollar reserves! The Euro is a stand alone currency representing an in house trading block. They may have to buy dollars for oil, but others must also buy Euros for European produced goods. If the Euro went to .10 to the dollar the EuroZone economy would not stop. But all international dollar trade would grind to a halt. The USA could not sell anything internationally, at all! Every other nation would simply abandon the IMF protocols and use their native currencies to trade directly with Europe. Even Arabia would break their SDR basket peg and trade oil for Euro goods, either using their currency or directly if needed.

Our outdoor fireplace is getting hot, lets step away.

The lesser of the two evils today (and this is the one the ECB / BIS enjoys watching) is our current frozen policy. We can no longer cut off the strong dollar / growing deficit circle by raising rates and invoking a recession as in the past. This time we must continue to pump the reserves at all costs in a process that only floods the world with more dollars. It's called a currency hyperinflation and is one we (as US people) have never witnessed in modern times. The pressure has built up full volume now as all escape valves are being closed. We are well on the way to a derivatives exploding event that will break into the open with a cascading dollar and full force US price inflation.

This is the "why" for the gold derivatives policy that Physical Gold Advocates are now enjoying. Also one that leveraged paper gold investors are being tortured with. In effect, we "gold buyers" are trading 1971 style dollar derivatives contracts for the physical gold we never could get then. And doing so before a 1971 style gold event that comes in the form of a denouncement of the contractual viability of all gold contracts. Let's call it "no gold for dollar derivatives"!

All the while, just like in 71 other "chUmps" (smile) are saving these same paper gold substitutes to protect themselves from this same crisis.
Further; many of them have sold their physical gold for use by the BBs. I think SteveH calls it OPG (other peoples gold). This is where the real supply that fills a Physical Gold Advocate nation's coffers (and mine) comes from. It's truly a good deal in light of what's coming. Let's not mess it up by talking about who is buying all that gold, rather just point everyone to watch how much is being sold!

The US cannot walk away from hiking our ""gold trail"" now. Because "this process" is one of the few tools available to them for keeping the dollar perception in a good light. In effect by slowing the currency transition process they are doing exactly what world dollar holders need the to do. They will inflate these derivatives until in effect; our modern gold market bankrupts itself as supply is exhausted. I say, good! (smile) But once we get to that stage, I expect that a super US economic downturn will ensue. Then the fed will go wide open and cover everything in sight to keep us going! The ongoing price inflation will be driving everything from physical gold to real estate through the roof.

I submit that many smart hard money thinkers like Traveler and Thai Gold (and many others) are walking forward but looking backward. I (myself) have tried this before but usually run into something I didn't see in front of me (smile). That something today, for modern hard money followers is in the form of an internationally induced transition away from the US dollar as a reserve currency. Such a policy evolution has the effects of driving the lead currency's creator into printing press mode as an only option to maintaining the viability of our economic and financial structures.

Yes, it eventually breaks everything! But this is nothing new for us gold history buffs and it's what has happen in countless modern national fiats around the world today. Nations that don't have a reserve currency to play with. We will do like their citizens do, continue to use dollars but carry in our pockets whatever new reserve is in fashion, as a backup! Be it gold or Euros or both. In addition, our entire financial structure (like in these other nations) will change to operating in an inflation economy. Money will be lost, big time and made big time, but things will still be financed, brought and sold. Houses will double, triple then double again in price, even as financing rates approach 35%, 40% or whatever. We will also follow the (then) prevailing world policy concerning physical gold, solely because it will make economic sense to our officials.

As such; like today, everyone uses dollar reserves because it keeps us within accepted international policy. Across the currency warfare valley our "gold trail" is coming to, we will also use gold as a free reserve medium. Mostly because it's what the leading reserve policy of that time will dictate and that will keep us on good trading terms.

No, we will not confiscate gold again. Perhaps if it is designated as US legal tender and caught up in some kind of currency change, that will pose a risk! But that's just following the same fiat rollovers so many other countries now must employ and will have little impact on most gold owners. Besides, PGA's know how to avoid such a trap through physical gold ownership diversity! US Eagles held along with a diverse group of new and old coins fit my pocket just fine. I don't worry about the premium on any ounces I buy today. In the future, the total price we now pay will probably be the premium anyway (huge smile from ear to ear!)

Again, as international trends follow the use of physical gold into the free trading asset realm, no longer as an official money, then it's value and ownership will soar the world over. To date this is the future before us as the dollar fails it's function.

Truly, a relationship with an honest international physical gold dealer will no doubt place oneself at the center of this exciting new financial evolution. (I'm trying to think of a dealer that would fit that description? I know I just saw one on this page. Somewhere?) (smile)

Don't tell me an inflating dollar economy doesn't work this way! I have lived in many, many lands and have witnessed and used such inflating systems. Look around for yourself at how non reserve moneys are impacted by their native policy today and the effects of those policies on all real assets. There are few examples that do not follow this regular fiat price inflation mode. Our dollar use and function is about to revert to a lesser more common level, suffering it's drop away from reserve need. In doing so it will change as never before in our time. In fact, it's only the current gold pricing system that may experience a larger change. Not only in use but in Western gold value perception.

""""We watch this new gold market together, yes?""""""

Thank you one and all for sharing this time
Trail Guide
Aristotle (10/18/2000; 7:24:11MT - msg#: 39302)
Chimps, Champs, and Chumps
I enjoyed the brief detour of the forum on Monday (and some previous days) into the realm of personality types -- with the Gold-related hypothesis that Gold advocates are most likely of the *NT* type. Dabbling with a linked on-line testing page revealed me to be distinctly a type INTP --for whatever that's worth to anyone keeping score.

Which brings me to my point. Any population can be divided and subdivided yet further based on the presence or absence of any given trait. In one rough cut we can focus on those who think independently about monetary affairs, and the remainder will be those who just go along with the flow. I call this latter group the "chimps" in this post because they see no evil, hear no evil, and speak no evil regarding the dollar, and are contentedly guided by the credo "Monkey see, monkey do." They follow the directions of their neighbors, whom at this point in time have been conditioned to consider Gold in low esteem. Obviously, this post is not written for the chimps--they aren't visitors to this forum.

Of the group of thinkers who see the problems with the dollar and the special merits to be found in Gold, we can divide them further into the physical "champs" and the paper "chumps." The champs are the ones who stand behind their thoughts by acquiring the Metal that they support in principle. This post isn't written for the champs, either -- they're already on the right track.

Hello, chumps. You guys comprise the sad group that is "so close and yet so far." Your good independent thinking has steered you toward the merits of Gold, yet you have undermined yourself in an attempt to capture additional paper through leverage based on the proclivity of me and my fellow champs to drive up Gold prices through our wise demand for Metal. Sorry. It doesn't work that way--as I (and many others here) have explained time and again, and most recently this past weekend.

What you chumps fail to recognize is that the Gold itself is the objective and desirable monetary wealth--as a safe and meaningful alternative to dollars which are subject to devaluation and collapse. And most importantly, you also fail to recognize the true role of your leveraged paper gold (futures) within the Gold market. The crux of this entire post is contained in the next two sentences, so open your mind and think objectively, setting aside briefly your indignance that words on a computer monitor have called you a chump.

Long positions in paper gold are NOT used, as you might like to think, as a "fire insurance policy" among institutions having vested interests in the status quo, whereby such a long derivative position would be expected (by you) to compensate them for rising Gold prices and weaker dollars. Instead, these institutions use the offering of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.(!)

By allowing yourself to miss the big picture, you are being played for a chump. The tragedy is not that you are throwing your paper currency away on paper gold, but rather that you approached so close to the brink of truth, and yet will likely have nothing material to show for your journey and efforts. It's not too late to stop beating your dead horse and take your place on the growing bandwagon headed down the Gold trail--that is, if you're not too consumed by your own pride and determination to stay with your horse until it regains its breath. My prediction is that the vultures will have your flesh too, because you'll let them.

Gold. Get you some. ---Aristotle
Trail Guide (10/21/00; 08:50:07MT - msg#: 39569)

SteveH (10/21/2000; 5:03:21MT - msg#: 39550)
Snippet from above link (even the-Privateer is getting on the Euro for gold band wagon now):

Hello Steve,

I'm hearing more and more where various commentators are allowing for a change in this direction. Most of them still do not think it's a real plausible event, but can at least see the pressures building in that way.

When I said a few days ago that it was showtime, several major moves came out of the woodwork.

Paris, Friday, October 6, 2000 ------- ECB Raises Key Rate ------ 'We see no threat to growth'' from this rate increase, Mr. Duisenberg said. He said the euro-zone economy was at ''cruising altitude.''----- "the forces underlying solid growth in the medium term remain in place"-----


Dubai Monday, October 09, 2000 ---------
Mr Jacques Santer, former president of the European Commission, has called on Gulf Arab oil exporters to price their crude in the euro rather than the US dollar as a means
to stabilize the oil market --------- "It could be the instrument to consolidate oil markets" and would be less affected by US foreign policy, he told a Gulf-Euro conference in Dubai. ------ "Trust and partnership spirit between the Union and the GCC could well increase if we were to consider trading the barrel in the euro" instead of the
dollar,-------- the future will certainly offer us opportunities for a move in this direction," he said, describing Europe as the world's biggest oil importer. ---------- "My contention is that the euro will move again toward parity with the US dollar by gradual extension of
the euro in international transactions"--------


BAGHDAD (AFP) - - Iraq's central bank has begun to buy european currencies, following Baghdad's decision to stop using the dollar, the INA agency reported-------Iraq's cabinet commissioned a team of economists on September 14 to prepare a study on the possibility of using the euro or any other currency in Iraq's trade instead of the Dollar.----

These were powerful diplomatic thrusts and they received very little commentary in our media. Santer's proposal is "in the works" as we speak and will impact the dollar now
and for a long time into the future. It has to be appealing to the producers in that region because the bulk of their supply goes to EuroZone countries. Why do you think
Duisenberg is playing his hands off policy so openly now? Market traders don't have a clue to the "whys" of his recent remarks. They think he is some fool. He's offering them (producers) a completely independent currency, exactly what they wanted and lobbied the ECB / BIS team for during pre Euro formation. We in the US are standing on our heads trying to explain how the Euro has fallen against the dollar. Stand on our feet and it's easy for anyone to see that the Euro is fine and in a strong position. It's the dollar that has risen far above other hard currencies lately.

This whole scene is playing out in a fashion that will allow producers (and ultimately many others) to shift (sell) out of dollar reserves while it's over valued. I cannot stress enough how important this development is or it's influence on American money policy in the months and years ahead.
Everyone thinks "showtime" means a spike in gold. In reality, it's all about a currency war that is setting the stage for a crushing failure in our gold pricing mechanism.

I remember when we used to get post after post of Middle East experts telling us how the US had all these producers under their thumb. We would never allow them to raise prices, they said! Again, that's walking forward while looking backwards. In the early 90s desert storm era, this was true to a degree. But, I point out that the Euro was not available then and most everyone said it wouldn't even be born. Today, it's a whole new political initiative because money always talked louder than guns.

Here we are with $30+ oil (who of these poster experts would have believed it, back then??? MK knew!) and the prospects are for it to go much much higher. So, what is our heavy handed, massive influence in the region doing to change this? Well, we take a serious, strong approach in the matter to show the world just how much our US military might can buy in production increases: "we release oil from our strategic oil reserve"!!! OK! That should send a signal that nothing has changed in the affairs, right??!! We rule that part of the world, right?!

the whole notion that we would back out of any military conflict in that region because they dropped our dollar is ludicrous. We must defend their oil production at all costs, no matter what currency they use. We simply cannot afford to allow that supply to completely fund EuroZone development at a cheaper price than we can get it for. That is exactly what would happen if we do not continue to back their governments and economic systems. Without free military and funding for
their economic structure's longevity, we would ultimately lose all influence in the region. This is strategic planing not discussed in the open by any of our want to be experts. For us (USA), keeping all oil, worldwide, priced somewhat par (in any currency vs the dollar) is extremely important to US vital interest. Both military and economic.


Today, all Euro oil supply is headed to being priced and settled in Euros. This change will greatly impact world perception as to the value of holding US dollar reserves. It is a change that is now "on the table" and producers are not taking the decision lightly. Once the ball starts rolling, it's good buy dollar overvaluation,,,,, and hello US hyper inflation. Especially if we want to keep our DOW and
financial structure away from bookkeeping failure. Roaring prices for goods, yes, but bookkeeping failure, no! This is how a real inflation plays out!


Again, ThaiGold, Traveler and others make good points, but these positions do not factor in the political will that's now in process. ThaiGold's argument that physical gold will be confiscated has been around for a long time. It has often been used as a reason to buy paper gold substitutes (mine
shares, ex?) because of their past response to such an action. But, today taking such a position is not working, is it? That's because it doesn't factor in the new "gold market direction" Another pointed to long ago. I only recently understood completely the ramifications of it. Anyone reading my Trails posts also understands it now. As far as to FreeGold and Legal Tender problems; our discussions about these items are numerous and date back to pre Thai days. Most of you long time readers have followed it as ORO, Aristotle and many others debated these issues.

Whether our paper price making markets take contract gold values higher or lower here is not the complete issue. The whole presentation is based on an utter failure of the entire dollar markets for gold as they now exist in paper form. The little physical gold that trades relative to the gargantuan paper trading today, will be completely overwhelmed as the dollar is transitioned from reserve
status. This "crushing of credibility" of paper gold will have an extreme impact on market valuations of all gold shares. "Semi hard money paper gold bulls" used to tell everyone that they would hold these shares through any crisis. Now we are finding out just hard their claim is in the face of the real ramifications of dollar destruction! The facts are that paper gold only functions well in "regular inflation's" like we saw in the 70s and 80s. When "real events" start marching our currencies into open warfare, paper gold is worthless. Unless you can hold them through a complete trading shutdown where their mark to the market value would be "ZERO"!

Many market watchers have always said that the battle was between the dollar and gold. That was true until another digital currency could take it's (dollars) place. We have been putting this private discussion in front of the public for a few years now. Recently with the help of Aristotle, SteveH, TownCrier, ORO and many others posters (too many to mention), Michael Kosares's USAGOLD forums are blazing the trail for all to see.

All of the many items ThaiGold posted today about government control of gold pertains to past policy in a different ""gold is official government money era"". The use of gold through that era is riddled with failure. In the future (see my latest Gold Trails) currency reserve competition will
require a country to keep gold free for private trade. Making price discovery a physical affair only. This will come about in a completely different atmosphere from today where gold is still manipulated as a world "official currency" asset. Mostly now manipulated by a failing IMF/dollar system. The next reserve currency, the Euro will not compete with gold and will require it to find it's
FreeGold value level. The US will have absolutely no incentive to controlling gold to defend it's currency in that era.

Hello sir! I certainly do respect your thinking and have agreed with some of it for some time. However, I believe that Another is very right in that "Events" are telling a different story than the one we are used to. I doubt we will ever see a real restrictive money policy in this country again. We shall see.

Sir, I know oil from it's "down hole operations" into and "far past" the influence of the old Texas Commerce Bank! If those" Cherry Wood" wall on the 40th(??) floor (if they are still there) could talk, some tail they would tell. Indeed!
But those days are long gone and far removed from today's
reality. I don't think we could have ever had a very private conversation at the petroleum club, it you did know me you would know exactly why. (smile) :)

Some people think I'm MK (hello Michael (smile)). Well, in my current time and stature of life, if two people saw a picture of Michael and myself, standing at "Roy's" for dinner,,,,,, You would most likely hear:

"OH! OH!, I know that one,,,, saw him on TV! He is in the movies!

"NO! NO! he's Michael Kosares, very famous and photogenic ,,,, but I don't think he's been in hollywood" ,,,,, Who's the other one ,,,,,, standing kind of in the shadow?"

OH! OH!, I know I've seen him before,,,,,, can't think of where,,,,,, Now I know,,,, saw him the other day ,,,,,,, He's Michael's ,,,,,,,,,,,,,, gardener?????????????

HA HA, talk to everyone another day, on the trail.
Trail Guide

Trail Guide (10/22/00; 18:04:22MT - msg#: 39664)

Apollo's golden chariot (10/21/2000; 17:57:20MT - msg#: 39611)
Inquiry of Sir Trail Guide

---Specifically what I had in mind was the broader political economic implications from the decline of the US dollar as an international numeraire that you perceive will occur in the future.-------


Hello and welcome to the golden vehicle upon which Apollo is the Charioteer!

Oh how much indeed does your driver's fame precede you, sir. Few here count a god of poetry, music and most importantly prophecy as their close advisor. (smile)

I enjoyed your post, as it's content showed no indolence of spirit. Certainly a quality inspired during your streaks across the constellation. Yes, we have all seen bright starlight before.

The political and social ramifications of the changes before us would take a large book of posts to discuss. Perhaps titled the History Of The World, vol. 6 thru 8. But for the benefit of brevity can we just keep it down to something in the order of a James Chavell novel? I think Gai - Jin (foreigner) would do. OK, I'll work on it. Nice to talk with you.

Trail Guide

Trail Guide (10/23/00; 19:26:57MT - msg#: 39745)
(No Subject)

My spelling and punctuation is not right? I don't know what you mean? (smile)

This reminds me of an old reply someone put to me when I asked him to clarify himself on a strong position. "What do you want, he asked? Good flavor or good taste? Because you can't have both from me at these wages! (Ha! Ha! What a guy!) He later took time to explain everything.

You know, hearing every comment today and with posters comparing my speech here:

I used to give talks at small meetings all the time and they never complained about my spelling! (laughing again)

You see, one of you was right, in that I have never tried to publish or write anything. My notes from meetings are what I work from and they are an outrageous hodgepodge of foreign writing no CIA agent or secretary could ever crack! (still laughing).

I'm much more of an eye to eye, face to face, quietly making my position known, kind of fella. Take MK or Mr. Turk; these men can write. Im not kidding when I say that in their presents or in the company of other smart / important people I would typically blend into the shadows.

First and foremost, my reasons here are to simply keep the path warm until the real play comes into view. If my poor writing skills don't make things clear enough, it's ok because soon enough events take a hand and clear the path enough to follow. True, talking to me in person, you would say the same thing others do; "Trail Guide, you don't sound anything like you write"! (smile)

Well, that reminds me of the guy with an extremely large nose. He went into a plastic surgeons office to get his leg burns fixed and they asked if they could also fix his nose? He said absolutely NOT! If you did that, I wouldn't be me!

So,,,,, in that light,,, if I gave these posts to someone to edit, or had someone else translate most of Another's thoughts to english, it wouldn't be me. (smile)


Holtzman wrote a good piece some time ago and I lost it's location. In it he made the distinction about how we were arguing about the difference between paper gold and physical gold, along with all our other debates. I think he said that it was all useless and some of us risked embarrassing
ourselves if paper / real gold spiked together. We should just diversify and watch the show, he said. ( I think that's what he said?)

To a degree I do exactly as he mentions, except that I don't trust paper gold at all when the going gets rough. Our differences is the same valley that separates PGAs (Physical Gold Advocates) from many modern hard money followers. It's a difference of "learning location".

You see, it all has to do with how one orients oneself in the world today. Indeed, understanding the word "orient" provides some of the answers. Interesting word, orient.

The old romans didn't have compasses and they depended on the position of the sun to gain location and direction each day. Every morning they would watch to see where it rose. They gave the name "oriens" to this location. In other words, the east. Later, "oriens" obviously a latin derivative, was slipped into english and it became orient. Not only was orient used to describe one's positioning in the world, it also referred to all the lands east of Europe. The Asians, etc..

In time, most of the world's thought could be broadly divided into Western and Eastern. How well one understood such thought and the people forces that created them, depended very much on how well we could orient our own thinking! Are you still with me? (smile)

For myself, I have placed my feet squarely on the ground that faces East to gain a better understanding. Because from here not only do the majority of the world's people live, there also resides most of the reserves of oil. Remember, "oriens" became "orient" and that traditionally was all the lands east of Europe. The Middle Eastern oil fields included!

Now, over time and across the space of human experience, Europe has become much better "orientated" to the "orient" way of trading and thinking than the West. To this end they will always meld better with them economically than the US can.

Indeed, this is something Mr. H had better "orientate" himself with because I suspect he is British. You see, I say this because only the Brits use "orientate" and that back - formation of a word has been in use there for about a century. Truly, plenty of time for him to understand why the Duke of Edinburgh once said,,,,,,, "the English are much more culturally and emotionally "orientated" towards Europe". Check it out for yourself? Perhaps that fine gentleman also knew the "oriens" from where oil did flow!

and that my friends is why their English paper gold is going to one day burn.

Now, did I get those letters and dots in the right places? (smile) I don't think so!

Trail Guide

Trail Guide (10/24/00; 10:58:56MT - msg#: 39784)

Hello Traveler,

Let's talk:

Your words first, then
====my words====more

The Traveler (10/24/2000; 0:25:21MT - msg#: 39771) Deflation Scenario II
Greetings and warm regards to all.

Tonight, I will address the inflation or deflation debate that was highlighted this weekend by the formidable and never to be dismissed Trail Guide. Forgive me as I tell you my view from 30,000 feet. Much closer and the details would get in the way of full understanding by many here.

First, I thank Trail Guide for referring to me as a smart hard money thinker. His companion comment that I and many others walk forward down the gold trail but are looking backwards is similar to saying generals always fight the last war during a current conflict or that you can't see the
economic pot holes down the road if you are always looking in the rear view mirror. Fair enough.

I however reply with a well-known admonishment from Lord Acton. This Cambridge historian of the 19th century wrote that those who do not know history are doomed to repeat it. I have devoted a professional life and investing life to knowing "something" of economic history - both domestic and international history. My summary viewpoint as expressed @ 39423 is reproduced below.


The economic lesson is ... ... ... ... ... .

Deflation is everywhere and always a monetary phenomenon -- a lack of sufficient currency and CREDIT in the economy to support prices. When the growth in credit slows or turns negative due to higher interest rates and higher default rates, then the above illustration [about the collapse of real estate] plays out.

================Mr. Traveler: conversely: the "real" inflation I point to is largely a cash phenomenon, where all the past massively over created credit instruments are brought up by the money making authorities and paid for with printed cash or allocations to the owners digital cash
accounts.================= more

Some wise ones here state inflation is the curse waiting for us over the horizon. I doubt it because we are already highly inflated. I point you to the NASDAQ's PE, home prices and auto prices for but three easy references.

================ Sir, your three examples are the beginning "price" results of our highly inflated financial credit structure. However, as I pointed out above, that structure today is in the form of "highly reproduced" (inflated) credit instruments. In addition add to that mix all the vast
paper derivatives in place and we can see how very different our present money inflation has been. Even as it only begins to raise prices.=============more

For hyperinflation to occur, even more credit would have to flow from Mr. Pump.

============Not true, sir. As your own examples pointed out above, rising prices in your examples above indicate how we are already receiving the effects of a hyper inflated credit system. Again, these are only an advance example of price inflation that's beginning to reflect the "real" amount of "credit money" we have created over 20, 30, 40 years. ============more

But to whom? The consumer is over leveraged already. The consumer has binged on easy credit to the point that debt service now takes more than 90% of disposable income for 80%
of consumers according to the St. Louis FED. See why the economy has soared. If the above illustration does play out, most consumers -- still anguished by their recent credit traumas - will avoid the credit trap and thus Mr. Pump will be "pushing against a string".

Remember, the consumer represents 65% or so of the GDP. As credit goes so goes the economy.

=================Good point! It's one we have used to explain why deflation in a credit inflation is always a real possibility. But, hyperinflation cannot happen in a credit society unless the credit starts being made into cash.. Our (yours and mine) "pushing on the string" scenario is
predicated on pumping more credit to those that don't need it.

However, in the real hyperinflation that's coming as it follows our current credit inflation phenomenon it's not the borrowing class that's liquefied, it's the lending class! Remember, out there in our vast dollar world, for every dollar a consumer has borrowed, some entity holds the other
side of the credit instrument. Our classic deflation begins when these holders are no longer being paid, resulting in the write down of their assets. Across the land, banks, credit unions, citizens with lend able funds and every other form of lender no longer own a credit instrument that's sellable at par. That's 100 cents on the dollar.

Hyperinflation begins when pushing on the string no longer is an option. As you pointed out; "the consumer is binged out"! But there is more (smile).

We would not embark into such an obvious currency destroying process if we could drag the rest of the world with us into a cleansing recession. Call it an "almost deflation" where we start the inflation / deflation circle over for one more credit cycle. This is our record from most the dollar's

No country ever hyper inflates for the pleasure of the ruling class, as many want to believe. They / We inflate to keep the domestic system in use and do so because it's the last resort. In other words you are forced into it! Today, the advent of the Euro has created a currency competition that will allow world investors to run from any deflationary, restrictive policy the US can offer. Our
currency will be lowered to non reserve status no matter what route we take. Just as in many other historic examples and present examples around the world, nation states always choose hyperinflation when no other way out is offered. No nation on earth has ever cascaded themselves into deflation once they are off the gold money system.

Below Traveler addresses some of the very aspects I detail in the above.======================== More:

Our worthy Trail Guide declares in his fireside chat along the Gold Trail @ message 43 that it will be different this time. It may be but as Cavan Man, a Missouri resident, might say: "Show Me". In part, Trail Guide states:

The US cannot walk away from hiking our ""gold trail"" now. Because "this process" is one of the few tools available to them for keeping the dollar perception in a good light. In effect by slowing the currency transition process they are doing exactly what world dollar holders need the[m] to do.
They will inflate these derivatives until in effect; our modern gold market bankrupts itself as supply is exhausted. I say, good! (smile) But once we get to that stage, I expect that a super US economic downturn will ensue.[*] Then the fed will go wide open and cover everything in sight to keep us going! The ongoing price inflation will be driving everything from physical gold to real estate through
the roof.

[And a paragraph later... ... .]

Yes, it eventually breaks everything! But this is nothing new for us gold history buffs and it's what has happen in countless modern national fiats around the world today. Nations that don't have a reserve currency to play with. We will do like their citizens do, continue to use dollars but carry in our pockets whatever new reserve is in fashion, as a backup! Be it gold or Euros or both. In addition, our entire financial structure (like in these other nations) will change to operating in an inflation economy. Money will be lost, big time and made big time, but things will still be financed, brought and sold. Houses will double, triple then double again in price, even as financing rates
approach 35%, 40% or whatever. We will also follow the (then) prevailing world policy concerning physical gold, solely because it will make economic sense to our officials.


Do read the complete message for a fuller context and more vivid understanding. Your wealth and your grandchildren demand this of you.

Perhaps the point of debate between us is: (A) Does severe deflation come next at [*] above followed sometime later by inflation and eventually hyperinflation, or (B) Does the US go directly to hyperinflation? This debate has many, many dimensions and is complicated to map. But let's give it
a whirl.

ORO @ 39481 has stated that the FED will do the bidding of its owners (the banks) if events don't get too far beyond their control. I agree. Do banks and other holders of debt instruments (loans, mortgages, gov't and corporate bonds) want their wealth withered by hyperinflation? I don't believe for a moment that the creditor class is this egalitarian.

==============No Traveler, I doubt the creditor class as a group is seeking to remove the financial inequalities that separate people through this coming process of hyperinflation. Far from it. As I stated above, the credit hyperinflation has already occurred. It's there, in place as we speak.

What is now faced by this non egalitarian lending crown is the choice of: having their debt instruments defaulted on and losing everything,,,,, or playing let the fastest runner win the game!

My friend this is the choice you get when the currency your assets are denominated in hits the end of it's "timeline".

Human nature has followed this path for thousands of years. You know the old joke about out running the bear? Well, these lenders will influence our financial policy as such. They will try to get their debt securities liquefied first, spend the fiat and in this process out run you and I. Leaving anyone they can beat to the mercy of the hyperinflation bear eating their remaining fiat assets.

Your point above about deflation and then inflation is still valid; if we cannot get the borrowers to borrow more and in doing so stop the economy from serviceing "OUR DEBT SECURITIES",,,, ! But we cannot risk the markets, in this particular time and place to make that decision.

Here, we and the world would for the first time make a "judgment call"; ---can the "dollar fiat system" our wealth is stored in endure the deflation / recession that must

To date, everyone stayed with the only reserve currency available. Tomorrow they will not because they have a choice.==================more

According to the IMF, foreign holders of dollars (including Central Banks) have a $6.5 trillion stake (roughly 60% in debt instruments) in protecting the value of their dollar holdings. Do they wish to see their purchasing power drop TO 25% or so under a hyperinflation adjustment

============Again, dollar holdings by foreign CBs are worthless anyway when the nation issuing them does and must run a constant trade deficit. The money can never go home, only build further on digital account.

This is the reason most Hard Money Advocates fall so short in evaluating our present gold values using only the commodity use of gold. They completely miss the fact that current dollar pricing of gold vastly understates it's wealth asset value.

Especially to CBs if their dollar assets dissolve in bookkeeping form, the way they would do in a hyperinflation. No, the billions in assets they hold in dollar debt instruments would not disappear, only be transferred through a massive devaluation of the dollar against gold.
================== more

or increase TO 175% or so under a deflationary adjustment?

=======================Again Traveler:
My above explained why a deflation cannot be in the cards. But if so, foreigners holding even government guaranteed paper debt in a deflating currency is little more than bookkeeping wealth if the actual goods buying power of the currency is compromised.

Yes, our US would continue to print dollars to service it's debt, making the accounts look good. But, in such a deflation situation, foreign exchange controls are a 100% guarantee. Foreign held dollar assets would not come home, at least not at the same exchange rate one needs to become
financially whole!

When the world begins to abandon a currency at the end of it's reserve timeline, deflationary gains on debt instruments are an illusion of bookkeeping. There would be no 175% real purchasing power gains allowed. ========================more

If those wise monetary strategists and Euro creators thought that the dollar would go "up in smoke", why do they continue to hold on to the US$ at an INCREASING rate of accumulation?
The ECB holds nearly 80% of its assets in US Treasuries (with 15% more in gold and 5% more in Yen). Is this the position of a shrewd central banker or wealth builder who is nervous about the future purchasing power of the US dollar? Why have not foreign dollar holders transitioned more
rapidly away from the dollar and into the Euro, gold and other vehicles that would protect their wealth from the confiscation of inflation and later hyperinflation. Given that its "ShowTime", one would think that the transition would be more complete than still having $6.5 trillion "At Risk" of going up in smoke. (Actually, it is "ShowTime"but physical gold is a sideshow in the unfolding three-ring circus). I suspect all those foreign held dollars are still in the USA because of an explicit promise -- Your dollars will increase further in value as we deflate the debt bubble and you are able to buy hard assets for dimes on the dollar.

====================Traveler, I addressed this in the above. Still, their asset base is safe in any circumstance.Their gold sales are largely to each other and much of the very gold they are delivering to certain clients will return for Euros once a dollar transition begins. Indeed, there has
been massive ongoing physical gold buys the world over. Who do you think has been buying all the gold non official "Paper Gold Advocates" have been divesting themselves of? The key to understanding the scope of this is in seeing through the dollar paper gold pricing system. Had the
prices of paper gold been rising all these years, it would have indicated a continued support of the dollar based gold markets. As such, the world today expects this currency system to fail, taking it's paper bullion markets with it!

These "shrewd central bankers" are no fool to the economic world nor the political world. The US is still a major military and political force and will continue to be for some time. Allowing the US to destroy our own system and offering an avenue of escape for investors worldwide is a master political play. Why dump your dollar reserves when such an action would make you the bad guy? Buy some gold quietly, yes. But, better to let your dollars dissolve and have your assets transformed by a dollar / physical gold devaluation. FreeGold will do just that! ======================more

To RossL, Nickel 62 and others, your question is thus answered. Those dollars sent overseas by the trade deficit have ALREADY returned to the USA in the form of capital flows into debt instruments (60% or $4 trillion) and to a lesser extent equities and other assets. This gleeful
repatriation of dollars is historically unprecedented and has been done for a reason. Like those of "Giant" domestic wealth builders whose dollars are now sitting in debt instruments, these instruments will be converted - in the fullness of time - into currency to purchase hard assets ("old economy" companies with captive customers, positive operating cash flow, little debt and little remaining CAPEX, or trophy real estate or certain other proven factors of production) once the deflationary spiral has exhausted itself and driven the price of all these factors into the ground.

ORO stated that the banks want the gold mines and telecoms on the cheap. The above is the process for setting up the BUYS of the CENTURY. Perhaps a real time illustration would serve us well at this point.

================= Your presentation shows a lack of understanding about how exchange rate risk works during unsettled times. Failing nation states that have opted for a fully """""fiat currency"""""" (the US dollar) do not simply stand by and allow ownership of everything in the country to be transferred to foreigners. Or even local creditors for that matter.

Truly, the vast bulk of overall debt assets standing against US credit extending institutions dwarfs our ability to service with real goods. Even at vastly deminished prices. These debt structures are held for further fiat accumulation only. Truly a Western Thought concerning wealth. Once an
economy begins to get into trouble, everyone flees these very instruments you stand by in your analysis. Truly, people understand political risk as it pertains to the fleecing of constituencies. It doesn't happen in powerful states and investors know it.==============more

A Denver ========"Traveler's example"====company at 40 cents.

In the late 80's and early 90's, some banks liquidated land at an average 24% of the then CURRENT appraised "Fair Market" value, incoming producing properties at 50% of replacement cost or about 60% of then CURRENT appraised value and residential homes at 81% of the then CURRENT appraised value. Less than a decade later, most properties had handsomely appreciated from the FED induced credit expansion. Boom then bust then boom is the age-old
cycle of wealth transfer TO the plutocracy.

========= These cycles end when the currency timeline ends! ==========more

Next, ... ... ... ... ... .

Does the US Government want hyperinflation? A close call depending upon timing and how events unravel. It could silently default on its outstanding debt and contingent liabilities (such as EXIM and SBA loan guarantees, FDIC insurance, etc.) by passing out wheelbarrows of FRN ala Weimar Germany. On the other hand, so many middle class welfare programs (the Big 5 are about 48% of total outlays) are indexed to inflation. They could never be met from the current tax code which has indexed rate brackets -- Thank you Ronald Reagan!

===========This is exactly what many people see and are preparing for! ==========more

Many models have =======more of Traveler's examples of possibilities=====apostles of Jenny, Jerry and Ophra.

Physical Gold Advocates fear not. Gold historically has done ITS BEST during a deflation! Yes deflation. When all other assets were spiraling down in value because defaults soared and collateral sales pressured the prices of all hard assets, gold alone increased its value. It has no liabilities (no one to default) and is portable to destinations without domestic deflation. See Professor Roy
Jastram's The Golden Constant (Wiley & Sons, 1978) for a 416 year history of gold under four major deflationary periods of the past. If you are a bit lazy or pressed for time, simply recall that gold in the 1930's went from $20 to $35 during that deflationary depression. One caveat: All four
were under some form of the gold standard.

=============== OK, now you say: """"One caveat: All four were under some form of the gold standard.""""
Boy Traveler, that's some caveat! (smile)

Four hundred and sixteen years of history examples can be toppled by one little caveat. Truly, that little point is exactly "the point" for today's time!

Our modern dollar world has created a fiat debt structure money system of biblical proportions. Nothing like it has ever been produced in the annals of time. We got to this point because our money was gold in the beginning. Then we allowed our confidence in gold as wealth to grow into
the abilities of mankind to continue such a money system without gold. The result is a massive debt against every thing except gold! Every asset that exists in the USA is fully covered by such debt several times over. Either directly or indirectly through various official government debts.

There is simply no historic example in the history of mankind that shows where everyone surrendered their assets to satisfy such debt. Yet, this is the process you Traveler, fully well expects from a deflation. A deflation by the way, that no gold standard today says must happen?

Truly, had the dollar advocates allowed it to be devalued against gold long ago we would all know where we stand. Free trading Physical gold would have slowly risen in dollar prices in an ongoing process that would have taken gold prices into the heavens. But, it didn't happen and an imploding debt structure (caused by pushing on a string of consumer credit demand) will be "QUICKLY" countered with debt instrument purchases from the official level. The old 1980 monetary control act is already in place and allows our fed to buy everything down to your shoe laces in order to stop any debt defaults. ===========================more

Is not deflation the very outcome that the Austrian economist Mises predicts following periods of rampant credit excesses? Furthermore, if one has escaped indentured servitude (being a debtor)through hyperinflation, how likely is one to "re-up" by borrowing at floating rates of "35%, 40% or whatever". What could one invest in and reasonably hope to make a positive spread (return on investment) if this is your cost of capital?

============Well Traveler, if you go to just about any third world country today, there are many extreme examples of what "re-uping" is all about.

Further, deflation's following the credit excesses Mises talked about only happen when people believe the currency system will last and opt to stay with it.--- OR -- They escape the bad credit risk inherent in remaining in such a deflating system by jumping to another system of younger
stature. Still, it leaves the choice of hyperinflation as the only route after a fiat expansion.

When such processes unfold today, people look for security in a fiat. One that will back itself with gold valuations conducted in an ongoing nature. Something the US fought so very hard to avoid all these years!===========more

With respect to Trail Guide's "living in many, many lands and have witnessed and used such inflating systems," I would point out theseom2Ä^Ý3yýThe above is1C¬ process for setting up the BUYS of the CENTURY. Perhaps a real time illustration would serve us well at this point post @ 39276) at $3.38, backed it to $7 and now moans about it at 40 cents. The chances are good that the bondholders will own this company following a structured settlement that converts the debt into stock and retains current management with reset strikes on their options. Current shareholders indexed rate brackets -- Thank you Ronald Reagan! brfcfc in 1C¬2ÄUƒ3yý and in the 1C¬ns. WHAT ARE RODS? Rods are cylindrical shaped objects that are appearing in the skies, in homes and in the oceans. WHAT ARE RODS? Rods are cylindrical shap

Trail Guide (10/24/00; 12:16:24MT - msg#: 39794)
Let's try it again?


HA! HA! Oh Boy!

I was just rolling up through the posts and came across the tail end of mine. I thought it was some kind of reply from someone else. I thought, what in the world is he talking
about with all that Rods business?????

Then I saw it was mine. Guess it was too long and got cut off. Don't know where the rods in the sky stuff came from? Must be those funny people in Colarado or is it Calf.? (big smile)

Oh well, here is the rest of it from where it went haywire:

With respect to Trail Guide's "living in many, many lands and have witnessed and used such inflating systems," I would point out these key differences in economic profiles.

Unless he was economically alert during the last time a reserve currency "fell from grace" (the pound sterling following WWI), then the experience of Mexico, Argentina, Russia and other commodity based economies are not on point.

==============Well, the pound opted to have the dollar back it's "transitioned" currency so the effects are not the same. Further, their debt structure had not come anywhere close to what we currently have. So they muddled through. The same could be said for the dollar if it took the Euro
as it's reserve backer. However, comparing the debt levels of Britain then and the dollar now is like comparing a baseball to the universe!===============more

Furthermore, hyperinflation is difficult to introduce when a country's government, businesses and citizens are already overly leveraged and are having trouble meeting debt service obligations ($2 trillion annually as recently posted by ORO). Total debt in America is often quoted in multiples of
record high GDP. It is one thing for the FED to pump money vigorously into the economy. It is another matter all together for the banks to find credit worthy or semi-credit worthy users of this fresh tidal wave of liquidity. By some estimates, corporate America has already leveraged up from
a conservative ratio of 25% debt to 75% equity to a precarious 75% debt to 25% equity ratio. That is almost a 10 fold (1,000%) increase in debt!

============= Traveler, every time you bring another log to our "Gold Trail" fire, I pour gasoline on it and burn it before it becomes of use. But keep trying, sooner or later I'll run out of fuel. (smile)

Again, hyperinflation in our economy will (as I demonstrated in the beginning) begin with our government buying the debt from creditors and changing the terms of it's payment for over leveraged citizens and businesses. Further, a rising price structure of an extreme nature, such as this, quickly raises all wages and income levels. Allowing everyone to service easily what seemed like a mountain of debt before. No different than looking back to when minimum wage was $1.00 and now is $5.00+/-. Only happening on a super accelerated scale. =======================more

In summary, he who has the gold makes the rules. The creditor class -- both the domestic plutocracy and their foreign cousins, has the gold -- both literally and in the form of debt claims. They would rather convert their paper claims into foreclosed hard assets following a deflation and
at worst loose a billion or two from poor collateral valuations while reaping trillions in new purchasing power. That beats passively loosing 20% - 40% - 60% of the value of the entire debt portfolio from hyperinflation.

=============== Exactly who in the voting public do you think is going to sit still for this paper conversion? You,,,, me,,,,that man behind the tree? Ha! Ha! """NoONE""" leaves their debt claims laying around in a country where their citizens are being economically tortured by huge, all
consumeing debt claims! At least not without massive risk returns. That's why rates soar so high. You either run for it or take a big chance in staying,,,, most run if a stable medium exists. Providing that medium in either Euros or a Free Trading gold market is where the ECB / BIS can play the
good guys============more

Furthermore, if the word came out that hyperinflation was the policy of the USA, who would lend their funds for the prospect of receiving less purchasing power later? I for one would rather take my chips overseas to an economy that is stable and offered good returns for definable risks.
Domestic usury laws can only be raised so high and bankruptcy laws tightened so tight before the great unwashed revolt.

===============My feelings exactly!===============more

The major risk to the scheme of the plutocracy is a revolt of the masses -- whether politically through election of populists who pass legislation such as foreclosure moratoriums or violently though protests, strikes, lynchings, pogroms and the like. Thus inflation followed by hyperinflation will be instituted by the FED at the instruction of its masters once the fear of loosing it all exceeds the greed of gaining another prized asset on the cheap.

================Very good!=================more

Lastly, consider this. Current wealth of creditors only increases during deflation as each dollar now held becomes more dear.

=============That used to be true before the volumes of debt securities began to dwarf the universe. Today, most asset holders are true to nature players of the trading mentality. If inflation becomes the risk, they will exit the door in an attempt to out trade you and me (and that man behind the tree (smile))! Most of them will simply run up the inflation ladder seeking the next higher return. In the process marking the market down in existing holdings until the government must also buy those items at par. ===============more

Inflation is a wild card for everyone. For example, my one ounce Maple may be worth $20,000 or $30,000 once deflation is turned into hyperinflation (and former creditors have switched to being net debtors). But what is that $30,000 worth in today's purchasing power - $3,000 for a 10 to 1
return or $300 for a big waste of time and energy?


This is one of the major flaws in Western Hard Money thinking. We tend to view the dollar price of gold in a static purchasing power light just because it's bookeeping priced through paper accounting deals.

Lost in our perception of all this is the fact that current bullion prices must rise into the thousands just to reflect the US credit inflation that existed 20+ years ago! Much less reflect it's value relationship to the current trillions of debt.

Our modern dollar paper gold derivatives have masked the true gold values all this time. Start with a base of gold holding it's international wealth value at $3,000 to $10,000. Then extrapolate that to handle any future money printing to buy our already hyper inflated debt! Now you have an idea why PGSs (Physical Gold Advocates) are so quiet as they buy bullion today.

The current marketplace has so understated it's true dollar value, physical gold must rise far beyond any price inflation that's in our future. Only Western commodity traders using a thought process that says; """the dollar market price of anything is correct because the dollar price says so"""" think gold today is a "one - on - one to price inflation" proposition. Nothing could distort the picture more. ==============more

Truly, what waits for us economically just over the horizon will be calamitous and stunning for all but a few.

===="""We watch this new gold market together, yes?"""=====

Black Gold, Yellow Gold - the only wealth worth physically owning.

=======Absolutely, Sir Traveler, Absolutely!!!!=============

Trail Guide

Trail Guide (10/24/00; 17:06:37MT - msg#: 39811)

Thanks for explaining about the long post cutoff limit. I think in the future I will address other posts with short clips of their items in mine. Then none of these will get so long.

TC, I'm going to read all of your recent clips as they do address a lot of the things happening now.

I also want to summarize my discussion with Traveler as it came across too broken. I do accept many of his points but am really trying to explain clearly what forces are in play now that will alter those same.

Thanks for all your work, Trail Guide

Hello TG,

I saw your msg#: 39809. No that is not entirely what I said. I think if you read the latest James Turk article here in the USAGOLD system you will see different. He does a nice job of explaining some of it. You see, assets can go up very big in an inflation but still come no where near to keeping their purchasing power. I'll cover this more when I post a summary on the Gold Trails.

Trail Guide

Trail Guide (10/25/00; 19:32:37MT - msg#: 39927)

Two replies, then a story.

I'm fighting a cold bug,,,,, trying to write a small novel of a reply to Appolo's #39611,,,, preparing a summary to Traveler,,,,,, and then I smell the stench of paper gold burning! So, I hurry up and look under my chair cushion (need a ladder to climb up and get in it now because of the mound under it) to see if it my gold bullion had also burned up in the flames,,,,,, it didn't. Boy, that was close (smile).

Mr. Holtzman, thank you for that reply and excellent explanation. I'm glad to see that you have "orientated" yourself into a position of understanding. My position in the currencies is a bit more thin in the diversity department.
I am now down to just the Dollar and Euros. Having recently changed the ratio far into the Euro's favor (around .88/.86). My advantage, of course is that I can just spend them there for any number of fine, much better valued assets if the dollar never goes south again. You know, in poker they say "anything is possible, it's just not probable". So, I do give the Dollar a .00000001% chance of never going down to Euro par again (smile).

I heard Eddie George is also becoming "orientated"! He went out of his way in Paris not to rock the dollar boat too much. Calling the Euro "substantially undervalued in terms of the medium-term 'fundamentals'. Oh boy, it must be killing them as the Pound is clearly in the same pickle the dollar is in and that trend is in motion.

Suddenly everyone must talk out of both sides of their political mouth and the ECB has got to love it. England / USA need to sell to Euro Zone or their already tiny profit margins are going to completely disappear. Not only that, the Euro exchange rates sets the competitive margins everyone else must mark against. Soon, if the dollar doesn't drop, taking the pound with it, we are going to have a very hollow backing behind an already sky high economic

To back up that contention, the same Reuters article said " Tuesday showed Britain enjoyed a trade surplus with the rest of the EU in August for the first time in almost five years, despite the strength of the pound versus the euro."! But then confirmed that "there is evidence that British
exporters have been cutting their prices in sterling terms to maintain their competitiveness in European markets in spite of the strength of the pound. That has hit corporate profits."

So, Americans openly display their strong dollar saying the Euro is week,,,, while knowing full well that EuroZone is outperforming on a long term basis and their currency is really strong in that fact. The pound is being drug up with the dollar, yet both countries know their money's overvaluation is a bad sign. Killing their markets.

It won't be long now and everyone will be talking out of only one side of their mouth,,,, and it will be saying drop those interest rates Alan, you must get that dollar down. Big inflation, here we come!

I bet the UK is into the Euro before we know it. They missed their chance (worried about a little minor inflation) and now will come up with some ad-hock tracking system, you watch! Eddie is already throwing off hints; "For the time being our best bet, it seems to me, is for both the Eurozone and the UK to continue to pursue macro-economic -- both fiscal and monetary -- stability in parallel" Did you hear that one? Trail Guide

you have placed so much fine information out here and I never go into as much of it as I would like. I saw your #39804 "Debt to equity, according to Noland, is at 83%". Not good, my friend!

I'm doing an abstract fiat money example and hope to use it as a base to construct some discussion with you. It' so hard to talk here with everyone using such closely related terms, we often don't get our point across. At least I don't.

Was traveling a while back. I stopped and tried to tell a fence post (there are a lot of those scattered across this great planet of ours) that there is a difference between "the price" and "the value" of things when fiat markets are involved.

I said that the efficient market theory is skewered
when there is an unending supply of new fiat credit for people to bid with. In such paper markets, the paper money price cannot represent the real value of things in the course of our lives. Take away the ever expanding paper pricing mechanisms and replace it with a fixed amount of bidding units and the real worth of things in our lives becomes known. Of course I'm not just talking about gold vs paper gold. It's most all things, except gold is the most extreme example today.

Know what? That post didn't say a word. Just stood there holding the fence up. Either I'm dumb as a "____ post" for talking at all or that sun-of-a-gun is smarter than it looked.

You see, I think it knew something was wrong below him that we couldn't see,,,, because next morning he was at a
phone booth calling Colorado about something. This really happened!

The moral of this story is:

"you can't turn a wood post into paper then gold,,,,when even "knot heads" know it's rotten two feet into the knoll"

Stranger, yes?

Trail Guide

Trail Guide (10/25/00; 19:35:10MT - msg#: 39928)
(No Subject)

Picture me with a big (SMILE) (EAR TO EAR)!


SteveH (10/25/00; 19:28:27MT - msg#: 39926)
How do you spell "disbelief -- two?"
Date: Wed Oct 25 2000 19:25
scorp54 (WOW!!!) ID#233298:
European central banks might increase gold reserves
Tokyo--Oct. 25--European central banks might increase their future gold
reserves and reduce exposure to the "risk-free" assets available in the global
market, Herve Ferhani, head of the foreign exchange division of Banque de
France said on Wednesday at the Nikkei Gold Conference in Tokyo. He said he
sees United States bonds and gold as global risk-free assets and added that
gold is one of the few options available to replace the US bond, or even the
only option.

Trail Guide (10/25/00; 20:28:42MT - msg#: 39948)
Last Comment

Hello Steve,

Well, it's never as bad as it all seems. Remember, people, nations and empires have been doing this from the beginning. We are, as a people much stronger and tougher than we think ourselves to be. Us Americans and all North and South Americans will survive and be better for it. So the
Europeans may come out on top for a while? Good for them. They are good people too!

As I said long ago; most everyone takes our thoughts as major gloom and doom. That is totally wrong. I expect the US to change, not die my friend. Great doses of reality force us into a better life, a stronger life.

Again, the secret to navigating through changing times is in not allowing others to control you. Indeed, 90% of that power comes by controlling your own financial assets. None of us has to lose to experience change, but we must change not to experience loss!

This chess game is a long one and we will have time to discuss this further. Until then, consider following a conservitive trail that puts you in control.

Trail Guide

Trail Guide (10/26/2000; 14:06:09MT - msg#: 40024)

A few comments:

---------------Cavan Man (10/25/00; 20:41:58MT - msg#: 39953)Trail Guide has left me behind along the dusty trail; left me in fact for the buzzards! ----------

Cavan Man, you know full well that neither I, you or anyone else can possibly talk with everyone here. I have a certain amount of time allocated for this. Some days more, some days less. There are other things to be taken care of and without limits, one could stay here all day. (smile) As this forum
has grown and events progressed, there is even less one on one dialog between all of us. In the end, we will all be reduced to mostly reading and watching facts as they unfold.

to continue further:

---Canuck (10/25/00; 20:53:44MT - msg#: 39954)
@ Trail Guide From your 'fence post' story,--------

Canuck, if I could deliver this message in 50 dialects, write 20 books on the subject and use every possible literary devise, it still may not spread the word in it's fullest understanding. There would always be people that must conduct a disquisition after reading and even then still never grasp it.

This is not said to disparage you, it's a recognition of the vast diversity of how our minds work. To reach a diverse group one must present their thoughts in diverse ways. You must already know this? In addition, some people and cultures grasp a riddle faster than plain speech!

The fence post story had many meanings, none of which were conveying a secret message to someone and certainly not inside info. The fence post analogy came to me naturally. In the past I have sat around campfires, under the stars, late into the night where the whole conversation involves the passing of riddles.

The use of "fence post" as in; "hard headed as an old post" or "dumb as a post", etc. is an old American wild west expression. Maybe even Euro/Asian, I don't know! It's often used today. During yesterday's discussions, I got the distinct impression in several of the exchanges that one of
them was acting like said post. The usage was done with that double meaning and also portrayed how wood is used to make paper and paper gold is traded for physical. Somewhere below the surface (post below ground,,, knoll) that which becomes paper (gold) was rotten to the core and even the (paper players, BBs, etc.) knot heads (as in knot in a tree or post) knew it. Stranger's only part in this was that I tied it to his "new fence" making he and everyone here talked about the other day.


So, you need to know my status in order for any of this to gel? Well I can tell you that a lot of high powered people through out the entire currency and gold world have had it all figured out for a long time. And they didn't mind telling you about how to play it with leverage, I might add! Yep, serious credentials, had they,,,, of a kind that one could just follow their thoughts without even a doubt. Know what it got them (followers)? Smack dab in the middle of a currency war and a very diminished portfolio to show for it.

Think of me as the garbage collector that you talk to every wed. over the back fence. That way I am sure you will not take what I say as an absolute. Like SteveH or Sharefin put it; they kept thinking (hopping) I was just a good story teller. You see, it's not knowing me or my level of
involvement in this that will make you any difference or do you any good. It's the process of turing around your thoughts to see all sides in this game,,,,,,, and that will place one in the best position to make decisions,,,,,in the end.

Trail Guide

Trail Guide (10/26/2000; 14:18:49MT - msg#: 40028)
(No Subject)

ALL: I willnot in a nutshell just tell everyone; Hi, I'm Mr. Main Man and I know the King of England, Frank Sinatra, Ton Cruise and Jane Seymor (no I don't really know them!),,,,,, and I am buying gold bullion so don't you think you should too? Not much of a foundation building in that is there? That's right, it's just a bunch of unneeded buildup that hollows out ones credibility far more than building it.

So, on this forum, in this format we bounce from point to point along the way and try to explain our reasoning. This whole game has a thousand parts and everyone wants to see their least understood bit discussed. Now, there are a lot of talkers on this and other stages and everyone has their
position to explain. Good! But in the end, all this discussion will get more and more distilled down into just one,,,,,, the right one. The one Another said that time would eventually prove. Knowing my private life (or anyone else's) will add nothing to further this learning experience..

I (and much more so Another) said one should consider buying just gold bullion and only gold bullion for what is coming in our future. Not any of the white metals, not paper gold, not paper gold substitutes in the form of gold mines, not even leveraged gold contracts from dealers. But every time we (or anyone else) said gold would soar, most listeners just heard that one "bit", then used their own understanding from the past, to further invest for the future.

Another always said to buy bullion in proportion to your understanding of the changing market! And that learning became relative to unfolding events. For anyone not listening that was a "forward looking statement". We were supposed to watch and perceive and learn how our new gold market was evolving differently from how traditional hard money thinkers thought it should. People heard "thousands per ounce" and their brain stopped working right there. They immediately raced to buy the same outdated products used to track gold advances in the past. They didn't want to hear the rest of the story, preferring to invest first and ignoring the points we further made. Didn't want to hear about what could happen between "now" and that "thousands per ounce" later! Knowing my background now, is not going to change those mistakes.

Now many "Western Gold Bugs" are deep in the mud with no easy way to reconcile to the changes we said were coming? Who knows? Especially as things keep progressing right along these lines. In their position it's hard to reverse yourself. If one sells out all his paper for bullion now, then some spike guns the stocks and such you just sold,,,,,whether a meltdown later happens or not,,,,, it's a
killer for you mentally!

I don't know exactly where it will go from here, never said I did. This could be the lowest point, futures stay together and track an easy advance over a month or a year? Or, as we have been driving home for a long time,,,,,, the political situation may develop into a full blown currency war. Then we may find official institutions literally dumping margin money into paper gold so as to sell gold paper worldwide. What all the "fence posts" out there don't realize is that a few billion in short margin can have the effect on derivatives of hundreds of billions,,,,,, and they just need cash to do it,,,,, no gold at all. Are they at risk of being called? HA! HA! You be the judge? If you got caught buying 2,000 contracts for example at $250 an ounce strike price (and even had the money to take it) would you stand strong for delivery if the price got hammered to $100 in two weeks or so? I don't think so! You would be like all the rest of the trading crown,,,,,, dumping your position and reestablishing,,,, over and over!

Further, at that point, everybody and their brother would know that a cash only fixed settlement was coming, because enough gold wouldn't exist to make everyone whole! That very thought would drive a premium into the bullion price that every paper trader in the world would swear was a conspiracy by the coin dealers (and bullion only dealers). I can hear it now on CNBC:

" Once again on Cemex, Landon and other major gold centers bullion trading (they won't say paper trading) was tightly controlled to limit the effects of what is believed to be manipulation of gold in Europe and by coin dealers worldwide. In an effort to help the market makers cope with the constriction of gold flows, trading is allowed for 30 minutes a week. During that time only some 300 contracts could be settled each day for cash at a fixed spot price . As a result of this limited trading, the premium on physical gold has been driven up well above it's real price designated on official markets. In some areas it's over $2,000 an ounce. Virtually shutting off all official center
gold trading,,,,,, on to other news!!!!!!

The above sounds like a joke doesn't it?


I have said this before and will again for the last time. I want all paper gold to soar. Such an outcome would be the very best thing that could happen. None of us hard money or gold industry advocates would lose with this. However, as a private individual I am not planing for that outcome. I am not, because of all the reasoning I have laid out in the past and will continue to do in the future.

Trail Guide

Trail Guide (10/26/2000; 14:25:24MT - msg#: 40029)
(No Subject)
Mr Gresham (10/26/00; 09:43:13MT - msg#: 40002)
TrailGuide is our "insider"

Hello Mr. Grescham,

You're not helping me with what you are saying. In my world it lowers my credibility, not raise it.

Trail Guide

Gold Trail Update (10/28/00; 10:40:53MDT - Msg ID:40160)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/28/00; 10:40:51MD - msg#44)
There Is No Way Such A Currency Could Ever Last!

I'm glad to see everyone brought their overnight packs because we are going to take an extended walk this time. It's going to last over several days, so let's get going!


There Is No Way Such A Currency Could Ever Last!

Here we have eleven completely different country's and each one operating under an independent government. They all still have their own internal currencies and banking systems but set most or all of their trade settlement and pricing in only one currency unit. With all the in fighting and at odds views, how could it be expected to last? To this end I completely agree with all the negative sentiment people today have! I completely agree,,,,,,,,,the dollar will never work! (smile)

Can you imagine any success at all when these nations try to use such a currency scheme? The countries of Canada, Mexico, Australia, Brazil, Britain, Japan, Peru, Argentina, Taiwan, Venezuela and Hon Kong all have operated for 20+ years under a Dollar system not much different in effect than the new Euro Project is birthing today. In fact, most of the world has used this ad-hock dollar reserve system for a long, long time!

So when we hear all the stories and reasoning about how the Euro will never last, just remember, the very same reasoning was applied to the dollar's future a long time ago. It's still here.

On the main USAGOLD forum I saw a post by Salmon (he must be hiking with us today) that asked a very relevant question I want to expand on; "People conveniently have short memory. I remember not that long ago $US were trading 80 on the US Dollar index."!

Boy Salmon, I agree some of these people must have been too young to have fully financially participated in the great dollar scares of the past. Either that, or your are right that their memories are short. I remember endless articles, discussions and books that all pronounced the death of the Dollar as we knew it. Each and every thinker all saw that the dollar would fail and their forceful commentary made today's Euro bashing look like sweet cream!

Yet, the dollar made it anyway and for all it's incredible misuse and global hatred is still the most widely used unit in the world. Over time all the dollar bears had to simply "be quiet" or risk being totally discredited as it's value climbed endlessly. Remember the mid 80s when the dollar was off the charts, making today's strength look week in comparison? What happened people? Dollar debt, money growth, price inflation all never stopped. Slowed down off and on, yes, but stop, no way! Every reason why the dollar should have stopped was / is still in force, nothing changed.

The very same people that voice their views against the Euro today would have, using the same criteria, said the dollar is toast at half the debt level and political contention it now holds. But it didn't toast well did it? That's because the world's "political will" all came together and supported the Dollar's use for better or worse until something else could be formed. You can turn this "notion" upside down, sideways and throw it against a concrete wall and still not present a sound argument that can topple this as the fullest explanation of the matter. All the grand US economic explanations only sidestep explaining the negative monetary issues that have traveled hand and hand with the dollar through it's ups and downs.

Besides, listen to the bashers for their reasons as to why their own native currencies are still in use? Even after watching some of their local moneys change even more than the Euro. Kind of silent commentary in that sector, isn't it? They hate the prospects of the Euro and say their (Europeans) people will dump it, but I ask why do you still use the Canadian dollar for example? Why is that money still in your pocket but your discussion precludes that others (Europeans) will dump theirs. Use their reasoning against the Euro and one must conclude that no fiat currency today can last.

Our reasoning in advancing Euro success is based on what is happening, not what must not happen according to fiat trading theory. To use the position that the Euro will fall because the dollar has risen so high against it begs the question: why did not all of the European currencies fail in the mid 1980s when the Dollar soared against them then? Indeed, so much higher than even today?


The Euro Story May Be Offering Something A Lot Of Paper Gold Investors Don't Want To Hear!

The Euro Project is changing the outlook for gold in a way many gold industry investor didn't play the game for. Not one of them ever factored in just how a reserve currency transition would impact "not only physical gold", rather the gold market itself as it exists today in dollar contract form.

It seems everyone was in complete agreement that any fall in the dollar would be bluish for physical gold, including myself. Yes, one day the dollar price inflation would return and bring with it the need for investors to once again buy all kinds of gold vehicles. However, as late as the mid 90s none of the hard money advocates thought of the Euro Project as a system that would change gold thought, use or valuation. The new currency was seen as just some new currency that would be tried out in another part of the world. Like a new Peso in Mexico?

But, Western traders had fallen asleep in their basic understanding of gold and certainly paper gold substitutes. Over the years, the very dollar system they expected to fail had been slowly transforming the pricing mechanism and the nature of world gold holdings. As contract gold was inflated to meet the needs of ever more sophisticated traders and hedgers, paper gold was seen as having a physical gold tracking longevity every bit as good as the dollar. No one expected the dollar to be displaced, so leveraging non physical gold in the form of dollar based contracts must be an easier, cheaper, more highly leveraged ticket. Sure, the dollar would be taken down a bit and price inflation will return, but the world was never going to leave this reserve system. In this stupor type reasoning, it made no difference whether real gold was behind the paper so long as it tracked the physical price. For confirmation of this reasoning, just visit some of the gold forums and listen to the traders. Even some on our forum are completely unbiased toward paper gold's worth. Is it no wonder that, in time paper trading grew until it became the physical price.

Again, no one considered what would happen if the dollar was transitioned away from being the reserve. Well, they must have thought; if it was to happen, what ever new reserve that came along would just offer the same paper system and we would all trade over into it. Wrong! Suddenly, the ECB has in it's charter the marking of gold to market, at what ever it's worldly price would reach and in Euros no less.

But, here, we have the entire American dollar based contract gold market predicated on a limited commodity price range policy, pushed by the US, that kept gold in a pocket of dollar valuation. Not allowing it to leave this range allowed the growth of paper only gold because the outside extremes of price risk (both bottom and top) was known. Now we have a real threat that the Euro could unseat the dollar and allow gold to seek what ever level physical demand may allow. Can you say, "unlimited risk"?

A complete breakdown of the worlds only current contract gold market would slam the dollar very hard, indeed. It would also completely disrupt and financially fail the entire gold industry. Most every player that is "playing for a move in gold" will lose his playing vehicle in a currency transition the system is not structured for "limited price moves"! Hence the reasoning for our "physical gold" only approach during the rough period ahead!

I'll close now, as we walk a little further. Then we can discuss what currency is "in abstract form". You have heard us say many time that the price inflation is already built into the Dollar, well, this will help you understand why.

Onward: next stop in a little while

Trail Guide

Gold Trail Update (10/28/00; 11:05:38MDT - Msg ID:40162)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/28/00; 11:05:36MD - msg#45)
Quick Correction!
In the last part, please read as: "UN limited price moves"

--the system is not structured for "unlimited price moves"! Hence the reasoning for our "physical gold" only approach during the rough period ahead!------


Gold Trail Update (10/28/00; 18:12:20MDT - Msg ID:40175)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/28/00; 18:12:18MD - msg#46)
The inflation is already around us!


Let's stop walking and begin here by using one of Traveler's thoughts (USAGOLD poster).


"Deflation is everywhere and always a monetary phenomenon."

The "Traveler" was absolutely right with the above remark. This perspective has been around for some time and describes to an extent our paper money dilemma. However, reading from a different angle would require another question; what kind of "monetary" are we dealing in"? Even better to ask; do credits in any monetary system always try to deflate?


Well, in most kinds of fractional gold money systems there is an absolute end to the amount of credits (debt) that can be extended. Even when banks are allowed to make loans at some multiple beyond their gold holdings, eventually the relatively fixed gold stores in their vaults stop all new credit creation. Usually this process is quick to react as a shut off valve and creates somewhat of a deflation before the credit expansion impacts the economy too broadly.

So here we can say that "deflation most likely is waiting around everywhere, all the time", but it becomes most apparent just as soon as banks begin lending too far beyond the fractional limits that gold places on them. Somewhere between point A "gross amount of debt created" and point B "gross amount of debt created", physical restrictions force a stop to further credit creation. That forces the economy to begins it's failure response to service some of said debt. Deflation is then in the air. Most of you hard money buffs have heard this explained before in several variations.


Today, fiat money systems operate outside gold's control and do it on two levels to destroy savings. Both of these levels work to pull wealth away from you in a way that's out of sight and out of your control . Further, the matter in which these processes are discussed tends to hide the wealth destruction by placing it's eventual effects as always happening more in a future tense. That's not the case and much of our presentation for physical gold now, is based on understanding how much a currency owner has lost already to said money wealth destruction.


So, try to place yourself in a different position, using a somewhat abstract view that may allow you to see what is happening "underneath". In an off take from Traveler's above, let's try to look at a different kind of "monetary" to see if anything changes with it's use. First, we consider the fiat as it is in use now.


Once we leave a fractional gold system, nothing changes all that much. In place of gold, banks are given strict percentages of credit creation that in some ways follows the same rules gold imparts. In a very basic sense banks can only create so much credit unless the central banking authority sanctions more bookkeeping reserves for them to lend against. In many respects, if those in authority kept to their strict rules, our fractional reserve paper currency system would work just like the above gold system would. We would indeed experience "deflation in the air" as soon as said lending limits are reached.

But in a fractional reserve fiat system, people make and break these money rules and use whatever advantage gained to overlord others. Some of us explain this by saying it's this faction or that faction doing it to all us in another faction. But power groups-are-us and indeed our whole political process is but the playing of factions against each other. So, I leave out the blame placing, preferring to see our actions as a people's will. Or political will in the end.

It seems that in our human experience, there is no end of reason why we should not avoid most losses and expand credit just a little more. War, special circumstances, social need, emergencies all add up to a constantly expanding debt system and changing the debt creation limits to meet those special needs. Simply put, a fiat system run by humans will not cut off the arm of single dynamic group when it (the system) can be engineered to cut off the finger of everyone! This is the monetary loss phenomenon we must understand and deal with today. It's the only deck of cards we can play with if staying in the game is a desire.

Every time excess credit is created it robs one of us of a finger of our wealth. Even though we cannot immediately see the general price increases such a money expansion creates, it's dilution of our own wealth is all the same and very real. As an example:

Work with me on this?

Say you owned a plot of land free and clear with a barn on it. You even had a deed to show it. That deed was a paper derivative of your real wealth holding, the Barn (and land). Worth at least $100,000. Now you may say that the Barn was yours and it alone represented your assets, paper deed or not. But just try (under current laws) to sell that land without said deed? No go, right?

Now lean back, close your eyes and imagine that deed as a type of fiat currency you own. Then, one day you try to sell the Barn at auction. You come to the auction house, deed in hand and offer it for sale. Suddenly, you find out that the county clerk has created nine other deeds against your land, placed them in the hands of others and those other deeds are also for sale by said holders. The auction takes place and instead of your one deed bringing 100K, the extra ownership forces your sale down to a real value you never knew existed. That being $10,000 as it represents your diluted derivative's share of the Barn pie.

So what happened here? Examine not only the facts but your misguided emotions as well. You, as a fiat currency owner may for years own a currency (deed) that you know has a buying power or worth equal to 100K. Yet, all the while you were saving this money for later use, other money deeds were being issued by the officials. An observant watcher of the financial scene would know that other money was always being created, but even the best of us never fully feel that those other deeds apply to our portion of the Barn pie. In other words, from the beginning and over some 20 or 30 years, our savings were diluted away by the continued issuance of new money. We always feel, emotionally that we can sell our barn near full price. That we can spend our money for something that brings in our perception of that $100K in purchasing power. But in reality, once we enter the marketplace in mass, rushed on by a sudden recognition of what the county clerk has done, we find our wealth was diluted away long ago.

This is what Another meant when he said, "your wealth, it not what your money say it be"!


Now open your eyes and think in currency terms. Why shouldn't we think our money is not holding it's value? The fact that prices are not rising only confirms that our part in the market economy (represented by Barn ownership) is not being subdivided, yes? No, the fact is that your wealth has already been inflated away by past currency inflation. You see, currency inflationist want you to perceive that your savings balance against equivalent buying power in the future, not today. The fact is that your deeds are being inflated and the value is lost, today! Never to be regained by gaining additional account balances in the future. The very extra balances you count on to keep you ahead, only dilute the pie that much further.

Are you with me?

The secret behind the over creation of fiat currency is in the fact that most of the holders have no way of knowing how much their wealth or buying power is being diluted. Except at auction! The auction that is the marketplace for all goods produced and sold.

Again, as long as the MAJORITY of owners hold the deeds without taking them to auction, the loss of value never shows up in the real market auction place we call "spending"! This is how a huge credit expansion in a fiat system hides the dilution. It entices owners to hold the deeds as near money in the form of interest bearing credit instruments. In this process everyone can lose a bit of a finger every so often and never know it. With all this background in mind I continue our discussion:


Once our regular fiat system expands debt well beyond a point where gold reserves would have forced it to deflate, our economy demands that we enter a constant slow debt expansion that stops deflation from taking hold. In this sense, deflation is always "in the air" the moment we stop adding reserves. The system slows down whenever new credit flow stops. At this point Travelers statement takes on more meaning and has an expanded context. "Deflation is everywhere and always a monetary phenomenon because; we create the monetary ourselves and do it with no controls over our desires not to lose as a group". The dilution of all our money holdings is constant and real, yet none of us wants the system to tally up as long as we can slowly share the pain. Suddenly, monetary phenomenon is really a social phenomenon when Fiat is used.

At this point, one the dollar world has been past for some time, deflation is no longer the consequence of over debt creation. Deflation is now determined by our hand as we adjust the fiat reserve supply. Often, in order to slow things just a little before we start again the fed stops it's manufacture of deeds (err,,,,,, currency reserves). It becomes a cycle that many have identified as the inflation / deflation cycle. It seems to have no limits to it's life in our modern world.

But it does. At some point, deflation becomes a socially impossible event because the credibility of the money system is rendered second behind recognition of real wealth loss. Here, we will lose the wealth anyway, but our books will still balance. This is our future in a currency at the end of it's timeline.

Consider this a while.

Then I will summarize my reply to Traveler, using the above.

Thank You
FOA/ your Trail Guide

Gold Trail Update (10/30/00; 08:31:19MDT - Msg ID:40261)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (10/30/00; 08:31:18MD - msg#47)
Real Inflation

Good Morning ALL,

It's nice to wake up on the trail for a change. In fact, change is in the air on this morning so rare,,, do you feel the wind beginning to blow? I do.

The other day (back in town) I responded to one of a series of The Traveler's posts. His was offered on 10/24 #39771 Deflation Scenario II. My reply was on the same day #39784 and (because it was broken off) #39794.

Before carrying my reply further, I wanted to establish a base of thought for reference. This was done in the last two talks (see below) of this extended hike.

So let's begin today, Onward:

Early on in that discussion I said:

================Mr. Traveler: conversely: the "real" inflation I point to is largely a cash phenomenon, where all the past massively over created credit instruments are brought up by the money making authorities and paid for with printed cash or allocations to the owners digital cash accounts.=================

This above comment should clearly point out what we see coming on the horizon. Over the last 20 or 30 years analyst have always explained our US inflation process as being one of continued credit expansion. If the economy began to contract from too few credits being created, we speeded up the credit making machine. This has been true and is something I agree with. But after so many years and cycles of this process it has largely become a continuing operation that never stops or any longer slows. Such an evolution into constant money inflation has and does slowly change and condition our perception of it's dynamics.

Back then, many years ago, slowing the money pump may have entailed actually bringing the paper creation down to zero or even into a negative creation condition. But, in keeping with the explanations I have pointed out on the Gold Trail; currencies have "timelines" that upon close examination are really just an expression of the changing social expectations of the society that uses said currencies. Earlier on this extended hike we heard:

========It becomes a cycle that many have identified as the inflation / deflation cycle. It seems to have no limits to it's life in our modern world. But it does. At some point, deflation becomes a socially impossible event because the credibility of the money system is rendered second behind recognition of real wealth loss. Here, we will lose thewealth anyway, but our books will still balance. This is our future in a currency at the end of it's timeline.=========

This ending process becomes a natural "next event", not only in our minds but in our culture's actions. We no longer think of the currencies credibility as being at stake or even an issue. Now, well into an expectation that "expanding credit" is natural and acceptable because the world (and ourselves) needs more of it; just the act of slowing the increase is enough to trigger deflation talk and thoughts of economic slowdown. The whole process of what we once knew as "real inflation" the monster, becomes an acceptable, wanted event.

Yes, we lose the wealth into price inflation anyway, but our accounting tells us we are keeping up, so everything is ok. Gently, the notion of a slowing of credit creation is good, evolves into a constant rising expansion of credit that is not moving fast enough! This is the realm we have been in for most of this decade even as it has been masked by an overvalued dollar. Now we begin to move into the next stage, "real inflation". From my Traveler reply:

=====However, in the real hyperinflation that's coming, as it follows our current credit inflation phenomenon it's not the borrowing class that's liquefied, it's the lending class!========

Because so far it's only the financial structure that's been inflated, the rise in real good prices is just a partial reflection of the "account inflation that's all around us". Already it's built into our rising accounts and denominated in digital currencies. Yes, we have been beating price inflation on the books, but only beating the portion that's been reflected against our partially liquefied super inflated financial structure.

I the dollar falls, and prices start to rise, we will demand that our accounts continue to beat price inflation. The officials will grant our request by making sure none of this nations financial assets fail. Because our money has been built as a debt money system, if you only just carry or use dollars, you are part of the "lending class". The very class most point out that will demand deflation. Clearly, our holdings out vote the perceived evil "world order" that we fear will collect! A world order that is really just a reflection of ourselves in the money pond.

Maintaining our perceived wealth, if only in bookkeeping form will require these officials to liquefy everything. The recent derivatives bill now being passed in congress is only another step in this cashing out process. A process for us, that can best be described as; someone standing in an elevator while the building around them moves downward. In our eyes, our accounts (as the floors around us wiz by) seem to be going up as they beat a new rising price inflation, in reality the entire financial structure is going down as all the credit instruments from our past are cashed out by the printing press.


This is why people run from what was once perceived as a strong currency and the social system that created it. This transition from "credit expansion" to "credit buy outs" acts to place real numbers into the economy and those real digital numbers will start bidding in the marketplace. Suddenly, as in my "Barn Deeds" explanation; everyone is forced to reconcile the fact that their previous buying power, held in various "credits in account form" never could equate to real buying in our truly limited goods marketplace. Their loss to money inflation was always with them over many years, just never quantified at auction.

In such a process, even foreigners, important people, bankers and such, do not retain their debt claims on society. They join in the mad scramble to sell out because they are just as unable to change the process as is anyone else. Deflationary gains never come to anyone that waits. From my reply:

=======foreigners holding even government guaranteed paper debt in a deflating currency is little more than bookkeeping wealth if the actual goods buying power of the currency is compromised. Yes, our US would continue to print dollars to service it's debt, making the accounts look good. But, in such a deflation situation, foreign exchange controls are a 100% guarantee. Foreign held dollar assets would not come home, at least not at the same exchange rate one needs to become financially whole! When the world begins to abandon a currency at the end of it's reserve timeline, deflationary gains on debt instruments are an illusion of bookkeeping.===========


This is why we don't watch traditional banking numbers or official money supply Ms for future directions. These will become reactionary items, reflecting the coming changes well after the cashing out event begins to unfold. ORO pointed out in what I view as a good description of how out system will spiral in such an event. Over and over, credit will be liquefied in an unending circle. Parts of his post:
====ORO (10/24/00; 23:00:45MT - msg#: 39827)
Trail Guide and Traveler - bankers liquidity
The banks themselves can not survive a credit crunch where more than 10% of debt is unrecoverable. That would wipe out the whole of the banking system.

In order to save the banks, the Fed must print enough funds to bring back the banks to a point where they are at least liquid, if not solvent. Meaning that as banks sell surviving assets to meet withdrawals

The market value of these assets from distressed sale will fall substantially below what it otherwise would have been. In order for the banks to survive, the Fed must pay above market prices for bank assets till bad bank assets are at a low enough level that they cover remainingliabilities.

Since the market value of bank assets (not the fictitious book value) under current circumstances (higher general interest rates and high spreads) is falling, while bank liabilities are still growing at an interest rate similar to that of treasuries, Bank capital is falling at 10 times the rate at which bank assets are falling===============
Even though ORO was describing a deflationary event response, once a real price inflation is accepted and expected by people at large, the rising rate levels force the government into this same circle of events.

Looking at all we can see today, "inflation is in the air" as never before. Expecting traditional credit cycle events to save our financial structure this time will be asking the system to do what no one wants it to do. The very best and clearest early indicator that a super inflation is upon us, will be seen in the next "one way" fall of the dollar from it's overvalued level.

Our system of hiding past dollar currency inflation within a falsely valued credit structure is about to break wide open from a falling exchange rate. In the era before us, understanding the failure of our dollar at the end of it's timeline will require little more than knowing the price of bread at a grocery store. High finance is about to be "distilled" down to it's true worth; knowing the physical gold price an honest bullion dealer that can deliver at the same.

Now, let's hike back into town to continue on the USAGOLD forum.

Thank You
FOA/ Your Trail Guide
Trail Guide (10/30/00; 13:29:32MT - msg#: 40272)

Hello Mr. Gresham,

Your $40263:

-----you are basically saying that the official targeting of a gold price was a game that could be played only until the remaining "goldbugs" woke up to the shell game, and stopped playing the Comex/LBMA markets. Betting their margins against officially-sanctioned and guaranteed margin

You know, a certain amount of the action in these markets is very real and based on the give and take of actual legitimate metal trading. I think this is what gives so many of the convinced (paper = physical) paper traders fits in understanding how the other parts are little more than cash against cash bets. They don't see any of it going wrong just because someone is legally bound to deliver the goods. Yet, if push came to shove, there isn't enough material existing in the world to cover all this betting. The only way these guys will grasp it is when it all shuts down and settles at some forced fixed level while people outside the betting game bid physical prices through the roof. But, by then
these paper boys, along with everyone they talked into this game, will be out side, looking in.

In this process, large institutions can literally and very legally sell the daylights out of our paper arena with no gold at all. Hell, it's free money as long as the game has a currency to mark itself in. Mr. G, when you have a market that (relative to volume) almost none of the players execute against (take delivery), even when they are way ahead, it's a dead give-a-way that they won't execute when they are under water! You agree, right?

My goodness, even a lot of the mines settle their short commitments for cash and roll over to keep the game going. And they mine the actual gold! Some of the biggest (most vocal) Western Gold Bugs, run like mad to sell any bullion they get held up for in a delivery. They get stopped after last notice day, and unless the metal is for a commercial use, it's sold right then and there.

In this environment, one that has existed for some time, is it no wonder the major "political will" (in favor of the dollar) has such an easy time drafting paper sellers? Is it any wonder that with every player alive using their tools to dig this hole as deep as possible
(for the good old Red- White- and- Blue!), the ECB/BIS is standing back as long as able. Watching to see just how far (deep) we'll dig ourselves?

I have to smile when thinking how; one day, a few CBs and other dollar holders are going to place a serious bid on physical. Don't worry, at your age you'll live plenty long enough to see it (smile). They'll say, we want a little gold now. No, no paper, just all you got in your little warehouse. That's all you got? Good, take it all! Right now!
Ha! HA! Soo-Long entire dollar gold derivatives market, forever!


You point out: -----Until this moment, I just assumed the paper gold market was a normalphenomenon of markets instead of a recent put-up job just to absorb physical demand, but now Ican't recall actually hearing of any other locations for it.----------

Good item Mr. G.! Stop and think and ask anyone that same thing. Truth is, the entire gold market on this planet is a huge derivative of just the LBMA! Even our Comex. They all mark themselves to dollar settled contracts and prices out of London. Just like oil. You want to know something
Another told me? The moment oil pricing begins it's full shift away from total dollar pricing, that very same moment, gold will do the same! Because oil and gold don't flow in the same direction, they can't settle in different reserves!
And if Euros become the predominate fix for gold, it will be based on predominately physical trade. What a change this is going to be, ha, ha!

------------(Hmmm... What a choice!) I should learn more about art works,collectible coins etc,---------------------

Mr. G., you read about the great German inflation's, read also about what they took when in Paris. When huge transitions of power mediums happen, money becomes things. Violins, paintings and antiques are good, but gold coins rule the roost! This idea about rare and almost rare old gold coins was not invented by MK or anyone else, the market made it so and will do so again.

-----------The boom in some real estate markets------------

Well, I expect that once "real inflation" comes to town, no one is going to have any problem holding onto their residential real estate. All other forms????? But individual houses will zoom right with the money meltdown and stay right with it all it's failing days. How long? Could take years.

But, remember, Real Estate will be hard to keep leveraged. You risk having the banking rules change as the whole economy switches into an inflation mode. Sure, houses will go up, but you may have to sell or refinance if it isn't paid up, full. In addition, houses will not come anywhere close to making you money once this starts. They will only keep up. Bullion, on the other hand must roar way way ahead, just to come up to the starting line! This is the real reason so many paper players cannot understand the leverage in physical gold today. But, boy, I'll tell ya,,,,,,, there are a few other quiet people out there that understand it.

So tell me, do you think I'm bullish on physical gold? Ha! Ha! (smile)
OK, enough for me, time for important things, gardening!

Good Luck, my friend

Trail Guide

Trail Guide (10/31/00; 05:10:28MT - msg#: 40300)
Euros here to stay

My points are:

Professor Hankel argues that the currency has failed to meet the key constitutional criterion of stability
--------but-------- Professor Hankel --------(is the same gadfly)----- who lost a court case to delay membership to the single currency two years ago,
-----------so-------------While embarrassing for the government, his case is unlikely to succeed.

Consider these good points:

The German government has recently insisted that the euro was bringing stability and growth to the economy, in sharp contrast with the instability of America. -----------

Hans Eichel, the Finance Minister, told MPs in the Reichstag that the situation was the best it had been for a long time. He said: Economic growth remains strong, unemployment will fall and inflation will stay under control." -----------------

Mr Eichel suggested that the real problems for the world economy lay across the Atlantic. He said that growth rates in America were unsustainable. The danger was of an American "hard landing" that would bruise the global economy.-----------------

Mr Eichel said: "You cannot have sustained economic growth with such a high balance of payments deficit and such a low savings rate. I hope this problem for the world economy reaches a gentle resolution.-----------------

As Mr Eichel spoke, ======= Washington was preparing to announce a rapid fall in economic growth from 5.6 to 2.7 per cent in the third quarter of this year.

==German growth is expected to average three per cent. !!!=

(it's the dollat that's too high,not the Euro too low!!!!)


Wim Duisenberg, president of the European Central Bank, called on Germany to do more to end "structural rigidities" during a visit to Berlin last week.


Chancellor Gerhard Schröder and Mr Eichel said they are reforming already. In July, they forced through the biggest package of tax cuts in German history. Changes to the notoriously costly German pension system are in the pipeline.---------------

Leigh, a comment in a min. (how is your foot / leg?,, broken still?)

Trail Guide

Trail Guide (10/31/00; 05:43:16MT - msg#: 40301)

Leigh (10/31/00; 04:50:26MT - msg#: 40299)
Quick (but dumb) Question

Hi Leigh,
I'm kind of dumb, so guess that question fits my level (smile)!

You know,,, the world is awash in derivatives,,,,,,one of the biggest gambling paper schemes of all time,,,,,,and it's all based on the continued use and stability of the dollar! In fact, that is the one area no one ever questioned when derivative stability considered.

Now, suddenly we have a perfect setup and presentation of a Euro / oil trial balloon,,,,, using a country no one would fault for doing it (Iraq),,,,, and the US literally walks all over the heads of Congress,,,,,,,,,,, leaving shoe prints on their backs in the process,,,,, to get HR4541 passed????

Like Zenidea says,,, just couldn't have nothing to do with each other, right? ,,,, silly huh????

I think Zenidea smells the same thing quite a few others smell,,,, a rat.

Then we have smart Western thinking players like Goldhunter lining up support for investors to buy even more losing paper trades! Hello Goldhunter! (smile) Keep talking sir, this is all setting up very nicely. Yes, I still have those 3 December contracts for our experiment. Before this is all over, I'll be using your oratory just like some other people are using Iraq,,,, laying the groundwork for a big
surprise. Bet I play the game of chess better than you,,, specially political chess! (grin)

Now, if I can just get my French Sorrel to perk up in the herb garden, everything will be perfect. (smile)

more in a bit

Trail Guide

Trail Guide (10/31/00; 06:21:10MT - msg#: 40304)
Chris Powell (10/30/2000; 23:03:14MT - msg#: 40295)
Iraq gets OK for euro account
Iraq Gets UN OK for Euro Account

Hello Chris,

I hope you guys keep following this because it's eventually going to open the books of more failed derivatives than any law suit ever could. This is it, right here,,,,, the whole play being laid out in the open. How fast this moves dictates how fast paper gold manipulation is destroyed as dollar use shifts.

Did you notice that little blip in the Euro,,,,, almost the exact same time the HR bill was passed and the reality of UN passage in Iraq's favor. Not much, just a little tremor in the ground marking the floor of the exchange rates. Actually, the HR bill may also mark the lowest point paper gold can trade. At least there may be very little pressure on the downside from new supply. In fact, the much more ominous side of all this may now begin to take effect. That being where real,, serious,,,, gold bulls that really wanted
the exposure to demand physical gold, find themselves holding HR paper instead. If they start dumping contract paper into a demand void, the price will suddenly plummet into a trading suspension.

On a larger view, this could happen the world over in any derivative that was created as a proxy for other items of real use. Not just cash settlement. Tell Bill to keep talking, I know it sounds thin to say this but he has already broke their credibility backs just by doing what he has.

On a lighter note:

I wish you guys could buy physical as you unfold this story (smile). A little of that alone would pay the bills and make up for all the aggravation. Ha! HA! Next time you're face to face with some of the paper boys, hold a gold coin up and say "when this hits HR 10,000 we'll be even". Oh, they will laugh at you, but watch em out of the corner of your eye as they run to the bathroom after you are gone!
Ho! Ho! Ho! (big grin)

Trail Guide

Trail Guide (10/31/00; 06:54:02MT - msg#: 40307)

Cavan Man (10/31/00; 06:10:37MT - msg#: 40303)
BIS/FED/Mr. Howe Revelations

Hi Cavan Man,

You make a good point. I thought a shift in American gold policy was in process summer before last, 1999. The fact is gold is still in somewhat of a range. Look at the (now old) IMF ploy, using gold at a market to market (marked to market) price and using it as a real currency asset. Can you
imagine, the IMF accepting gold as a currency payment while gold is not an international official currency anywhere? Now I hear they may do it again.

You are right, the US could be shifting itself towards the inevitable, a Euro / gold world.

I don't worry too much about the BIS being on the Anglo side of things. You know, boards all have factions within them and just because the US has two seats means nothing. The dollar ability to expand and represent all world commerce has limits and that board has know this for a long time. Long before Alan came on. They never wanted a "neutron bomb" transition, rather a recognition that it was time to go. The way our J. Welch is leaving GE. Nice and controlled.

But. the players have all taken the last stages of maintaining dollar use too far. They took the trend and ran it into the ground, especially gold. Now the only way to work it out will be some sort of cash settlement, but that is becoming sticky as most of that will be in dollars and dollars now look to be at risk.

The next stage of this will most likely come when the fed lowers rates in the face of our overheated economy and sets off a big dollar slide. Then watch oil line up, first behind partial Euro pricing, later followed with full pricing.

What a mess, yes? What an interesting event to follow.

Trail Guide

Trail Guide (10/31/2000; 7:17:31MT - msg#: 40309)

Thanks for the tip and invite. I didn't know you people knew anything about French cooking down there! (huge grin)

Watch those miners, they are really in a pickle now. If your dollar stays down as gold spikes they will be in a vise grip. The more time goes by the more I think good mine investing in the future will involve identifying solid reserves, selling equity, then never mining it. Just sit on it. Give us your thoughts and experience when back on line.


Trail Guide

Trail Guide (10/31/2000; 8:43:51MT - msg#: 40316)

Canuck Gold (10/31/2000; 7:15:13MT - msg#: 40308)
Request for clarification from Trail Guide/FOA

Hello Canuck Gold,

I think your handle is new here, so welcome. I can't keep track of everyone anymore, nor answer all posts.

In a very humorous way I must say: ---- It took me a while to scrape the thoughts surrounding your question off the floor. You see, we pounded that subject into mush on several occasions. (smile)

OK, your words:

-----1. The first paragraph above appears to assume *********** their prices do not appear to need much encouragement to rise. -----------

CG, It's my understanding that most every miner the world over uses various official and semi private financial institutions for ongoing business. They use regular banks, bullion banks, investment banks and government banks to sell and finance their gold trade on both sides of the transactions.

In many cases, their freedom to sidestep their gold sale contracts are severely limited. In fact, I bet just about every form of loan contract against them, whether in currency, gold or equity based, has covenants and restrictions that tie all the mines assets up in any form of financial dislocation.

Now, a dislocation can occur on the banks side as well as the mines side. If some of these BBs or other financial players get into trouble and must call their loans / financing arrangements for renegotiation, it can back-play into all the other tie-ins on a mines books. Most everyone thinks that in an emergency, with physical gold soaring, the mines will just be able to snatch their gold up and peddle it into whatever market they choose. Don't count on it. In a crisis, the banks will snatch the gold and they will peddle it into whatever direction they choose. And more importantly, they may force the gold to cover derivatives at what will be officially sanctioned settlement prices. Paper
prices that is. Because in the fine print, most coventants express what market is the right one to identify an accepted price! We shall see if my thinking is right?

You see, in addition to that thought, we also fully well expect that initially a locked paper gold price will be touted as the real price for bullion, while the free physical traded price will be labeled as having "premium robbery". In other words, paper may show $300 in a very limited (locked and controlled workout) trading enviornment while physical will be reported to be selling at $300 plus a
$2,000 premium.

Are you with me? Not a good situation for any form of paper gold substitutes, mines included. Will this happen, exactly? Good odds, my friend. We shall see.

---2. Windfall taxes have not been introduced following the recent jump in oil prices. Why do you assume that governments will impose grand fathered windfall taxes on gold profits? --------

CG, go back and read all the stuff about the Texas Railroad Commission. OPEC was modeled after them. The recent runup in oil was nothing compared to the huge rise that happened in the 70s. (price adjusted). Besides, let oil gun past $60 or $70 and see what happens. It ain't over yet.

Further, the value jump in gold we discuss is off your radar screen, I'm sure. The amount of rise will be huge and certainly drive a lock down on traditional mine to market sales. Yes, the free market in existence then will trade. But it will trade mostly existing gold and trade it because international competitive trade settlements will require gold to act as a non officially decreed currency. The US
will be forced to open gold for this purpose. But it says nothing about gaining the windfall of newly produces gold as a taxable asset. Sure, such a tax would mean nothing now, at today's prices. But then with gold in the many, many thousands, rigidly controlled mine production the world over will produce some mighty fine taxes. And don't say they (officials) can't do it. Oil production and price was very well controlled in US for a long time. It can be done with any asset that's ground based and fixed.

-------3. After suffering years of depressed gold prices, do you think that shareholders will stand idly by while governments confiscate their investments? -------

CG,,,,,,,No, I expect them to stand idly by while governments "tax" their investments! Hey, they do it all the time, what's new about it now?

---------Most of these people have suffered enormous losses and would rightly expect to be rewarded for their years of patience and loyalty to, and support of, the mining companies.----

CG, while I am sorry for their loss, this story has played out in countless industries from the beginning. My only comment is that had management promoted their product (gold) as something to hold in a 9:1 ratio above mine stock investment, the gold world may not have been able to arrive
at this moment. The paper gold game may not have ever got off the ground!

-----4. I just cannot foresee Michael Kosares continuing to trade gold in a quickly falling market because he would go out of business. ---------

Clearly, you underestimate the political will of having a physical market to survive. Truly, MK would do more business under these conditions. (Just my thoughts Michael, I do not pretend to speak for CPM)

-----The end game of your scenario would surely occur within a very short time frame and at some point, all gold dealers would suspend business until the dust settled with the expectation of enormous windfall profits to come. ------

Short time frame? Could be yes, or no! All gold dealers stopping trade? Some yes. Enormous windfall profits to come? Most private citizens are not in the business of mining a product. Owning gold is not a business venture so taxes are not an issue here. They are holding private property that
is no longer official money. Therefore, there is no incentive for the US to again treat gold as money again, like it once did. Private asset, yes! Money no! Perhaps the Legal Tender Eagle could be a problem, but it's not a big deal.

-------However, if a windfall tax was imposed on mining companies, how could a government politically avoid imposing a similar tax on gold dealers and individuals?-------See above!

ALL: One of the big roadblocks in the minds of Western investor is in the perception of gold as an asset in and of itself. They have seen it remain in a political value pocket for so long that they can only view the trading of gold as a means to an end.

This too shall change!

Trail Guide

Trail Guide (11/01/00; 08:05:27MT - msg#: 40377)

elevator guy (10/31/00; 21:21:58MT - msg#: 40344)Leigh's 40299

Hi elevator guy,
I told you I was dumb and you go and make a point of it? Ha! Ha! (smile)

No, I didn't directly answer Leigh's question and if reading closely one can see I don't directly answer most questions. Yet, I somehow think my "subject title: Comment" got Leigh and others to thinking real hard.

Mr. Turl got it (hello turl): Trurl (10/31/2000; 9:16:51MT - msg#: 40318)

Here is some clear wording:

The HR bill confirms a lot of what we have been pointing to: that all the massive paper derivatives created over this past decade are little more than leveraged bets of accounting.

All done to simulate a defensive position so people can operate in our dollar world. Therefore, supporting the view that dollar value and the world trade that depends on it will continue without entailing much currency risk.

Our position always was that:

Their (derivatives) value will go up in a cloud of smoke just as soon as some financial crisis demands their conversion into useable cash retaining it's value or end product. Yes, they will be liquidated for said cash, but this accounting cash they are turned into, will lose it's value to super inflation faster than you can blink or spend which ever comes first.

Within this mass of trillions in digital creations are our gold derivatives. Though much smaller in number than their currency cousins, their risk is "unlimited" in a real inflation crisis and could literally bring the dollar banking world to it's knees. These little items are the real object of the HR bill.


Because a real crisis in today's world will entail a dollar breakdown and loss of it's trade use that comes with such a breakdown. During this transition of currencies, the thinking world outside "Western financial perception" (much of Europe and Asia) will want physical gold, not just an
accounting lock on it's rising dollar price level.


They know "American Political Will" and how it reacts to real inflationary crisis events that appear on the horizon. Our HR bill is exactly such a reaction. It appears well ahead of the actual event it is replying to and is usually not understood by most investors.

Such a bill allows "hard money" positions to be liquidated into "cash only money positions" thereby delivering the owners directly into any paper inflationary fire without physical holdings that divert international exchange rate risk.

That means:

Your dollar holding values plummet, taking all their contract cousins down the same exchange rate river. While everyone defaults on gold deliveries because gold holders say "so sue me, I'm keeping the gold"! It's the only money asset you can't print.

The result is an ongoing official recalibrating of paper contracts that HR makes viable and is but one more confirmation that paper gold derivatives today do not equal and are not a substitute for physical gold.

Quite clearly one should conclude that paper gold will burn and physical gold will soar during the next crisis. I know because I now have Mr. G, Mr. S and Mr. R all on my side saying derivatives were never what we thought they were.

Are you with me, now? (smile)

Trail Guide

Trail Guide (11/01/00; 08:08:13MT - msg#: 40378)

Chris Powell (10/31/00; 17:58:05MT - msg#: 40333)Iraq, the euro, and physical

---------I'm just trying to figure out exactly how the S.O.B.'s will try to expropriate me once the price of gold breaks out of its paper stranglehold!--------------

Leigh (10/31/2000; 11:48:45MT - msg#: 40325)

-----If, let's say, I wanted to pay a plumber or school tuition or some other bill, could I offer gold and it be readily accepted? And would there likely be no tax on the transaction?--------

Hello Chris, Leigh,

You know, if I wanted to pay anyone today or in the future, I could offer just about any medium. Gold, silver, bearer bonds, cash, stock certificates, car, truck, boats or chairs would all work.

Gains taxes would be due and we all would report it. But you have to ask yourself; in our world tomorrow, with inflation running away wouldn't it be the lesser of two evils to have and use major assets that held value against currencies than not to have them?

Our whole argument today isn't about anything new to gold bugs. It's just about realigning our holdings so the paper money inflators do not take us any further into their paper gold trap.

Yes, physical gold will trade at super values, but stocks trade at super values today too and our life doesn't change all that much. If new capital is needed, we sell some appreciated stocks and use the proceeds. Today and tomorrow will be no different as we use the fiat for trade and hold the asset for savings. Ages old game with an new twist, at least it's new to us; use real gold for savings! So, what if one gram of gold is worth $300 dollars (or whatever) tomorrow, this same game is played out the world over using failing currencies every day.

Again, the great battle now is in seeing how Western understanding of Hard Money issues was convoluted by getting us into using an industry and it's paper product as an inflatable substitute for the real thing. A lot of people lost in this and are still losing. My point is that there is a way to catch up, square the books and get back as this all unfolds.

It's not glamorous, but then again winning a game isn't always about being in style. Look at me? Hell, I still have all my leveraged Western friends, even though I beat them all. They just don't know it yet.

Very sociable of me, don't you think? (smile)

Trail Guide

Trail Guide (11/01/00; 08:27:39MT - msg#: 40379)

Canuck Gold (10/31/2000; 10:00:39MT - msg#: 40320)Reply to Trail Guide 40316

------With such a dislocation taking place, the price of physical would explode further. And if governments can get away with taxing the investors, what makes you think that they won't introduce onerous capital gains taxes or other 'fees' on gold transactions? Could you please expand on your final paragraph to 'ALL'. How will it change?------------

CG, From my #40316:

---ALL: One of the big roadblocks in the minds of Western investor is in the perception of gold as an asset in and of itself. They have seen it remain in a political value pocket for so long that they can only view the trading of gold as a means to an end. This too shall change!------

CG, Governments aren't "getting away" with taxing anything. First of all, they do today and will tomorrow tax companies as needed. What assets are left over after the government taxes a company is what you brought in value as your stock holding, nothing more. Their gold in the ground can never be yours as all you own is the cash derivative residue left at the end of them conducting a business operation.

Every company in this country is invested "in" with this clear understanding. Real assets are nothing more than the cash they can produce "after taxes". The fact that traders bid stocks for takeover prospects or some notion that they are worth more than what they can ever return in real after tax earnings has nothing to do with real wealth. Remember, in a fiat economy, the market for anything cannot represent an assets true value, only it's inflated trading bid!

So, they tax gold mines X times. What's new? Suddenly, sometime in the future gold becomes a real international asset (not a currency) as it recovers all the years of it's paper price understatement,,,, and governments want to impose a tax on this new reality.

But, then international trade protocols change and requires gold to be freely traded, demanding it's worldly citizens can trade it on equal footing with all other invest able assets (only just not leverage able). So, they tax and control it's production. OK, we all paid too much for the end assets of most mines, based on this new structure? Well so too did investors in the oil industry once oil shot up in
the 70s. They paid fat premiums on the expectation that reserves could be pumped at increasing amounts and at higher prices. But they never factored in how governments would through the TRC would impact their stock's PEs. Almost the very same thing gold stock investors did, recently.

Did they prevent our access to oil? No, global competition and protocol cut off most government initiatives in this area. Even today we find there is a limit to oil tax amounts so as not to prevent free competition. I know this is not a real or valid comparison, but it does give you think food, no?


When the Western world returns to thinking and using gold in a savings perception,,,,, the way it was for a thousand years and the way major players think today,,,,,,,, and stops waiting for governments to ordain it as money before it can be saved,,,,,,,, the sooner we will be free the
shackles of fiat money control. Keep using fiat digital for trade, yes! Keep trading assets so as to keep up with fiat's depreciation,, no longer needed!

Trail Guide

Trail Guide (11/01/00; 09:19:37MT - msg#: 40382)
gidsek (11/01/00; 03:40:40MT - msg#: 40364)
Rockgrabber Questions

Hello gidsek,
Nice work in working through the Rock's questions. I have one off the cuff point to inject.

My observations:
Why is it so many points are made referring to the Euro (or any other currency) not literally being backed by gold? Usually it's implied through the structure of the question or statement that somewhere, somehow, investors are buying Euros or expecting Euros to be strong again because it's "backed" by gold. Further, that backing description is meant as a throwback to official gold being exchangeable into the currency at a fixed rate.

Now, come on? That term "backing" is never meant to be taken that way. In that tense I know of no fiat backed by gold today. We all know fiat is not backed by gold today. The whole world knows that fiat is not backed by gold today. In fact, I have it on good authority that most of the
universe knows that fiat is not backed in that way by gold today (smile)!

So,,,,, exactly who or what group of people is this reference of "backing" perception pertaining to?

The truth is,,,,, no one! None of us see it in that light and none of us buy any currency thinking it is in some way offering a fixed gold return,,,,,, or even a limited fixed gold return!

How is it really seen?

If a military general is at war and walks to the middle of the battlefield to talk turkey with another general,,,,,,, his men usually stand with him. In the course of conversation he will point to his tanks on the hill as "backing" his men in battle.


No different than if you just lost all your money in a business venture and the banks are after your now broke self. Needing a little breathing room, you produce a certificate of account that indicates you have 60,000 ounces of gold bullion in a private vault in Argentina (or whatever) and ask if this gold "backing" me is worth anything to the banker?

Are you with me? I thought so. I knew so. (smile)

Trail Guide

Trail Guide (11/01/00; 09:36:27MT - msg#: 40384)
Reply / Comment

Thanks -------Topaz msg#: 40367)----- for asking that question?

ThaiGold (10/31/00; 18:24:05MT - msg#: 40337)
Freudian Slip.?.

---Freudian Slips?------

I don't know ThaiG, is that a dock where one ties his yach named "Freudian"? (smile)

No? Then what is the contradiction you see?

Trail Guide

Trail Guide (11/01/00; 10:10:52MT - msg#: 40386)
Last post, got to run, thanks all!

LeSin (11/01/00; 03:49:57MT - msg#: 40365)
Sir Trail Guide @ "Aussie Miner's Pickle in Vise Grips"

Thank you for the URL. I book marked it and will study. Have a huge Herb garden and regular garden for all types of gourmet cooking. We entertain a lot. Always brought sorrel, never grew it.

Gold Miners

You know, I own some miners and so do a lot of big physical gold advocates. What separates us from most other mine investors is our long term view. Actually this (our views) is something the CEO worship us for. We pick them carefully, don't trade and hold for their rebirth value after the
dust settles. All the cock sure traders never would accept this before but now they are listening.

Eventually, even with all the destruction most mine stock values will have, their new value will rest on the profits they gain over and above production controls and taxation. Yes, gold will go so high that the mines will still be left with some slice off this super high top. And that slice will be big!

But, before running out and loading up, we have to remember that these are not savings or hard physical holdings. They are business risks. Right from the beginning we buy and expect their values to drop. How far I didn't know then and don't know now, maybe this is their bottom. At least for
the super strong unhedged ones? Yet, to maintain this strong holding concept and deflect the risk that was coming I hold in a correct "very low" percentage of assets and expect a zero valuation for a time.

If they run tomorrow, good. If they run from zero, good. I don't care. Now you see why most hard money paper advocates cannot stand the pressure when the real blow off arrives (as it may be now). The real event always was much larger and different in scope than the 70s precedent we all learned how to play from. Success in this hard money stuff is for real savers, not shoot the moon rocket riders.

I think most average people will be very surprised at how bullion reacts to the coming party. It has an excellent chance of keeping up with any mine holding or paper bet. It has an even better chance of gunning well past both of them. In the end, most people will lean back and ask, "why did I work so hard at this". You see, old Saud knew how to count his chips and let the paper boys wear themselves out. So do I, so should you. (smile)

Trail Guide

Trail Guide (11/02/00; 06:03:22MT - msg#: 40442)

Want to help the miners? Want to help people? Send this message to every person in the gold business! Promote it's use as a product slogan to the WGC and ask every miner to plaster it on their trucks, offices and billboards. Ask every bullion and coin dealer to use it if they want your
business. Promote gold for it's main primary use for over the last thousand years;
-------something to own and save ---------

Endear this message into the minds of average people and watch the world change! For the better!

Gold: a real savings as natural as the earth itself
Doing so will support the world's gold miners;
good people that work to bring us a wealth that never goes out of style.

Physical Gold Advocates 2000 - "saving your efforts today, for their use tomorrow"

It would make a real difference in the perception of a lot of people. But I doubt it would ever be accepted by the industry. (frown)

Trail Guide

Trail Guide (11/02/00; 08:07:42MT - msg#: 40451)

Tree of Life (11/01/00; 22:02:53MT - msg#: 40415)

Hello Tree of Life, and welcome!

Nice posts. I have a few points to comment on.

------Now how did gold get involved in all these. You may say. I believe the gold carry trade took on new meaning in 1995. Originally, it was the European banks legitimate way to earn some income from gold leasing but to ---------------

ToL, there are all kinds of explanation making the rounds as to why the CBs lend their gold. I agree that they did and do participate in some lending. But that was only in the beginning. It helped precipitate a market for other motives to hide in. We must look at the nature of the beast to
understand why it's just a smoke screen.

From the very beginnings of capital markets, no one lends their assets for free. Actually, I say it's from the beginning of time, but there is some argument against that one. Some people have even gone so far as to say that the banks lend gold based on it's booking value, around $50/oz (pick any low number if you will). Then, the 1% or 2% they get, based on the selling price looks good.

Then some tell me that gold is like holding Yen reserves and that 1% is about the same? Indeed, I know some of them do lend with this perspective, but that analogy is based on a very, very small reserve comparison and only a tiny amount of gold would be used to balance this.

Well again, none of these guys lend anything for free and that is what 1% is when lending in at least a 4% world. It just doesn't happen

The original "gold deal" as it first came into play involved lending the gold, the borrowers (BBs) selling it for cash and then they (the BBs not the mines) pooled that cash in a holding account. There it was held in interest bearing instruments, not delivered as financing to the gold mines. That pot of cash grew with it's added interest and became the ever increasing per ounce price the mines sold their production to in later years. Fulfilling their contract.

Having entered into these contracts that guaranteed a pot of cash to buy their gold production, the mines could use these contracts as fixing their profit margins to borrow money against and expand their operations. OK;, so this is how it started. I think American Barrick was the pioneer of this
back in 1986??

But, as I opened with above, this was just a lead-on sanctioned by the governments to create a market for paper gold dealings. All the rest that followed we have discussed endlessly. However, my main thrust in this is that the CB did have a political return to gain by starting this, it wasn't done for free.

Now, if this was a real lending operation with the intent to get some return on their idle bullion, they could have easily structured it far differently. As it is they lent the gold into a contract scheme that gained them far less then the actual rate returned. The mines would have been happy to create the deal even if it fetched a static guaranteed gold purchase for them. Thus giving the CBs a much higher return. You see, the mines motive was not to receive a higher than market price for gold, rather receive a stable price for gold so financing could be arranged. The fact that gold prices fell made Barrick (and many others) look real good and their staff stood for all the praise. When in fact
they didn't know it would work this way (back then).

Today, and over the last few years, with gold ever falling, all sorts of gold deals have bee worked out that have no connection to the CBs. A lot of it is completely outside the mine industry too. It's been carried so far that much of the stuff is just naked financing based on gold's price. The real return was in playing the official stance that gold must fall a little every chance it had to encourage
dollar settlements for trade. It's that simple. Drawing up a gold contract didn't have to have but a little gold selling involved and could be done just lending mostly fractional cash, borrowed at close market rates. The falling gold price did the rest. That's why so much of the value in a lot of current paper is worthless if gold rises. There is no physical to cover it! Why do you think they can trade
more paper in Britain than actually exists? What a mess, huh?

I'll tell you something else and this applies to Farrel's earlier post. All you have to do is dig real deep in that miner's papers to find where they must post more margin to back their deals if gold rises over $600. This isn't just my little guess, so ask them to see if I'm wrong (smile)? I bet that thing is back worded to include equal treatment for all creditors in a crisis and has an escalator clause in it that could take that whole co out if gold gunned to $2,000 in a week? Of course no gold delivery, just an accounting adjustment that would change some ownership. You see, they (and all the other hedgers) bet big time that the IMF/Dollar group could keep gold in it's paper price pocket forever. They never thought about what would happen if gold got priced in Another medium, a Physical only Medium!

HO! HO! HR 10,000 here we come! (smile)

Trail Guide

Trail Guide (11/02/00; 08:29:42MT - msg#: 40452)

I bet even my little saying in #40442 would get knocked off. Looking back at it they would probably think it was a slur against miners. It wasn't.

Mine investors slam the only people that can help then (physical buyers) while encouraging leverage traders to take short term plays in their favorite stocks. They say they invest in the industry for all it's positive fundamentals, then laugh at the fundamentalist for buying such a slow investment???

They want everyone (governments included) to stop selling gold, but when these gold holders decide to leverage up (instead of owning gold) the traders cry at how stupid the sellers actions are.

Trail Guide

Trail Guide (11/02/00; 08:33:44MT - msg#: 40453)
Gone for a while!
I've been sick with a bug for the last few days (been in and out)and am over it now. Have a lot to catch up on so will be gone a while.

Let's talk later

Trail Guide

Gold Trail Update (11/6/2000; 11:53:22MDT - Msg ID:40689)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (11/6/2000; 11:53:21MD - msg#48)
(No Subject)

Just a quick note to mention that a major family problem has come up. I will return to regular hiking just as soon as able. As usual, someone will try to save most of the main forum discussion for me while away.

Also: TownCrier, good to see you back.

Thank You

Trail Guide (11/19/2000; 19:31:16MT - msg#: 41777)
One quick post
Hello all,
I'm still working through a few private things. But, rest assured that I'll be back before this election is over.
I think (smile)?
You know, both Bush and Gore are good guys. I bet they are at least equal to the best members of your family "in laws" (huge grin)!

Below, I'm perhaps saying the same things in several different ways. Give it some thought?

All of us are them,,,,, those two guys!

Looking out across this national stadium, filled with millions of people, I ask myself; "does everyone here, expressing their views publicly, understand that "they & we" are this society as a whole"?
Mostly, I think that deep down we do and our brash accusations are a form of posturing for our own self interest.

But, when some negative people speak or write the same challenges over and over we can't help not to place their private sincere position as being the same as their divisive public stance.
If that's true, then fortunately for the rest of us, large societies do act as a mass and the finality of their
political choice always drowns out these vocal few "trying their hearts out" to speak for "US ALL".

The citizens of this great land are far smarter than the media or many private speakers make us all out to be. I know, because I hear and talk to our "regular people" all the time, just like they were family. Ha! Ha! Many of them are (smile).

We "regular people" know a thing or two about real life and how it works---------
Truly, in western democracies, no one controls group think, even as many would have us fear that some power players can. We, like the great herds of buffalo of yesterday - year, move in a way that makes observers think a shepherd directs us. But just watch them media boys dive for cover when we go that way instead of their way!

So here I am,,,,, here we are,,,,, right in the middle of this, the largest mass of opinion in our human group. Feels good and safe here, doesn't it?. I'm happy here and think most all of you readers feel the same.
We all move together, sink together, swim and sometimes succeed together as a nation,,,,, for better or worse. Thank goodness we have so many around us that our strength is so
strong. In this light I always say; "god bless America but heaven help the world"! (smile)

This evil society?-------------
Why, it's us, we know it! So please, sir don't keep repeating Gore's and Bush's bad traits so loudly? You're talking about "us". you know.

Does anyone writing here think we as a political people are not an awful bunch of self centered manipulators? Ha! Ha! I didn't think so,,,,,, so what's the problem?
We take our own little self interest as far as possible until the larger mass puts a stop to it. Good! Because then we all become governed by the larger mass's self interest ,,,,,, and that becomes the strongest trail we can follow ,,,,, as a group ,,,, for better or worse. At least they create "our" lawful order, as bad as that may be. And in that structure we live "kind of" peaceably, even if it's not the same moral choice for all of us.
Still,,,,, bless this nation from sea to shining sea!

In most modern western societies political power has no strength without wealth and that's good. So it takes us off our usual course of chasing money for a while. That's ok because their control of public wealth is not conceded to them without a good fight and a good fight comes second behind this winning the majority of human support first. So, during these brief power transfers, the nature of, control of and longevity of any particular nations wealth assets is subjugated to lower status while winning the greatest number of votes comes in on top. Not winning the support of the most moral, mind you, just getting the votes any way one can. It's a terrible way of doing things, but that's ok,,,,,,,, it's us! We accept that privately when no one is looking, right? I thought so. You newcomers to this, that think it's all so unlawful, remember, we been doing it for over 200 years.

Taking this high ground for a firm footing----------

I now point out and ask; "no leader can ever do everything promised, nor can they accomplish our agenda while being everything moral for the greatest mass of this self centered nation,,,, So why do we place them upon a platform that not one of us can stand on ourselves"?
Yea, I know,,,, you already knew it's the best we can do and the best they can do. I thought you grasp that.

But, reverse the tables in our current presidential election and ask yourself; "would Mr. Bush not do the exact same thing Mr. Gore is doing? Don't answer that out loud or someone will hear it in the other room (smile). If he (Bush) didn't, then he would not be fighting his best to represent the best thrust of our national will. Right? So why can't Gore scratch and claw for all he is worth?

You see, we expect, demand and need a leader that is most like us. So don't be presenting Gore or Bush as something they cannot be to the mass that eventually places them in power. If you do, then your opinion does not represent the greatest strength of our nation. That being;

"the power of a people to govern themselves by finding a leader strong enough to win this no holds bared fight, for the support of most of us good people".

Ruthless? You bet! But knew that already, didn't you?

Crooked? Yes! But knew that already, didn't you?
Moral? Probably not! But knew that already, didn't you?

Honest? Only to the extent that our desires will allow him to be!

So, myself and the greatest majority of Americans I stand in the middle and say;-------
"let the best person win the hardest fight over the longest mile. We demand it because we are one tough bunch to govern. So be it and good for us"!!

As a national family we choose to shake the walls of our house as we please and damn the outsiders looking in! General Patton said it best: " Americans love a winner and won't tolerate a loser"! Indeed, when this is all over we'll all be winners, like it or not.

I say to my fellow Americans,,, my good friends and bad;

"put up your dukes and let's go for it,,,, after all I'm the best neighbor you ever had or ever fought with ,,,,,, Oh, by the way ,,, how are the kids,,,, God bless you and yours ,,,,, and do you need anything from the store,,,, I'm going that way?

---from one of "us" that's just like "them"---

thank you all for reading and happy thanksgiving
Trail Guide

Thanks for the thoughts Michael! (big smile)

Gold Trail Update (12/02/00; 11:40:03MDT - Msg ID:42692)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (12/02/00; 11:40:02MD - msg#49)
An analysis for the time ahead.

The Perspective------

The world is not going back in time for a repeat of gold's historic money function. The future of gold is before us and that future holds it as an asset of great wealth, not a currency for everyday spending. Indeed, it will be more than money, perhaps a wealth beyond money!

Hello friends and readers:

For many long years I have been following this new evolution in gold. I have also been following how that evolution is changing Western hard money thought. It seems that our new gold market has only now started forcing hard wealth investors to reconsider their long held beliefs about bullion vs. substitute gold. Many of you, have also followed the Thoughts of Another from the beginning and have recently concluded that this evolution was not only a long term process, but as much political as it is financial. With years of those early writings under belt, it's easier to now see where "the events" Another spoke of, always were "fluid in political dynamics" and their impact upon the gold market's structure left little firm ground for "historic investors" to stand.

We are, today, still standing on moving ground as a new monetary dynamic works it's way through world financial opinion. Not yet completely understood nor is it often spoken of in proper context, it's effects are, all the same, very real. Half of that dynamic is the ongoing destruction of the paper currency system our entire house of wealth is measured with, dollars. The other half of this evolution is within the "transition to" and "development of" the next paper measuring system our trading economies will use. Yes, as this process is played out in our time, it seems that the Euro will perhaps be the system we will all one day use. This transition will have a tremendous impact, not only on physical gold value, it will dismantle the way gold is traded for decades to come.

Our part in understanding this--------

For the casual observer and participator in this evolution everything around us, that is financial in nature, will seem to blur as events write new rules into our once static money history. I believe this storm will become worse as many paper assets are buffeted by it's destructive winds. During this time the transition of currencies will place a more proper price on all the paper values we now hold to be so true.

In this light we should know that our real things in life will not change all that much. Your tools, chairs, cloths and cars will remain yours. Houses and land, TVs and boats, all will retain the exact same "value" they always had. What will change is our ability to use our currency and paper assets as a medium to measure the "real value" that's always so inherent in these items, yet so well hidden in our perception of today. Yes, the currency price of things will greatly change, even as their "use value" moves little. Such is the nature of dying paper money systems. Such is the ending of a currency timeline!

We of Western thoughts and values---------

The world of "Western thought", of all things financial, that we have lived in and with for so many years, was slow to evolve into it's current state. Over time we came to accept that; because "paper assets" were so often used to measure and price the "trading value" of real goods, that these paper items must be equal in "use value" to these same real goods. Holding one's wealth in CDs, contracts of delivery, stock ownership and IOUs of most every form; all constitute owning "trading value", not real ownership value. Never were they equal to the real wealth itself, for only during long-term, major inflationary expansions of money substitutes could such a fraud be hidden. Further, it could
be better said that the "trading value" our fiat money system places on these paper assets is more of an illusion immersed in "conceptual economic value", not the "use value" real ownership implies.

Yes, it's true that accounting books say we can convert all these various paper holdings into their "use value" by just selling them and buying real things. But accounting standards fail to evaluate what a "world money medium change" has done in the past and will do in the future to the holders ability to "convert and buy". As in the past, the world will deliver "real things" against "paper trading assets" as long as the medium is accepted at par with "use value".

But once a nation's medium of exchange is placed in transition to Another nations medium, and subject to revaluation, wealth denominated in the failing over expanded paper mediums must be delivered as "more of the same currency" in place of real asset settlement. This is the true face of hyperinflation.

Behind years of massive paper wealth creation, there is never enough domestic production capacity to settle "in kind"! Relief in the courts from the fraud of real goods settlements reverting into paper settlements is rare in hyperinflation; as "fair value" is often seen as also being the same as "a fair value in legal tender". During such periods, legal tender can buy equal "use value" if only the real ever changing world values would just hold still. It never does because the more intense the transition becomes, the more intense the exchange crisis and the more quickly real world values (costs of goods) will move away from the paper holder.

Reading Western Thoughts---------

Truly, there is a big difference today in Western views of holding wealth, from the "gold coins in your pocket era" from the past. The longer it has taken the marketplace to challenge these differences the more human opinion mutated them into one in the same. We see this perception firmly grounded in written opinions today. The security of holding gold substitutes in leu of physical gold has never been stronger. After 30+ years of children growing into adults in a Western paper world, only delivery default and gold industry bankruptcy will change such paper minds.

The new future of gold is directly before us as our changing money dynamic will find paper wealth illusions running in circles. Paper assets will continue to set the price of things even as the currency price of things rises faster than paper wealth can reprice the same. Round and round we will go as our system outruns itself and strains to match the illusion of past paper wealth creations against the real world of taking delivery. Stranded on the money trail of past precedents, millions of investors will lose fortunes by holding what they thought were gold substitute assets.

Nowhere will this process be more vividly seen than in our physical gold markets as they reemerge from a total paper default. During the initial default stage, the entire gold industry as we know it, both paper trading and mining, will utterly fail to perform it's function of tracking the real value of physical gold.. But once the smoke is cleared, physical gold will first soar beyond every other asset medium, both precious and not precious, then it will be at the starting gate with all other real things. Then it will again run the fastest race against the onslaught of hyperinflation.

Nothing will change the trail we are now on------------

Today, at the end of a long history of dollar use, we say that this currency's timeline is ending. We repel from the popular thought, perhaps common thought, that some foreign political order is killing the dollar. It's easy to use war like terms to describe the dollar battle as one side losing the fight against another. I, myself, use it often to make a clear point. But, in truth, it's out of context to present the transition that way. Truly, the dollar is dying from it's own old age and it's debt burden is the final disease.

The arrival of a new system to take it's place will eventually take on all the appearance of a victor plundering the vanquished. Perhaps this is the way it will be played out in our media. Indeed, the stories will be ripe for telling as investors caught holding "dollar system" dependent paper assets will no doubt paint this transition as unlawful. Perhaps even avoidable, if only somehow the right team was at the helm. Yet, reversing this timeline change will be like stopping a surging river at it's historic height of flood. Still, history is perfect in showing that no government, team or individual has ever controlled a transfer of wealth measuring power on a scale such as this. Never has and never will.

So the evolution of hard money opinion will continue and much of that change will be witnessed as the timeline ends and people learn from watching and talking. Much of that evolution will be presented on forums such as this. Some on each side will line up with their wealth bet on their best perceptions of the outcome. Perceptions built on the solid ground of history, but riding our "fluid political events" of today. It will sweep us all down the same river of evolving money history. Down the surge we go, some drowning as they cling to paper based hard wealth illusions, others surviving the trip with the heavy weigh of physical gold for ballast. All in all just continuing the interesting journey we call life.

Thoughts spoken with a background of coming hyperinflation--

It's almost impossible to compare our (FOA & Another) outcome of all this to other opinions because we have built our actions and testimony upon the one-way flow of this timeline transition.

We say "one way and one way only" and waver not! Own physical gold and position one's other
interest with regards to a changing reserve currency dynamic.

Most every commentary written that is somewhat at odds with us, uses a foundation of a continued sound dollar financial structure as it's base. Be it; deflation alone and / or deflation with some return to a gold exchange standard OR a total failure of other world bodies to reach for other acceptable alternative structures. Some say a little inflation will arrive and lift all boats within a "more of the same" dollar world. Indeed, their boats include a paper gold system and it's ongoing use by the gold producing industry. All of these concepts are yesterday's outcomes and will be washed away in this great storm.

We say the timeline is ending and will do so in a great transition of dollar use. None of these other opinion's positions can reconcile the dollars inability to compensate it's debt load at par based on it's exchange for the goods of daily life. Truly the economic structure of the US cannot now, nor ever can in the future pay the costs of supplying real goods as payment for it's debt. We, as a financial nation, have gone that far over the cliff.

Even the most unsophisticated player on the world financial scene will agree that their wealth would be subjugated to a lower par of matching the US's output ability. Today's paper wealth, if held during any pay down period of deflation or the further debt expansion a "little more inflation" would require, will be substantially destroyed. I allowed to happen, the dollar would be dumped in an accelerated fashion as a world trading medium. Indeed, the world today may float in the same economic trading ocean and our goods exchanges may depend on a somewhat level sea for movement; but we no longer all float in the same "medium of exchange" boat.

Yes, it's to everyone's advantage to see the dollar transitioned with the least disruption, but to think that our international governing power structures are all in bed together begs the rhetorical question; governments only represent a following when their private constituency's debts can be settled? I submit that the power structure that offers the best dollar debt transition settlement will receive the most support and use of it's currency bed.

A new reserve currency with gold valued at super high levels will support debt transition into that next currency system far better than a restructure of real US economic production repayment ever will. Such an avenue of escape for investors and world traders completely cuts off any attempt by the US of engineering a deflationary landing. Such a landing can be explained and distilled into many esoteric forms that bear little resemblance to a classic deflation. But all, in the final measure, require deflation and a lesser settlement of debts. It will not happen.

In our time and for the first time in the modern US dollar history, the US will embark into a classic hyperinflation for the sake of retaining it's own lessened dollar for trade use. As destructive as that might be to players in this financial house, it is better than immediate total economic failure. It will evolve in a form much like the course of any other third world country, if it's currency too was suddenly deprived of world reserve status. We will, like people the world over, learn to live with it and live in it. Truly, our dollar and economy will not go away, but it's function, use and value will change dramatically.
Thank you

FOA/ your Trail Guide
Trail Guide (12/02/00; 17:57:22MT - msg#: 42706)
Hello all!

No, I'm not fully back yet but will try to make time. I have a lot to say and update on and will try to slowly fill it in over the next few weeks.

Randy@ the Tower, so nice to see you here. Don't let Goldhunter off the hook (smile). I'm coming in with my best shot a little further down the road. You may have to hold him while I swing, he's a hard one to pin down? (big smile) Come on Goldhunter, it's only money (bigger smile)!

Cavan Man, Mr. Gresham, Auspec,,,,,, I'll try to infill against your comments. Perhaps tomorrow?

Nice discussions and reporting Black Blade,,,,ORO,,, everyone!

Thanks all
Trail Guide

Trail Guide (01/01/01; 19:31:16MT - msg#: 44832)
U.S. and EU Economies May Be Moving in Separate Directions
Hello Everyone,

A while back I had to stop writing. Several important things have taken most of my time and continue to do so. I let MK know of the uncertain nature of my continuing these discussions at the same volume level as in the past. But, as time presents itself I will update as able. I hope to bring up to speed several past discussions that were left cut off.
To do this, I'll have to conserve what writing time available by posting on the Gold Trail "as able".

Here is a very good writer that has offered an excellent update of the Euro situation. Please enjoy his clarity. Link is above and a portion below.


U.S. and EU Economies May Be Moving in Separate Directions
William Pfaff International Herald Tribune
Friday, December 29, 2000

" " The explanation for this emergent autonomy of the European economy would appear to be the creation and coming of age of the common currency, the euro. Before monetary union, European exchange and interest-rate policies were largely dictated by the defense of relatively weak

This usually meant maintaining national interest rates at levels that depressed overall European domestic activity and growth. The EU countries' economic policies were indirectly determined by reaction to U.S. policy on the dollar, formulated with reference to U.S., not European, conditions.

A pluralism of economic power has been on the way to restoration since the Europeans established their single market in 1992. Its achievement would mean that the world economy has two strong and autonomous supports, and that now seems nearer than ever before." "


Thanks Trail Guide

Trail Guide (01/01/01; 19:35:03MT - msg#: 44833)
One more thing
Happy 2001 to all!

The year of change.

Trail Guide (1/2/2001; 17:27:46MT - msg#: 44894)
one needed comment
escapethematrix (1/2/2001; 16:41:45MT - msg#: 44888)

Hello escapethematrix, thank you and welcome.

I was just sent today's postings, saw your piece and am very happy you found this item. It's good that this is public now. It is my intent to engage the direction of your post along with using much of the groundwork laid by MK's and Randy's solid efforts. Truly, these men have seen through the fog for some long time. This year that fog should clear for all to see. If only I had more time and energy. But, it shall be done.

A trail walk is coming, oh yes, it's coming! (smile)


escapethematrix (1/2/2001; 16:41:45MT - msg#: 44888)
USA Today Blurb.........
Greetings and salutations to all posters and lurkers of the best Gold site on the entire Net........Many thanks to everybody for all the great posts, with a special thanks to FOA/Trailguide for sharing his monumental mental acumen with all of us.....Anyway, I nearly spewed out my coffee this morning as I read.......


Leaders of six oil-rich states Sunday approved steps to issue a unified currency. The move is part of a plan by Saudi Arabia, Kuwait, Oman, Bahrain and the United Arab Emirates for a regional currency and a unified trade zone.
It is designed to help speed up free-trade talks with the regions biggest trading partner, the European Union. Currencies of all the countries, with the exception of Kuwait, are pegged to the U.S. Dollar.

As the old song goes...."Signs, signs, everywhere are signs"........I thought I had read somewhere that top EU officials were in the Mid-East over the weekend....2001 is off to a Golden start....

Gold Trail Update (01/03/01; 08:50:38MDT - Msg ID:44933)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (01/03/01; 08:50:37MD - msg#50)
Euros: -- the breaking of dollar derivative gold! ---


Thank you for the comment yesterday on USAGOLD's main forum.

I have to say that everything is working out well as the new "Power Euro" begins it's displacement of our dollar. Right on que, the gold derivatives are taking a beating as that portion of the dollar market is dismantled. Hyperinflation, in most dollar economic zones will eventually gun gold much higher. But, not until gold has out-run everything on the planet so as to get to that inflation price starting gate!

It seems people will learn about "this new gold market" in two fashions; they buy gold and await the dollar / derivative failure or they buy substitute gold (mines and derivatives) and watch this entire dollar gold structure sector get destroyed. Either way understanding will be gained.

I know you have opted to own real gold while watching this all unfold. Truly, physical gold will explode in an unbelievable fashion once the Euro has supplanted derivative gold trading with physical gold trading. A process that allows us little time to buy more gold as derivatives descend. The wash out of trading in paper gold could take their paper values to depths unseen. While a virtual explosion in physical buying, happening at the same time, will make the physical run-up un-buy-able during the first several hundred percent.

If it unfolds more slowly than this and starts from these levels, "good for physical gold advocates". But, as I understand what is happening and the political preasures in force, physical gold is about to become the only portion of the gold sector that will perform,,,,, and perform as no other asset in history ever has!

Oil producers / backing Euro Zone development / backing super high physical gold / will change the trading dynamics and gold perception as never before. Between then and now, those gold substitute players, who are waiting for past historical paper performance to lead the way, will be forced into financial oblivion. All the while betting on a paper horse they thought was a Golden Arabian.

I'll have more as able, on this trail, our trail into the future.

Michael and Randy, today is a very good day! A very good day, indeed! (smile)


Trail Guide (01/03/01; 15:54:16MT - msg#: 44966)
Randy (@ The Tower) 13:32:16MT - msg#: 44957)
-- surprise rate cut was in the works. Any other rabbits up your sleeve?------

Hi Randy,
Your post made me comment!

Ha! Ha! Allan blinked first and a small few knew it! Picture him and the ECB standing head to head, not moving an inch. He moved and now the dollar is lost. With all the quick short covering on the stock and currency markets, "noone" noticed how much the long bond got smashed.

------ A 30-year bond fell a whopping 2 10/32 to 111 2/32 to yield 5.48 percent -----

Now our strong dollar support system is fracturing away. This year the dollar will lose it's reserve status to the Euro. Or at the very least share it. Nothing is going to fall again as a "Real" inflationary bias begins to build in our dollar world. Stocks, real estate and even basic economic activity will all feel the effects of a super dollar expansion. Done only to keep the dollar status somewhat in the game. Deflation will not be allowed. Nor will the gold derivatives markets be sustainable in dollar terms. Everyone in the world will be selling paper gold short in an effort to make some hay as it's structure crashes. It's called piling on!

This move by Allan is as important as the Washington Agreement because it marks the first time we are forced to action by a "competing" financial system. This game is well known to some and it's outcome is being positioned for. The Gulf producers, Europe and the BIS have been doing so for many years.


Gold Trail Update (01/05/01; 14:20:41MDT - Msg ID:45126)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (01/05/01; 14:20:40MD - msg#51)
Back to Trail Marker #1

Hello ALL

Before starting our hike, let's review an old trade.

A while back, I left a marker on the Gold Trail so we could one day return to examine some old footprints:
FOA(5/25/2000;2:54:39MD- msg#23)Trail Marker #1

For the record, as I posted several times, I'm not a trader. Nor am I a futures trader, even though I have traded almost everything there is and done so before many of you were born. With this perspective of me, not being a naive newcomer, lets recount the trade.

A one time poster here made a bet to show that paper gold was better than real gold:

BTD (5/23/2000; 16:01:57MT - msg#: 31098)
""I just sold my Krugerrands and bought futures contracts""

Well BTD,

Because so many of these "bets" are done and never openly followed up on, I thought I would copy his actions in real time with real money. I did, as reading my msg#23 above explains. I dumped a portion of gold in one quick sale. I must have got unlucky, because my offer of 300 Krands hit a down moment and sold at $270oz. that day. Some called me out on this and said I was building this example unfairly. But, you know, in real life, in real trading, often unfair things happen as many of you can understand. The rosey paper bets never do in real time what they do over an after dinner wine! (smile)

I used the sale proceeds and brought appx. $81,000 of t-bills as margin, then brought (went long) three (3) Dec. gold contracts at $283.30. (I mis typed this as 383 in my post, but most of you reading would have known this). I got around 6% on the bills while waiting.

About six months (Fri. Dec. 01) later I traded out (sold) my 3 contracts before being delivered against them (stopped, in broker jargon). They were "sold on close" at $268.60. I saw no point in buying 300 ozs. of warehouse receipts for $283.30oz when an order for 300 Krands could be had for around $271 at the time. Ironic that they were only around a dollar above what I had sold them for????

Anyway, the math (I hope I type this right?) works out roughly this way:

After liquidating my margin account, I had lost:
$14.70 oz on the futures (283.30 - $268.60 = $14.70)X 300oz = (loss of $4410.00).

Then my interest on the 81K amounted to $2,430. +/-

which made my loss appx. ($1,980.00) (less all commissions we can easily round it out to ($2,000)).

SO,,,,,,, I sold 300 krands for $270,,,, after a few months my $81,000 had become $79,000,,,,,

of that I couldn't buy back the 300 rands at the new price of $271.

Wait a min! I would be short some 8 ounces and all for what?//

Boy, the convienence of holding paper gold is sure expensive! I didn't want to roll this over again by buying another out month!

The truth of the deal is that if one must trade, it's often better to just trade physical with a good dealer (I know I saw one somewhere on this page?).

The commissions are in the physical prices already. At least you don't get hit with a paper blitz that amounts to nothing but added loses. All you newcomers remember that a lot of the bark about paper trading is just that ,,,,,, bark.

The guy telling you how to do it couldn't do it himself so he want's you to pay a commission so he can play a game (with your money) that beat him long ago.

Besides, as the evolution in gold moves on, just owning physical will do it all without any trading and the gains in wealth will be staggering.

Here a few quotes from BTD's post that can now be seen in a different light:
----Two weeks ago I sold 300 Krugerrands and transferred the funds into my commodity trading account and bought 3 gold futures contracts. This is my preferred way to hold gold. In my trading account, I invested the margin funds in 6-month treasuries (earning 6.05% interest), and used these treasuries as margin to buy 3 gold contracts (unleveraged).------

---In this way, I earn interest on my money, yet still retain full exposure to movement in the gold price (I have my cake and I'm eating it too).------------
(TrailGuide note: HA! HA!)
-----In fact, in some ways, one can consider this as lower risk than holding physical gold: futures contracts require a low commission (with the right broker) while physical purchases and sales cost a high premium charged by the dealer;---------

----I earn interest on my treasuries, while the holder of physical "loses" the interest he could have earned.------

------The reason I'm telling you all this is to provide an alternative perspective to the bulk of the posters on this forum.--------- Well, I AM a trader, and I don't believe FOA/Trail Guide can foretell the future any more that the $5.00/minute psychics on late night TV. Trail Guide is a very articulate and thoughtful commentator, but his ideas are just theories like everyone else's.----
Well, all I can say to all the BTDs in the world, is that your big trades lost you (and anyone else that followed it,,,, me too) a few ounces of gold. I could have just kept my krands and not been any the worse off. In fact, I would have had a couple extra thousand of wealth in my pocket.

Like Another, my Thoughts are "free as the wind". In fact, $5 bucks a minute is cheap compared to the loses the BTD paper boys sell you.

OK,,, now it's time to head for the Gold Trail,,,,, the Physical Gold Trail,,,, that is (big smile)!

Either today or tomorrow, with comments on the last several days and the new currency directions of the Gulf States,,,,,,,

as able!

Gold Trail Update (1/6/2001; 9:49:52MDT - Msg ID:45166)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (1/6/2001; 9:49:51MD - msg#52)
The Perception Of Gold

Hello everyone!

It's been a while, so let's build a fire and plan the walk.


Long ago I was given a stay at the Paradise Lodge, up on Mt. Ranier. During the summer this volcano, outside Seattle, is a favorite for mountain climbers training for other big European and Asian mountains. Many other day hikers also take the high trail above 10,000, just to say they did it. Some go much higher!

On a clear day you can pick a nice spot close to the Lodge and watch the climbers work their way along the trail. Way ---- waaayyyy --- up there, they look just like ants. Often, clouds bellow in and envelop the troops for a while as they disappear from your lower view. It often becomes scary as we can see when they are disoriented and start off in the wrong direction. Sometimes only a few steps separate them from a chasm of disaster.


This is also the way I feel watching us walk the Gold Trail. Just like from Paradise Lodge, I have a different view than many of you. From where I stand, I understand much of what is ahead. Yes, a lot of us have been up this trail before, but this time, evolution is moving the mountain and bending our common path.

This time my friends, I tell you, the risks are ten times greater and the drop-off much more sudden. Indeed, we are but ants on the financial mound from where others can see us. Like the mountain walkers, thick fog also fills our thin air. So gather close to the fire as we check this worn map and mark the changes I know are ahead. But remember, before knowledge there must be understanding and before understanding there is perception.

Truly, as peoples, we can know nothing if perception cannot separate "real" from "illusion".


Hello PH in LA, I read your #45071. PH, nice construction of the way it works. However, roads do curve. Here are a few of your items so as to extend current perception:
----- However, last I heard, there still existed something called "delivery notice"; the day on which holders of contracts must declare their intention to stand for delivery. ----------

------ I declare my intention to accept delivery. At this juncture, (as the system is presently functioning) I would eventually receive my gold.-------

------Now, for a physical market to open up separately as FOA forecasts, the paper based futures market would have to vaporize instantly. Otherwise, anyone noticing that prices were higher on the physical market, would merely opt to stand for delivery and sell the delivered gold there. Far from causing the futures market to fall farther, it would merely explode higher as investors took delivery at Comex and sold it on the new Euro physical market.-------------

A financial structure, such as our old 20+ year paper gold market, is changed by the force of currency traders reevaluating their use habits. Such structures do not rearrange themselves on their own. People use a large economic backdrop to create their perceptions of the worth of paper contracts. At this point our current gold pricing structure is built on physical values constructed on our currency's viability as it functions in it's current economic structure. The inability of contract performance is not "priced" into this structure, yet. From gold mine sales to bullion bank dealings, paper gold is accepted as physical even if it changes hands a hundred times before it's zeroed out in paper exchange. All done without bullion conversion.

It will be our changing "economic backdrop" and "it's restructure" under an evolving reserve currency that shifts our and our institution's beliefs past the point of "contract viability". Dollar price inflation, while impacting gold prices later, will not be the initial trigger that guns gold into the thousands. Many are waiting for this new dollar drop to kick off the next gold bull market.

It will, but Another dynamic will happen first.

It will be the inability to reconstruct the present volume of paper gold into a new reserve currency, the Euro, that breaks the gold pricing system. It is at that point, where the inability of our dollar biased gold structure to perform a currency reprice or make delivery at all, prior to transition, that will cause us to discount the value of all "future gold" against "instance performance". In other words, "on sight spot purchase and possesion".

What all that means is that physical gold, "on sight", will start trading at a much higher price than any form of contract gold. From Comex to Hong Kong to London, workouts will be required prior to real delivery. Even the normal "contango" of interest, built into these contracts as higher prices for further out months, will not begin to overcome the new "price discount" on paper contracts. That pricing discount will at first be in perception only. But later, as the fear of non-performance builds, bids will reflect this perception. Once the massive OTC gold markets begin to demand various dollar to Euro workouts, prolonging delivery times by offering cash extenders, "perception discounts" will gain legitimacy and become "factual discounts" based on "understanding".

As I said before, in other posts, this whole act will be presented in the media in different lights. The first priority in dollar land, will be to promote the legitimacy of the dollar paper pricing dynamic, no matter if gold is delivered or not. It will be labeled as; "dealers are making huge profits on physical gold by trading it with premiums far above the london markets". Long after most of the paper rules have been modified to shift the majority of contract gold into cash settlement, the paper prices will still be reported as the "real prices". Not the other way around.


PH, when you say: --- anyone noticing that prices were higher on the physical market, would merely opt to stand for delivery and sell the delivered gold there-----:

No, in our real life currency evolution, it's the other way around. When the perception builds that all gold trading and contract structure is shifting to another reserve currency, all of us know the derivatives will not / cannot be converted at par. Mostly because the extended dollar is debted and expanded far beyond it's current usage. The real world dollar assets dwarf andy comparison to a new currency system. The only way to "par" your exposure is by doing the well known impossible, taking delivery. That is a dynamic all of us have been positioning for for years. The only paper owners that are not worried are the ones with an economic good that demands satisfaction, in gold if needed. Oil! The rest of us must bolt towards the closest "par" conversion first. Real gold.

Indeed, "Big gold Traders" don't stand for delivery when there is a possibility (certainty) of cash settlement. Especially in the near future, when the big big bullion banks and exchanges must set in motion a "trade for liquidation only" rule. A rule that basic physics will demand and the courts will back as long as the settlement currency is "legal tender". They will and it is!

To get physical gold in such an enviornment, you must sell for cash and do your buying on the physical markets. But, as we all know, noone will "par" their transfer when even cash settlement is at a 1,000% discount to physical trading. Welcome to the real world of a currency crisis no government can control.

Note: PH, did you think we were playing for peanuts (smile).

My friend, truly, this is but one portion of a huge international dynamic, in place, that will change our perception and understanding of gold. Even change it into knowledge. Truly, gold will once again become "The Wealth Of Ages".

The aftermath of this will leave us in a physical gold trading world for the rest of out time. It will, by default be mostly done in Euros. Mr. G. (one of USAGOLD's good posters) noted that his perception was that we could all just buy Euros. Well, I have, and the Euro will be the next digital transactional currency holding reserve status ,,,,,, and it will eventually be much higher than the dollar ($10.00 = E1.00??).

But most of that exchange rate will be a function of both an inflating reserve Euro against a hyper inflating dollar removed from reserve status. Prices will rise in all currency systems around the world as the Euro eventually expands it's coverage everywhere. There simply is no way to undo 50+ years of dollar inflation without unwinding some of that into our real economic price structure. The price of folly does not go away. This is where gold was planned to return and to be part of a wealth structure without being a currency,

This big difference from our present dollar /non gold recognition reserve, is that nation states and individuals can / will contain their lost wealth in an official free market in gold. Gold production, everywhere will eventually be extremely controlled with citizens reporting unofficial mining in much the same way as people report each other to the IRS. But, make no mistake, miners and citizens will all benifit. All mines, both big and tiny will make huge profits on the limited production allowed because the price will be so high. ($30,000+ in dollars (big smile) But, the road between here and there will more than likely price mine owners close to zero, first.

You see, gold will be a major wealth / saving asset to just about everyone. Not a currency. Make no mistake, $30,000 dollar gold divided by ($10,00 to E1.00) Euros = E10,000 in Euro gold. Gold moving to this level over the next number of years will allow the Euro reserves to cover it's issuance in a duel asset world. We will all save both Euros for interest and spending and gold as permanent wealth.

"Noone", not even our oil producers will control gold wealth, it will be sold and lent as a wealth medium, no different than Real Estate or Factories. Just not lent and spent by bankers as currency. Gold will never again be able to act as a trading currency in our modern digital world. We have tried that on various gold standards and even presently using this failing paper gold market. After the default that's comming, no nation or people will not accept such a deceit again.

Yes, corrupt governments will still have their way with fiat money. But, for our immediate future we will go this rout first. Truly, even the dollar took 50+ years to kill itself. So too will the Euro.

Remember PH, yesterday you could live a good life in Spain (smile) even considering all their money troubles, using their currency and saving dollars. Tomorrow we will also live a good life here in the USA. From Florida to Oregon, we will use a declining dollar and, just like in other nations today, own gold and Euros. Why, I bet life will be better than in our youth. At least for those who know a good gold dealer (big smile).

The perception that you can not "afford" gold at higher prices will give way to the understanding that we "earn" the "wealth of ages" at any value. Trading excess dollars for gold at, say $5,000 will meet no more concern than paying $25,000 for a car. Just wealth in a different form.

Now, see what you have done? I am out of time and must finish these other comments later.

PH, Michael, Randy, Everyone,,,,,,,,
Yes, Jan 04 was a good day!

Fires out, Zip up, while the stars are still bright

(smile to all)

Trail Guide (1/9/2001; 17:25:47MT - msg#: 45352)
Hello ALL!

I hope to post again tomorrow. Will then comment on several posts given over the last few days.

USAGOLD (Michael) (or Randy),,,,, I could give some names of banks that offer Euros? But I think CPM could/should advise most any client as they do gold business in Europe.

For Americans that are non-residents (or simply don't have a place there)of the Euroland Zone or England, an Offshore savings account in Jersey (Channel Islands)or Isle Of Man would do fine, I think? But there is far more to cover with this than I would ever get into in public. Again, CPM is the place to ask these questions and seek direction.


Gold Trail Update (01/10/01; 17:50:31MDT - Msg ID:45424)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (01/10/01; 17:50:30MD - msg#53)
24 hour hike.

OK,,,, everyone is here!

Light packs this trip, because we are moving fast. It's finally time to take the curve and see that "unseen view"!

Let's go,,,,, keep close because I'll be talking as we hike,,,, commenting on a number of views others have mentioned. Then we will stop and have a grand look.


Silver, you ask?

Same old song for a brand new generation, all ready to hear those wore out verses being sung once again. It seems it doesn't make any difference that silver has failed every MODERN human attempt to include it in hard money use and thought. Yes, just like the various failed gold standards, we keep trying to convince people that silver is better than fiat money, even as good as gold. Perhaps, a poor man's gold, no?

Ha! Ha! The last thing a poor man (or woman) needs is silver. Actually, any metal could be a poor man's gold, even iron! One ounce of iron is more affordable than silver and has just as good a chance at outrunning gold,,, percentage wise of course. Isn't that right Randy? I saw your face back there in the group (smile).

The only real argument all the silver pushers have is based on it someday outperforming gold and holding that gain for good,,, again percentage wise. This is the same old worn out logic all the various paper gold substitute players also use. Throw it into the same waste basket with options, futures, leveraged gold contracts, delta hedging both long and short paper positions,,,,, even gold mines, silver mines and the like. All of it is pushed because of the same thought; "why own physical gold when these items will go up faster in the next move"!

Yea,,,, somebody forgot to mention that the next move in gold may be of a nature like "noone" has ever seen before. Oh, you didn't hear that this time the entire paper gold marketplace may crash and burn,,,, taking all those above leverage vehicles down with them? Exposing silver for the play it always truly was,,,,, just another leveraged metal being pushed to poor people standing next to gamblers?? Yea, poor people shouldn't use gold,,,, that's only reserved for rich people hedging their big wealth. Ha! I ever there was a way to increase the gap between have and have nots,,,,, just sell the nots silver while the haves keep gold.

Try this "Thought" on for size:
--- In the beginning, the earth and Western style gold trading was created (smile). All we had were these big 5,000 ounce gold bars moving around. At say, $5 an ounce one of those bars cost $25,000. But one day, as the years went by and use / need pushed it's price ever higher, $100 an ounce became the norm. Oh my, what will we do, who could possibly afford a bar that cost $$1,000,000? I have an idea, said a smart woman (us guys didn't get it), let's melt the bar down into one ounce units and everyone can afford (use) them. Especially now with an ounce being $100. We can call it "poor man's gold money" or "poor man's gold wealth"!

-----Then the price went to $800 an ounce and once again, the poor man couldn't effectively use gold as money. Once again someone had an idea, let's melt the ounces down into 1/10 ounce coins so they will be $80 each. Once again it will be "poor man's money". Boy, we can even build on this logic and add alloys to the gold! Making one gram coins that are the same size and feel as a full ounce. Great day, now gold will always be the "every persons gold";

-----because it can always take the place of paper fiat,,, no matter how much any currency inflation drives up the conversion value of paper money into gold!-----
The point made here is that gold has no set currency price and never has. In fact, we don't even need any more gold produced! All the gold in the world could easily convert all the currency, bank accounts and wealth in existence into gold value,,,,,,, at some currency price. As pointed out above, it will always be available for wealth replacement even if we have to put just one atom of gold in a one ounce coin. Don't laugh, it may happen (big logical smile)!


All the commodity players, gamblers, mine operators and silver pushers try to sell the public this story; that gold can't rise too high because it's just a industrial use commodity. Therefore, it will never go too high and thus the need for other vehicles to compensate for currency inflation.

Boy, what reasoning about gold's future, resulting in a conclusion that a need exists for leveraged products. But, imagine if gold went up so high no one would buy it and the mines would all go broke???? Ha! This reasoning flies in the face of the fact that gold always eventually rises to match fiat inflation and it doesn't get to such a price because """NOONE""" is buying it!!!!

The proposition is:

-----Hey, nobody is going to buy any jewelry if gold rises too much?---

No wonder so many miners are in such a fix with brain power like that at the helm.

When the next real price inflation begins, silver and every other hard asset will indeed, rise in price. But, for it to become the "poor man's gold" that bridges the wealth gap, silver buyers will have to reconcile a major value rise in gold first. The result of the breakup of paper gold leverage. Only then will gold at the gate of the great inflation race,,, a race that, at best, silver follows gold!

---Gold my friends, not a story of riches to come,,,, real wealth for all modern people today----

The USA may have robbed local and foreign dollar holders of gold in the 30s, but it could not rob the poor of the world of their physical gold ,,,, not then,,,, not tomorrow,, not ever.

As the song goes "ohhh nooooo,,,,, they can't take that away from meee"! (smile)


A drink of water and,,,,,,Onward:

Black Gold?
If I understand the reasoning, some people think there is a mass of physical gold out there and it's being used as underground money. This is what explains the low price of gold today, as all that black market gold surfaces?

Well, that may not be the proposition, but if any of you want to know; none of our evil outlaws are so stupid as to use gold for trading when there is literally "TONNES" of cash circulating around the world. Please, give all of us a "logic break" for a minute? Why would I, as a crook, carry even one ounce of gold when three crisp $100 bills can take it's place? Even ten $100 bills are easier than gold priced at, say $1000. And there is no shortage of that cash stuff around! Hell, I bet there really is more tonnage of "Black Market Cash" in the world than all the gold still in the ground. Cash for ounce,,,,, gold still priced in the thousands! Believe it!


OK, now we are coming to the grand curve. But first a few more comments. I'll rest a bit here and present the rest around 8:00 or 9:00 mountain time (if my time conversions are correct)

Thanks for reading
Trail Guide (01/11/01; 06:22:11MT - msg#: 45462)
Why are all these people here?
Oh NO!

I just closed my laptop, crawled out of the tent and found all these gold trail hikers ready to go? Before I check everyone's park entry tickets (and National park service golden pass cards for people over 60, (smile)) I must see my schedule.
Oh No! I forgot to place an AM after the meeting time in my last hike post. Oh Boy! I'll be back. Let me get some coffee and a pastry. Any French bread shops out here (small grin).


Gold Trail Update (1/11/2001; 11:35:13MDT - Msg ID:45487)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (1/11/2001; 11:35:06MD - msg#54)
The Curve!

OK,,, I had my coffee and morning walk in the woods to see the wildlife,,,,, packs on,,, let's go.
It's always great to spend time out here,,,, away from the city,,,, out on the Gold Trail.


One more point on Black Gold as we walk:

All that gold, more than triple what we think is out there, would have been in existence for some time prior to our life spans,,,,,, given the timeline required to produce the stuff. Remember, Black Market production could not have existed prior to, say 1971, as even public mines were not making cash profits. Also, it takes real cash and investment to produce both White Gold as well as Black gold.

Indeed, simple extension of physics concludes that nowhere near that much "EXCESS" gold could have been dug over the last 25 years. It didn't happen, even with slave labor. Because, as in above, even lawbreakers have to sell most of the gold in the open just to cover the illegal "Cash" they invested in digging the ore in the first place. These guys don't do such a "wash" business when their cash works just as well in the first place?? Get my point?

Also, the gold would have been moved into the open as the majority of goods and services brought with illegal money, to create their evil lifestyle, must involve the White Market Economy too. Black market wealth is mostly in cash, it's just too easy to move and spend. So, there is no reason to go through gold first, just to buy in the real marketplace.

With all that gold out there, the Dollar powers would not need to create paper gold debits to placate strong dollar backers. In fact, I suspect they would have created channels to flush all that gold into the market. Illegal or not, this action would have suited their end result.

No, the natural trend of easy money humans, both good and bad would be to spend said gold for other consumable wealth and keep cash in the background. Indeed, this is truly what has been happening as regular investors trade physical for non-physical substitute gold. The small amount of physical supply vs the monstrous paper trading denotes how such existing gold has bridged the industrial use gap. It didn't take a vast new unaccounted supply to make paper seem real, just moving the existing into new hands did the trick. OK, we finished burning that story in the fire.

Let's build another fire.


Mr. Weaver, my god you are all the way out here too?

I did check my trail markers and sure enough, as you said, someone placed a little silver on them,,,, on top of the gold plate that is. It seems that over the last decades of western hard money thought, people have always been trying to ride silver on gold, nothing changes (smile).

That day, when gold first hits $5,000,,,, we will all see something "not as before". You see, price inflation will not be the initial driving factor for gold. No, it will be a realignment of the gold price discovery system. There,,,, in that destruction of paper,,,,, anything with leveraged perception attached will tarnish,,,, silver included (smile). Then,,,, after that value adjustment,,,,, all hard and real assets like gold, silver, real estate, oil, natural gas, soap, etc.,,,,,,,, will be at the starting gate of the great dollar inflation race. The gun will fire and we will all run the trail. In that environment, none of us will "AFFORD" anything of hard value. We will, however trade for what holds value the best,,,, not what gains currency price the fastest or the most-est. Gold, with the greatest history of holding the highest numerical value of world wealth in lieu of assets,,,, will outrun any and all contenders. And do so from a new higher level.

At the flea market, you will, along with others bring boxes of silver and wallets of currency for trade. But, the least discount for real trading value against "real use economic goods" will belong, always, to gold.

Once the trading is done, before walking away from the flea barn, we will square the books by trading any left over silver and currency for ("single atom" if needed) gold coins that have then become the world's secondary saving accounts. Indeed, people will have to accept a discount on silver and or cash to exchange it's excess back to gold. The Free Gold marketplace will do what no government ever could; make gold a savings wealth, not a medium of exchange.

My friend, for a free life, choose gold!

-- Gold, natural wealth, a history of kings, but ess than a holding in these days of our life --


Why even discuss or buy the Euro?

Someone very smart once E-mailed me that "you must somehow impress upon them that the Euro is but a means to an end, not the end in itself". How very true, even though it sometimes appears that I am a big Euro backer. Or even that I am European! HA! HA! I would not wish such a terrible association on my friends and relatives in EuroLand (smile)

Even so, the day after our Fed lowered rates, the ECB did an equal thing of importance; they stayed still! Our Euro friends are in the drivers seat now.

If you have hiked this trail for a while, it's common that the next gold adventure will transpire with a shift in world currency design first, then affected again from world currency values. Yes, gold will react twice, once against the hyper increase in American domestic economic goods pricing,,,, but before that against the demise of dollar use in most international financial structures.

Most hard money players have expected for some time, that gold will rise in dollars as the dollar falls against other currencies. To date; the dollar has begun to exhibit it's initial fall in exchange rates, but gold has not risen. Don't worry, because it won't rise until a further reduction in dollar "use" has become the trend. Presently, under current international currency structure, the dollar could fall considerably and even ignite slight local price inflation,,,, and gold still would not rise. This goes against the grain of your 70s style money history teachings, correct? I knew so.

You see,,, "this market is not as before". I heard that somewhere years ago? But, it's true. Only a reduction in "dollar use", worldwide, will fracture the current paper gold markets into discount against physical. Then, any further fall in our dollar's exchange value will trigger both major price inflation and a continued huge rise in physical gold prices. But why is it this way?

I'm glad you asked, because we are just rounding the curve. Make room for everyone,watch and listen as I describe this magnificent view! Oh my goodness, it is good!


Gold, it has no market price!

Some long time ago a group of us came to an understanding that would eventually shake the financial gold world. It seemed that, then, for over twenty years physical gold could be had without the currency markets placing a correct price on it. This made fertile ground for all the special gold dealings that took place over the next decade or so.

Background and foreground for reference:

Lord Keys:
was and is always thought of as the father of modern currency inflation. Whenever prices rose, it was because the treasury was following poor old Keys thoughts on official money policy. But, in truth, we only accepted and acted on half his directives, then proceeded to label our 1/2 use of his stuff as "his socialist process". In truth, he promoted that we expand fiat during times of trouble, then contract during times of less trouble. In the end the world slanted toward a non gold fiat money expansion only and reaped the result.

----Us humans acted on the part that suited our drives while placing the failure of our actions on the whole of Lord Keys's thoughts-------

California Electric:
is a big problem today. But, once again we use only half a process and label it as whole. We created a somewhat fractured deregulation of that state's electric system but called it a full deregulation. Just like Keys above, humans used what part of the process we liked and when it failed, called it a "whole failure" of deregulation.

------ this is the natural way we perceive our social and legal interaction, "and we been doing it a longggg time"------

1970s dollars:
Before the USA took the dollar off of gold, many dollar proponents openly stated that gold would tumble if it had no dollars behind it. Again, the Western mind had conditioned itself to knowing and embracing only half the concept. Again, it seems that we have a way of acknowledging the half of a concept that produces the most liberal response for us while ignoring the half that promotes the most long term good.

We didn't just conveniently forget the truths of what money was, rather we abandoned the knowledge that our dollars were a warehouse receipt for gold. Gold being a real economic good that, for centuries circulated as money, but now ,was suddenly reversed and seen as a receipt for dollars? Something of a major reverse, no?

Indeed, we accepted that dollars were more of a warehouse receipt for "goods exchanged in our economy". Once again we expected everyone to accept "this half" of the process. The half that benefited us the most. Yet, if it failed to work, it was the whole gold process that failed.

----- This, my friends is the legend of gold use in our modern society. Like so much of our flawed thinking, we embrace what is trendy for our personal singular perception while rejecting what is best for the whole.-----

BIS's paper gold:
While extolling all the virtues of gold in an official money system, we ourselves shun the non leverage of physical gold. Indeed, we buy,,, among various gold deeds,,,,, paper gold in the form of BIS shares. Once again we blame the official system because this paper receipt finds it's value defaulted on.

Prior, we proclaim to anyone that will listen that a share receipt of "X" amount of retained gold value is a good deal because we can buy it for 1/2X. X being the the physical gold price. Then, when the humans on the other side of that transaction try to do to us what we were trying to do to them, that is gain the full thrust of gold value we purchased for 1/2 full thrust, and we lose our gain ,,,,,,,, something is wrong with the gold market.

This is but one more fine example of paper gold, like pre 70s dollars, not being able to perform it's perceived function of marching to physical gold's value. Again, as in all above, we as an economic society try to reduce these instruments into non organic concept of receipts that carry no flavor of human function in their distant performance.

----- We brought gold, but if the paper gold market fails to perform to our expectations,,,, then the whole gold market,,,, including physical gold is considered not right for our ownership. We invest in half the process but expect the whole process to work.----------


The Grand view:

Whether we as hard money people knew it or not, our society, governments and yes, even cabals,,,,, all influenced the structure of modern gold markets and did it in a way so that no one could know or trade on the true worth of gold.

Because gold became entwined in modern fiat money function, it suffered all the same effects fiat received from the expansion of banking in our economy. In that arena gold could not help but be paperized and even labeled "the physical gold market".

In truth, anyone understanding this dynamic early on, would see that over time a real currency price for gold would disappear. As we embraced this banking component of the whole gold picture, true to the various examples above, we discarded the need to know what physical gold "alone" would buy. Physical gold was no longer needed as a "receipt for commerce", like our modern dollar. Therefore, it's value in the economy would be degenerated toward our perception of it's commodity value. As long as the banking price, that is the paper price, stayed within this jewelry commodity range, we accepted it as the real price of physical gold.

Indeed, once again, we were destine to experience the gut wrenching results of using half a concept until the whole concept failed. We are at that point today, with gold.

The result of all this was to allow physical gold accumulators (physical gold advocates) to buy gold at an unknown constant discount to it's real wealth value. No matter what the paper trading derivatives would say over the years, any gold delivered through the 90s could be counted on to contain a massive, colossal, value above any past attained paper price.

----Truly, as we talk, there is no known market price for physical gold! A market price for physical gold does not exist!---------

As Another tried to explain and I tried to refine,,,,, gold has historically represented it value as a function of the total world wealth and economic activity. Over time, our known gold supply has grown by leaps and bounds, but our economic structure and goods creation ability has literally exploded a thousand times that gold creation.

In doing so our wealth relationship with gold has seen it's ratio degraded to a tiny fraction of where it would be in a physical only market. Paper gold and the examples above of the human dynamic, have played an incredible roll in creating a mismatch of wealth value unknown in man's time.

I would guess that Michael Kosares, the owner of this gold site, has traded tonnes of gold over his lifetime. Yet, from the time of his start he has never sold gold coins for their physical worth. Truly, he has only sold them for the supply and demand market price of paper gold banking.

Further, as Mr. Paul Eaden's (spelling?) research piece in USAGOLD's opinion site shows, the derivatives market makes the price of gold. Using his view to look over the Gold Trail, we can see that paper dervatives can not reflect the "value" of gold that Another said was comming.

It is from here that we can understand the awesome leverage contained in holding but one ounce of gold. Here, on this ledge overlooking the entire golden valley, we can see this truth! Yet, it is a revelation to gold buyers as much as a curse on gold industry and leveraged paper investors. They spend their days, consuming their wealth, betting on a price that cannot represent gold until it fails. Destroying all they wait for.

From here, we understand why the current prices for gold do not have any bearing on the buying habits of the major players that walk this trail. As Another has said " The price you know, it be your price, not my price".

It is true, we are buying gold, not to trade for a paper value created today. Rather, to hold it beyond the paper destruction that must come tomorrow. Gamblers, traders and gold substitute players will all witness a colossal shift in world wealth that degrades their holdings. Even as their bet on half the process is proven as a folly very typical in human nature. Only unseeable as it exists.

Let's make camp and wake in this new position a while. It will be proven as well worth the hike

Fires lit, the stares are out and stories are near:

The price of gold need not be known
it's value cannot be seen
fire in the fields will make truth be shown
in such light it's worth will be redeemed
so on this ledge we make our stand
and no evil will reach this air
real wealth becomes nectar it's taste as cream
by our lips this reason is fair

Good night all, the best days are ahead!


Trail Guide (1/11/2001; 14:58:34MT - msg#: 45507)

Well. I'm stuck here for a while and updates are still coming through, so:

Paul van Eeden,
Sorry I couldn't place your name correctly when I used it at the Gold Trails. From where I am, I could not access the Gilded Opinion at the time for clarification. Nice thinking, sir.

Randy@ The Tower,
You are right, our dollar and the Yen sure are joined at the hip. Yes, that whole system is going down with us and they will inflate just as much. Can happen no other way. I remember that just a short time ago (or was it a year?) someone here was pushing the Japan market as the place to be. Ha! HA! In short order they beat a hasty retreat from that stance, having sold out first and telling us all after the fact.

No, I'm "on trend" and following Japan down the path and owning bullion and Euros in good proportion to other assets. Everyone here will know when I start allocating out of this mess; that's when West Texas oil fields will start pumping orange juice because $200 oil won't make them any money in our super inflationary environment (smile).

Yes, the HKMA are in line with several other nations as they waver between unloading dollars and keeping them. All the Asians are looking to each other for another reserve, but none of them can afford the impact a regional system would give them. These guys don't trade with each other the way EuroLand does, so they are drifting into Euros kicking and screaming all the way. Once China discloses openly what they are doing privately, all the other Asian Block will run into Euro Zone. China will do the largest tradeing with Europe ever known. Did you see the C1 piece in the WSJ today. Oh yes, "" Europe is the Place to be""!

I want to see where Alan puts all those foreign held treasuries as they come running home. Our bond market is sure to get the shakes, even as the Fed guns the money production. Some change of perception. By the way, that old "super wealthy" fella I mentioned sometime ago,,,,, that he
placed all his 25+ years of gains from big mutual funds,,,,, Yes, he put most of it in physical gold and still thinks the stock markets will go higher. Indeed, his Mutuals, he sold did not take much of a hit. He's right so far in that almost all the US market gains were built on money inflation and he
thinks they will drift even higher as it all unwinds into real price inflation. Only he says gold will boom well past all that once the dollar structure cracks. This is his 80++ year old thinking and doesn't know anything about our reasoning. Small world.

More replies coming.

Trail Guide (1/11/2001; 16:15:06MT - msg#: 45511)

Cavan Man,

----It's time to consummate the marriage-----

Ha! Ha! I'm not going to tough that one, my friend. But as to "progress"? Well, if you are watching my position you see someone with most of his unneeded cash in Euros drawing interest.

Yes, I still have dollars because I need those darn digital currencies to buy garden seeds and pay the help. Funny, how those fiat system don't go away no matter how worthless they become. Hell, in Brazil they still use the same money. Some people I knew were living there during the 1,000% days. Oh boy, and they still use the stuff. Yes, real life has a habit of proving my point that we are not going back to any gold based currency again. It's just the way we are.

I own physical gold in serious proportion to assets and don't care what the paper price goes to. As long as it's lower, I will buy more over time. Current gold falling in price offers some evidence of pilling on by sellers of paper contracts. But once the gold banking system cracks, I know there will be no physical offered during the next several hundred percent rise. Soooo, I got mine.

I own some gold stocks that I expect to ground to almost zero if the system does not crack first. So far, right on target. Again I'm holding for the profit they will make on the last $1,000 an ounce above massive taxes and production controls. All done after this transition. Yes, controls and taxes will keep the first $9,000 but I make plenty on the last bunch. No, I do not expect them to keep up with bullion.

Time wise, the WA was the first real shot that the BIS, ECB and others were willing to see the demise of our dollar gold block. To date, they are selling it down the drain. Besides all this, I guess nothing much is happening (smile).


---The 'monetary' play of gold Sir becomes more speculative by the day.-----

You are right there. The new EuroLand initiative is phasing out monetary gold in lieu of asset gold. Look closely and you will see this is in essence the entire GoldTrail and the BIS / ECB are on our side.

---The 'commodity' play of gold is good (supply shortfall vs. demand) IF one concedes the fact THAT officaldom will hold or increase gold forever.------

No my friend, the commodity play for gold is dead in the water. The game is how much can the paper gold market expand until it loses all credibility and fails. This sudden shift in our US economy is the result of several factors coming into focus at the same time. Oil, Euro credibility, dollar's
timeline end and our own expansion of gold banking to prolong the dollar. It's all havind an impact on curent gold dealings. As for officialdom holding gold? Again look closely and you will find that none of their gold has been lost, it's just been sold as a currency pairing asset (smile). This is nothing new as it's been going on a long time.

---However, it is a fact that official sector gold has and is decreasing because THEY do not see the monetary role of gold as once was.-----


---The 'commodity' play of silver presently and I will quote Ted Butler on this one 'Is the best risk/reward in the last 100 years."--------

My friend, today is absolutely the worst time in history to buy yourself into anything labeled a commodity that carries leverage. Because, most every commodity market is swollen in dollar expansion, they will all crack badly when the dollar world fails it's debt. Silver is good, I own some and have said so before. But I also carry $100 dollar bills as assets along with $1.00 bills to spend. In the same light I don't expect those $1.00 bills to ever take the place of or gain on my $100s. Silver is in the same boat, we will trade it but it will not gain the wealth credibility of gold. Further, just as in Brazil, silver will have to compete tomorrow with circulating dollar cash as a currency.
Yes, digital, inflating currency will be everywhere and be used everywhere. In such an environment "I don't need that much silver because I got cash and gold".

Also, I think it was Golden Truth that I last posted to here,,,,,,,,,, some long time ago that I would buy some platinum and Palladium. I did then and still own it. But, it is just an investment, not a wealth savings replacement. It's done well but, in fact, some other investments have done better than these metals.

White Hills

---"Go to the Moon , Alice!!---

Ha! Ha! That's right, my friend!


Welcome! Yes, own a little of all of it, but as Dirty Harry said "know your limitations". I say understand the difference between diversified world class savings and narrow investment risk.



----On a monetary front there is no currency backed by gold, the endless, circular discussion of such is speculative. --------

No currency should be backed by gold because all such systems fail from human intervention. That is why we are proceeding to an asset based system based on the real fundamentals of a true supply /demand dynamic. All performing in a Free Gold marketplace.

--IF, there is such a monumental storm whereby gold does in fact reach many thousands per once, then dollars would be worth 'dimes'.--------


----In such an event gold would be confiscated, there IS precedence of this my friend.----

Now that is a "circular discussion". I say, Legal Tender gold held by US residents could be at risk.

------Silver on the other hand, IHMO, would ride on the back of gold (as would all PM's) but would not be confiscated for two reasons; a) sheer bulk------

Yes, that is good logic. It's also the reason investors will not give up using paper currency in exchange for silver. The real precedent here is that governments like Brazil will print whatever denominations are necessary to keep currency use going. We, likewise will save gold and Euros but spend cash. Silver will be on the outside looking in.

-----b) there is no precedent of such.----

Well, there was no precedent for gold taking before they did it,,,,, was there (smile)

------- In speaking with several large silver dealers in the last couple weeks, one oz. silver is non-existant, 5, 10 and 20 onze bars are non-existant and rarely a 50 oz. is available. Most dealers are selling 100oz.and upwards. Is this true of gold lately---------

I bet it's true of steel. That stuff is just flying off the shelves,,,(big grin)! My friend, these silver stories are as old as the hills. Wait 30 years, they will make the rounds again in Europe.

more later

Trail Guide (1/11/2001; 16:41:47MT - msg#: 45514)

Cavan Man,

--- What do you mean by "allocating out"? Thanks.-----

Perhaps buy some companies or other assets. But, that will be "in the thick of it" and by no means a total sell out. For most of us, that's me, the coming storm may last most of our remaining days.

ALL: Please don't mis read me. My long running point is to show the nature of things outside our Western View. Every day, around the world, people deal and cope with failing, changing financial life. We all, too, can deal with what is coming as long as we stay open and informed to world
events. Presently, our world is in the grips of a New York broker perception.

It seems to them that everything about wealth can be handled with an option, future or mutual fund allocation. You want to save some Euros as a diversity? Never mind that it's a real functioning currency for a collective nation bigger than ours,,,,,, the NY advice it to buy some Euro options.
You want to back your meager dollar savings with some solid gold, the NY answer is to buy some Bre-X. Or, whatever.

Across this nation, I see a people hardly ready to spiritually and family wise cope with a "real downturn and serious inflation",,,,, and they are leveraged to the end. Yet, trying to use their credit cards to buy some silver mine stock. Oh yes, they owe five times their net worth, but hope that 100 ounces of silver and some $2,000 in a mine will pull them up even with the big boys.

People, that is a crying shame. The advise should be to change your lifestyle "Radically" and get out of debt ASAP. Then save some of our nasty digital currency. Then diversify into things that will never fail to hold value. A poor person, and that is many of the people that are currently being scared enough to think about hard assets, must consider buying the best first and the least last. Paid
up in full as able! Because you can hardly afford to take a chance when the chips turn down.

Sorry, I'm just waiting for time to pass and I'm jumping on a high horse.


Trail Guide (1/11/2001; 16:59:17MT - msg#: 45516)
(No Subject)
OK, I can go now.

Thanks all

See you next time on the GoldTrail

Trail Guide (1/12/2001; 7:33:54MT - msg#: 45541)

Once again, I find myself waiting for a travel connection. Thank goodness for USAGOLD.


Well, my first reply is; As Mr. Fleckenstein often say, "you are not connecting the dots".

I am giving Black Gold the same association as Black Market Gold dealings. This broad name gathers up all gold produced, refined in some reasonable fashion and used in commerce or black barter. It also covers what would have supplied excess, unreported official holdings.

The main points for us to consider when digesting Mr. Guyatt's work is:

Much of the past world gold production both White Market and Black market, prior to say late 60s early 70s, went into paper currencies. That is to say it was sold for industrial use (for paper money), sold to governments for reserves or coinage (for paper money), or refined into worldly recognized and tradable bars (again later sold for paper money). The amount of this pre-71ish gold production that was mined, refined and retained was very small compared to the off record amounts channeled into secret places as described.

The reason this perception is correct in negating our author is that all the gold, Mr. G. speaks of, is in some vault, somewhere,,,, it is not in raw ore form. The process of refining, at that time cost as much as the gold was worth.

Soooo, in order to build these vast stores of gold, not recorded before, would have cost the owners, at the time, more capital to retain it than to sell it for cash and just keep the cash. Further, as our bright Randy points out, during the period that this volume of Black Gold had to be built up, world production could not have come anywhere close to supplying it (dug on the side and out of sight) as any major profitable ore bodies were closely followed by everyone in the business, including governments. Remember, it's only the modern advent of Heap leach and the recent run over $100oz in the 70s that created the ability to mine cheap bodies.

I agree, there is a lot of gold out there in circulation and it is large. But, that gold does exactly what private gold does best; it circulates as is. No one in their right or wrong mind would use that gold to issue derivatives against in the way Mr. G. suggests. Yes, recent bullion owners can and do sell their holdings for cash and the BB then leverage that bullion into x paper. But, that is the same process I have pointed out for some long time now. Such circulating gold has been used to fill the demand gap as it's owners become single derivative holders. But, more to the point, the derivative printing is leveraged 100 times this actual physical inflow by the BBs. If indeed, the supply was balanced, there would be no reason to leverage with paper supply, they would just sell the gold outright and drive the price.

Yes, the gold may have been stolen and put into storage. But it could not have been in the excess amounts described, beyond worldly knowledge, because of the above production realities at that time. Hell, even small time outlaws, taking and selling thoughts or software require some kind of
infrastructure and collaboration in the open market to succeed. Much less take, store and paperize million of tonnes of gold bullion. Connect the dots.



As yourself and Stranger point out, the money supply rise is breath taking! Again, I say, for the first time in our history we are about to feel the effects of reserve currency competition.

As pointed out further back in the GoldTrail, Allan will not tighten again. To do so will fully concede the dollar. His only avenue in this "new world" of money warfare is to forget the dollar's value and retain it's usage as
much as possible. All done to combat the Euro.

We started down this trail when the Washington Agreement put us "on the road" to high priced gold. The fed will now "manage" a progressive destruction of dollar credibility.
That will entail:

----a loss of credibility of the entire gold market system and corresponding bid down of it's transactions and assets---

----a falling dollar vs the Euro-----

----a falling interest rate environment on par with the recent decade of Japan experience-----

--- the use of our 1980s monetary control act that allows the fed to buy debt from all comer's---

--- a stock market that will not fall as much as we think
(use the old German example here)-----

--- the loss of our ability to shield ourselves from price inflation by buying cheaper foreign goods---

--- the growing loss of trade as China and EuroLand evolve into "the trading block" the world strives to deal with-----

---- real life hyper inflation as this country and generation have never known -----

We are on the road, my friend. It's going to be some ride.


Michael, Thank you for your messages! (smile)


Trail Guide (1/12/2001; 9:50:26MT - msg#: 45552)


Nasal congestion affects most gold estimators to a degree, but it never is as wealth threatening as ear wax can be!

VARIANCE, indeed becomes the question, my friend. If it does exist on the high side then there was no need for derivatives issuance. Negate that proposition and all becomes as you say.

However, with a mild alcohol solution applied within the canal, we may hear the "drum beat" of a massive shortfall of estimated gold existence. Further in the distance comes the sounds of doctored physical stocks, a year or so ago, being tapped for delivery. Only a fall in dollar prices managed to
truncate such demand, yes? Week hands turned away so the strong could continue. Herein, begins the story of leverage paper displacing demand for what does not exist.

Ahhh! Truth is always stranger than fiction. (smile)


Trail Guide (1/17/2001; 17:48:41MT - msg#: 45801)
Hello everyone!

Randy, between your posts and all the others I must make some time to discuss. I hope to be free most of tomorrow and friday,,,,,, will cover several topics including a general comment about MY's great formulation of the money world around us. Also, will explain what I tried to get across about Black Gold.


Trail Guide (1/18/2001; 7:26:19MT - msg#: 45842)
Hello all!

Some of my friends (and apparently many readers) often ruminate on why I am so fractured when writing. Often giving the impression of rambling on, not to mention a poor english structure, spelling and grasp. Someone asked, "Your not that way in person, so why such a literary style?" I'll try to
answer what I did strive to explain once some time ago.

My full grasp of english is somewhat poor. But, that's because of a mental structural problem induced by a worldly exposure. With that simple reply, I'll leave it to your best imagination's ability, to decipher (smile).

A better reply, though, would be; it's just my way of following a format introduced by Another. In other words, in his words to me with my (words added) -----

"one should not tell readers (his) exact knowledge, position in life, or what (other's) thoughts should be. Such (talk) extols the self and lessens the reason pursued. (Rather,) let anyone that will listen, think your Thoughts (thru), seldom exposing (them) to (your) fully concluded points. They (people) gain our understanding on (their) own terms, in (their) own way, in (real) events, over time". He
often said; "we are not (here) to prove things, my friend, time will do (that) for us. It (time) will (also) expose (our) standing in world of Thoughts" and "is it not better to stand (in) a crowd and speak softly to (the) nearest ear" and "truth (is) never hidden or (not) exposed, it (is) simply not reasoned by exposure to understanding".

So, (smile)

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

This is the first part of Robert Frost's fabulous classic, as printed above the USAGOLD Walking The Gold Trail page. I'm not sure if it was Randy or MK that choose it, but it was perfect in all the ambiguity such words could convey. For thinking, reasoning people it creates an air of where we
are today. We have rounded "The Curve" of understanding and now must contemplate the trail to follow. Truly, most everyone knows, now, that there are two paths we can go down. Each path denotes following it's own economic block, world currency block and gold price structure block.
Indeed, our future quality of life may depend on how much we understand about these two paths.


Trail Guide (1/18/2001; 9:32:39MT - msg#: 45846)
Randy (@ The Tower) (1/17/2001; 11:20:40MT - msg#: 45784)Excellent! Here is only a small excerpt from MK's FULL report today -----------

Yes, that MK is something! While I cannot get his entire News & Views, what you have provided speaks volumes of a mind endowed with good reasoning. His vision is well positioned to navigate and understand this modern money world around us.


I have this to add:

Who among us, ten or twenty years ago, would have ever thought the fed would still be exploding our dollar production today? Back then, such an "inflation of the currency", over this long a time span, was unthinkable. It would surely lead to an immediate destruction of the dollar. But, here we are, watching as dollar production is gunned for the ????? time.

Everyone with any knowledge at all, the Ruffs, the Browns, the Schultzs, etc.,,,, all knew any such currency inflation, as we see today, would send the world off the dollar standard! Where would we all go for money relief? Why, gold and silver, of course! But, what happened? Well, the world
economic structure changed and those extra years sold time to others for the creation of Another currency.

You see,,,,,,, this was the trick (or ploy) of "one world trade". This concept alone produced the extra demand that needed "trading dollars". This short term transition, aided with cheap oil deals, demanded "digital money" for trade, not savings. It was this new "one worldeconomic expansion
demand" that put our dollar so much more "in play" for it's settlement function. It's value as a savings utility was not in demand, but it's need to denominate and close settlement was. This exceptional surge in trading demand overcame it's loss of demand as a "holder of value".

However, this "digital need" would not alone, negate the run into gold others forsaw. For that sector, our new currency creators needed an overflow valve that would cover this demand. Paper gold! A devise pushed at first by all dollar users.

But what of all the dollar instruments floating around? Cash dollars, near dollar like securities and even Treasury issues? Even they are not the static holdings we knew them as twenty years ago. These paper digits are but commerce receipts and are now a 1000 times more fluid. In fact, few of us can say that we actually have an account that these things are deposited in. Yesterday, instead of real deposits, we owned "deposit credits" and account credits. Bad enough to own them then as it created doubts of redemption. Today, however, we own "deposit credits" of "deposit credits"! In other words, our entire money universe if completely liquid and fluid in nature. We as an American
Western society own no form of a stable currency structure. It is completely a "digital settlement receipt" money.

In this fashion, no form of trade slow down can be allowed. Economic slowdown today, is the death of dollars on a scale never known. Where dollar assets and liabilities, matched on banking books, would once cancel out, creating just a simple alarming deflation,,,,,,,,, today, one dollar loss wipes out hundreds of dollar derivatives assets based and created against that one single deposit credit asset. Even a minor slow down will have the effects of a colossal banking failure. Therefore, the Fed is now in a different universe than the one most economic forecasters are following. It's not a case of changed rules,,,,,, it a case of a completely different environment.

The fed must create an inflation on top of an inflation. To not do so, they will immediately concede the currency world to the "old world's" new currency and it's physical friend. Gold! Even most Euro doubters are beginning to see this new light:

----"Picking a new currency to switch into may seem tricky, but there are only a few sound choices. The euro, a currency nobody ( including us ) had a nice word for in a year, is now one." --

This, my friend, is the new dollar money world we have evolved into. A process that has expended the value and timeline of any and all dollar based assets. As Another said; "your wealth, it not what your dollar say it be". Indeed, what we own is but a shell of a transitional world currency system. Somewhat like owning the common stock of a trading shell company. No assets, but still has a useful bid? It leaves us with little value once it's digital bid, it's "USE FACTOR" moves on and that factor will leave if the world economy slows in the slightest way. In common language, a recession will bring the Western dollar world a modern hyperinflation the likes none of us have ever seen or
read about in our time!

Major players in the gold world have not been blind to this ending dollar timeline. Physical gold is not off their radar screen, just paper substitutes hard money assets not backed by Euro governments! They are not blind to the continued use and need for paper gold to govern the dollars slow demise. Collapse this paper gold world too fast,,,, and the dollar is toast,,,,, too fast!

Indeed, without a Euro to take over the dollars "digital roll" we would be headed for an full blown economic nuclear event. Something oil producers are loath to accept. To this end, the Euro is forced to survive,,,,, warts and all! It will also be physical gold that carries the bulk of past dollar inflation, and the wealth that represents, in the form of gigantic dollar gold price increases. The world's wealth, as denominated in money will not disappear, it will only change hands and form as it supports a new currency system. CB gold is today, traded as an asset, not sold as a liability. Only Western Media reports 1/2 this fact to extend paper gold's decent.

Gold substitutes? Who needs them when their value is based on a failing paper price structure.

Today, who knows the price for physical gold?
It has no market price in our dollar world!

Physical Gold Tomorrow? It will outperform every other asset ---- because it's value as wealth is so misplaced in our time------

As MK so boldly observes;
-----"There comes a day of reckoning..."-----------


Trail Guide (1/19/2001; 16:53:56MT - msg#: 45944)
USAGOLD (01/18/01; 19:34:02MT - msg#: 45876)
To FOA. . .A challenging question from the C-Man. . . .

Thank you for inviting me up here, on stage. I'll offer some frank discussion to Mr. Cavan Man's challenging question. Only, I hope my oratory doesn't drive the audience from their seats. (smile)

Hello everyone,
I assume you were all given and have reviewed USAGOLD's #45876. Good, then we can get right into it.

C/Man's permanent question is; "Why doesn't Greenspan do something about this? He must see what's coming."!

This crosses all the endless boundaries of political vs human wants and needs. Any answer to such a question exposes our own reality of just how much we all live together and compete together. As I mentioned before; we all are floating down the same river of life,,,,, bickering and debating, living and working,,,, even taking each other into court and war,,,,,, and doing all this as our floats ride the same current of water to it's destine end.

To better understand my replies, let me profile myself a bit. In both the physical and mental image.

The physical:
Am obviously a male and in the second half century of my life.
Have been married only once, to the same wonderful woman for several decades.
I am religious, understand the bible and do physical deeds to convey that knowledge to others.
I strive to live a moral life in every physical sense.
Am in good health and work at treating others as I want them to treat me.

The mental
By some gift of destiny, I know the people world around me. Perhaps better than some?
At all times I am intensely aware of the diversity of human life we all must operate within.
Myself and each of us have our right and wrong codes we live by and these are not always the same.
Yet, and because of this, society as a whole must function thru consensus or make war.
I fully well understand a successful person's (and nation's) feeling that they alone made their way in this world thru hard work and self sacrifice,,,,,, and I admire that pride and courage.
I also well understand that, by far, 99% of these people got where they are at with luck and good fortune,,,,,, more so than their special talents or moral good deeds.
And too, I bridge boundaries of thought, without judgment, in order to promote a common good.

From that "heavy" description, I'll lighten the room a bit with a true short story I find most remarkable for it's human clarity, scope and definition as it applies to all of us (smile):

------I was once at a bar in a very exclusive, very private country club. In this part of the club there were no waiters, only a large team of bartenders that always stayed behind the bar. They would be fired, on the spot if they walked onto the small club floor. By code, this area required members to get their own drinks for ourselves and others. Kind of a step-down from the "big life" so as to bring us back to "regular status". The talk was very friendly and no business discussed.

A new guy, who I'll refer to as "newguy", had just come of age (new money) and wanted his place in the group. I think he was Australian, if my memory is correct. Standing at the bar, within a crowd, he boasted openly about his new boat, 14 meters+/-, and how cheap it was to operate. Conveying a sense of wealth availability. "At this rate I could have several",,,,,,, he said this with a smile and an honest intent. But I (and other older men) knew his motives were as usual for fresh money. After a short chat, he felt like he was fitting in and really making his position felt.

Then, (I'm laughing as I recall this) another much older member strolled up for a drink, just catching the tail end of newguy's talk. Now, you have to understand, this other fella was world class wealthy, but you would never know it. His way was always light and easy. He poked his head into
the group and told newguy,,,,, in a low gravely voice:
---"Boy, you made a good decision on that one! I also down sized to one of those little boats. Saved me a tonne of aggravation. Hell, I now have the rest of my slip rented out to two other members. Good for them for having the space,,,, and good for you for doing the same. You know, the world doesn't need attitudes like we used to have. Good un Mate! (as he walked away)------

Ha! Ha! Ha!,,,,, everyone around newguy kept a straight face as he kept the beer mug at his lips, while looking at us over the top. Then he lowered the glass and said with a straight face,,,,,, ----"He's right, ya know!"----
Ha! Ha! Ha!--- then we all had a great laugh -----------

Ok, where was I?
That story not only tells us who we are in society, but how we react against competition in society. Sometimes the act is extended into a life long play. The above little interaction is carried out in board rooms and on the street,,,,,,, at the CIA and between nation states. No matter if one is rich or poor,,,,,, buying and selling countries or teacups,,,,, operating businesses or pickup trucks,,,,, we all do our part to "puff up" as a defense against the world we perceive is out there. We adapt into
the social and business flow that's at hand. The norm of the occasion,,,,, and the political reality that's in our world around us. Our personal codes of life are often at odds with the consensus of the diverse world we must operate in. Such is life!

You see, in real life, we must often take on the appearance of that world around us. This action isn't lying or cheating so much as it is trying to act out a play that is essential in dealing within our hugely diverse society. A society, by the way, that is mostly made up of people that aren't "the good ones" as we so often perceive ourselves to be.(smile)

This line of comment now lays a foundation that takes me to politics. As I have come to understand the captain at the helm,,,, the driver of the corporation,,,,,, the general at the controls,,,,, they are all just like us. Working outside our personal moral standing standards, they must function using a diverse crew that's usually not of the same thought. Do these leaders lie and cheat if the stress becomes great enough? Of course, how do you think the ,,,, workers of different moralities are jostled to perform,,,, the job gets done and profits get made,,,,,, ! Do these bosses all get caught? No, the ones we extol as "good ones" don't.

Does the democrat tax and spend? No more than the republican borrows and spends! Is your group's moral or business objectives correct for the country? Only if they apply to the whole diverse society. Otherwise, you are imposing a will upon others.

Now, with that overview in mind:
Is Alan Greenspan doing everything he can to oversee a fiat banking system while functioning within our political society? I can answer that with .9999% certainty. Yes! In fact, throw a few extra 999s on that answer (smile).

You see, a nations rules, laws and moral requirements are never more than a consensus vote from changing. In such an environment, no leader can function for long at his own or our own standards. The office, itself is a reflection of power groups pushing their own position and that requires us to make our personal codes just that, personal codes. Not public codes.

Any person of clear vision could stand upon the highest mountain, look 360, and see that this country is not the same body it started from. Our codes of conduct, perceptions of right vs wrong and even our attitudes of wealth have all been diluted from other sources. This is not to say it's
good or bad, as this dilution often comes from foreign political perceptions that preceded our nation' history. In some ways, it predates many generations. Right or wrong, good or bad, some of these accepted political directions have been used a long time.

Mr. G. is not trying to make us something we as a group are not. He cannot. His objective is to support, prolong and protect our financial system as it must operate in it's present evolution. Make no mistake, he and every leader in his position understands that fiat money systems are always in evolution. There is not and never has been a status quo when it comes to a nation's money. Recent history is ripe with such change, even during the usage of gold within the currency stable.

I can assure all of you that our fed chief does not confuse a strong vs week dollar with a stable fiat money system. This current strong vs week dynamic, happening over the span of 20+/- years is little more than wafting from bank to bank as we ride the river that is our currencies timeline. Our
dollar is evolving even as our society evolves. It's use as a world reserve and even as a medium of exchange was never written in some code of world conduct or acceptance. Circumstance and consensus will change any currencies worth regardless of who manages it's trip through time and space.

So, there you have C-Man. I wish you had asked earlier? Because; "I didn't know there was a problem." (smile)


USAGOLD (01/18/01; 19:34:02MT - msg#: 45876)
To FOA. . .A challenging question from the C-Man. . . .
FOA: "The fed must create an inflation on top of an inflation. To not do so, they will immediately concede the currency world to the 'old world's' new currency and it's physical friend. Gold! Even most Euro doubters are beginning to see this new light. . ."

Including me. I saw in the Economist the other day that Goldman Sachs is calling for a euro price this year of $1.22! Bold and telling. . . This is a currency price based on "an inflation on top of an inflation". . . .Yes?

Cavan Man called today. And as is frequently the case the conversation got around to you and Another, the economy, currency values, etc. It is always good to hear from this fellow knight and traveller, and in the midst of the conversation he asked, as I have come to learn is his customary fashion: "Why doesn't Greenspan do something about this. He must see what's coming." I tried to answer that question, but I wonder how you would respond. Here (Greenspan) is a man who spent his middle years as one of us. Then he became Fed chairman charged with the responsibilities of lender of last resort and something changed. . .Or did it? I answered the question as best I could but it is one that does not lend itself to an easy answer. And perhaps only Alan Greenspan himself could answer it to real satisfaction. I venture a guess that he might respond smiling slyly with "I didn't know there was a problem." (Thought of that after I hung up the phone, Cavan Man.)

FOA, I wonder if you, or perhaps Another, have any thoughts on this. I think the question might open the door to some interesting discussion. If anyone else would like to take a stab at it, I think we might all gain by your thoughts. And I hope I am not usurping prime posting privileges, C-Man. It is a good question and I didn't want to take the chance that you might pass on a great Forum opportunity. (I hope you don't mind.) Now you've stimulated us all.

P.S.(and an aside) An editorialist asked this morning: "What do you get when you cross the Chairman of the Fed and the Godfather." Answer: An offer you can't understand.

Trail Guide (1/20/2001; 8:52:40MT - msg#: 45983)
Cavan Man (1/20/2001; 5:33:18MT - msg#: 45970)
Trail Guide Question
We export more than our currency from US shores. What of those in the "East" that have perspective not unlike those in the "West". I believe there might be many of these; yes?

Cavan Man,
We export many goods & services, true. But, over time our competition is making these exports less inviting. Even now, at current exchange rates, much of what we sell can be purchased somewhere else at close to the same value. Remember, at some point, as our dollar drops in value,
domestic inflation raises local production costs enough that it cancels our much of any perceived "falling dollar advantage" in world trade.

The coming dollar fallaway will not induce any such export boom that many foresee. It will not be a saving grace for our economy. You see, in the past, such a drop in the reserve currency had the same inflationary effects on all world producing economic structures. This time, however, a
transition into Euro use for reserve and trade settlement will blanket such rising cost effects, somewhat protecting any national trading block that opts out of the dollar receive structure. The obvious advantage will become easy for everyone to see.

Even "nonwestern" players, that operate within the Western zone of thought, are not permanent in their trade position. They will shift as everyone else does. It's just a matter of time and evolution.(smile)

Before I go deep into this, I would like to hear how others would walk in Mr. G's shoes. I also have a Black Gold comment for ORO just as soon as we pass this area. I'll be back in a day or so.


Trail Guide (01/24/01; 17:10:44MT - msg#: 46354)

Hello Randy,
I'm working on a long discussion between us. At my place just above the trail head. Over wine, we will travel all the way back to around 610 BC, in the area of Lidia. This will be an easy read that lays out a broad position about gold. Who knows, we may even run thru a timeline and into a fella
our other posters have mentioned, Homer? (smile) Indeed, maybe the perceptions of gold by the ancients will prove to be the best position for anyone to be in, considering the nature of what is coming.

Well, some paper gold bugs can't understand how a failing paper pricing system for gold can hurt their mine investments. Looks like this is only the beginning. How many HMs, MENs, HLs are next? Great days for physical gold advocates,,,,,,, awful days for players of gold substitutes, no?

Physical Gold,,,,,,, nothing else can compare!


" " Placer Dome sees no hope of higher gold price, plans massive asset write downs " "

------TORONTO (CP) -- Seeing no prospect of a significant rise in the price of gold, Placer Dome Inc. (PDG:TSE) is reducing the accounting value of its gold reserves to $300 US an ounce from $325. The world's fifth-largest gold miner also cut its estimate of its proved and probable gold reserves by almost 30 per cent.-----------

------- In light of the reduced gold-price assumption, Placer Dome's proven and probable reserves decreased to 47 million ounces as of Dec. 31, down from 65.9 million ounces that were considered economically recoverable at the end of 1999.--------------

-----------The company said the volume of reserves would be cut by a further five per cent if the long-term price of gold fell to $275 US an ounce------------

------------In the meantime, "we are relentlessly pursuing cost-reduction initiatives and other measures in response to the business environment."---------------

Gold Trail Update (1/25/2001; 10:00:14MDT - Msg ID:46428)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (1/25/2001; 10:00:13MT - msg#55)
A Comment, then The Gold Of Troy
Hello Randy!
I thought this would be a good time to take a break from the trail. Here, at my place on the Trail Head, we can consume the luxury of a more relaxed, liberal conversation. Some day, I hope Michael, yourself or others may physically join (actual posting) in talks. I know MK is very busy (talking to friends / clients and counting his / their gold (smile)) so his being here, in spirit only, is enough for today.

For you, Randy, I'm afraid that the times ahead may make yourself one of only a few that will talk to me. You see, attitudes in this gold market are going to become very hard, almost stone like. Some of this will be reflected in a widening "valley between paper gold owners and physical gold owners",,,,, that is a subjuec I have, in the past, referred to. Unless one has the reasoning powers to see the future in physical gold, as I know you do, the possibilities of overcoming and / or regaining ongoing and future losses of wealth will congeal many a person's feelings . So, for now, engage your free spirit and have a glass of my best wine. I hope you enjoy this red, there were only 500 cases of it made in the whole world and I got the last one (smile). All the best, my friend.


(after a sip and a moment to reflect)

You know, in a little bit, in the next post, I'm going into a whole discussion about ancient gold,,,,,, carrying the thought right to the present. But before doing that:

I think it's a real shame, the way our Western / American investment culture has changed the private persons perceptions of gold,,,,, indeed, a change in their perceptions of all wealth. It seems that almost every form of asset holding must be in some form of leveraged and / or non real ownership. Paper this,,,,,, paper that,,,,, ten to one gains,,,,odds are on your side,,,, and so on and so on. And, the problem is not just gold,,,, it's visible in everything.

I guess this is what happens when decades of currency inflation leads to almost free money flow for any imaginable use,,,, and that unlimited ability to borrow and spend comes on top of little or no price inflation! The dollar's reserve function and the lack of significant price rises such a world financial structure creates,,,,,, has developed a frozen value perception in our currency's image. A frozen value image that our society absolutely knows is their net worth's purchasing power for real things. Collectively, it isn't and never has been.

We have a whole generation,,,, even several generations,,, perhaps, yourself included,,,,, that do not perceive their standings as being high up upon the hill. Many, if not most, of the voting public see their economic location at the bottom or only partially up said economic mountain,,,,, and they see that any fallback in the economy will drive them into negative territory. In reality, we are, and have been on easy street. With such a conflict, is it any wonder that Alan Greenspan must inflate further? No different from the past,,,,,, but still inflate, regardless of the world's new currency environment? In addition, following such a public political directive, our fed's inflation can casually respond to the changed nature of our derivative economy and not seem out of place while doing it.

With this almost national perception of a false "net worth purchasing power" and with our ability to borrow more into said net worth, our perception's impact,,,,,,, as a whole,,, on society's money culture cannot be resisted. Yet, all this proceeds as our fiat values, in reality, are transitory and always have been. It's just not understood as a natural process. We see it in all our conversations, at home, at work, at play and on the internet. With such a well grounded belief:
----People are reduced to playing a game with their wealth, instead of employing it to create a better standard of life. A better standard based more upon the security of ownership, now, than upon some quantity of purchasing power who's future value conversion is unknown.------

(another pause and a sip)

You know -------- some readers think I'm being disingenuous when I write,(and I am using that word with Samuel Johnson's 1755 definition) but it takes that much and more to impact the diverse minds that come here. When saying diverse, I mean intentions as well as educational and cultural backgrounds.

I know there are "real asset" people, like yourself, here. Physical gold advocates that are, in no rime or reason, gloom and doom gold bugs. Like you, Randy, they applied their mental faculties using a lot of hard work and grew to understand the real world and where it's going. Not just following the Western investment crowd.

But, we also engage no less than a small hoard of "western style" paper gold bugs on this venue,,, as over the years they have become and represent the majority of hard money thought regarding gold. Using the thoughts and perceptions I just outlined earlier (above),,,,,, these people,,,,,, mostly Americans and foreign natives using American trends as a guide,,,,,,, are employing their assets into this hard money arena,,,,, and doing it using historic realities, not future realities. That's fine if we relive the past! However, today, the evolution of our currencies lifeline trend has deformed these investment methods into little more than gambling. And it's the exact same gambling dynamic they vocally deplore and are trying to escape from in other areas. In case any readers are drifting off, here, I'm directly referring to paper hard money investments in today's world. Not only are these perceived hard money vehicles "not the same as before",,,,,,,,,,, like the currency, too ,,,,, their station in life is moving on. Out away from what their past precidents.

(another pause)

When gold is discussed on public forums and at investment conferences, many true physical gold advocated don't perceive the motivation behind the oratory from today's paper gold bugs. Their interest in physical gold is real, but their actual intent is to gain "a" security by profiting from a gold dynamic created by other's buying actions. Never to gain "the" actual security by entering into the gold dynamic themselves. Many of them don't have a clue of what all that means. Yet, such an understanding would delinenate the huge difference within this concept. Especially today,,,,, and in the future as said difference may make or break the financial worth of many. Here is an example of such thinking:
----- Two guys are talking about shoes:
"Hey, did you notice how few people have shoes today? I know we have them and their use is obvious. It balances our overall physical appearance and gives a long-lasting foundation for our feet and for our human structure. In turn, shoes support all the other investment clothes we own and use during our life."

While these fellas are talking several other "Americans" overhear the conversation and join in:
"Shoes,,,,, shoes,,,, what's this about shoes? You say there is a demand for them,,,, a deficit in supply? Oh yes, we completely understand the concept and fully embrace it. Without shoes, none of us could economically stand up straight. The whole world is woefully shy of them and will someday be forced,,,,, if not by foresight, by need, to own them. There is no way any of us could transverse a hard rocky economic road without gold,,,, weeeee mean shoes! Man alive,,,,, I'm going to buy a shoe factory and make some money from all this new demand."

But, the first two guys observed and asked:
"But, wait a minute,,,,,, aren't you going to follow your own keen concept and buy some shoes for yourself and your family first? You know, that public shoe company does not and will not,,,, by government tax laws and regulations,,,,,, sell it's product directly to it's owners. They can only give paper profits to their owners. During all the big rush, you will be in with all the other "shoeless buyers"

Oh yeah,,,,,, we will later buy them,,, said the traders,,,,, besides, I got a 1/4 shoe now,,,, that's a start. And, by holding these tiny shoe laces, we can stand here and fit in with all you well heeled players (grinning like Texas Westerner on an oil well ). Look, I'm in this to make money,,,,, it's just a concept like all the others I follow. I do the same thing when I'm with other "conceptors" of the same ilk,,,,,, I talk their talk to understand their concept. But, I really don't need your gold as long as I got my paper profits.

OK, said the two guys with shoes. We don't mind your talking with us, so long as your perceptions don't distort our end purpose of having good shoes,,,,,,, and just don't complain when your company's value can't equal the worth of good shoes on the hard road before us.

Further to consider,
I think many players degrade our reasoning because it just suites their confrontational nature. Their constant replay of the same past failed positions clouds the view, even as it does make everyone think harder. Some may have to drop more wealth before they learn, I don't know? In addition, some paper players, caught up in the paper game our currency inflation creates, mentally cannot let go. To do so places them outside their social strata even if it saves them much heart ache and money. They feel that only the leverage is in the leverage of some gold substitute, never gold itself as the means to an end. Own silver, mine stocks, erivatives, etc.,,,,,, and that position will restore their already considerable loses, they hope.

It's a: "there just has to be a way I can play this game using some paper system",,,,,," even another more leveraged metal if need be". I, myself, know the feeling and over a lifetime have evolved through it. Problem is I doubt others will have that same luxury of so much time.

So, Randy, let's go back in time and space to build a gold perception the physical gold advocates have understood from the beginning.

I'll post in a few hours (if the power stays on at the Trail Head) (smile)

Gold Trail Update (1/25/2001; 16:28:50MDT - Msg ID:46462)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (1/25/2001; 16:28:50MT - msg#56)
The Gold Of Troy!

Hello again Randy,
Let me read something to you that will set the tone of this ongoing discussion:
---- Was There a Real Trojan War? ----

Until the 19th century it was widely believed that Troy and the Trojan war were imaginary. Then, in 1871, an American named Heinrich Schliemann began excavating an ancient city in Turkey. To the amazement of many, this retired businessman had discovered the lost city of Troy.

Nine cities have been found at the site, one on top of the other. The seventh city was destroyed around 1250 BC and appears to be the Troy of legend. You can still see the ruins of its towers and its walls, which were sixteen feet thick.

Schliemann identified Troy's location through clues he found in the Iliad, the epic attributed to the Greek poet Homer. Little is known about Homer except that he was blind. In ancient times it was believed that he had lived during the Trojan War, but most modern scholars think that he lived in the 8th or 9th century B.C. His poems weren't written down when they were first composed, but were transmitted orally for many years. Some people suspect that the poems were actually the work of successive generations of poets, and that Homer didn't exist. Of course, the same thing was once said about Troy.

All thanks to the work of Heinrich Schilemann. Without him we might still regard the Trojan War as nothing more than myth. What started the Trojan War? It has been suggested that the Greeks may have been fighting to gain control of the Dardanelles, a water passage between the Mediterranean and Black seas, near Troy. Or perhaps the war truly was fought over a woman named Helen. The truth is lost in the past.---------------------------------
Well, Randy, that Mr. Schilemann (1822 - 1890) was quite an explorer. His work helped uncover a mountain of knowledge about ancient life. Not to mention it helped us conceive how these people viewed their "wealth of Ages". Thank goodness for California gold. too! Yes, I said that right, as that is what financed his work if you can believe it?. Here is more, then I'll begin:

Heinrich Schliemann was a bold dreamer and a prolific liar. Despite those credentials, it wasn't politics that brought him to Gold Rush Sacramento in 1851. Instead, it was the death of his brother Ludwig, from typhus. Schliemann, a German-born merchant had been living in St. Petersburg, Russia.

He planned to make sure his brother was properly buried, claim what he believed to be a sizable estate, and get back to Europe. What he found, however, was that his brother had been buried without a tombstone, and his brother's business partner had made off with the loot. So Schliemann paid $50 for a marble headstone, and set himself up in business as a gold broker. In addition to making up outrageous stories in his diary, Schliemann was more than a little paranoid. Afraid of fire, his office was located in Sacramento's only brick-and-stone building, at Front and J streets. He wrote that he often slept on top of the gold, with pistols across his chest.

Despite two bouts of yellow fever, Schliemann persevered, and in nine months he made more than $400,000, some of it legitimately. He returned to St. Petersburg in1852, using his Gold Rush fortune to make an even greater fortune in the Crimean War. And his money allowed Schliemann to indulge his real passion in rchaeology -- and preserve himself a place in history.

In 1871, Schliemann, using Homer's "Iliad" as a guide, began digging in what is now Turkey, and found the lost city of Troy. A German merchant with a penchant for prevarication spurred the growth of modern archaeology and found the gold of an ancient era -- using the gold of California.

Oh boy, what a life, what a story?

Yes, on that small mound, about 5 miles from the coast, they found layer after layer of ancient cities. One of them was indeed, Troy. The treasures were many and quite a few made of gold. Hair - rings and small fluted beakers, vessel covers and sauceboats, even a spectacular large diadem (head dress) with pendants. These treasures are, in fact housed in some 50 museums around the world. Later, around our time (1994) it's been certified that a lower level of excavations did, indeed belong in the Bronze age, 2600 - 2300 BC. This places these golden remains around the same periods and datebacks as in the Thebes works.

-------The studies in Egypt.

One current project called The Theban Mapping Project, is giving us a better and better idea of how life was during these early civilizations, and this is but one of several "modern" evaluation of ancient life.

In that area of the world, researchers are probing a lot of ancient lifestyles. From around 3000 BC, through the Old Kingdom (2700 - 2100 BC), during the Middle Kingdom (1700 - 1200 BC), passing the New Kingdom (1500 - 1000), into the Graeco - Roman Period (300BC to 400 AD),,, this is truly some record of life. It, along with many others, uncovers and exposes so much history it's astounding.


Our reasons for following these old lifestyles is, for us of course, to gain a better perception of how humans understood and used their wealth, back then. What is coming to light, for for gold advocates, is an ongoing evaluation of how we, as a modern people, have lost so much of our connection and understanding to what wealth is, how much it's worth and how to use it. This is, of course, in contrast to the ways wealth, including gold was seen and valued then.


Concerning "gold as money", One of the first things we established about the Troy collection was that there were very few, if any coins found. At least allowing for the size of the find. Nine + levels were dug, representing a hugh section of antiquity and no coins remained with the find. Here was a mass of civilization leaving treasure after treasure of fantastic gold artwork, yet, no coins to speak of. We cannot conclude that the coins were taken and melted down, because the art was just as valuable, yet it didn't get taken. And these treasures were laid down in several cities and generations, over time.

Researching further, many of the other great finds from the BC and early AD period were from tombs and lesser burial sights. Places where people of "excessive worth" took their excesses with them. But regular cities with regular people had relatively few coins. So what is the point? Let's go further.


Some of the earliest coins were stamped with a detailed press, struck with a blow that indented the heated metal. The Alyattes from Lydia (610-561 BC) was one of the earliest. It and a whole host of later coins were marked this way. We know that some of the most rare were natural forming in stream beds, because they were electrum (natural combination of gold and silver). They would not have been man made that way, at that time. Mostly because the silver gold combinations, in natural forming metal, were never equal in amounts. Giving the coins different values. Were they this particular about content and weight? You bet. The first coins were called staters, meaning "weighters" and were used as the norm for weights in other coins.

So, with the Athens, Macedon, Tarentum and Antiochus to name a few, began the worlds first coins. Gold coins? Yes they were, but money as we know it? Our view of how these people viewed and used this gold money is, we believe, far different from what gold scholars teach. And it's impact on estimates of existing modern gold supply and use is enormous.


walk up to any citizen living during 335BC, in the latest town where Troy once was, show them a "Head of Zeus" (Saracuse 3 stater) coin. Then show him a vessel of oil and ask which he would take in equal trade for anything? Odd are, even though your two items were of equal value, he would take the vessel. Why?

All throughout these early times, prior to BC and into some AD, people didn't see these gold coins as we think of money today. These various gold coins had tremendous value, but they were just gold pieces. They were wealth for trade like everything else was.. That's simple logic, I know, but the vessel of oil, for instance was just as tradable as a gold coin. In fact, within most of the medium sizes city states of that era, barter of like goods was just as good or better than gold coin. One's life was better if he owned wealth he used.

Humans of that period didn't live all that long a time span. Even though some accounts prove otherwise, the majority of life went by rather quickly. If you were a regular part of society in general, your wealth was what you had and consumed during those short days. There were no banks or investment houses and the average person's return on a wealth unit was his length of use and it's quality of life enhancement. More to the point, this logic made these guys spenders of gold, rather than savers! If you had gained gold in trade, for your services or goods supplied, you had no reason to save it. There was no other money that needed to be hedged against value loss.

It's becoming more and more apparent that average people of that time quickly traded (spent) their gold for something useful of value, for both them and their family. They didn't have the excess we know today. In modern nomenclature; this logic dictates that a much smaller amount of gold money circulated and circulated faster than many supposed. All forms of jewlery and art objects were in the same situation.

For longer savings, even for those of above average means that had all they wanted, people tended to spend their most valuable gold coins first, while saving the least valuable (bronze, silver, iron) for emergencies and later use. To us, today this sounds strange, but place yourself in that time. It was better to build your most useful and needed store of things while times were good.

Therefore, you traded the gold, which brought the most equal trade, first. If things got so bad that one had to dig up the stash, you were trading for last ditch things anyway. Kind of like wrapping up and burying beef jerky to get you thru a pinch. This use of lower metal is suported. Remember, lots of things served as money objects them. Even much later, AD, it was common in Roam to trad big iron bricks that were forged as a bull. It's use was in trade for "one bull" or something of that animal's value.

This tends to explain why so many hordes of lesser quality, non gold coins are always being found today. Roman silver, bronze, iron, copper coins are very common. The classic belief is that all the gold was found, melted down and recast. But that action just didn't fit the whole profile of life's need back then. The majority of gold in average and even upper hands was always on the move, in trade or payment for service. Each succession of ruler, simply reused the old coins or melted them down and restruck with a new image. And new gold was minted only if it was easy to find. Especially stolen jewlery. Mined gold was a very last resort.

Remember, real useful goods crowded a rich ruler's house, too and these were just as valuable and tradable as gold. Besides, far too many finds have come up with jewelry and no coins to suggest some robbery by thieves sold the coins to new rulers with melting pots. The gold would have been taken whether coin or art.

Taxes were paid in goods, service or coin (preferably gold) and regular people knew it. Far better to trade your gold and save your wealth in a bulky form so the tax man's take at least has a chance of taking less than enough. To store your wealth in gold and risk him finding and taking it all was just not acceptable.

The great gold stores we have found almost always point to their being the reserves of a rich ruling class. Just like modern billionaires, after too much comes excess and gold was the only alternative for someone with guards and regular army.

On the Road

More and more evidence is mounting that the largest portion of gold, during this early period was, "On The Road"! The perception that every person had some portion of gold as savings is blunted by their lack of need for such wealth. Gold was needed and used to spend "On The Road" more so than in local domains. Whether for armies or traveling merchants, gold moved more than it was saved. Even gold in the form of art was "fair game" for the regular people to use as a tradable medium. In fact it was just as likely used as money "on The Road" as coins. This further explains the findings of small amounts of jewelry in most of the locations where small towns were located. In the reasoning of Troy, the lack of coinage supports the movement of gold more than the saving of it.

We find gold more in the "upper status" burial places of great cities than in the areas where common man traded, lived and kept his personal worth. We further conclude that gold was much harder to find and utilize, back then than many supposed. Yes, great amounts were around, but the reality was that these amounts were perhaps 1/2 or less than many others conclude. Simply because finding or producing gold meant displacing labor that could be making barter able goods of equal value. Besides, gold that was in trade, was valuable enough that what existed mostly covered it's need in long distance commerce. This further points to a much greater value for a much lesser amount of gold while it was used during this period.

When evaluating lifestyle wealth, back them, many often find themselves comparing things in a relative mode with today's perspective. In this position we think the mark has been far missed for gold worth. It's possible that gold payment, in these early times amounted to a hugh premium compared to today. The various goods and lifestyle conditions in existence, indicate a much higher relative worth for their goods of daily life. Thereby giving gold a much greater relative worth within one's life also. If a one stater Darius of gold, from Cyrus of Persia was worth a very valuable vessel of oil, why utilize the effort to find gold just to trade for some oil. Better to skip the gold production and make the oil. This was the norm for thinking by people not trading on the road, living "within local" city states. Indeed, outside the need to pay armies, a much smaller amount of gold did the job much better than us modern thinkers thought was necessary. Further, the use of oversea warefare and trade perhaps lost more gold into the ocean than we will ever know.

Consider these possibilities well. In that gold today is in a much lesser existence, compared to modern goods supply and lifestyle enhancements, when comparing it to it's value in life in the past. It's true worth as a wealth medium could be a 1,000 times higher! For it to return to it's ancient position of true asset wealth, for trade outside the modern currency relm, we can see where it's European benefactors have once again placed it "On The Road" to much higher fiat currency prices.

Next: Gold from the Roman era forward.

Thanks Randy and ALL

Trail Guide (1/27/2001; 10:54:37MT - msg#: 46629)


In response to your CavanMan question about Greenspan; I made my reply a deep and philosophical ramble, hoping to draw out some other's concepts and opinions about him. For some reason (smile), I feel I know the man and his reasoning, in depth, and wanted to see just what others would do in his shoes. A few replied and I will later, in kind. Perhaps, to our good poster PHinLA's writings, yesterday. Hope his power is still on (grin)!

As to your / our little bet (smile),,,,, I can dump a few K trying to make a point about physical gold vs futures, but dropping a US$ to Mr. Kosares over England would mentally and politically break me,,, Ho! Ho! Ha! Ha!,,,,,, Actually, I don't feel that you are a gambler, but business men of your stature must take public risks on occasions, no?,,,, So, on that account, I will not feel good about taking your money (grin). Besides, being so positive of my new gained one US dollar of wealth from USAGOLD, I already converted it into Euros and invested it (huge grin!) Ha! Ha! Time will tell, my friend!

To comment on your post earlier:

Adrian van Eck doesn't miss a thing and is usually right in the middle of every political motivation that's flowing at the moment. My observations are that this is but another example of the fluid political events we follow and do concur that the methods indicate open economic trade warfare
behind the screens. Indeed, yourself, myself and anyone following the flow of comments here at USAGOLD are attempting to measure the impact of these moves upon our respective currency / economic zones. Even as these nation states combat each other, behind the doors for an upper

Boy, I have a hard time replying any better than our Mr.CavanMan did in his (01/26/01; 19:07:51MT - msg#: 46590) and everyone should read it again. You have been holding back on us sir (smile).

His point to you, Michael, is that of history and the ebb and flow of greatness in nation states: ---

--"The UK trade flows to the East naturally. As usual, your thought is excellent. However, the British being primarily a conservative people will not make a (quantum) leap of faith across the pond I do believe. Rather, they will be a key member of the EC over the long haul."---

So, I can only support his complete post with my comments followed with several copies from Dravos.

My Coment to a few others:
Codoleeza Rice, G.W. Bush's foreign policy advisor, is only doing her job. But, her proposition alone does not negate the obvious; the US in coming off an economic peak inspired by a huge Fed engineered currency inflation. And, because this dynamic is happening at a point and time unique in
history, world reserve currency trends will now control how the US handles this particular liquification of it's system. This simple point is painfully in plain view throughout the Euro Zone block. It's on record within so many ECB, French, BIS and multi EuroLand publications we cannot begin to repeat it all. They (EuroLand) saw our expansion for what it was, knew it's reason for building, noted that our dollar was driven to "overvaluation" by political means, and knew the Euro "under valuation" was but a passing thing. The British were not yesterday, and are not today blinded to this fact. They, as have other dollar trading blocks, completely based their financial structure upon an endless extension of the world's present reserve currency structure. Yet, today, for the first time in modern US history, there is a real risk that that reserve structure may fracture,
taking those financial houses into a hyperinflation with us.

Bringing Britain into NAFTA would be a great accomplishment and is as good as any a political and economic point for the new Bush people to aspire for,,,,, but points are for arguing while reality is the game that wins votes. Do we really think England will dive for this even as Mexico reveals the danger. From Dravos:


Mexico Will Seek New EU Trade Links
Alan Friedman International Herald Tribune
Friday, January 26, 2001

Fox Wants to Offset Potential Harm to Growth From U.S.Slowdown

DAVOS, Switzerland President Vicente Fox of Mexico said Thursday that the U.S. economic slowdown could damage his country's growth target this year, but he said he would work to replace lost U.S. trade and investment by forging new commercial ties with the European Union.

"The slowdown in the United States could affect our projection of 4.5 percent growth in 2001, but we want to substitute it with more European trade and investment and make use of the recently signed trade agreement between Mexico and the European Union," Mr. Fox said Thursday night in an interview in Davos with the International Herald Tribune.

Mr. Fox said he would soon visit France, Britain, Germany, Spain and Switzerland to promote Mexican exports and to seek fresh European investment in Mexico.----------------

HA! HA! Well, Michael, CMan, what do you think of my rambeling on? Can't you just see Britain wondering why they are coming in the front door while Mexico is running out the back? Oh Boy!,,,,Here comes Fox, a smart cookie I might add, signing trade expanding pacts with EuroLand because he can't make his numbers with the US. So what is England going to trade to us that could undercut Mexico? Makes you think, right? (smile)

Also,,,,, Why in the world would Britain want to joint up with this bunch, at a period where they are all driving each others profit margin down the drain, just to recessitate a plunging economic and financial structure built on dollars? And,,,, If anyone doesn't think that Japan does not stand head and shoulders within our little NAFTA organization, they better get new a new financial planner because their own thinking is way off. Their Yen economy is back boned into the USA and it's dollar. More from Dravos:

---------- ------------

Japan Fights to Counter Gloom Over Its Economy
Alan Friedman and David Ignatius International Herald Tribune
Saturday, January 27, 2001

DAVOS, Switzerland Prime Minister Yoshiro Mori of Japan will use an appearance here on Saturday to try to counteract the extreme gloom about prospects for the world's second largest economy that has emerged at the annual economic conclave here.

Mr. Mori's appearance at the World Economic Forum, the first ever by a Japanese prime minister, comes as bankers, business executives and economists are wondering aloud if Japan is in recession. Fears are mounting that, after a decade of anemic growth, the country's political paralysis, high debt and snail's pace approach to deregulation and reform could combine with the U.S. economic slowdown to damage global growth prospects this year.

According to a senior Japanese official familiar with Mr. Mori's speech, the prime minister will offer both hope for the future and a frank, even humble assessment of what the official termed "the lost decade."--------------------

Also from Dravos:

------------ --------

Fed Chairman Warns Growth 'Is Close to Zero'
Mitchell Martin International Herald Tribune
Friday, January 26, 2001

Greenspan Backs Big Tax Cuts, A Political Boost for Bush Plan

NEW YORK The U.S. economy has virtually stopped growing, Alan Greenspan, chairman of the Federal Reserve Board, told Congress on Thursday, a surprisingly gloomy view that increases the prospects for a deep interest-rate cut next week.----------------------------------

So, Michael,,,,, the fifty-first state? I don't think so. If they do it will be like buying all kinds of leveraged gold substitutes several years ago when some thinkers where saying stick with the real thing instead (smile). By god, that would have been the type of political advisor the Queen needs today!

Britain, like Physical Gold Advocates today, may show some ware from linking to the huge economy of the new Europe, but those minor scares will be nothing compared to the loss (like gold paper players) of going deeper in dollar leverage or staying at all within the US financial and economic trading block. Just at the time in history when we must super inflate away our debts.

Further to your post, Michael: They cannot keep the pound as it stands. It's almost a dollar derivative now. In fact, I know they are monitoring the Gulf Cooperation Council, looking for pointers on how they will structure a parallel currency that uses Euros for settlement, all prior to
joining. Besides, they (HM Treasury) have already shown their hand to us by clearing out as much of their favored Bullion Bank gold debts as possible before EMU.

As to their becoming a halfway house, bridging trade between a future inflating NAFTA arena and EuroLand? Great idea, but Mexico is already showing that won't work. They and everyone else will undercut Britain long before they can "rule the waves again" (smile).

You are a good historian, my friend, and any assessment of world power flows requires just such an input if one is to understand these modern moves. But this time the real history is before us and we will be a big part of it! Oh yes,,,,,,,,, we will!

Now, I'm going to take my little boat and go fishing. Mans got to eat, you know. Be back later, after a fish dinner! (smile)


Trail Guide (01/28/01; 15:32:22MT - msg#: 46753)
(No Subject)

I have several unfinished discussions I wanted to some day return to. The Traveler series was a good one. The aspect of Black Gold was another. Then we could breakdown Mr. Greenspan's thoughts. All in good time. Recently, I began what would be quite a side journey at the GoldTrail Page. Just now I see a need to explain the entire timeline of events that lead to our offering "Another's Thoughts". Why he said what he said when he said it. All this in the middle of an ongoing adjustment I'm making myself, in my life. And,,,,, I offer all this to all free spirits that would consider these things. What do I get out of it??????

How about: "Hey, I read your stuff and don't like it. But, thanks for the effort".
OK! Fair enough.

How about: "Hey, you are all wet and here is my views why you are wrong".
OK! Fair enough.

How about: "Hey, that's interesting, thanks for the effort and here is another question if you can get around to it".
OK! Fair enough.

How about: "Hey, I don't buy it but your story is a process that's not finished yet, so keep talking and I'll keep an ear open.
OK! Fair enough.

You know, Another said a long time ago that we had said enough for most to follow. And he felt he had disclosed enough to average people,,,,, even how they could ride out what was coming. He was going to drop it until it all starts to unfold. Then start again. But I thought, being an American, that it would be interesting for everyone over here, if I just walked along and pointed out some of
the play by play action so the train of thought would not be lost to the average guy.

But then, I never realized that there were so many nuts in the world. Like that one that stomped Another at Kitco, endlessly. I thought they were few and far between. Then several of them even started in on me over here. I don't know, but it seems they all went to the same school,,,, or they are all the same person? Their line of reasoning always starts out as a regular discussion, then degrades into some personal attack. Again, always the same thought process saying: "you people are all being mind controlled if you discuss any of this with them". I have to ask you all ,,,,, What the hell is that anyway?,,,,,, what are they getting at?????

Now it comes to, when someone can't make his point, he switches directions and practically calls me an agent of drug dealers. Jesus! This is the absolute worst hit I can take!!!!!!!!

What is next? Will he ask Stranger, are you some agent dealing drugs with your trading in and out of NEM? How about Randy, will you be profiled as moving opium out the back a pick up, using the trading profits from your gold trading? Is there no limit to this?

I guess it would not be so bad, but,,,,Why is it everyone here presents themselves as conservative and glad to get them people out of the White House,,,,,, then several of us goes on to ask Thaigold to further his logic as to how Giants are moving dope along the Trail???????

Good God!!!!, how do you think this reflects on me and others on this side of the screen?

Well, go ahead and jump to that boy's website and while you are at it let him explain how the gold world works! Let these guys explain the reasoning of international politics and money flows,,,,,,,, even let them explain the
"Thoughts of Another",,, I damn sure won't now,,,,

Because I wouldn't want any of you having your kids see their parents discussing gold on the internet with some outlaw like me!!!!!!!!!! The more I think about this the hotter I get!!!!!

To all of you that have supported this effort, I thank you from my heart. And I will continue to hike the GoldTrail. But on that venue alone I will stay for a good long time!!!!!!!


Gold Trail Update (01/29/01; 14:39:35MDT - Msg ID:46845)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (01/29/01; 14:39:33MT - msg#57)
Getting some fresh air.

I put on my boots, backpack, gloves, binoculars and went out walking the trail today. A fella came up and asked, "after yesterday, how ya doing"? I said follow me.

We went down to a stream and filled my bucket of water. I took off one glove and stuck a finger into the pail of water.

The water quickly started steaming and my friend jumped back with an expression like he couldn't believe what he just saw.

I said, "it's ok,,,,, this is a good sign because the water isn't boiling,,,,,, it means I'm cooling off!
(partial smile)

I asked him to thank everyone for me and excuse my human nature, until I do the same in person. But, just the same, I'll stay over here a while longer and send letters for all to read from the Trail.

Gold Trail Update (02/01/01; 13:47:11MDT - Msg ID:47127)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (02/01/01; 13:47:10MT - msg#58)
Troy and Beyond, Even to Rome!

Once again Randy, Hello and thank you for your efforts as the technical manager of this path! (smile)

Hello also, to all the others that have come to our hikes, walks and talks. We started this recent discussion, "going back into the beginnings of gold", right after our hike #54 "The Curve". There was good reasoning for stopping and camping here, because it was time to understand gold as few have ever understood it in our time. Taking a few days to overlook the valley from this spot will enhance our perceptions and prepare us for the next leg ahead.

So, grab your coffee and tea and lean back,,,,, the stars are out to light the night so our Thoughts alone may travel ---------- "The Gold Trail"!------


Going back over #56 "The Gold of Troy":

You noticed that I structured that discussion in a way that makes the independent mind wonder about. Let's pull those thoughts together and move along.

We found that history had left us with some conclusions that were, it seems, never concluded. Archaeology had never been approached by someone like us, with a different hard money perspective. Yes, all the records were there, but most every paper written on the subject appeared carbon copy. They all projected our modern sense of money into the economic structures as they existed, back then. "Of course, we are today more complicated", our history papers said,,,, so,,,,,, allowing for that difference "the ancients still operated back then the same as us now". How neat!

Yes, our teachers "called our perception of money, their money and our perception of goods, their goods" in the same context we can use now. They said "hey, they were using hard money to buy and sell from each other, just like we once did" Again,,,,, how neat"!


The Treasures of Troy, all 259 items, were hidden away since 1945 because of various war and political problems. The significance of the find was tainted with scandal until only recently. Around 1994 (or 1995?+/-) the entire lot resurfaced in a museum in Moscow and several well respected scholars were finally able to examine and evaluate the exhibit and the actual site. Their conclusions? Using modern tools of the trade showed that while Schliemann did indeed find several lost cities stacked upon each other, his find went back further in time than anyone thought.

A recent book "The Gold of Troy" (April 1996) gives even further clarification.

From the author's works comes evidence that Troy was a ------ "leading center for gold jewelry making in western Asia Minor and the Aegean" --- " Thus the largest of the Trojan Treasures were Industrial in Nature and refute the supposition that they were objects in burial sights".-----

My research into many more papers and books, like the above and other written works, further shows that the sight was more of a grand market. With numbers of craftsmen in separate offices and work sites turning out some of the very finest gold metal works one could imagine. Even by today's standards. There were metal molds and crucibles found that were used for various metal working projects. We also conclude that the city was rebuilt several times over an extremely long slice of antiquity,,,, each time performing the same function of a trading town. All done during a slice of time that said gold coins did not trade as well as the other metal ones. Gold was saved, not traded.

Once again, returning to the theme of #56, there were virtually no coins found among the priceless gold art objects. Being a big gold trading town, worked over hundreds of years, certainly some gold coins would be around? Especially if gold and other metal coins were saved and used as money. But, none were around.

Jumping back to:

The object of our viewpoint from #54 "The Curve", was to point out that gold today, has no currency price. Yet we are asked to value it on a gold for goods basis established by modern currency exchange rates. We wondered if the ratios in value between gold and goods, today could be the same as they were in ancient times and middle ages. If this ratio could be matched, we are told that the value yesterday and today would be much the same as our modern money says it is. I do wonder?

We buy and sell gold today, based upon the supply and demand of printing press contracts created on established exchanges around the world. In our present time, there is no trading price for gold based on the independent trading of physical gold alone. Or on the actual trading of gold goods, outright. All currency pricing and therefore modern accepted values for this metal is established on the paper derivatives markets.

To better grasp what we are really doing when buying real gold,,, close your eyes and imagine:

----- Today, we are simply "paying a fiat currency commission for the advantage of holding and owning physical gold metal"! ------ People that trade this paper system, exclusively, are simply betting on what that commission will be, not the eventual gold value. ------

----For actual gold obtainers, this function, that our exchange paper pricing mechanism is doing, is giving us metal for an unknown real price and value.------

I say "commission" in the above, because the total quoted price a coin dealer sells to you at, is little more than the world gold trading market's guess of the risk it is taking in supplying customers with the metal,,,,,, without a real market to establish it's currency price. It's that simple.(smile)

None of them and none of us know what the real value or price gold today is. I use the phrase; "our advantage of owning the metal", because buying physical gold for today's currency,,,,,,,is like buying a lifetime wealth option that never expires. The commission one pays for this gold coin position, in the for of what we call today's price,,,,,,, may one day go to almost zero as our paper market structure fails from the discovery of real price.

All happening because these physical gold options, we call real gold, return to actually trading for a value based on their worth in our world. It's the Physical Gold Advocate's "advantage", because while he is waiting for the real value to emerge, the real value that we know existed in antiquity has never gone away! It just doesn't have a marketplace to show it. It will.

All the while paper gold players are playing for scraps,,,, giving up their commissions,,,,, betting on the changing price of said "commission". Indeed, one that cannot go too far up without killing the entire system. And thinking it's the real price for gold they are betting on all the while.

"You think long and hard on that one? (smile)

For us, as hard money "Physical Gold Advocates", to understand the value of gold, we must remove ourselves from present time thought and think of gold as the Ancients did. Not as money but as little tradable hunks of metal. Gold for goods, straight up, as the citizens of Troy did!


Troy and Beyond, Even to Rome!

Back then, there was no other currency. No paper moneys or banks. One had no need to save gold as a hedge or savings account. Your wealth was in the useful things contained in the world around you. Those little hunks of metal were just that, little hunks of gold that everyone knew had trading value. They were not money, not the way we think of money today. They were just a beautiful metal, gold.

In fact, that is why you carried them, to use that gold if it brought the best deal in a trade. That was worth considering because they didn't always bring the best trade. Unless most of the time you were on the road. Within local communities, at least, goods for goods exchange always traded better than goods for gold. But over distance, the town next door or the seaport across the Aegean, those gold hunks could usually do better than the flask of oil you took with you. One made the best use of gold by using it, not saving it.

Unlike today, the laws of money were turned on end from our perception. Gold was for spending (trading) and spend it people did, especially "away from home". There were many non-gold coins around then, silver, electrum, bronze, iron, copper and they did something we cannot comprehend;

----"this bad money drove good money into circulation" ---- (smile).

Yes, the little metal chunk that carried the highest trading return was spent first! But why? Because the average person's wealth and savings accounts were denominated in the real useful things you owned and consumed during your short life. (See my #56 again to get the mind working) This, my friends is the reason the vast majority of physical gold stayed "on the road" of commerce while all the other metal coins were saved for later use. Gold traded best, so it traded first.

The common repeated ratio that during most of the Greek times a 1 to 10 value existed between silver and gold was official dogma and sounded about as right then as it does today. But, like today, it was seldom tested on an established exchange. That's because the coins had no denominations and were much less traded between themselves, not to mention there was no exchange! Anyone holding gold would be a fool to trade it for silver or any other metal because a trade for goods or services would surely bring a much higher return. The same was true for silver because it was better to risk a trade for goods than be taken in a trade for gold.

Back then, gold chunks were, by far, more rare and tradable than most any other coin produced. If it wasn't traveling by night or stayed too long in a trading town, it was quickly melted into the next generation of national coinage and sent packing again. Or it temporally became the object of a Troy metal craftsman's hand. You see, those little chunks of gold, I point out again, had no denomination of currency unit on them. They were fair game to become tradable gold in any form, be it bar, coin, chain or chip. The same rare gold made the circle between coin and "use object" many times over.

All of this is supported because aside the finds of major treasures, the finds in "working towns and homes" did have tiny gold objects of wealth but rarely did they have gold coins. The presents of these other tiny pieces of gold wealth in medium size homes indicates that they would have had the resources or incomes to use gold coins as trading vehicles,,,,,,, but they did not have the resources to tie up that much wealth by saving coins of gold! That same "logic train" negates the premise that these same working people couldn't afford gold and therefore used lesser metals as coinage in equal value or in a 1 to 10 ratio of gold! They did use these other coins, but used them less. Gold finds, relative to other coins are rare because it was always spent. Place yourself in their times?

Again, people "did" often have and save "other" metal coins. So many, in fact that great numbers of these bronze, silver, etc. coins keep being found at dig sites today, all across Europe and Asia minor. Many of them found right in the same "regular" backyard saving accounts we ourselves sometimes use. Planted long ago as the next best trading item one could store and not lose too much "use wealth" during the wait. Indeed, these lesser items could afford to be put away.

But, you thought silver was more in style as a coinage then, because so much of it survived? If that were the case, those metal items would have made the exact same trip gold did. They would have been melted down and reused into jewelry and coins, never laying down for rest in such great numbers. (good logic, yes?)

(My thanks to The Smithsonian Institution, Doug Smith and many, many others that have, with the advent of the internet, placed so much of this research in public view. Also thanks to all those that have educated me over all these years)

I'll read several partials from these written pieces:

-------Some of the most interesting ancient coins were neither 'Greek' or 'Roman'. In fact, the coin producing civilizations of the ancient world spread far across Asia including people and places rarely mentioned in beginning World History classes. One of the most well known of these were the rulers of much of what is today Iran, Iraq and surrounding regions: the Parthians.----------

--------The land areas of ancient Parthia lay between the Caspian Sea and the Persian Gulf, and its boundaries included all of modern Iran and contained portions of what are now modern Iraq, Turkey, Armenia, Azarbaijan, Turkmenistan, Afghanistan and Pakistan---------

--------(it) roughly corresponds to modern Iran, was approximately 648,000 square miles, about equal to the areas of Great Britain, France, Germany and Spain together ----

----------The Parthians created an empire which, at its height, presented Rome with a serious challenge for the control of the Middle East west of the Euphrates river. They were the only civilized power to withstand the might of Rome at its height- the same Romans who had conquered Carthage, Macedon, the Seleucids, and the Gauls. So, who were these Parthians, whose empire stretched from the Hindu Kush to Mesopotamia? ----- (They) created an empire which lasted for almost 500 years (and) have been so nearly forgotten ----------

---------The Parthian kingdom began with the election of Arsaces I to the kingship of the Parni in 247 BC.--------- In 238 BC, Arsaces I succeeded in defeating the Seleucid governor of Parthia and establishing the Parthian kingdom. With his accession, ***** the coinage of Parthia begins, and would continue, with only a short break, for the next 500 years. This coinage has proven extremely important for Parthian history for several reasons; primarily because of the scarcity of written records - the Parthians themselves did not leave behind any written legacy---------------- For the majority of Parthian history we have to rely on a combination of fragmentary literary sources and references, archaeology, and the coinage itself to create a coherent, though incomplete, story.****

------------- *** Their coinage formed the medium through which western, in particular Greek, ideas of coin design were transmitted, and transmuted, in the Middle East from the Euphrates to the Indus and beyond. The Parthians developed one of the first recognizably feudal systems on record- which was transmitted to the Sassanians, and thence to the Arabs. **** The Persian epic history is now thought to include lengthy portions from the Parthian era - the Parthians had a great oral tradition, in keeping with their nomadic background, and greatly valued BARDS and story-telling. The Parthians also left a legacy in art and architecture, creating a style that mixed Hellenism with native Persian influences, particularly in ornamental metal work. There is even a small literary legacy with the "Parthian shot" - a phrase taken from Parthian horse-archer tactics in which the archer would feign flight, and, while riding away, fire over the back of their horse -----------

---------Their economy and success was based on taxes paid by traders using the 'Silk Road' that connected Rome and the West with China and the East. Parthian finances depended greatly on Rome's failure to make direct contact with China until the late second century AD. Parthians were known for being men of their word and their coins continued to be issued with fair weight of good silver long after Roman silver coins were being debased.------------------

here we find a major civilization that existed during most of the early BC Greek periods and crossed well into AD Roman period. We have found that their coinage tells set the pace for much of that time.

Most of the coinage, we have dug up today, from that period and part of the world was in the lesser metals of silver, bronze, etc.. Even the Persian, preceding the Parthia, had most of their coins in silver form. This, no doubt, lead to our present hard money education that silver was as good or better than gold, back then. The fact is, as we are concluding, that gold and gold coins were made back then and circulated more widely because of their value. The mere existence of gold coins (those little hunks of tradable gold) supports this concept of their use. Indeed, their rarity today indicates their value, back then as most of them were recoined. Leaving only lesser coins behind.

The Persian king, Darius The Great, did issue gold Darics right along with silver Sigloi and did so as early as 500 - 490 BC. This we all know and agree. But so few of them survived, modern thought created the view that gold was far too scarce to be much used as a complete tradable unit back then. But this view takes on the same arguments we hear today, always leaving out the possibility that gold value was much higher. Carrying a larger share of wealth with less metal. It was scarce, but that isn't what erased their record of existence. Gold was used so well and needed so much that it was always "in trade" and "on the road". If it wasn't, it was melted into Another countries wealth.

However, it was the recent discovery of Parthian gold coins that best supports a change in concept for hard money followers. It was thought that gold was not used in that land and trade from Greek nations was always done in the lesser Parthian metals.

In 1982, in an archaeological dig at Tillya-tepe, a real Parthian gold coin was found (a Gotarzes I (95-90 B.C.). Later in 1991, several Vonones I (A.D. 8-12) were found as authentic! While the archeological significance of these coins is still hotly debated, I am aware that there is a supporting passage in an Ashmolean Museum piece, where around 94 BC the process of working gold is mentioned in Parthia. The existence today, of known gold working and trading, in this era, opens up the entire hard money proposition about the evolution of gold as wealth. If gold was traded, there was enough for coinage trade too. The Parthian find completes our supposition that gold moved freely between nation states then. Indeed, the workings of gold at Troy, a stop off on a major trade route between these cultures, adds to this. The fact that Greek coinage, in gold, was also widely used, even as it was rare in that nation's borders, means that Greek gold and coins had to have also come mostly from supplies "on the road" as they passed through the region. This concept demonstrates that gold moved and during that movement was coined, often.

In fact the earliest Greek gold coins (The Head of Zeus) came from their colonies on Sicily and in Tarentum on the Italian mainland. Not on their local soil.

The same argument was applied to gold use pertaining to the Greeks. Because gold was indeed hard to find around their local area, many concluded that the few Greek coins produced in this early time were done so from necessity and as a last resort. As we pointed out before, Troy changed that perception because gold is now known to have been a long established trade item, subject to the craftsman's hand. In fact, several examples of gold coins with holes in them indicate they may have been hung as jewelry in chain. Gold was rare and was melted if it held still too long. But, it carried a higher value in trade than any other coin across all of middle asia.

For a "Timeline" view of these cultures - link above. -

At that site, we can see how the Parthians walked right along side the Roman development even as they passed through Troy along the way. All during the same era. Their timeline use of gold coins now offers an counter concept against accepted hard money thought based solely upon Greek and Roman history alone.


Following the death of Philip II of Macedon, his son Alexander The Great spent the last 13 of his 33 years life changing the world. The gold coin of "Macedon, named Alexander the Great, stater, (336 - 323 BC) became "The Coin" and standard of the world for some time. He set the precedent of "recoinage" by melting down the gold of other nations into his stater piece. It is in our view that his practice had more of an impact on perceived known gold stores than most everyone accepts. His people did work the mines for gold, but produced far less of it than imagined. Rather, his mints were ordered to melt and restamp any and all gold that passed their way. Most of it was "gold on the move" as was the custom of his time and before. Rather than adding greatly to the existing gold supply, he just better identified what was already being used in commerce.

That practice was something the early Roman era planers would not understand until after most of their Roman Republic years had passed. Truly, Roman stamped gold during the Republic years, would be very rare (as it is today). At first relying greatly on other's gold coinage as a tradable unit. Only later did their armies melt captured gold for government storage. Following in the "Footsteps" of a process that continues to convert existing gold into identifiable gold. Even into our day.

It wasn't until the era of Roman dominance that they recognized the need for Roman tradable gold. Gold in their name for use away from home by their armies. During this time the first Roman "aureus" were struck by their armies. Coins created from "taken" gold, already in use, was formed into the very best trading chunks a soldier could have. The coin "Lucius Manius" (82-81BC) aureus, was one of the many created after the Roman Senate allowed their generals to coin "taken" gold as trading money. Thus begins one of the greatest gatherings and usage of gold known at that time. Some of it the very same gold we use today.

If one read my posts during the Washington Agreement period, you will recognize the phrase "On the Road"! Beyond the obvious political reasoning we often present here, the case for "to little gold today" has been behind our motivations for some time. The gold in our world is not as great as so many suppose it is. I hope to demonstrate why this gold "on the road" concept will further influence our political currency situation as it evolves.

Let's stop now and continue later.

Thank you all for your support and kind words.
Trail Guide (02/02/01; 12:55:46MT - msg#: 47250)

Again, I thank everyone for their contributions here and for the chance it gives others to see how a good cross segment of hard money people think. Your posts are valuable to all that read here as they convey every aspect of understanding, from deep thought to personal responses in our changing world.

I have mentioned to USAGOLD that I will never reply to a post in a negative way again. In the future, it must be the managers / owners of this site that instill what flavor it will have, not any of us (me) with our human outcries. Thank you all for reading and supporting this venue.

USAGOLD #47148:

Thank you, Michael, for your noting my piece on the trail. There is much more to this talk as it will explain how this gold dynamic is being used for political objectives today. I hope it leads to a better understanding of, at least, the fundamental forces that have created "This New Gold Market".

Randy #47141:
Thank you, also and I will follow up on your thinking in the next Trails Talk.


ORO -- #47214 -- Euro roost

Sir, you have, more so, than many of us, offered such a fine commentary over time. I know you realize it would be impossible to reply or even comment on the full content of everything you present. I think you also realize that my drive here has been to point out bits and pieces, more so
than make full conclusions. All done in the spirit of education and extending individual awareness of the future before us, thru gold.

Some time in the future, if events progress enough, I would like a dialog with you that is more than just a small point from my end. Until then, I will simply comment, as able and appropriate in following the political trail. In that spirit, I want to comment on your post next week. I have this to add today:


We all attempt, if the drive is in us, not to only understand, but also influence the leaders that work for us. In that respect, as a nation state, country, or society of peoples, our eventual goal must be more than just life itself.

This vessel we call life, this planet of us, this body of soles nearest our abode, is far too all consuming for any one master or group of masters to guide or even control by themselves. In this, every one among us should strive to add their difference. But none should be so bold not to lose track of what the world is here for; enjoying and living the time we have.

If lucky, some make it up several decks on our ship and even see the captain's view on occasion. If even more fortunate, he might have a word with the mind that is the wheel. It isn't always what we want to hear:


this life is so large our cargo so great
we trust you know how to go

Of course say he with clarity in sight
from my direction my assistants do know

with blank map in hand he makes his plan
and tugs with a tear then a bow

later, admits he, I must swear to thee
the land HO we seek, must still grow


So, my ORO that shines as gold, after the trip perhaps our experience will be a recount of a journey that was maped along the way. No matter the outcome, no matter the path taken we are all just people on the river of life.

As the "NewGuy" said of the one deemed more knowing in my story of the Country Club Bar #45944---

--- He's Right, Ya Know!"----------


Trail Guide (2/6/2001; 8:12:36MT - msg#: 47562)

Hello all:

I can't talk now, but I noticed in the link above (found on MKs great news page) that Old England is changing it's Thoughts. (smile)


Tuesday February 6, 11:53 AM

Support for euro soars among
London bosses - poll

---LONDON (Reuters) - Support for Britain's entry into Europe's single currency has soared among company bosses in London, a London Chamber of Commerce and Industry survey showed today. --- The proportion of the capital's top executives in favour of entry "as soon as possible"
has doubled during the last 18 months to 40 percent, according to the poll ----------------The poll, published in the London Evening Standard newspaper, found that a further 36 percent favoured entry "within the next few years", bringing total support for joining the euro to 76
percent.--------The Labour party is committed in principle to joining Europe's single currency club--------


Ok, now they are getting the drift! Also take a look at Pandagold's:


( msg#: 47540)
"......GORDON BROWN made a profit from selling some of the UK's gold reserves and investing in the ailing euro currency, MPs were told yesterday. A senior Treasury official said that, even though the euro had fallen in value, not lost out because investments in euros also paid interest, unlike gold. Gus O'Donnell, also insisted the Chancellor's policy of selling gold was not related to the Government's desire to join the euro.............


Ha! Ha! Old "GUS" read that last line from pre-printed material,,,,, don't you think? With the Euro and it's economy, also forming a powerful base, and it's coming policy about gold, the Brits won't need as much gold as a government money reserve. Because the ECB will allow this new non - money asset to rise like never before! Especially in dollars! And that thought gives big paper gold traders the shakes, as it's (paper gold marketplace) trading value is based on a dollar price band remaining in place. Soooo, HM government is saving a few of them (big BBs) before EMU.

Don't forget to notice the item in today's WSJ about how Euro-zone producer prices fell in december! This does not sound to me or to the Brits like a world currency that was being printed as "social trash paper" does it?

Let me see,,, if the ECB keeps rates from falling too fast and the USA keeps rates falling to ensure it's overheated economy ,,,,, then something of a shift in in world opinion about reserve money is coming? No?

It looks like more of the miners are doing something "who would have thought of"??? ,,,, dump all their real gold into the gold paper market. It would not take a rocket scientist to see how their financial structure demands nothing less? Yet, investors are still clinging to the ideal that all these securities are a proxy for "real gold"!!!! This could eventually lead to the failure of paper gold and / or the total loss of "equity" value for most mine shares?????? More than a few paper traders will feel the sting of buying paper gold based on it's ongoing paper pricing of real physical metal.

Some mines will, indeed,,,, make it across this valley,,,,,, and still have massive reserves intact. But, for the thinking gold advocate,,,,,, playing all the speculative metals and mine securities for a quick profit will only produce quick loses,,,,, no? Today, every aspect of perceived value in the gold arena is an illusion based on an "unknown",,,,,, the "unknown" trading price of physical gold.

The real leverage today, is found in the "hunk" of real gold in one's hand. That value will be shown at "Another" time.

Black Blade (02/06/01; 06:31:56MT - msg#: 47549)
I feel let down by Harmony (HGMCY),------------

Buy a real physical gold value,,,,,, today,,,,,, for free,,,,, by just paying it's currency commission as a full price. The future is for all who can see ahead,,,,, down the trail. (smile) The "Advantage" of holding real gold has never been better!

I'll post in a few days when I have time.


Trail Guide (2/6/2001; 8:18:34MT - msg#: 47566)

Randy (@ The Tower) (2/6/2001; 7:48:38MT - msg#: 47559)

--For the uncertain times (monetary environment) ahead, if you haven't got *physical* gold, you haven't got a clue.----


Ha! HA! You are right there, my friend!!!!

I must be "on the road" for a while.


Trail Guide (02/07/01; 16:46:12MT - msg#: 47710)
A New Tack From U.S.
A New Tack From U.S.
David E. Sanger New York Times Service
Wednesday, February 7, 2001

Treasury Secretary Rejects Lecturing Tokyo

WASHINGTON President George W. Bush's Treasury secretary plans a new U.S. approach for dealing with Japan, as the world's largest and second-largest economies appear headed into decline. -------------------------------- The combined effect of slumps in both countries, which together make up about 40 percent of the global economy, is being felt worldwide. Yet politicians and bureaucrats in Japan appear to be invoking the same prescriptions - hundreds of billions of dollars of more deficit spending by the government - that have repeatedly failed to get the country growing again. ------------------- He said, for example, that he was not interested in lengthy, vague discussion of Japan's myriad regulations. Instead, he said, he wanted to introduce "price competition" to Japan, noting that it was exactly that kind of competition from abroad that rebuilt U.S. industry in the late 1980s and early 1990s. ----------- But the same Japanese executives with whom Mr. O'Neill says he wants to deal directly have spent years fighting against low-priced competition, both foreign and domestic. --------------


With no where to turn, no new initiatives to tap and arriving at a timeline change in international currency values; both these countries are about to take a path of no return. As this downturn begins to bite, our collective governments will be forced to buy up every asset necessary. All just to keep the fires burning! This is the classic threshold of an intense inflation.

It makes me recall a line from Red October, the movie,,,,,, where the Russian submarine captain (played by our retired 007) disposes of his KGB counterpart just before stealing the ship! He says:

---- "to where I am going, you cannot follow"-------

Indeed, where the dollar universe is now heading, no nation should follow! Can you spell hyperinflation? In Japanese?


Trail Guide (02/07/01; 17:03:13MT - msg#: 47711)
Nation Hopes to Return to Preeminence

A Despondent Japan Seeks Some Answers
Howard W. French New York Times Service
Wednesday, February 7, 2001

The fearful talk in Tokyo financial circles for more than a month has been the possible collapse of the banking system. Banks never recovered from the bursting of Japan's speculative bubble in 1990 and remain saddled with an untold, and undisclosed, sea of unrecoverable debts. If defaulting creditors set off a wave of failures, it would mark the second time in two years that the country has experienced a banking crisis. ----------------------------- Growing numbers of Japanese economists maintain that the postwar obsession with exports is a major part of the
problem. According to this view, the welfare of Japanese people has been sacrificed in the name of mobilizing capital toward exports instead of developing goods for local consumption.----------- As a result, the public has been stuck with tiny, expensive homes in overcrowded neighborhoods, high prices on consumer goods and few affordable options for day care or elderly care. Japan's
electronic brands are known worldwide, but many Japanese do not own a clothes dryer or dishwasher. Young women are increasingly revolting against the system by postponing marriage and children. -------------- "The Japanese focus has never been on making Japanese richer, their lives happier or more convenient and predictable," said Haruo Shimada, an economist at Keio University. "All of our energy has been focused on competing with the United States."


Most Western people do not know the Japan that resides in the last several lines above. We have always been told that they are rich with savings. I know this land of the Yen and their image was never as good as we were told.


Trail Guide (02/07/01; 17:10:01MT - msg#: 47712)
Interest rate cut in euro zone some way off - ECB

By Jane Suiter, Economics Editor

Interest rate cuts are still some way off, according to two of the most senior figures in the European Central Bank.

Strong data from Germany have bolstered ECB hopes that Europe can withstand the slowdown in the US.

Yesterday, the Bundesbank president, Mr Ernst Welteke, repeated his view that the time was not right yet for a cut in euro zone interest rates but the ECB was closely watching what kind of impact the US slowdown might have.

"We still feel it is not yet the time to reduce interest rates," Mr Welteke, a member of the ECB's governing council, told CNN International.

German manufacturing orders jumped 2.7 per cent in December, far higher than the market had been predicting. French consumer confidence also hit a record high in January.

The data also boosted the euro, which rose above $0.93, closing at $0.9333 from $0.9308 a day earlier.

The currency could move back to parity with the dollar in the coming months, said Mr Horst Siebert, one of the German government's panel of independent economic advisers, in a magazine interview this week.

"It is feasible that the euro will move back towards dollar parity," he said in an interview to be published in today's edition of the German weekly

Trail Guide (02/07/01; 17:17:57MT - msg#: 47713)
Britain must ease US fears on Euro army, says Cook

By Toby Harnden in Washington

BRITAIN must allay US fears about the new European Rapid Reaction Force, Robin Cook said yesterday.

Speaking after meeting Gen Colin Powell, the US Secretary of State, in Washington, the Foreign Secretary said that the force could strengthen Nato. Gen Powell said he was encouraged by Mr Cook's promise that it would not be a rival. He said: "If we approach the European Strategic Defence Initiative in the way that Robin and I have discussed, then there's no reason to see this de-stabilising Nato in any way." Mr Cook reassured Gen Powell that Britain was fully committed to the Anglo-American relationship.--------------


Seems they have changed their feelings????
I will be back when able.


Trail Guide (2/8/2001; 6:23:19MT - msg#: 47776)
I will have time later today for several comments. One, in particular, is to point out MK's observations on his Live News Feed Page (see link).

Also note this item from the same feed:

Japan's Economy Contracts
Revised Quarterly Figures Confirm Recovery Has Stalled

TOKYO, Feb. 8 (Thursday) -- The Japanese government said today that the nation's economy contracted by an annualized rate of 2.4 percent during the July-September quarter of last year, confirming fears that recovery has stalled ---------------------- Today's forecast may also force
Bush administration officials to rethink their promise to forswear badgering Japanese policymakers about how they manage their economy.----------


Trail Guide (02/08/01; 17:58:35MT - msg#: 47819)
I must post tomorrow.

Trail Guide (2/9/2001; 7:58:39MT - msg#: 47869)
News item

Taken from the USAGOLD news link above:

Japan's Central Bank Cuts Rates As Economy Sputters!

Friday, February 9, 2001 9:32AM EST

TOKYO -- The Bank of Japan sliced its official discount rate to 0.35% from 0.5% in the face of immense political pressure to boost the sputtering economy. ---- The cut, the first for the discount rate since September 1995 ------ the bank will resume outright purchase oftreasury bills for the first time since April. The announcement came after a one-day meeting of the BOJ Policy Board held amid pressure from the government and the ruling coalition to ease monetary policy.
--------- see likn below


Thank you beesting ( msg#: 47794)

Now we can all say: hyperinflation in Japanese;
-----Kwabun fukurasu koto-----


Trail Guide (2/9/2001; 8:21:30MT - msg#: 47872)

Part of Michaels full message on his news line: -------2/8/01 . . . Over the past
several years, a series of recurrent financial shocks has stressed the world economy and sent central bankers and finance ministry officials scrambling for solutions---------

MKs full post is sending a strong message to everyone to buy physical gold. It's a good message and very compelling. Especially today! We are only now starting down the path that will impact every investor's assets if they are not prepared. Here is another ominous sign from IHT

Bush Charts a New U.S. Course on Global
Financial Crises
Brian Knowlton International Herald Tribune
Friday, February 9, 2001

WASHINGTON The administration of President George W. Bush appears to be moving away sharply from Bill Clinton's strategy of strong U.S. intervention in times of international financial crisis.-------------- In recent weeks, signs of such a shift have accumulated in the pronouncements of the new Treasury secretary and in the policy views of top Treasury appointees under
consideration. ------- A top candidate for a key Treasury Department position, for example, called two years ago for the abolition of the International Monetary Fund. Such views are now adding to fears among some analysts and economists that the new U.S. administration might move too slowly
and do too little in the event of future financial crises abroad.-----------


For myself; our gold story has been one of an unfolding drama between two long time forces in our world. The USA and The Old World,,,,, Europe. The entire play can been seen best through the eyes of gold,,,,, it's evolution,,,,, it's use as a political medium,,,,, and it's eventual impact on the failing dollar system. Never before in our history has physical gold been used as such an article of political change. Indeed, not since the ancient times will it have shown such a value in human affairs. Tomorrow, the future wealth of many will be stored in just such a medium and the impact of such stored wealth will never be greater in our lives.


Trail Guide (2/9/2001; 9:26:46MT - msg#: 47878)

Yes BuenaFe, the fuse is indeed lit! (smile)


Over on the Gold Eagle Forum an excellent piece was written by Mr. Lawrence Parks. See link above. We should read the entire article and after reading it, please consider my position. I want to reproduce parts of it here and then comment:


It's Not Your Daddy's Gold Anymore --- by Lawrence Parks

As recently as 30 years ago, some people bought and held gold not because they thought it was a "store of value," a concept that is intellectually defective and empirically indefensible, but because they had historical memory that gold is money. Today, as the older generation passes on, the new generation is tragically getting rid of inherited gold just as the reasons to hold it are becoming more imperative. ---------------

-------Indeed, all around the world, in Mexico, South Korea, Malaysia, the Philippines, Russia and else where paper-ticket fiat monies are collapsing. While Europe is well on its way to adopting a single currency, the Euro, and there are mutterings about a single Asian currency, there is not yet a call for gold.---------

----In contrast with the older generation who understood the role of gold, the reasons some folks hold gold today are almost all fallacious. They include mistaken notions such as:

(1) gold is a hedge against inflation. (This has not been true for the last eighteen years.);

(2) gold is a proven asset. (In fact, for the last eighteen years, the opportunity cost of investing in
gold has been staggering!);

(3) gold is a good diversifier since it is inversely correlated with the equity market. (Flushing money
down the toilet as the S&P goes up is also inversely correlated with the equity market, but who
would do that?);

(4) gold is cheap compared to its history. (This says nothing about why it is cheap. It is cheap
because there is just too much of it for the purposes for which it is being used.); and,

(5) there is a shortage of gold production compared to that used in jewelry fabrication. (But this is meaningless because there is more than a fifty-year supply above ground. No other commodity except silver, which has also played a monetary role has even a one-year supply above ground.)

------- There's more to this, but you get the point. Since these perceptions are wrong and people are recognizing that they are wrong, as the older generation passes, inheritors are getting rid of their gold. Gold will have its day when the fiat dollar collapses and people once again demand
gold-as-money. Then, and only then, will there be a reason to guarantee future payment to save and store gold. The payback to people who have the foresight to have held gold will be astonishing. -------------------------

Dr. Lawrence Parks is Executive Director of FAME, the Foundation for the Advancement of Monetary Education, and a member of Workers' Education Local 189, CWA, AFL-CIO.


Thank you Mr. Parks for your fine thoughts to the gold advocate public.

I also perceive the market in exactly the same light, as do most Western children of gold owning parents. However this view does not address the total evolution of gold, only one small timeline portion. On the USAGOLD GoldTrails page we are in the beginnings of going all the way back, in an effort to demonstrate what gold was then and how it will return to those values tomorrow.

One of the great problems with gold advocates today, has been in their failure to recognize whether the current world currency price of gold represents the real trading value for actual physical gold. This facade has been the source of much of the mis-perception you outlined over the last 18 year timeframe. As we have demonstrated so many times, the trading of gold has morphed (good word, uh? Perhaps metamorphosis?) into the trading of contracts. These paper markets have served to drain away and replace physical gold demand. If an actual physical traded market existed, based in total on actual movement of bullion, the real value and real dollar price for gold would be known. Therefore, the paper prices today are, as I pointed out before, little more than a commission paid to cover the physical delivery risk in this morphed gold marketplace.

Look back and place yourself in France, around 1965. One could have had gold for around $35 or $40+/- US dollars. What would you have thought if someone told you that by 1980, that gold price you paid in 1965 was equal to the commission on some bullion coin trades at the new high
prices? "Nuts", would have been the reply.

Today, as the ECB / BIS begins to once again morph the marketplace, our dollar price in gold will once again be headed towards becomming the commission price. Of course, my analogy is in a different scope and context, but the precedent of such an actual percentage move is already priced into physical stores of gold. The inflation of dollar currency has already been measured in gold. We and the children, just cannot see it because we are looking at an illusion.


Gold Trail Update (02/09/01; 14:24:04MDT - Msg ID:47894)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (02/09/01; 14:24:03MT - msg#59)
Current background

Hello everyone!

I was going to post this on the Main Gold Forum page because I didn't want to break the chain of thought here. But, because it's so long,,, I'll post here and reference this item on the trail later.

If a gold advocate reads Michael's wonderful piece (see link above), all the reasons for buying gold should be clear. His sound purpose is certainly clear to me. But, far too many savers have been lost in the blizzard of conflicting stories about gold. With all the changes that are taking place now, many have just backed away.

After giving my talk about "the curve" (along with other talks), I hope that at least a firm perception is in place as to why our current gold prices are little more than a facade. A currency price based mostly on the trading of contracts, not gold itself. Most of you grasp this, yet wonder why the "facade price keeps falling?

I'll use some things from the Carl H post the other day (Carl H (02/07/01; 20:05:56MT - msg#: 47727)

Hi Carl, I'll comment first them start into your post:

From where I sit:

There were two distinct parts to our (Another and my words as added) commentary over the last several years. Political history buffs would have recognized it right off and spotted where we were going with it. For the most part, all of this discussion was centered around the decades old combat between the Old World and our Western World. I'm talking about the combat for economic domination.

For those of you too young or not versed in recent history, during the last 30 years, most of Europe has been trying to work itself out from under American financial influence. This has shown itself so often it would take an entire documentary to reproduce or explain. Perhaps, larger than History of the world vol 1 thru 17 (smile). For us, though, the most important aspect of this has been in the slow formation of European economic unity. In fits and starts they have worked their way through various currency blocks that embarked on all sorts of fixed exchange rates and trade agreements.

The metamorphosis of their most recent 20 year struggle resulted in today's Euro and the expanding zone of financial structure it represents. This is only the most recent example of an effort that started somewhere back before our time. Perhaps the European Economic Unit (ECU) could pinpoint the modern beginnings of this struggle. Again, this represents the most recent 20 year segment.

The world's economic timeline will no doubt look back and mark this period in a way that we mark ancient history. I think most scholars will use the BC / AD reference as a way to describe it. Perhaps BE / AD, meaning "Before EMU" and After (dead) Dollars. The currency birth and political movement we have just witnessed will indeed have just such an impact on our Western lives and truly require a time stamp to reference it.


In the BE period, gold was the only other world currency. Yes, this dethroned metal currency and wealth asset was still used the world over as a last resort. A last resort against a failing dollar, that is. Gold values, BE, went through many convulsions as the dollar's use and stability ebbed and flowed. All the while, the world held gold "just in case".

As the political motivations to create a "Euro system and currency" grew, many nation states found themselves at economic risk. They hedged their economy between dollars and gold, but wanted the new possibilities another economic zone could offer. It was a new way to break the total economic control of our dollar reserve system. Everyone, it seems were watching and maneuvering as EMU approached.

The problem for many wealthy states was: how to continue within world economic trade, save your currency exchange wealth in reserve and not be killed if this new Euro system became a huge success? For some, gold was the main conduit to hold your excess reserves in, that way you were between currencies. But there were several problems.


The dollar had already approached it's useful life several times. By the early 90s, it was a basket debt case of super currency expansion. Ready to fail, right then and there! It was kept alive through CB participation, because it remained "the" world reserve and we could not operate without it. As the modern world evolved, digital currencies of fiat nature were and will remain the number one way to do trade. No matter the costs or problems entailed in their use, or how often these worthless papers come and go, humanity uses and demands their presence. We have but to go no further than into several of today's currency inflating nations to see where the locals still use paper money. My point here is to not expect a return to hard money. Hard wealth as savings, yes. But hard money? Never again. See my other posts for further explanation.

Make no mistake, CB support for our US unit is the only reason it's exchange rate didn't plunge, throwing us into a massive, local price inflation. And, because most other countries held dollars as a reserve, they would have inflated also. All this support was done in order to stop a complete economic trade breakdown before EMU. A decades long wait.

The trick for the CBs was to keep holding dollars and even expanding those holdings as needed to balance US trade deficits. Deficits, by the way that have not only been negative for a long time, but have grown explosively during the 90s and right up and thru EMU. This dollar support made sense because holding reserves in a failing currency, while building a new one offered little loss potential. Yes, once the new system began to function, your dollar holding's value would eventually be reduced almost to nothing. But those reserves only represented support for the system itself, not actual buying power in the native currency's land, USA. You see, once a permanent trade deficit becomes structural to the function of the currency's economy, those dollars,,,,,, those units of reserve buying power,,, can never return for the purchase of anything! Without killing the exchange rates and native economic structure first. Yes, in the case of what comes first (chicken or egg), you cannot send dollars home to buy useful goods at a reasonable price if the whole trade structure fails. In the US's example, used here, local inflation would drive the dollar prices of everything we export through the roof, long before all the goods were brought. Completely, negating any and all exchange gains from a falling dollar exchange rate.

So,,,,, once the Euro was functioning and morphing into it's new reserve roll, the ECB would,,,, like in the US's present roll,,,,, have no need for excess foreign cash reserves. However, some wealth structure would have to be present in the asset reserve category to replace those lost dollar values as they failed. That structure would be gold. More problems.

Prior to and just after EMU, many oil producers and a whole host of other wealthy nations / individuals, were not going to buy into the Euro first off. What if it failed? Or worse, because the dollar was on it's last legs of support already, any failure of the Euro system package would also lead to a total break away of continued support for the dollar. In this dynamic, even dollar holdings could dissolve! This was the background from where Another's Thoughts were being broadcast. During the BE period, about five years before, there was indeed a near failure to proceed with EMU! After some 20+ years of effort, such a failure would have sent us back to the gold standard (and worse) of days gone by. Many of you can remember this during the 1995 area. The effort seemed to be falling from political bickering. It was critical to oil wealth producers and many others that the Euro be born. If it didn't, an all out bid for real gold by everyone would ensue and I mean everyone. More problems.

Part of the support package for continued use of dollars revolved around oil. If for any reason, oil prices rose prior to EMU, it would break what little economic life that remained. It was well known that the entire local US structure depended and was built on reasonable priced oil. Later, this position and it's pricing dynamic would begin the movement of commerce settlement away from dollars. But, not yet. Actually, in the years prior to EMU, oil needed to plunge in dollar value in order to prop up the system. It did, boy did it,,,,, but not for free as so many thought.

It was well known that gold could buy oil, or better said,,,,, a cheap gold market price would buy cheap oil! But forcing down the gold price for the benefit of private sales would be some effort as long as people were buying in mass prior to EMU. That mass buying process would feed on itself from the fear of a dollar / Euro transition. Thereby, negating the whole cheap gold for oil game. Yet, the ECB (and the BIS) already knew this gold market of ours and knew it well. You see, our dollar gold market has evolved over many years. Long before the 90s, it was well on it's way to becoming a virtual paper market place. An easy trading market that basically held "it's paper gold price" well within the commodity use function of gold. Around $400 to $600 was considered about right. With Western views sliding into complacency as our world dominance grew, we as investors grew to see "trading gold" as the best use of our wealth. If we wanted to engage hard money thought at all, we just traded the price, not own the gold. In this atmosphere the mine industry exploded with easy capital. See my post about Mr. Parks great article below. So we as private gold owners unloaded tonnes of gold many started down the road of owning leveraged gold securities instead.

In this backdrop, new mine supply was more than what the world needed, at least the Western world. All the CBs, both American and Old World, began a policy of discounting gold. All for the purpose of supporting the dollar reserve system. Yes, the US played this game, knowing full well the currency reasons behind the Old World purpose; to hold the dollar steady until Euro birth (EMU). You see, we (USA) thought this was great because we gave the chance of EMU a one in 100 shot! This truly backfired and now the BIS / ECB have the US fed in an inflation trap.

So, the dollar got support from CB's holding more of it as a reserve,,,,,, the dollar got support from a falling gold price,,,,,, the dollar and the economy behind it got support from crashing oil prices. All of this leading up to a huge change. A change that to this day is still mostly behind the screens.

The next part of the play came as world paper gold traders starting making use of a good thing,, falling dollar gold prices! Never mind that the real gold movement behind the paper market was becoming a tiny fraction of this paper trading. Never mind that the dollar would eventually step back from world reserve status,,,, changing the settlement function of our paper gold market overnight and killing everyone's paper holdings. They said:
----"Why,,,, we know why gold prices are falling, the CBs of the world want it down,,,,,, but we don't believe all this talk of Euro success",,, "there are a hoard of other reasons", "besides, we are making tons of money playing this paper game"!-------

Now, I'll pause to introduce some items from Mr. Carl H's post.
Section 1 -- Bullion Banks Establish the Gold Carry Trade

From what I have read, it seems that a few years ago a number of Bullion Banks started borrowing gold at interest rates of around 1% from Central banks. This gold was immediately sold on the spot market and the money and invested it in higher yielding investments. This type of operation is referred to as a carry trade. This practice went unchecked and has reached a point where at least 6000 tons and probably as much as 10000tons of gold are owed to the central banks. To put these numbers in perspective, annual world wide mine production is estimated to be about 2500 tons.
Thank You Carl.

Yes, they did introduce the gold carry trade then and the timing was no accident. I also have to point out that Another was the very first to mention (post) a gold lending number anywhere near that level. He said it was around 14,000 many years ago or would soon approach that level. Everyone, except those that knew the game, said it was NUTS! Now, the 10,000 figure is on every desk in the world.

Central Bank lending of gold for low rates made absolutely no sense. A fact almost every hard money writer expresses. But, they fail to bridge the conclusion. If a low gold price was wanted, and they did indeed want it, the CBs could have sold the gold outright, driving it down. Then brought it back later. With the growing public perception, so well outlined in Mr. Parks article, no one would have minded it as the stock markets were all the rage. Why buy into a diving market and hoard all this excess gold for long.

Further, in a different light, the CBs could have simply used the mining industry strategy and apply the interest gained on the cash sale proceeds to buy the gold back later at higher prices. Indeed, this is exactly what the mines are doing now.

Further: They didn't need to lend it, just sell it. Later, they could have just printed new money, that is, create near money securities for their own account and apply them to long term contracts from the industry,,,,, buying new mined gold to replace the sold gold. No need for the lending equation at all. But, you see, there was a need.

So,,,, the only reasonable, legal reason for the banks to create a world wide gold lending structure was to grow a paper facade that the real gold buying, Another spoke of, could hide in. All perfectly legal, but very political. Again, I point to Another's long ago post that said; "the reason gold prices are falling is because so many people are buying it". Ha! Ha! That one was greeted with total disbelief and ridicule. But, boy a lot of money was lost by people that turned from that message.

Now, back to my post:

In the middle of all this new paper trading environment, people didn't notice what was happening. Way back when CB lending was just beginning, some smart people starting taking just a little bit of the action. Besides being big buyers of CB gold sold outright, they were also buying some of the borrowed gold. The same gold that was lent into the market by the CBs and other big players. You know, the gold that's borrowed, sold to create a pot of money. Then that money draws interest until it's used to buy the new mined gold and replace the loaned stuff. The same process that also makes the gold carry trade in our currency markets.

Well, that real gold off take, done by these major gold advocates, was not all they they took (smile).

Now,,,, a lot of these people started thinking. "We already have a lot of gold and our demands in the decade prior to EMU may drive the market way up. So, why not help the CB's purpose (and ours) by always bidding low at outright sales. And because our money is tied up in gold, drawing no interest, why not play the CB game for them? We'll take some of our buying money and use it to create the cash pot for the BBs,,,, for use in their gold lending deals. They can skip the borrowing and sale of gold part and just commit our money to pay for the new mined gold. Drawing the standard few percent in return. The mines don't need to know that no gold was sold. Further, the BBs will need to hedge a fall in price to protect themselves in the deal. In doing so the public will see the derivatives price of gold fall, just as if some was sold.

Note: The BBs (in this small niche of deals) must only protect their interest from a falling market because that is the only function that would threaten the mine's future repayment of gold,,,,, a to low gold price. If their collective actions did drive the paper trading of gold to the floor, killing 90% of the industry's ability to continue operation, their profits from their paper hedge could at least cover the liability. Yet, conversely, any rise in price would be no threat to this particular deal structure.

So,,,,,,in the middle of all the gold carry trade, naked shorting, gold sales from regular investors and, in general, a blizzard of paper gold trading,,,,,, some major players were building real gold buys and not driving the markets as they did it. The success of this operation created the dynamic that allowed physical gold to be purchased off the radar screen and the flow of oil to continue. Once again, no manipulation outside our standard paper arena! As Another was oh so fond of saying: "gold and oil will never flow in the same direction". (smile) Now, more from Mr. Carl H:

Section 2 -- Lining up the Gold to Unwind the Carry Trade

I consider the above paragraph to be fairly well established information. Now, I will speculate for a moment. If I were the bullion bankers and was in this situation, I would want to get my hands on a tremendous amount of physical gold at cheap prices. As far as I know, only the central banks and mining companies have large amounts of physical gold. In the case of the mining companies, it is still in the ground. I will assume here that the central banks would be very reluctant to let the bullion banks default. It would show how stupid or corrupt the central bankers are and it might be a big enough scandal to change the outcome of some elections. Ok, so this means that I have to convince the mining companies to sell me all the gold they produce for the next several years at prices close to what they are currently. So, how would one go about convincing the mining companies to sell their future production? Youíd either have to convince them that the price of gold was going to stay low for the period of time for which you wanted them to sell you the production or you would have to coerce them into selling future production. To accomplish this, you would have to convince them that there was a large supply of gold that was going to be dumped on the market. As stated above, the only other large holder of gold is the central banks. So, you have to convince the central banks to drive down the price of gold and act like they are ready to dump much more gold.

So, the question then is how to separate a central banker and his gold. Simple, create a potential crisis of a magnitude that it will force him to sell gold to prevent it. This is easily done by simply writing a huge gold call options (or surrogates thereof). Then, if the price of gold rises, the Bullion banks will fail and probably take the financial system with them. This compels the central banks to cap the price of gold at a level that less than the cost of production for many mines. This forces those mines to hedge or go bankrupt. The Bullion Banks can then acquire the forward production at prices near the cost of production, or to acquire the bankrupt mine. What is even better is that hedging will help hold down the price and force other mining companies to hedge.

OK,,,,,,,,,, again thanks Carl.

Your view above is very clear. But it is based on several lines of thought that don't exist.

(First), the BBs are not really at risk. Yes, in my macro view, if the gold system was to default out of sequence, world trade flows would indeed, break most of the BB, but do it from the regular economic side of their structure. However:

It's the function of the marketplace, itself, along with the entire gold marketplace that's at risk. In the event of a total run on gold, induced by a huge surge in gold demand, the banks would force their clients, on the short side, to post so much collateral that it would force them into bankruptcy, on the spot. Most of you may not know it but all the mines and even gold industrial players have margin thresholds that, when reached, go up like a rocket. Even ABX has a $600 point that requires massive additional collateral beyond that level. Any short run in the paper gold markets would be almost overnight and go thru $2,000 like butter. In that event, even ABX would not have the collateral to cover it. Remember, below ground valuations are not deliverable in a gold run that demands three day delivery!

The bank's short positions are, as our good poster ORO once pointed out, always hedged in paper positions. If the market ran away, the bank's demands for performance on those positions would crater every arena they function in. Once, again, the banks play the market forces against each other. If, in the course of operation the whole realm of forces are played to zero, the banks just stand aside. I know, of course, that they would be impaired, but the bulk of the blast would be endured by everyone that plays in this marketplace.

The point of my presenting this is that the whole object of the paper gold dynamic is and always was to function for industry hedging habits, not so much to deliver gold to the public. Yet, because this maze was encouraged by the CBs to grow so super large, it's goal was so that political gold could be moved. One day, this entire structure will have served it's useful purpose and then it will be allowed to fail. That day is approaching.

To bring us up to present:
To date, that purpose has been served largely because it succeeded in keeping dollar supporting oil prices down, extending our US economy,,,,, until EMU. As evidence to the process, notice how oil prices began their dollar rise only 6 months into post EMU. Clearly, there was no longer a need to support our dollar economy once the Euro was established. Indeed, just like a turning supertanker takes time, so too does the higher energy prices take time to work their will. Make no mistake, the world has seen the very last of cheap dollar oil. The next dynamic of that process in the transition of oil settlement support into Euro denominations. Notwithstanding Iraq's move as a convenient trial balloon, the mass of this transition will not begin until the US has clearly embarked on a slowdown. And that slowdown, energy induced as it is, will, this time, force the fed to fight it with a super inflationary buyout of anything and everything that defaults. Right down to your shoe laces. This, my friends is the inflation dynamic unleashed once a currency is removed from reserve status.

Further; its no mistake of identification in understanding the ECB / BIS roll in all of this. That the ECB has started cashing in all it's interest on dollar reserves points to a new direction in currency warfare. Our own Randy@ The Tower has documented this for some time. In addition, their marking gold to market is a prerequisite to following the Fed's new inflation stance by scoring the dollar against the Euro gold price once the paper gold markets fail.
Gold Trail Update (02/09/01; 14:29:39MDT - Msg ID:47895)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (02/09/01; 14:29:38MT - msg#60)
Background part 2

Further; its no mistake of identification in understanding the ECB / BIS roll in all of this. That the ECB has started cashing in all it's interest on dollar reserves points to a new direction in currency warfare. Our own Randy@ The Tower has documented this for some time. In addition, their marking gold to market is a prerequisite to following the Fed's new inflation stance by scoring the dollar against the Euro gold price once the paper gold markets fail.

To the point:

However, there were still outstanding gold deliveries on all sides that needed to be addressed, even after EMU. So,,,, around early 1999, the BIS decided to allow the erosion of the paper gold markets to continue to conclusion without fighting it with outright buys.

LeSin's post today (# 47852) about someone noting a BIS offer to take England's gold is to the point. (Hi LeSin, how is your French Sorrel growing? (smile)) That was the last offer before a changed position. They would not do it today. Look at your charts and see where this market the time where gold was finally allowed to drop below $280. It is indeed strange that it hasn't fallen much further.

Where once they stood ready to buy gold outright, in order to stop the wholesale reproduction of contract gold from driving the traded price too low, and degrading the very asset that gave oil producers reason to support the dollar,,,,,,, the market itself would now be allowed to kill itself. All so the final gold contracts could be delivered. That process was evident in the Washington Agreement and the years it would take to complete that workout. (see my Macro below for further explanation)

Where I had seen the WA as a breaking event, Another had long before seen it as an extension of the process that would eventually drive paper gold credibility to Zero. Indeed, he said (posted) that well before WA. As an aside, he always said that all paper would burn. In retrospect, prior to EMU, if it didn't happen, all paper assets were subject to destruction and now I see his point. Post EMU, just gold paper is now in the hearth. He does think EuroLand is the future and I respect that position, greatly!

In my Macro view told in a slightly different way:

We all thought that one day the whole gold system would explode in some huge short covering rally. Indeed, if the Euro failed,,,, producing no EMU, the sudden demand for gold would have driven the paper market sky high until it too broke from financial failure. Making million airs the world over of countless gold owners,,,,, and billionaires of any leveraged player that brought mines, futures or options. Well, maybe billionaires for those that cashed in while the shorts still had money to pay. But,,,,,,,,,,, it never happened. Thank the EMU folks for that.

Now we entered the AD era,,,,, the European Monetary Union (EMU) was a success,,,,, the Euro was formed. This was a political sea (for me also) change regarding gold. It was around spring 1999 (that time again), was when Another made a point I will never forget. It was posted here on the USAGOLD forum. Now that we were in the AD era, the decision was made to let the dollar paper gold market kill itself. We all posted endlessly as to why it could /could not and would /would not happen, but there was one other aspect left out at that time.

As I mentioned above; most of the major gold buyers,,,, the physical gold advocates,,,,,, those that want it as a wealth reserve,,,,,, were gathering physical gold all prior to EMU. Even after EMU, as we worked our way into the early Euro era, gold ownership is intended to bridge the transition away from dollar reserve use. For these nation states and individuals just want gold,,,, not for trading now,,,, nor for use now,,,, and they don't care about it's dollar price now.

We thought that after EMU, dollar paper gold prices would slowly climb as physical demand impacted the paper marketplace. But the problem with that is that such a climb will destroy the ability of the BBs to function and complete that portion of contracts that require delivery. Remember, we now have countless major Euro players waiting for gold deliveries from mines and other contracted sources. Overall a small portion yet, all within the trading noise of this huge arena. Yet, this gold is a major part of the Euro system of the future as it will be a replacement asset for nation states that stand outside the Zone but will trade within it. (as a contrast to Britain that will join)

From the time of the Washington Agreement until it's end (three years left out of four+/-),,,,, the dollar paper gold world will be allowed to do the equivalent of a currency inflation. No nation or government CB will now stand in the way. You see, the only way the physical deliveries can be completed is for the market place to have it's way. In doing so, by continuing to short the market in a piling on stance, liquidity will remain for delivery. Remember, the gold recipients do not care what the dollar paper price is at delivery, only that their gold buys can be completed. And for that to happen, the BBs must have an ever lower price. Hence the contradictory nature of the major ECB bank, regarding gold.

Yet, the real message must not be lost. Between now and then (perhaps tomorrow or in a year or so), physical gold will embark upon it's own road. A GoldTrail if you will. A drama seldom witnessed ever, much less seen in our time. I state flatly and for the record that the premium paid on the purchase of physical gold will climb through the roof in the days, weeks, months and years ahead. Between us Physical Gold Advocates, we will know it's but a reflection of the free market to come and a true account of where it's value really stands. For the paper trader, it will become the curse of lost wealth.

This, my friends is the face of a failing paper gold market. A market that evolved far beyond what it originally was used for. A "New Gold Market" built for the support of a currency's ending timeline and allowed to die of it's own misconception.

From here we can see the "advantage" of physical purchased for an unknown value. Gold held as the ancients held it.

No denomination necessary until it is allowed to trade,,,, "Free" once again!

Then our journey will be done. Then our wealth will be complete.

"We watch this new gold market together, yes?"

Thank you all for your time
Trail Guide (2/11/2001; 9:41:57MT - msg#: 47990)

USAGOLD (2/10/2001; 9:45:48MT - msg#: 47938)
Winter Thoughts on Another Thoughts


Hello Michael,

Thanks for taking some Saturday time to digest our subject. It is all consuming, isn't it? I think it's obvious to anyone reading it (background post on TrailsPage) that the post is structured in "rough draft form". I started to define it into a real publication and realized such a work would quickly grow to over 20 pages (smile). Later, I stopped and just posted the general thought outline. Besides, defining today's modern events is a job for each individual reader that comes here and is what I truly hope they will accomplish. My hope is that the play we are all viewing is engaging enough to draw people to think, as Another so wanted everyone to do.

For yourself, Michael, I see you had absolutely no problem defining your thoughts as your post above clearly described. By the way, try to read Mr. Roger Cohen's piece on the NY Times News Service link above. Titled; Europe's Shifting Role Poses Challenge to U.S.,,,,, excellent conclusions
and he's just a step or two behind your steps. I can see him in your dust on that blazing trail. (grin))

I think one of the most difficult understandings for all of us to grasp lies in perceiving the rising value of physical gold while the dollar world around us keeps telling a different tail. People that pay the cash price today, for the advantage of having gold, then sell that gold into a falling paper marketplace are doing no different than the mines do. That is selling hard reserves into Another's
pocket and doing it for almost a free price. Losing the very same wealth that the paper goldbugs lose as they, in parallel, move in and out of paper contracts. All in a vain attempt to circumvent the effects of a dying dollar gold market.

In doing this they are just playing the same trading game Western investors have been conditioned to do so very well. In the process they will end up with impaired balance sheets when they need real assets the most; when this currency / political transition breaks into the open. In your piece on
the News & Views page, you outline the sad nature of a gold industry being taken to the cleaners because their inability to step away and consider what is being done to them. Absolutely correct perception and well structured thought!

Yet, in retrospect, this is a common problem in any business that's in operation to make a paper profit, isn't it? The trouble, in our gold arena, is in how investors have been lead to perceive gold mines as personal gold reserves. But someone forgot to tell them that these entities must function or die. And for a mine to function they must sell gold into the same currency market that is used to price their equity.

I guess people didn't "think hard enough or long enough" about how that would work if the vast metal contract markets grew so large that trading the contract superseded the validity of receiving the mine's product (gold). In other words, as paper supply grew, paper prices fell and most holders simply took their losses as they dumped the paper holdings. Never taking delivery because they didn't want it and even, at times, running from it! All in a perfectly legal use of the system as it is structured. Such performance leaves open an easy door for non-hard money traders to make a "business man's profit" by exploiting said dynamic. Of course this trend was encouraged by the CBs. But, that encouragement or conspiracy as some call it, is no different than a governments encouragement of turning the Arizona desert into a playground with water. Ha! Ha! It's all in how we see and feel the effects, isn't it?

Investors forgot that only a few short years ago, a world currency was treated in the exact same manner as our contract gold markets today. Randy, ORO, yourself and many others all understand this well. The dollar was over printed and traded until everyone simply traded it's price (exchange
rate) and no one was taking enough gold delivery to shut the system down. Same dynamic, as you so well know, my friend.

Back then, just as today, paper gold, those paper dollars as they were called, became the denominator of gold's value without the discipline of a physical exchange to right the misconception. We all know the results and it's eventual consequences. Perhaps the beginnings of today's final death march into the sunset of our currency. A Timeline end, so to speak.

Today, miners sell their product for a cash price because that was the "business plan" they signed up for and it included using this paper pricing system. No one would squawk one bit at how wrong it all is if gold was at $500! Yet, the same logic to end the terrible practice would still exist. I wonder if Criss Powell could address that segment for us? It does need discussion if only a supposition, right?

Further, I suspect their actions, GATA may be opening a can of worms that could accelerate the very process I have been describing. Quickly cutting off the avenue for many to escape the paper strangle hold?

One more thought for everyone:

If mines had charted their companies to sell the product outright and retail, the problem would not have changed because we all would still trade their product (gold) at the contract paper price. Trying not to own the metal, just trade the price, no?


Back to your thoughts, MK,

The only near term hope for gold is in a restructuring of gold trade, worldwide. Thank goodness we are at the end of the end and entering that beginning! The political process that's now on trend is doing just that. In every political motivation, found in the Old World, the need for physical gold to be valued in modern life terms is evident. Yet, this completely conflicts with every Western agenda that demands gold remain within it's perceived dollar commodity price band. Ironically, if the West were to somehow win, leveraged gold bugs would make only inflation adjusted gains. Something in their view that would be just fine. Indeed, the very system they deplore would pay them their due.
Conversely, if the Euro faction wins, Physical Gold Advocates would enjoy outsized real gains along with future dollar inflation gains. Fortunately, for Gold Advocates, physical gold will win the day anyway. Not because we are playing a world game, but because the natural laws of physics are ending the dollar's time.

As we look down this path, I see nothing but a one-way trend as gold traders are cleaned and gutted by their own desire to play leverage in the very paper market that's being restructured. To this end Western Thinking will morph (that word again) into a new understanding of what is real and what is not. For most, that education will require a big price before it's completed. But then again, just look at the cost of many years in college? Perhaps learning is always expensive? (big smile)

Thank you, my friend and everyone for reading
Yes, Wintering well.

FOA, just a simple TrailGuide

Trail Guide (2/12/2001; 7:30:19MT - msg#: 48073)
Anyone that could not get the piece below from NY Service ( I mentioned it in a post to MK), it's now at IHT. See link above.

An Evolving Europe Raises U.S.-NATO Anxiety
Roger Cohen New York Times Service
Monday, February 12, 2001


-----R Powell (2/12/2001; 7:04:05MT - msg#: 48070)
Salmon, the writer of that Bloomberg article is not correct when he says, "Harmony Gold Mining Co., South Africa's third-largest gold producer, said on Tuesday that it secured an option to sell 1 million ounces of borrowed metal." Harmony bought options but not for "borrowed" gold.-----

Hi R. Powell,
The problem with their structure of the deal is that if gold falls below $260, to $240 for instance,,, their banks would force them to borrow at the new $240 range and spot the gold onto the physical market. The paper market is not concerned with their mining new gold to sell into this option over
time,,,,,,, it's their precedent to almost every other miner to exercize their position with existing gold as the paper created price falls. Further breaking the system.

Again, whether or not this much gold can be borrowed today or not makes little difference. Once the paper sellers start piling on with naked positions on the otc, these mines will be forced to use their options. This is just another example of non-hard money players using existing paper market
structure to limit their cash risk. They don't care about gold, the market or the metal, they are just following the leader.

All of this is leading to a complete breakdown in the entire pricing system. We watch and learn.


Trail Guide (2/12/2001; 8:00:44MT - msg#: 48077)
lamprey_65 (2/12/2001; 7:40:22MT - msg#: 48076)

Hi Lamprey,

The bank has the prerogative of cash settlement with these options, for the premium alone, or reorganize that portion of the financing into a gold loan,,,,, using the put as part of a physical deal. It all depends on whether the actual lender (whoever that may be (smile) is seeking immediate gold or not. Yes, the put writer may just function on the side with a cash settlement, completely outside the
physical play, to his favor or not, depending on the price. And physical gold may or may not be forced into the play. This is the problem that has overhung the whole paper market for a long time.

All through out this period, no one knows when someone is going to forces real gold to move. Usually, when it does, it's because a need exists in someone's portfolio and that need requires existing material. Not mined gold over time.


Trail Guide (2/12/2001; 8:06:52MT - msg#: 48078)
Chris Powell (2/11/2001; 12:32:20MT - msg#: 48009)


Thank you for your comments and clarifying your reasoning. I'll have another comment and note later.


Trail Guide (2/12/2001; 13:30:43MT - msg#: 48106)

R Powell (2/12/2001; 9:13:48MT - msg#: 48083)
Harmony hedge

Rich, we still are on different channels. Let me take another poke at it (smile). From your post:

----Trail Guide, whether or not the one time cost (premium) of the put options is included in the loan is irrelevant.---

Ok, I completely and totally agree with that item. The premium that H paid to buy the option contract came out of their pocket and has no place in the context of this. Whether they get the premium money back or lose it all means nothing to this discussion. next:

---------The loan was for mining expansion.------------

Ok, the bank gave them a bunch of cash to spend on infrastructure. As H makes money from their business plan they will pay back this loan. next:

--------The bank was worried that Harmony wouldn't be able to repay IF POG sank lower SO the bank required some insurance of the Harmony's ability to repay. ------------ Harmony bought the right to sell gold at a future date at a set price. They own this right, it is NOT an obligation.

Ok again!
However, before they sign on the dotted line, H buys an insurance option so the bank can be covered. True, in standard nomenclature an option,,,, "in and of itself" and "standing by itself" is but a right to do something, not an obligation. BUT, H does have an obligation to perform on their loan AND this option is tied to that performance. In contract law, that obligation on the loan is passed thru into and upon this insurance collateral called a put option. Therefore, because that option performance was made in conjuncture with the loan, H will be required to use it ""as the bank directs"" --IF-- their business function is impaired by a gold price so low that they cannot conduct
ALL their business in a reasonable profitable manner. next:

----------If you buy an option to buy a piece of land at a set price for a length of time, youhave the right BUT NOT the obligation to buy. ------------

Absolutely! next

--------- Harmony can sell gold at a future date for a set price. If POG is higher than that set price at that future date, Harmony will get the higher price.-------------

Harmony can do what ever they want with this option contract AS LONG as it does not infringe upon the collateral the bank used to make the loan. But, you see, that option is part of the loan collateral. This option, this contract right to do something is part of what the bank claims as an asset
against the loan. If the price of gold went to $200, as an extreme example, the bank may not allow H to just sell the option for a cash profit. The bank also has several implied "RIGHTS" within the loan agreement on how to make the best use of "collateral assets" in a default situation.

We, as outsiders may not make assumptions as to what liabilities the bank incurred to supply the cash for this loan. The assets that originated this transaction, that is, "where the cash came from", may want themselves taken completely out of the deal if gold was to tumble. Or they may want physical gold outright? Or the bank may want to simply retreat also. So,,,,, in the event of Harmony being financially impaired from a too low gold price, the bank may seize the option, borrow physical gold at the then much lower price and sell said gold into that option's higher price. Then simply hold this new cash in an interest bearing account that would pay the low borrow rate on the gold loan. Still, H would be on the hook because their assets, gold in the ground that was already attached for the cash loan, would be attached to eventually pay off the new gold loan. No, if prices remained too low and H could still not operate, then the gold loan would just sit there and roll over and over.

This may or may not be the case for them, and I am just explaining how some of these things work. But it is a very common structure today. next:

----They did not sell forward, they are not "locked in" or obligated to sell at all, at any price.---

True, I never for a moment thought that they sold forward.

But they are locked into a cash loan obligation and that contract's credibility depends on the bank's ability to use several methods to remedy a future situation. Sure, if we freeze the moment and all prices stay the same, their contract is static and everything is fine, just as is any other contract in such a situation. But, any and all loans are dynamic, my friend. Ha! Ha!, ask any banker? What you
can and cannot do is subject to future circumstances. next:

---- If they do want to sell, they have assured themselves a minimum sale price. Futures sales = obligations ------

As long as they are up to date, and have permission to liquidate loan collateral, yes. next:

-----Options may or may not be exercised.------

If your option is not part of a loan obligation and held as collateral, this is true. next:

------Many of the complaints (forward sales) against the paper gold market are valid, this one does not hurt POG and seems misunderstood.----------

I don't think any big players are confused about this. Perhaps the investing / trading crowd may not grasp it fully? It's the possibility that all these paper hedges may be forced to crowd into the forward sales area that shakes the market dynamics. Further, it's all together possible that naked shorting and carry trading could overwhelm the paper supply and force paper prices into a future lower price range. Staying on such a trend, paper gold could lose all credibility to perform as a proxy for physical gold! Eventually trading at a discount. All because every long holder that's in the game for paper trades only, is trying to unload because of all this new supply. This is why I said a long, long time ago that at the end of all of this we may see a colossal spike in comex futures OI (400,000 1,000,000 contracts) as everyone tries to cover their cash risk. Caring nothing about who is , can or wants to take delivery. Long before this begins, the premium on physical gold will
start a vertical rise the likes we have never seen! (smile) We shall see.

That's my take on it, my friend


Trail Guide (2/12/2001; 20:18:53MT - msg#: 48125)

SHifty, I have your post now, but am trying to keep these two Grizzlys from eating me up. Be with you as soon as able.(grin)

OK, John Doe and R. Powell, now we are diving in (smile).

I want to flatly state that all of what I have been talking about here is using Harmony as an illustration. They may or may not be in the situation described. Even though I don't own them, they are a good gold company. Out of a trillion bad ones.

I may have to take your posts a little out of sink to address each item, but will try to stay in order. You said in R Powell (2/12/2001; 14:58:56MT - msg#: 48109):

------ However, if POG does fall, H can still sell gold at $250/ounce- a price that (the bank is satisfied) will keep H in business and repay the loan. Answer to your question, Harmony will exercise its option to sell at $250 if POG is lower than $250 but is not forced to.-------

Now,,,,,,, we need to think about this a little bit? On one hand we say that H does not have the obligation to use their puts, only the right if they choose to do so. But, on the other hand, if the price of gold falls below $250, they would not be forced to sell into those puts? My friend, that begs the question; "if their loan package is built on the presumption that they must have $250 or better to make their payments, who would they sell their production to if the world paper price is below that"? Will the bank let them just hold the puts and sell into a lower world price? That's right, they won't. It's not a question of them being forced to sell into those puts, they "WILL" sell into those puts. And the bank will make sure of it. Below $250, H has no choice and the obligation stems from the loan structure itself. As I stated below, the loan itself implies that the puts are collateral and controlled by the loan covenants below $250. next:

-------The seller of the option holds liability for its exercise, the buyer (holder, Harmony) of the option has no obligations, just the choice of whether or not to exercise the option.------

Even though you understand the function, I think you are somewhat out of context and seeing these puts as being entered into more as a business speculation by H. These contracts are collateral against the loan and carry an obligation of use below $250 in order to season the loan further. Again, as I said above and below in #48106, H will use these puts under these conditions, as they will have no choice. next:

-----------The banks have no control over Harmony's business- they can foreclose on the note if H does not make the payments but- just accepting a business loan does not give the bank control over how you run your business-----------

Rich, how did you come to the conclusion that these puts are part of H's business? They did not own them and didn't want them prior to the loan. As the article in Barrons (and their own statements) make clear; they were forced to make these part of the loan structure as collateral. Once again, below $250, the conducting of H's business has no bearing on whether these contracts are used. The loan requirements will make them use it even if they somehow didn't want to. I hope
we have at least established that these puts assets are bank collateral and cannot be harmed. Yes? next:

----------If POG is less than $250, Harmony also has the choice of selling gold (at that option price) or selling the option which amounts to a cash settlement (no physical involved). Either way, H has insured that it will be able to repay its loan. Trail guide, If the puts for $1 million ounces of gold sales (or cash offsets) generates enough money to make the loan payments, then the banks would have no further interest in marking to market gold in the ground or anything else at Harmony.-------

Rich, this is where a lot of us investors go off on the deep end if we are not careful. Myself very much included. (smile) I think you know that these loans are made based on the performance of the entire company, not just the one little segment they finance.

Sure, H could sell gold into these puts or cash them out as needed to cover their usual expense,,, then out of profits make the loan payments. But in order to do that they must still mine gold and that requires all ongoing operations to at least break even.

I point back to the context of my earlier post. We, as industry players are concerned of a sudden fall of gold to say $200. As my example below used. At that point, H, as a viable operation in it total would be impaired. Yes, that one loan could be covered if they run just that one segment of their business and sold into these $250 puts. But, no lender will carry such a loan. If they originated the loan with limited liability, they still must act prudentially.

They will not let H simply eat up that put to keep them going. Just because the loan is being serviced, doesn't blind the lender to the fact that his total collateral assets are being impaired. You can't park your brand new ford pickup in the ocean, up to it's engine, and still expect the bank collectors not to come for it? Even if you are making payments!(smile)

Because that put is collateral, it is subject to seizure and use to not just pay the loan but close it out. In the case of many of these mines, the sale of the hedge securities, Harmony's puts in this example, would not cash out the loan. It's not enough. That could only happen by the lender borrowing gold and selling it into the put. Then they would have full cash with a very small or almost no payment
liability. Sure, they would oue gold. But, that trade off would stick as an attachment to H's unmined assets until something happens??? Don't think for a min. that their reserves are not totally involved in a loan with gold at these current levels. next:

R Powell (2/12/2001; 15:29:48MT - msg#: 48111)

-------- The bank expects repayment of the loan but (unless the bank owns the puts!) the bank can not force business decisions involving the puts. The bank can foreclose on a business for non-payment but they can't force business decisions on a company just because a loan exists.-----

Once again, Rich, it's the old "pick up truck in the water" analogy. I guess, in a way you are right. If you lent someone $25K to buy a pick up and he left it in the ocean one month later,,,,,,but kept making payments,,,,,,, you couldn't force him to make a reasonable decision,,,,,, and place the truck in safety. Yes, it is his business to run. But, somehow, someway, I bet you as the lender would try to take control of the way that truck was being used. I think laws concerning collateral assets give lenders (yourself in this case) the ability to grab their collateral! And even allow then to use it in a way that covers their exposure. Boy, in my past life I must have been through this before
because I just know I'm right,,,,, (grin).

My guess is that you would try your best to remove yourself from "salt water truck ownership" and get as much of your money out from behind that collateral as possible. Just as the lending banks would do in H's case,,,,,,if gold fell to $200. You see, the whole darn truck is worthless at $200,,, I mean with all that salt water and seaweed! (smile) next:

R Powell (2/12/2001; 15:49:13MT - msg#: 48112)

------Agreed. If I have payments due on a new truck, the bank wants it well taken care of (and not sold) unless the bank is paid-in-full. As the purchase of the options were conditional to obtaining the loan, their well being (even though they are time wasting assetts) is a concern of both lender andborrower. Harmony has also obligated itself to performing as profitable enough to repay the loan which it will do by conducting its business which is gold mining.-----------

Well sir,,,,,, My whole thrust has been regarding what the impact would be on the total marketplace if gold fell into a very low range. H is just our example. Your point leaves out several things. They cannot conduct a profitable business of gold mining if the price falls too far. If they begin using these put profits to fund the entire operation, the collateral behind the loan is degrading just as a truck would do in salt water.

They (H) purchased these options as part of the loan package not "next to" their loan package and these puts became collateral "within" that package. The loan officer (lender) will seize that truck (put options) and sell it (cash out the put) to cover the loan. If that action does not cover the loan, then he will drive the truck personally (sell borrowed gold into the put) until his lost asset is
recovered as best as able.

Rich, you have misconstrued my point. Under certain circumstances, to low a gold price, the lender will be the one borrowing gold and dumping it into the put,,,,,, not H. Yet, the degradation of H would be just the same. next:

John Doe (2/12/2001; 16:05:50MT - msg#: 48113)

Hello John,

------- @ Trail Guide
The only way Harmony's put deal could drive gold down is if the originator of the put (whoever that is) bothers to hedge its exposure to the put by borrowing and selling (i.e., a direct physical short)some or all of the gold covered in the contract. As the normal course in these types of common
derivatives is to maintain a continuous delta hedge, perhaps some small amount of the total 1 million ounces has already been shorted and more would be added as the price falls (if it falls).-------

OK, I could live with that position(smile) next:

------As the originator's hedging away of the risk of selling the put to Harmony can be carried out in the futures market without any physical involvement whatsoever, even the sale of physical is notassured, though one could assume, though a chain of trades offsetting the futures, that eventually, someone, somewhere, will sell enough physical gold to maintain a "valid" hedge. As some principal
somewhere is likely "good" for naked shorting, even a terminating physical sale is not necessarily

Again, I'm with ya! next:

---------- Harmony, is, at worst, only driving the gold price down indirectly, if at all, and then only to the extent that its put purchase is being delta hedged by its counterparty, if at all. ------------

John, all of what you present is how it's usually set up. It's after the clock starts that the real action begins. I posted earlier that:

""" True, I never for a moment thought that they sold forward. But they are locked into a cash loan obligation and that contract's credibility depends on the bank's ability to use several methods to remedy a future situation. Sure, if we freeze the moment and all prices stay the same, their contract is static and everything is fine, just as is any other contract in such a situation. But, any and all loans
are dynamic, my friend. Ha! Ha!, ask any banker? What you can and cannot do is subject to future circumstances.""""

That "future situation" I speak of is a quickly falling gold price. Falling well below most everyone's ability to function. If gold falls, it's not just H that is in the "salt water", the whole industry is and all these paper hedges will be seized long before the companies can use them to hang on with. This is when the system really implodes as every bank with a contract (read that salty truck) will be trying to remove their money from the entire sector. Not just make the loan payments. To do this, they will sell borrowed physical until it's supply is gone,,,,,, even at a very high rate. All this supply coupled with everyone unloading long paper positions that can no longer be credible,,,,, will crash the gold market!

This, is a very crude micro explanation of how and why any amount of further hedging is giving the sector the shakes. It's far worse than you think.

On that happy note, I'm done for a while


Trail Guide (2/13/2001; 7:18:38MT - msg#: 48152)
SHIFTY (1/4/2001; 3:11:38MT - msg#: 44999)
Trail Guide/FOA: I am a small placer miner and own physical gold ( in most all forms) and also un-hedged mining company shares in equal amounts. I have a problem understanding how Gold will have a tremendous value and that this will not also be the case with un-hedged mining companies that produce the very substance that you say will be so valuable.If we hold physical gold in a safe place to be pulled out for use when needed , what makes the gold I hold better than the gold that will be poured into a bar on the same day in the future? Will it not have equal value in whatever is being used as the medium of exchange . I can see where physical may out perform shares ,and I also can see where hedged mines can go bust , but I must be missing something here. Are you saying that mining will be outlawed in the future? Or will it be performed only by a world
government of some sort and all the people that own the mines can kiss their wazoo? I hope when time permits that you can shed some light on this for me.

OK, shifty, you write:

------Or will it be performed only by a world government of some sort and all the people that own the mines can kiss their wazoo?.------

For the record, I never have even for a moment considered some one world government. I also laugh at the notion of some great Cabal running the show. These shallow statements are the dream work of people that confuse social order with someone controlling their lives. Our world history is full of rules and laws enacted by various factions from the beginning. Face it, laws always infringe on some group as they yell big brother! We will never be without some segment being controlled for the society at large! It always the easy way out. Broadcast that some small bunch is profiting by ruling over us.

For better or worse this is the way human kind has governed itself. During some time frames it's real bad and in others it's real good. We slide from one side of the bank to the other as everyone rides this river of life. But never has any one group been smart enough or powerful enough to
control us all. And never will be. It's a waste of of our short lives to base our decisions on when the all powerful Guru will take us over.

-------Are you saying that mining will be outlawed in the future?------

Shifty, did you really mean to ask that? After all the countless references to taxes, production controls,,,,, the precedent of the Texas Railroad Commission,,,,,,, the reasoning for governments to write legal tender laws and their ability to implement them,,,,,, the recent control of California power distribution?,,,, the foundation of a changing reserve currency system,,,,, In all this you ask
in the context of something done outside the law?

Is your income being taken as an outlaw act, because it's taxed? Is the speed limit range an outlaw rule because it 35 mph? Is the dumping of sewerage in the Mississippi an outlaw act, or should the law be changed to stop infringing on the free rights of some? Do you see the rules that control
someone else's assets as good because it benefits your cause? Do you think rules are bad if they suddenly impact your investment assets?

If gold production is limited, and the amount produced controlled by law. Would this be an outlaw of mining or the better use of a limited resource? Any number of controls could be implemented and they would certainly impact some. Yourself? You will then be one of the ones that's being ruled by the mass, right? So you can't dump all the waste in the river you feel you should be able to? You can't drive as fast as you feel you should be able? You can't take as much money home because the IRS takes more than you think they should? So gold production is limited and said production
is taxes in some controlling way? So what's new in the world?

Remember, in the 1800s there was no income tax,,,,, at all? People back then said the same thing you do now,,,,,,, "What now, is making money being outlawed?

Shifty, the world moves on whether we want to be on the ride or not. Fight it if you will or adjust yourself. I'm also in the boat and just navigating the rock in the river. Watch your Bow, my friend, rapids dead ahead! (smile)


Trail Guide (2/13/2001; 7:25:33MT - msg#: 48153)

John Doe (2/12/2001; 22:40:58MT - msg#: 48131)
@Trail Guide

John, when discussions get this long and in debth, we must be more exact in our reference,,,,, or one cannot reply effectively. Your words:

-----I continue to see inferences that Harmony would have to "sell into the market" if the put goes into the money.------

Where do you see this and how did my context infer this?

-------- If the market is below the strike price, the gold that Harmony normally mines will simply be "put" the originator of the contract at or perhaps sometime before expiration, and not "sold into the market".------

Did I not place all my proposition within a category of gold dropping quickly into the $200 range,,,, as an example?

-------- I sense you are trying to fit Harmony's recent financing into a contributory role in the process whereby the paper-gold markets are predicted to freeze and/or collapse.--------

Absolutely, but within a framework of the entire industry suffering the same fate. That future problem is the source of the jitters the market feels when each new hedge is applied. How did you read my post to reference otherwise? The total thrust of the post was in this direction, no?

Thanks TrailGuide

Trail Guide (2/13/2001; 9:48:46MT - msg#: 48160)

Chris Powell (2/11/2001; 12:32:20MT - msg#: 48009) Is GATA cutting off paper gold's escape? (Corrected version)


Hi Chris,
Thanks for clarifying your position. I fully well understand where GATA is going with their efforts.

Anyone that has invested in the gold industry during the 90s has had a real negative impact on their wealth. If one used the past decades as a precedent for rules , typical equity valuations or laws of conduct within this arena, their assets should not have suffered as they have. Cycles of highs and lows were expected, but a complete washout of product (gold) value was never in the cards. Did someone change the rules or were the rules just never fully understood?

My position is that the rules didn't change and the system is functioning within it's range. What did happen is that investors never owned these securities during such a period. Therefore, they never had a chance to experience how they would react outside the perceived fair pricing band.

This commodities pricing band, that gold is conjectured to belong in, was never forced outside it's fair value perimeter until this decade. Allowing for past inflation calculations. Reading what Mr. Parks wrote the other day in

"It's Not Your Daddy's Gold Anymore --- by Lawrence Parks" (see my 2/9/2001#: 47878 for ref.),

we can get an idea of how it all happened. Without an investment need on the horizon, western gold demand fell back into an industrial mode with jewelry being the
greatest portion of that segment. Further, the selling of existing gold savings, no longer seen as real wealth, added to the supply.

From my location, I could see where the common paper pricing of gold that was used through out most of our modern times had never functioned without a backdrop of bullion accumulation by the Western masses. Once this liquidation trend was in place, anyone from the shoe boy to the CB
could simply sell contracts as part of the crowd and no one would argue. With everyone now betting on gold's price moves without wanting the metal, paper gold could be traded with very little ownership demand for metal. The volume of this particular type of trading could and did completely
overwhelm the physical segment of the markets. Sold over and over, then brought back from a disgruntled "trading public" at a lower price. "Someone is after us", was the cry! Yes indeed, it was us!

Actually the proof is in the air, all around us, and your position, Chris, bears this out. Taking a line from Mr. Parks, ""It's Not Your Daddy's Gold Anymore", paper traders do not endorse the physical advocate's side of the equation. For us advocates, gold at even a dollar is a good thing.
Where as gold below the mine production range is a negative manipulation of the system for long paper traders. Again, had gold risen to $600 because the Governments, the traders, the players, the banks and all, jumped into long paper,,,,, not a word would have been said. Yet, the physical gold buyers of the world would have had to pay dearly for their new savings.

Chris, your comment saying:

----"But what are we at GATA to do? It didn't seem enough for us to sit back and let nature take its course----"

This intrigued me. You know, you could have said great day for gold, lets all buy the metal and not add any more to our industry investments! If the Cabal wants to use their illegal operations to drive gold into the dirt,,,,, bring it on, yes? You know, no industry ever went broke from people buying it's main product,,,, in mass! It's funny how the industry investors always try to remedy the same dynamic by asking the mines to slow down. Yet, this is something they all fear that new government controls on production would do???? But, jumping to the physical side of the fence is never an option?

Yes, promoting the metal, buying the product, would eventually cut off the paper selling far easier and faster than any legal action. Bill Gates didn't get where he is at by telling everyone that his company shares were a far better thing for the public to buy than his software???? (smile)

You say:

------- Governments and mining companies have responsibilities beyond themselves --governments to the public, mining companies to their shareholders and employees and even,especially in mining-dependent areas, to their countries as well. -----------

True, but these are still businesses, not one's personal reserves. When we "Western Children" told everyone that would listen to stop buying their main product (gold) and buy near product substitutions,,,, what does one expect to happen? Then we blame the government for exploiting the issue and the mines for falling into the hands of manipulators that offer them the only way to stay in business,,,, sell forward.

Just because all this happened to fall in a time period where currency issues are impacting the problem doesn't negate these faults of thought in the industry,,,,, or it's dogmatic promoters. Had gold product been promoted, it's physical demand could have easily overridden any political
motivations,,,,,, hands down. We chose to bet on a lame horse and now want satisfaction because that animal is under an attack it cannot overcome. Physical gold today, even allowing for it's incorrect currency valuations proves that it's the better defense during strange times.

You say:

-----FOA/Trail Guide is right that GATA may accelerate the breakdown of the manipulated paper gold market -- that indeed is our charter, exactly what we set out to do. If GATA helps "cut off the avenue of escape" from the paper gold market, so be it. -----

Why did you not see the physical side of this? My friend, I was referring to the escape from all paper substitutes and the escapees being from all walks of life. Not just the big BBs or trader types. Truly, what you fear is what we embrace; that gold will fall further while physical supplies

I perceive that your actions will accelerate a breakdown in this paper market and that breakdown will not shut down the market. No, it will leave the system mired in legal moralizes while the premium on physical gold spikes well above the paper trading price. Leaving both the gold
advocate and gold substitute bug no avenue of escape.

The longer the physical markets can operate next to a rapidly inflating paper market, the better it will be for gold buyers.

You say:

-----Gold IS special, but the kind of trading that distresses FOA/Trail Guide -- the trading in gold's mere price, as opposed to trading in the metal itself -- is hardly unique. Most markets trade this way, commodities and currencies. Speculators pile on for the ride whatever is being traded. As long as there will be trading in gold, there will be speculation. ----------The difference with gold is that its being more than a commodity -- its being a universal currency in itself, -------

As I said, had the price of gold stayed within a $400 to $600 range, the present system would not be opposed one bit. It would even be suggested that gold is performing it's historic roll of documenting currency inflation. Even though such inflation would be well beyond the commodity price of gold. All is well as leverage players use the very same system to profit themselves at a level equal to the real inflation rate. And doing said profiting as both big boys and small operators alike. Leaving the much larger world public no place to gain an equal share by owing real gold.
We indeed, as Mr. Park's children, stand in a mirror and do not see ourselves draped in Western thought and wearing new world ideals about old world wealth.

"Free markets", the paper traders claim, siting on both sides of the fence. "Free Markets are what we seek, as long as they trade our way".

My perception, Chris
My perception


Trail Guide (02/15/01; 10:47:43MT - msg#: 48286)

I was just out talking with a fella that helps me with my garden crops. Held one of those Oregon Sugar Snap snow peas up to the sun,,,, could see all the little peas in row,,,, in the pod. Tasted it. You know,,,, some of the good things that grow from god's fertile earth are worth much more to a
person than gold ever has or ever will. (smile)

Speaking of gold: (some of you may want to skip this one)

raspberry (2/13/2001; 13:56:24MT - msg#: 48174)
------ After several years of analyzing, buying, holding, hoping, and reading this forum, I am cutting back on precious metal positions. ------- cash has not been trash, even when it comes to PM stocks. ---------

You are not kidding, "rasp",,,,, everyone is learning the difference between trading a "precious metal position" and owning real gold for it's "advantage" over currency! Cash and real gold are not trash in today's world and never have been. It's just that over the last few decades "physical gold advocates" got morphed into the same basket "gold bugs" were in. The media projected that being a gold bug meant trading gold stock options, gold options, gold stocks, gold futures, gold options on futures, unallocated gold certificates at banks and even delving into leveraged gold contracts at some back coast gold dealers acting like coin shops! Did I leave anything out, there must be others?

Just as soon as all this garbage sank faster than the real thing, the media jumped in and said owning gold is a real bummer. They say this after decades of telling us that a "gold position" and "physical gold ownership" were one in the same. Is it no wonder the public talks about it all in the same context. You have to ask yourself:

----"The Western View, were you born with it or did you have to learn it?"------

I know where Gata is going with their line of attack and I support them for it. There are some bad guys out there that are going to be eaten alive when the GATA pressure is high enough. But, I think we have to allow that a little part of my conclusions are what Chris was pointing to when he said;
that people got sold a position in racket. Even if my purpose is outside their thrust, my logic can mean everything in building a new gold advocate's understanding. (Hello Sir Chris, thanks for thr reply. I'll be talking with you in a bit.) .

From his post of: Chris Powell (2/13/2001; 21:20:26MT - msg#: 48208)

"We may agree that real metal is better than paper. (I hope we agree that the generous proprietor of this forum is an excellent source of the former.) We may even deride those who have found themselves on the wrong end of speculation in gold paper. Certainly GATA has done as much as anyone to expose and explain the gold derivatives racket.

But then what of people who invested honestly both in gold paper and in mining companies under the misapprehension that the ordinary rules would be followed and that there was a free market in gold, the free market that their governments told them there was?"

Note: please real all of his post.

Well people, all the "gold positions" I mentioned above are, indeed included in those very same derivatives he speaks of! Sure, "Gold Bugs" speculate on them, make and lose big money. But, most conservative "Gold Advocates" never consider them as the place where one buys gold?

When someone invests honestly in gold paper, in Chris's context, they have to follow all the rules as they stand. This includes accepting that our physical laws are part of and form our very trading assumptions. Not thinking, investors apply half the logic, trading just the price of something, expecting our real physical laws to apply anyway. They won't, on their own, unless you make them apply to your position, by taking delivery.

Trading the price alone from the long side can work, but getting away with it only happens when we are in a certain "historic price band". That past price precedent has made us think we were following the rules and succeeding. This classic, mental omission has been the source of untold
loses, brought upon ourselves as we try to play half the game,,,, all the time. Today, as we leave the comfort of those "safe price ranges", the dynamics and the nature of all this is exposed as two separate markets.

Basic investing rules include selling out any long position if supply is created faster than demand. The paper half of this gold market is in such a situation. Unless you plan on bridging the two markets by taking delivery, you are buying the wrong side of the gold dynamic. Whether we like it or not, even though real gold supply is in deficit to it's demand, paper supply is way more than it's demand. When the price ranges left their "commodities range" it created this new divergence. Almost like saying "it's a new gold market, yes"?

Again, this is a real world we live in and real world physical laws are what makes the trading rules work. In that real world, if someone is "honestly" long to get gold in the paper market, then stepping up to the bar and taking delivery would be the "honest move"? If not, I say again, he is playing the wrong market, and paying for it. Because the paper supply / demand dynamic is against him. The officials didn't change the rules on this portion, we brought it on our selves.

Exercising one's contract position for real goods, even if if the price drops, changes the dynamics of supply and demand for the actual metal. And does so in line with whatever the paper supply is. If the demand for paper is made to be equal to demand for real metal, then noone could sell more fake paper than the gold that exists! It's that simple of a physical law. In this state, there could have
been no "dishonest markets" as our perception proclaims. We would have owned it all! You guys are with me on this, right?

Let's face it, Western Gold Bugs played a part in this political game because their investing habits led them there. International currency trading do include gold values, no matter what London says and it truly is His Majesty's "lion's den". Had we all stayed conservative, and physical, the government forces would have been forced into another form of a 1971 gold window closing long before now!

Paper Gold Bugs take on a gold position and "play like" they (and everyone else also) will demand delivery if it drops. This is the source of the silly notion people get when they watch OI. They stick their chest out and say; "boy, us and them are going to squeeze this market with delivery demands if the price keeps falling"!--- "Looking around the room for others to agree with them as they talk"!--- then the price just keeps falling.

Yea right, they can just afford the margin and are scared stiff that they may have to post more,,,, And they are going to go 100% AND PAY UP?? ,,,,, yea right! You say Gold Bugs and Gold Advocates are one in the same? No, there is a big difference, my friend. Cunning Gold Advocates take the Gold Bug's margin money then turns around and buys physical gold with it. Awful bunch of people. Nice, GA's are safer and never get involved in the whole process. They just buy gold for it's advantage and wait out the serious wealth that's coming.

So, when the price drops, paper Gold Position players run away and say it was just a game of hid and seek, after all. "But, we'll be back!", is their yell,,,,, looking over their shoulder at a full gallop. Ha! Ha! They were just trend followers, after all. I have to return to using my earlier reference to Park's post and then say,,,,," the children just want to play a game",,,, and cry when they lose. You
want to hear how the big boys think? Close your ears, because it ain't nice.

---The governments are all going to let this thing die just like the 71 dollar with it's gold backing. They are not going to kill it by declaring worldwide position limits or 100% margin. They would look too dirty if they did. So, when guys like us (gold advocates) see the action, we take a bite.

We buy all the physical the market will offer us at ever lower prices and sell the hell out of "gold positions". It's happening the world over! Knowing full well that the boys ("Gold Bugs") will run from delivery. Hey, why not? At least half the equation is politically correct for today's era. The trading era, that is! Besides, people go to Vegas, dumping more money than the paper gold crowd, ever will. All the while knowing full well that there is no payoff. Atlantic City is just as full of gamblers and they are not asset players either,,,, just want to spin the wheel for fun, like these paper Bugs". Hey, we are the good guys in all this,,,, at least we are buying the mine's product,,,
gold. We aren't killing anyone's job,,,, the paper bugs are by supporting the system with their buys and never taking any product!!!! -------

Ouch, that hurt! The truth has a mild sting sometimes.

OK, once again, the market place will follow this trend of inflating world "gold positions" because people keep buying those paper positions. How does it go?? A trend in motion goes to conclusion? If there is one thing we have learned in this world; if there is a demand, someone will give it supply. (smile)

As long as it's just paper on margin we want, they got plenty to sell. Now, if anyone starts shifting their buying habits away from paper, this game will end. But don't worry about that because everyone is waiting for someone else to start that trend. You see, it's just like a business cycle, the supply will build until demand falls away or the whole infrastructure disintegrates. I'm betting that the market itself will fail.

One more thing, "Rasp", there is nothing wrong with owning mines. But we have to understand that their trading stock price is based on a never ending supply of paper gold. Knowing that, I expect my gold mines to match the paper price right to the end. But then, because they are a small portion of my bullion budget, the mine owners love me as I will keep them far longer than anyone else will. Perhaps across the valley and into the profit range we will all see the reasoning for this? (smile)

"Man's just got to know his limitations",,,, and what he's buying! (smile)

more later

Trail Guide (02/15/01; 17:02:46MT - msg#: 48325)

Hello again,

Mexpat (2/11/2001; 9:01:39MT - msg#: 47986)
FOA/Trail Guide - Background No. 2
Hello all..Greetings from sunny southern Mexico.

Usually, if I read the material carefully and ponder it a while the meaning becomes clear but one paragraph in FOA's recent posting went over my head, particularly the last sentence...this is the paragraph:

FOA (02/09/01; 14:29:38MT - msg#60)
------- In addition, their marking gold to market is a prerequisite to following the Fed's new inflation stance by scoring the dollar against the Euro gold price once the paper gold markets fail.-----
Perhaps FOA or another of the forum's knowledgable posters could break down that last sentence a little for me. ---------------

Hello MexPat and welcome Sir.

The ECB has been marking their internal gold stores to the market for a while now. This was part of their charter. If I remember correctly, it does not include the entire amounts of bullion held within the full system of european central banks, just the ECB portion. Later it may score the entire
amount, which is already some 30% at these prices! USAGOLD's site master, Randy, has been posting these quarterly reports for us. To date, the initial significance of this move by our Euro friends is cosmetic. Most of the financial world does not make much of it.

What is threatening, to date, is the open conflict of money policy this points to. The US Treasury, IMF and Fed, as a group have been demoting gold as an asset backing against their internal currency, our dollar. I think their most aggressive stance goes back to the Jamaica Accords and or
the SDR evolution. We, America, promote the value of our dollar in and of itself. Mostly pointing to our goods, services and assets that dollars can buy. Of course, if you have followed this for long, you know the dollar and near dollar supply has shot to the nearest star and will never actually convert into these products in total. At least not at current exchange rates or internal price levels in
the US.

So,,, we promote the dollar using a different format, by saying that foreigners can invest here, not buy, and find the best returns. This works as long as foreign CBs support our dollar as a reserve by saving it themselves. Making for a stable exchange rate and benign price inflation (in the US). Many thinkers have said, over the last 30 years, that those foreign CBs would never continue to do this. Well, confounding everyone, they did! Their real reasons have been our topic for years now.

However, we are now at a point unique in our time. The advent of their Euro is fracturing the ECB reasoning for continued dollar reserve support. This all moved beyond the software stage and entered the hardware era a year or so ago. Now, as some reports are confirming "for all to see",
Euroland is moving away from dollars. They started selling their interest received on US reserves a while back, and continue to do so. Randy has the actual date for this somewhere. The ECB is now, outright, selling some of it's actual reserves. The game progresses.

So, what of their gold values? Eventually, as the dollar works it's way toward becoming just a regular money, it's exchange rate will tumble. Vastly aggravated by our world class trade deficit. A deficit, I might add, that has become structural to the function of our economy in a non price
inflation manner.

Further; the high energy prices we have recently seen did not just come out of nowhere. Our energy markets and / or their political plays have not changed for 20 years. What has changed is the producers advantage of having a choice of currency to settle oil in. The Euro or the Dollar! This
process has also been a long-term topic of ours.

Contrary to what everyone thinks, the US is at double the economic oil price risk as EuroLand. Even though, initially their price goes higher than ours, because of continued dollar settlement, their entire financial structure is far less leveraged. The producers can sit back and watch who functions best, over time. And time is already working it's will within the US. You have but to read the headlines of Black Blade to know that. Thank you Mr. Blade for an exceptionally fine job!

The one thing that was negotiated into the EMU was gold's place in the world. Indeed, this is where the ECB and BIS knew their oil neighbors well. By signaling gold to be an asset, not a currency, it could be promoted to rise outside it's commodity range without competing with the new
currency. With the history of the dollar's use of gold, America's war on gold and it's locked in political stance on gold, Old World Europe played a Master Stroke. This could not help but solidify an evolution into Euro use by practically every country outside the dollar world. South
Africa plays large in this. One or two of their mines will also.

Now,,,,,, as the dollar begins to weaken and price inflation starts to march, the demand for real gold will eventually spike physical premiums thousands past the paper dollar gold markets. In ANOTHER master stroke, the BIS knew that the entire bullion house structure was endorsed and supported politically, to frame gold in a dollar price band. Outside that band, up or down, these paper markets cannot function. Especially if the driving force becomes a physical demand that drains all settlement credibility from contract gold. There will be no squeeze in these markets now, as they will be allowed to kill themselves by trying to save themselves. Inflating the supply is that process. The loss of such credibility will eventually come as trading just stops, virtually closing the dollar contract markets as we know them. Opening the door to an ECB sponsored physical

If I had to guess, we will see Shanghai, Johannesburg and Dubai all joining with major internal Euroland financial centers to form the EBES (Euro Bullion Exchange System). By this time, the ECB quarterly reports will be seen as a scorecard of Dollar vs Euro values. We shall see!

I think you can take the microphone from here, sir. I've said enough on this. (smile))

Thank you

Trail Guide (02/16/01; 06:16:55MT - msg#: 48375)

Chris Powell (02/15/01; 20:29:43MT - msg#: 48340) Trial Guide's latest

---------- If GATA can help overthrow the gold paper market, will you not welcome it? --------

Yes, I welcome and support your efforts. There are two ways to overthrow this and understanding the politics leads to different strategies. One would be to do just as Gata is doing. The other is to buy gold and stand aside.

I fully well understand your position, the mines and certainly their shareholders should be the one's behind it, financially. This should be your source. On the other side, the fabricating industry and gold advocates, such as myself, are caught in an emotional trap by helping undermine and destroy the very process that gives them cheap product. You follow my drift?

It's kind of like supporting a local tax increase for education and environmental work; it's the right thing but will cost you in the long run. (smile) Still, we must appreciate the political thrust in a Macro view. Advocates need a clean break to all this and without public pressure from a leading point group (Gata) that break could take on a mud like consistency for several years.

I felt that it was not time yet to take real action and education was still the best venue. However, your opening presented itself and you acted in your best knowledge. Please understand, that if your action stalls, there will come a much better opening, later. You simply must wait for it.

I give the odds of this (ECB policy) carrying thru at 99%, but if it did not (1%) we would be left with a crippled industry and no free market. In this atmosphere, all pricing would be Black Market in the extreme and completely negate all the good functions of gold. A mess for everyone.

Still, given the strength of their (ECB / BIS) drive, your legal activities may have not caused a stall in the process; that being allowing the system to inflate itself into a shutdown. Your whole recent attack, while seeming strong from your standpoint, is like greenpeace circling a battleship (smile). If they decide to gun the props, your efforts will be in managing the wake more so than damaging the ship or it's purpose.

Understand, your actions still serve as a huge public service advertisement, regardless of it's success in court. So, in that light, "keep talking Bill"!! Your shots may be aimed at the real good guys in this (from a physical gold advocate's position), but that flock of turkeys standing behind them must run for cover it the big boys duck! Ha! Ha! (big grin)

Good fortune, my friends

(gone for the day)

Trail Guide (2/24/2001; 7:15:55MT - msg#: 48858)
USAGOLD (Michael),

In a line from Forest Gump; "stupid is as stupid does"!

I have to observe that; "Confidential is as Confidential does"! (smile)

The point I was making to the forum (for some time now) is that; ECB / BIS were telling everyone to go ahead and print all the paper gold the market can stand because we don't want your kind of market anyway,,, anymore.
All the while watching to see just how far the ratio of official physical to paper could expand. Sooner or later, London would hit the mathematical no return point and
something had to give. Are we there yet?

Now we see a little white flag that's; from the other side,,,, and no one else was to see it,,,,, yet it was about as private as having your general walk out on the battlefield dressed in white!
This little confidential note could be saying; let's talk about this,,,, can we work something out,,,,, perhaps we can
do whatever it is you guys want to do? (smile)

But, you never know what is behind these little notes? Could be just a trial balloon? Never the less, I think we are moving into a new stage in all this and our paper market place for gold is about to get "adjusted somewhat" for it's ability to equal physical.
As Another would most surely say to their signal,,,
"we talk now, yes"!

Randy and all,

I want to take another trail hike but am waiting for the weather to settle. Storm clouds are blowing in and I want to walk with a few private friends before the wind. Never know, might have to board up a window in the thick of it. (smile) OK, be back when able.


Trail Guide (2/25/2001; 18:15:39MT - msg#: 48937)
Sovereign Debt Reductions: Private and Public
Wednesday, February 21, 2001
10:00 a.m.–Noon
Wohlstetter Conference Center
Twelfth Floor, AEI
Is It Really Good Policy to Pay Off the
Publicly Held Treasury Debt?
Friday, February 23, 2001
9:00 a.m.–4:15 p.m.
Wohlstetter Conference Center
Twelfth Floor, AEI

--- When Treasury securities are gone, what will substitute for them, and what steps are available if policy makers should wish to prevent their disappearance? This conference will consider these questions. ----------

Randy and all,

Keep an eye on these conference thoughts (if you can)? There is a lot more being thought about than the policy
initiatives presented! Some serious thinking is surfacing there, off stage. I think some of this is tying in with gold being used again,,,, but used in a Euro format. It seems the water is beginning to flow (smile). Just so happens that the BOE is asking around themselves, by posturing their actions as questions?? Do you ever wonder how well thought plans suddenly grow from nowhere, at just the right time. This
should spark some divergent activity between paper and metal as our BBs try to stop this perception from being manifest in the markets while real gold is held back.

There was even an item:
Implications of a Disappearing Treasury Market by: Hayley R. Boesky --- Goldman Sachs Liquid Markets Strategy Group -- Major Trends in Euro Benchmark Issuance --

We shall see.


Gold Trail Update (3/10/2001; 20:58:12MDT - Msg ID:49755)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (3/10/2001; 20:58:11MT - msg#61)
On the road!
Hello everyone!

Well,,,,,,, things are not as before,,,, are they? (smile)

In my last post USAGOLD Forum post (#48858) we noted that the paper gold game was reaching it's limits. The BOE was almost asking "what do you want us to do"? The answer came as plain as day as the paper price was driven a little lower in return for a gold sale reduction. Yes, clear as a mountain stream,,,, the unwinding has begun! It will continue until the big event when the gold rules are officially changed. Not much different than when the dollar hit it's credibility limit in 1971. As Randy has often pointed out; the US printed gold contracts back then until they (dollars on the gold exchange standard) lost their mathematical ability to be converted into gold.

Everyone that is expecting some huge paper short covering rally has got to ask themselves one question; "do ya feel lucky"? (smile) It's important to consider this because today's paper gold contract market is in the same credibility position as the dollar in 71. There is simply no way the Bullion Banking markets are going to allow our current marketplace to adjust to this mismatch by marking "This New (paper) Gold Market" to market against any true "delivered" physical gold value. Forget it! It's never going to happen during the dollar reserve era.

Just as in 71, this modern fiat gold market will be disconnected from the real gold market. Back then the dollar remained at $42 / ounce +/- as a somewhat free physical market exploded into the hundreds. Today, considering the magnitude of the mismatch we have attained, the paper market will probably never pass $360, even in the worst possible short crush. The dollar forces will call $360 the right level just as they called $42 correct??? All the while physical gold will slowly gravitate completely away from any connection to the real demands for delivery.

Even such a rise toward $360 would occur only after the BBs decided not to sell into the paper market any further. It all depends on how the rules are changed later. We shall see.

What's coming in 200?:

Let's see, spot gold is at $358 plus the physical premium of $2,200,,, so that equals $2,558 per K rand. Oh,,, you say that's crazy??? You will just demand delivery of your contracts at at $358? Or call your gold accounts for full allocation? But wait, didn't they just declare position limits, cash liquidation only for all out months, a $4,000/oz premium for spot conversion because of the shortage and forced customer reserve requirements triple the actual physical value for all converted BB physical accounts? And you wonder how or why anyone in their right mind today could pay in the future a $2,200 premium to a coin dealer? Ha! Ha! That's just the warm up, my friends.

What's in process now??:

The Washington Agreement placed in context where the Euro system is going with gold. That pronouncement drove home the fact that our Dollar gold pricing system was going to die with the dollar reserve function. The WA placed us "on the road" to high priced physical gold and low priced contract gold. It could have been the end of the LBMA pricing structure, right then and there, except that it would have clocked the global financial structure too fast.

Indeed, our Euro friends helped the system out by giving it some more of the same poison, more paper gold inflation. Yes, all the while since the WA, people have been falling all over each other trying to explain why so much new European gold has entered the market through lending. Yet, all that was mostly lent was more paper credits built upon a failing dollar gold pricing system. You see, they left the maintaining of system credibility to the dollar faction. Kind of strange how gold keeps showing up as part of the US trade deficit? Even is it's only a trickle.

Gold bugs cry that the paper market is not free because government endorsed inflation in this arena is killing it's price structure. Almost as if they want fiat gold that less inflated? Well, that's great if your "gold" money is in our modern gold producing industry and that's hip deep in committing it's product to satisfy these same paper contracts. Yes, this mistake of "hard money" allocation by western savers, is the result of ignoring history and how currency systems evolve. Gold industry investments work if the current fiat system is remaining "in use", but showing price inflation. However, when currency systems fall "out of use" while moving into super price inflation,,,,, the next competing system will side with physical gold! It doesn't happen often, but when it does real wealth in one's hand becomes worth many times investments in "almost gold". Truly, the dollar price of physical gold is going higher than anyone expects.

To make this clear:

It makes no difference if the current paper gold price bottoms here or is sold into the dirt. Just as soon as the dollar paper gold system begins to lose credibility in matching physical gold value,,,,,, gold bullion and gold bullion alone will out perform every possible hard money competitor. That includes all the other metals! "Noone" will need to teach this dynamic to the public then. All we will have to do is watch it all unfold. Believe it!


It's coming time for our next talk about gold in antiquity. Walking the GoldTrail becomes all the easier when we understand just how little of it is truly out there. Far, far less than the paper pushers would have us think.

Until then;

"We watch this new gold market together, yes?" (smile)

Trail Guide (3/13/2001; 7:29:22MT - msg#: 49942)
Comment: On the markets!
Hello all:

We could be watching history in the making here? Physical gold demand and it's lack of supply is beginning to break the relationship between the paper gold market and physical market. Paper credibility is being seriously challenged by a sustained high lease rate and the lack of that dynamic's
ability to raise the paper pricing structure. Something we have been waiting for!

A continued falling price in the face of spiking lending rates is signaling contract supply being offered without physical supply. It's becoming a full blown paper arena (fiat gold) as the BB establishment must protect it's books to keep paper prices down, even if no gold is traded!

In the past, such a dynamic could perform the same function and still have the effect of lowering lending rates as investors dropped physical gold stores in trade for a return on fiat paper gold. That supply fed the physical market. The Dollar / Euro economic war is beginning and now, that game is driving wealth into holding real gold. This breaking ratio between paper lending rates going up and paper prices going down (if it lasts) will quickly separate said pricing structure. In time, we will embark on a different price for physical. The premiums will rise well above the paper prices, Believe it!

Note: Be sure to watch how the mining stock's traded prices fail to break from their relationship to paper prices. They will track the ups and downs of paper, even if paper fails it's ability to match physical gold. Even if physical premiums rise, mine values will follow fiat gold values? At some point the rules of exchange involving paper gold settlement will have to be changed (locking most mine product sales into the old structure) and this is when bullion will completely outperform "almost gold substitutes" by a wide margin.

Expect all past relationships to come into limbo as this all evolves. In this breaking economic enviornment expect silver to simply fall away.

We shall see.
Very busy times, now! I'll talk more later.


Trail Guide (03/13/01; 20:51:15MT - msg#: 49975)

Hello Mr. Gresham,

I don't think I could ever measure up to that Loan Ranger fella. Bigger than life he was,,, bigger than life. (smile)

I have access to most all this forum's posts. Either I save then, my system does it or a helper handles it. Just recently I scanned quickly over the last number of days. Boy, what a wonderful diverse group of opinions and insights. Wish I could discuss all of it with everyone. Yet, for now, I must skip past most of the direct questions and deep discussions, adding something when I can. As anyone knows that have conversed with me on this venue, when time is available I talk as much as possible. (smile)

Thanks for the kind expression, sir G! Truly, if my comments suggest to you that this trail is worth following or even just studying, then I know others are doing the same. Someone once told me that following in the footsteps is easy, understanding why they walk this path and conveying that same is hard.

Not everyone can or will grasp such a long term logic concerning wealth. The benefits of keeping wealth for a lifetime only come into clear focus when years of addiction to leverage have worn a man's riches to dust. While we lament our lost bets and covet the speculative gains of others, this drug of leverage calls us to play once again. In the end, few are the savers that have partaken the
leverage bet and finish their days owning the real metal of the ages. Perhaps some giants know this all too well?

As shifty said today, "I just can't see it", concerning my reasoning of mines and why they will not come to fullness we expect. No,,,, no sir, you cannot see it. You see, it isn't just the mathematics or the legality or the morality of it all. Not event the politics of market games that we battle. The enemy is from within. Only the strong can stand firm with what the western masses perceive as a bet of little return, real gold.

Yes, we can see buying "near gold", "leveraged gold", "gold in the ground", "poor man's gold" and "almost gold". Little by little, we give it back as the rules change and time moves on. With each defeat comes hope. Hope that someday when that guy who's been buying real gold, has his day in
the sun,,, then too will my leverage bet finally make my wealth as whole as his wealth.

My friends, history and time never stand still and savings built upon the dreams of men are often lost with these constant shifting sands. The sands of human events.

-----Gold, the wealth of ages, must not only overcome the evolution of time, it must also overcome our own inability to see what cannot be seen.----------- It does this oh so well.

Thank you all for writing and thinking here and thank you Michael, very much for your efforts.


Trail Guide (3/14/2001; 6:13:19MT - msg#: 50011)

Michael (USAGOLD) and ALL:

MK has asked me if the poster using the "ANOTHER (Thoughts)" handle over on Kitco is the real thing?

MK, I didn't even have to look, my friend, it is not him! This person (the real Another) commits to a purpose and holds strong that course. Then states it outright if he decides to change. While others will, no doubt try to duplicate his Thoughts, I know he would find this a good thing. Such is his nature and reasoning that he encourages thinking.

I figure there are few people in the world, with his extensive background and position, that they could point the way so far ahead of the fact. So, when reading the "Thoughts of Another" anywhere outside of USAGOLD, understand that it will only be the "Thoughts of others" writing their views.

When the next postings of Another begins, and they will, these writings will start with a "first" message and I know that that introducing letter will go the Michael Kosares before all others. Such is his style, such is his way.

Thank you all

(Personal) Friend Of Another / FOA

Trail Guide (3/14/2001; 6:21:52MT - msg#: 50013)

50,000 posts! (smile) I wonder how long it would take to reread all of the again? Ha! HA!

And the good part of it all is that 90% of all those posts hold very good insights. Even the remaining 10% have sharp comments and nice links. What a great gold forum!


The economic and financial war has begun. That's no small point and it carries with it huge consequences.


Trail Guide (03/16/01; 19:57:42MT - msg#: 50184)
Hello all,

So, the contract price of gold gets sold down as if tonnes and tonnes of bullion were dropped on the market. Yet, the one month lease rate didn't return to 1/2% or some other fraudulent amount. Almost makes one think someone is selling paper bullion without the bullion behind it?

The stock markets begin to price in open economic warfare and our media says it's just a little slowdown? Now, OPEC lowers production to keep prices at a level that can only wreck the US economy and people wonder what they are doing? It's almost as if someone is moving their troops in a way that will eventually bring down the dollar and it's financial structure.

Yet, here I am, holding mostly Euros as my currency,,,,,, drawing interest,,,, and able to spend said money on goods at the same rate that dollars will buy wealth? But the currency traders say my Euros are worth less than dollars?

And my gold bullion (coins and all) are safe and sound,,,,, waiting the breakdown of the paper bullion pricing system. A process that seems to have just started,,,,,, for the first time,,,,,, in real time!

And in all of this I fully well expect my wealth holdings to not grow one bit over the next twenty years!!!!!! But, I do expect the world markets to evolve and revalue my assets, showing their true at a later time that was always their real worth today.

No, not near gold, not almost gold, not poor mans gold, not gold in the ground or other paper gold,,,,,,,,,,,, just plain old gold in the hand. An asset that will out perform every other holding in the times to come.

--------- The wealth of ages; a lifetime of work kept in a savings from our past. --------

Be back tomorrow to talk (smile).

Trail Guide (03/17/01; 16:20:45MT - msg#: 50226)
(No Subject)
My system keeps loging out? If this gets through that's why I'm not here! Will try again in 13 hours
or so.


Trail Guide (4/12/2001; 5:53:27MT - msg#: 51756)

Gold Trail Update (4/12/2001; 5:54:42MDT - Msg ID:51757)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (4/12/2001; 5:54:42MT - msg#62)
ANOTHER (4/12/2001; 5:56:39MT - msg#: 51758)

Trail Guide (4/12/2001; 6:11:11MT - msg#: 51760)
Hello again Michael and to everyone here!

I have had some kind of a virus attack on my entire computer system. As I just told Michael (privately), I am reduced to using my home based unit to post. Whoever sent this visitor to me no doubt expected it would destroy everything (it was a very good one). It didn't. But, it will be sometime before all my data assets are available again.

I'll make some timely posts this weekend and have asked Another if he could/would fill in for me until back up to speed. We'll know in a few days or weeks? Because it's been so long from his last writings, I think he will do it as this period is a somewhat free time for him.

So, thanks to all for your thoughts, comments and good discussion. The journey continues (smile).


Trail Guide (4/14/2001; 8:22:09MT - msg#: 51857)
The Journey Continues!
Hello again, everyone!

Well, I'll try posting today, but I must warn you that this effort is coming from the old brain cells alone. At least for a few days / weeks. I'm working thru the Home computer only (not to be confused with where I live, rather the Home unit that gathers and sends everything).

USAGOLD and USAGOLD INTERNATIONAL ------ Another is going to begin writing his Thoughts again. It'll be on the screen as it comes in. Of course, the first hello will be coming to you, Michael. Before all others. I'll work on keeping up as best as I can. Will be posting some of my items a little later.

Talk later

Gold Trail Update (4/14/2001; 14:10:15MDT - Msg ID:51877)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (4/14/2001; 14:10:14MT - msg#63)
The Journey
Thoughts are a river as it runs upon the land
they begin with a purpose and nourish us as sand

we walk a path by this water so near
and our vision must know this trail will prove dear

so trust in your heart that this way is the birthright
and the sun will light in the darkest of night

these Thoughts make us dream a truth that is whole and
"as this river runs through it, may it strengthens our sole"


Few things in life remain the same. Always near, yet sometimes far, the future is before us and will remain so for ever more. Look back for understanding, look back to know how we once thought, look back to confirm your own feelings, but don't look back to know the path ahead! That future, my friends is the water that flows from us today.

No one changes the world by their own actions. But the future can be shaped by our understanding and how we, as a people react to new perceptions. Yes, in our living of life, this very dynamic makes the world tomorrow. Better said, we are the future we seek to know! Understand us and where we are going and one can plot a course that points the future.


With time on my hands, recently, I did a research project. I ask all the Gold bugs in the world to stand in a straight line. Then asked all the physical gold advocates to make a parallel straight line next to them. Boy, that was some long line (smile). For days on end, I talked with many of them as I walked between the rows. I was struck to make several observations:

All the gold bugs seemed to be talking nervously. Always looking up and down the row to see what the next fella was doing. With cell phones, laptop computers, private radios and every form of communication, they were all trying to do the very same thing; trying to make more currency. Almost the same thing that people who trade the stock markets are doing. Strange, I thought. The gold bugs hated this unbacked fiat currency as a wealth trading unit or a wealth holding unit, but still wanted to own more of it than the real wealth of gold. All of their actions were aimed at protecting themselves against any loss of currency function by making more of the same failing currency. Keeping ahead of the coming loss by having more of the deteriorating wealth item added to them? Kind of like a French farmer's logic reply to the knowledge that Paris is about to fall; " I'm not worried, got my wealth in cash in the bank of paris and I know the government will add to my holdings enough to cover any failures of ruler ship". So I ask myself what is the farmer and gold bug gaining here?

Standing back across the row, I asked a physical gold advocate what he made of all this? It's all very clear to me he said:
"""""""You know, fiat is a good thing in this day and time and we all could not do without it. These gold bugs would have you think just the opposite, even while they try to make more cash wealth for themselves. Yes, it's true, the current major world fiat is breaking down as it folds it's hand. But the current gold market, these bugs trade in, is run by the same guys that don't want their fiat use to end yet. So when they change the rules of the market, look at how many gold bugs leave? Almost none of them.

The rules of play, using Casino Chips instead of real gold, are all right out in the open just as the gold market we used to know becomes little more than a shell game. A Dollar Gold Casino, if you will, and the gold bugs don't want to leave it. If they can't use "near gold" to play with, they won't play at all. So, their whole advocating of the gold story is just talk. They stay right with trading fiat assets instead of gold even as their market slowly fails their purpose.

It's almost as if they didn't really want gold wealth in the first place. I see it as if they want everyone else to make physical gold worth more so their fiat based assets can grow? God awful logic for a gold advocate, but then again, they aren't gold Advocates? These are the new breed, aren't they? Fiatgold bugs? Well, I write it all off as the Gold Bugs can't see the difference anymore and still crave playing in the same house, using the same house rules. Most of them would rather the government keep the fiat going at the expense of just a little higher gold price. Say $500? Just enough to make their fiat grow. Instead of advocating holding bullion wealth and a freegold market to crash the old system. Ha! Ha!, These guys even want those in charge to change the rules back into the players favor, bankrupting the house in the process! There is no chance in hell of any casino doing that to themselves. It'll only happen when the casino's credit is taken away. And that process is in the works, don't we know! That's why I am a physical gold advocate. My time will come as the fiatgold bugs go broke with the casino. I guess it's the nature of life that we go down with the ship we sail."""""

Will it all pass as this gentleman presents it? I sure do think so.

Tell me, how many of you are watching supply and demand, CBOT positions, Comex OI, trading volume, gold share directions and chart TI? And for how long have these items told you nothing about the direction of currency gold prices? You see, the future of the world value of gold is now waiting on the outcome of a political currency war. A process that's been in the works for more than a few years now,,,,,, And the longer this stretches out, the more the outstanding supply of "almost gold" securities is built up. Making the whole Fiatgold Bug arena ready to fail in a mighty fall.. All done in an effort to keep the dollar system going. We have been presenting this picture for some time now and the end comes closer.

Every time the ECB doesn't "blink", ANOTHER economic nation block looks closer at the EuroZone as the backing economy for a new reserve currency. As each day passes with the EuroZone showing even marginal growth without the benefit of an American style trade deficit, the internal economic dynamics of the USA builds against it's dollar management policy. Eventually forcing the US into a full blown super inflation that has no limits.

Every day that the ECB marks gold to the market, it says that; "when the market for gold is free of the forces of dollar management, it's value will be marked to the market ----- whatever that value may be and independent of the Euro currency's use and position in the world"! Indeed, by inference, the value of oil also be marked to market through gold. Slowly, the world shifts on it's axis, my friends. We must not be blind to this change.

It is as we pointed to; the different nature of the EuroZone economies, diverse social management and attitudes towards gold values, will eventually support that nation block in the mists of a crushing US downfall. Within the total dynamic of this economic transition, physical gold values will return to a level where they will once again represent the "wealth of nations".

For us, "the wealth of mankind".


So let the water flow clear as the sun in our day
this time is for us, as we push on for the bay

mind you this stream can speak words quiet and fair
this river of "Thoughts that are free as the air"

Ladies and gentlemen, friends and readers,
later today I will begin on the main USAGOLD FORUM the next series of:

"The Thoughts of Another"

thank all
ANOTHER (THOUGHTS!) (04/14/01; 18:08:54MT - msg#: 51887)
To this USAGOLD Forum and Mr. Kosares, good evening.

Thank you FOA for your time and work.

We talk once again my friends. This forum, it grows strong for all ages and nature of peoples. Read they do, from all places on earth. I read and see the knowledge as written, but it be the knowledge we still must see that speaks with greater strength.

Walk the gold trails of my good friend, do I. On my feet are "strong sole" of thick leather, purchased with much knowledge of physical gold. These shoes not go bare before our journey is done. On trail I see your "thin sole" gold investments cast aside and scavenged by beasts. Their
owners walk no more as these investments took not this hard road of dollar transition. Many more will wear paper gold wealth thin before this walk be done. Only physical gold will see sun after this storm.

Some say dollar strong and holds much value still. It bends not and is strong and worthy. I say their vision is limited to see only post supporting roof. Not what on roof already or what must be placed on roof. When new Euro currency is done, full weight of dollars will return as your wet snow. In that day, we check curve of this good post, not before.

Some say dollar buys much gold and is strong in metal. I say, paper gold be not metal! We have more dollars than gold in world. As long as your system works, you sell gold to gain real dollars and we sell dollars to gain real gold. All be well in your world and mine, yes? Soon, dollar return in
bank and Euro return in bank be equal, no? More later, dollar return become even less than Euro. Tell me about your paper gold value then, my friend. Perhaps, dollar then seen strong in this lesser gold only. You think long and hard on this before end of year?

I think Euro buy much more oil then. We shall see. I will return often now. Discuss our future then.

We watch this new gold market together, yes?

Thank You

Trail Guide (04/15/01; 07:28:10MT - msg#: 51906)
Hello all,

I tried to get back on the forum, but it was absolutely full! (smile) Could not get to the trail page either. Have some replies and other items, will try again later.

Thanks for reading and writing your thoughts

ANOTHER (THOUGHTS!) (04/15/01; 18:58:39MT - msg#: 51943)
Mr Gresham (04/14/01; 18:44:54MT - msg#: 51889)
Welcome Mr. Gresham. We talk for a time, yes?

You write:
"We who read here generally buy the coins, one ounce and less. The "Giants" you speak of are usually buying the large bars (100 ounce?), yes?"

I ask you, how many of your bars in tonne? This is the small purchase size.

"Is there a limited supply for them to get, and only through the large brokers with their "private wealth management" programs?"

I would say the BIS is best broker, always. It best to sell dollars for gold when gold is offered.

"I am trying to understand why this knowledge you bring is not being acted upon by some others with "deep pockets", such that the markets would be moved, or shortages occur, even before the dollar is seen in weakness."

My friend, you see the gold with "Western eyes". In mind, it be always, "how much currency does my gold bring". In this world of much paper gold, it bring not much dollars yes. In such matter, your currency makers do make your wealth lay low. This dream of much dollar currency for gold is the
illusion in the "Western Mind". Your men of "deep pockets" do probe for shortages, however, their wish for low supply is not to be found. Their pockets are full with "credit gold" and sad are they at currency price this brings. It is the fools game to corner paper gold printing press, no? Sir, I stand with no fools!

Days and nights do pass and one morning will bring a dollar price for gold you have never known. In that day, I will cast this currency down and walk with real wealth. In this day, the gold will trade in Euros and no bribe of credit gold will be needed to mark this new money.

Today, I my world it be how much gold does dollar currency bring. A difference in understanding from yours, I think. Today, amount of bullion available for dollars no longer the reflection of bullion dollar exchange, it be now the most terrible bribe for world dollar use. An acceptable deal in most of world, such is real world outside your laws, no?

But, it is here, in act of making extra credit gold, where the "shortage" you speak of, is measured my friend. A good man with one eye does see this time as of but few years and short days. Aside from our Euro political changes, history alone does show all great currencies end with this overselling of credit gold as last of era. This paper gold credit is always for the fools first and last. It value is later reduced to same as currency, along with holders of no gold.

It be our good fortune (and yours) that bullion is offered still. For the simple man, such as I, this wealth is that for kings but more so for his people. For all peoples, gold will be again the wealth of ages.

In this day, at end of dollar era, all do see real bullion sold for sake of market credibility, only. Perhaps too, bank credibility, I think. In this world, the lower this dollar paper price, the more bullion becomes available for credibility sake. It is the good thing for men of "small pockets" and the curse against traders and fools.

I bid you the good fortune of "small pockets" with much physical gold! We watch this new gold market together, yes?

Thank You

Trail Guide (4/18/01; 05:05:37MT - msg#: 52084)
-- Silver slips as film sales fade faster than expected --

03:27 GMT-04:00 Wednesday, April 18, 2001

----Silver prices fell for the first time in a week after Eastman Kodak Co., the biggest user of the metal, said photographic film sales are falling faster than expected.

Sales from the product line that includes Kodak's main film business fell 7 per cent in the first quarter, and the company said it saw no end to the decline. Silver this year has been trading at or close to its lowest price since 1997, mostly because of weakening demand from jewellers and silverware makers.

"This news from Kodak is going to hurt silver demand," said Jim Pogoda, a trader at Mitsubishi International Corp. in New York. Given the sales outlook, the company "has already bought all the silver it needs for this year," he said.-----


Note: When the American economy goes into the tank, silver will be down there with it. We have but to watch, and learn as as the Hunts did, while this fact is proven once again. Silver, an industrial metal that never was gold. Only promoted to be.

ANOTHER (THOUGHTS!) (04/18/01; 06:19:54MT - msg#: 52086)
USAGOLD (04/16/01; 19:15:36MT - msg#: 51997)

----- I would also like to take this opportunity to welcome Another back to this Table. The circle is now joined in continuity again -- all around. Already I have added to my own file of vintage "Another (Thoughts!)" with this shrewd observation:
"This dream of much dollar currency for gold is the illusion in the "Western Mind". Your men of "deep pockets" do probe for shortages, however, their wish for low supply is not to be found. Their pockets are full with "credit gold" and
sad are they at currency price this brings. It is the fools game to corner paper gold printing press, no? Sir, I stand with no fools!"

The smile of recognition returns to my face as this point is made in these few, short sentences better than I have seen it made in entire articles on the subject. Welcome back, my friend. --------

Mr. Kosares,

Thank you for your welcome and acknowledgment. I add that within this circle many feet have walked and the prints of the Kosares show most lasting impression. I see the stature of this man as American, however no Western mind is found within him. One day all will rush and follow your path before strong tide washes the deepest heal mark from sand.

It be true, my friend, in history no man does corner printing press. Many have take this path before. Even declare themselves "leaders" of "financial knowledge" and "sophistication", do they. The Gresham does make wonder about such things and asks for reason noone does claim gold from printer?

Such demand be as 100 men with contract asking Spanish farmer for 100 basket of olives where clear examination in field display only 10 basket. Such good reasoning have these men, demand delivery and illusion of wealth to others be none! None ask full collection for fear of illusion to
become reality, no? Perhaps, take what offered and wait next year. Better, sell claims for olives to Western investors with little eyes and clean shoes? Perhaps financial knowledge and sophistication of these paper sellers is more considerable than average fool. In the days that come,

"better one olive in house than six blooms on tree"!

We watch this new gold market together, yes?

Thank You

ANOTHER (THOUGHTS!) (04/18/01; 06:41:33MT - msg#: 52088)

Mr Gresham (04/17/01; 10:33:51MT - msg#: 52041)
Was the Washington Agreement the most significant event in gold since you were last posting in 1998? Do you have any reflections on those events?

Mr. Gresham,

One must weigh the mind of this Randy. It be heavy, yes? Do read the thoughts of the BIS for these same are printed review as #52046. Hold a mirror to these events for reflection. Such descriptions I discuss come next day.

Thank You

Randy (@ The Tower) (04/17/01; 13:37:02MT - msg#: 52046)
Mr Gresham, nice question (msg#: 52041)
--- "Was the Washington Agreement the most significant event in gold since you were last posting in 1998?"---

If I may be so bold, let me anticipate ANOTHER's answer with an answer of my own.

The most significant event in gold since the dollar's gold default in 1971 has been the successful launch in 1999 of a long-awaited new currency system built upon neutral (meaning, multi-national) management and, more importantly, a floating gold reserve structure that finally abandoned the now obsolete "fixed" gold legacy of the failed Bretton Woods structure.

With this new reserve structure, the prevailing institutional incentive from '71 to the end of the millennium need no longer be one of "price suppression" for the perceived market value of gold.

In this light, the most significant element of the Washington Agreement is seen to be NOT the amount of pre-announced gold sales, but rather, the self-imposed curb on gold lending operations by these European central banks. And if you think about it, this action with the Washington Agreement was nearly just a predictable inevitability from the moment the eurosystem committed to provide for freely floating gold reserves. The "tools" of the prior suppression are on the outs. Believe it. The WA simply announced the foregone conclusion in a package suitable for newspaper headlines.

Just as the value of the post-'71 paper dollar has long been propped by the international yet artificial "mandate" to hold these dollars almost exclusively as reserves (acting in tandem with the dollar settlement for oil and the overhanging debts of the "Third World"), through this new currency structure gold (and its price/value!) has now been "officially" set free to replace these dollar reserves (savings).

The reason this full transition has not already occurred is that institutional interest still exists to foster the smoothest practicable transition until that unknowable moment where the final remaining *SNAP* in the adjustment occurs.

Speaking for The Tower and personally, I continue to buy gold with excess funds because I prefer the real wealth of gold over managed paper (and digital) contract currency. As a bonus, the real wealth value of same gold will provide a pleasant benefit upon full completion of the transition in world currencies' reserve structures. (An understatement, to be sure.)

Gold Trail Update (04/18/01; 20:20:07MDT - Msg ID:52143)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (04/18/01; 20:20:06MT - msg#64)
Lombards, Normans and Franks
Hello again, everyone! (big smile)

I'm glad to see you are wearing the big wilderness bags today. You got my message that it's time for a serious hike. Alright!

After years and months of talking about gold, I have talked to friends about switching my delivery. During all this time, I did my best to emulate Another's style of presenting information and observations. Mostly here on USAGOLD, while he stood aside for a period. If you have read any bit of his works you know that style. He points to things, inserts thoughts, then drops names, ideas, political intrigues and suppositions. All in his good way of making people think and form perceptions on their own. While he has sometimes talked "through" a forum venue, in the process reaching others he knows, this endeavor was always for the citizen and never started as a shallow ploy to influence traders. It was more for the simple person that those "Thoughts" were meant. Truly, in the middle of all the gold rhetoric, his one plain comment remained intact and has never changed; buy physical gold!

During this period, I worked at breaking up my delivery. Even in clarifying, my replies were mostly partial answers. I have to admit, this has been a larger challenge than expected (smile). Now, I want to talk to you as I have plainly conveyed perception to others in the past. Using a human dynamic to make my points, as is my usual mode. So, I'll continue to employ a down home, on the trail tone. Please remember, I'm restoring a world of lost disk data while doing this. At first, most of this will be right out of the old brain.

You have read the varied items in Gold Of Troy #56 and Troy and Beyond, Even to Rome # 58, so lets get going.


Onward the trail!

Look at this grand view.

It seems like forever, doesn't it? I'm actually speaking about this never ending struggle we have had understanding gold. Well, don't feel bad, mankind has been at war with gold for as long as he has gained an educated opinion about money. (grin)

Pity us. From the very beginning the good earth gave humans the perfect vehicle for commerce and trade, but we have bastardized it at every turn. No wonder so many modern people are lost to seize the day when it comes to keeping something of lasting value. They have been so influenced by today's convenient lifestyles that they lost the meanings of real structure in savings and savings with enduring historic stability! Content to trade their life's personal financial security, that these meanings would have provided, in exchange for some other perceived grander returns! Returns that only modern risk securities can provide. All the while placing an ever larger portion of their work's returns in long term peril. Assets from hard efforts they may never get to use!

It seems the whole of Western thought has some bit of concept about gold. They know it's good in crisis and will admit to making a quick shift into bullion at peril's first sign. Even Gold Bugs consider the point of timing when they will run for the cover of those big bars. Using their mine share profits to make a score! It's the same for investors in lesser metals; they just want to hit that quick ten times gain over gold before their split second switch to the yellow bullion occurs. Truly, it will never happen because gold will not hold still long enough for their purpose.

Hard money investors, to the man, point to a shortage of gold and the ongoing paper manipulation that's making it so cheap. Yet, in the mist of all their planning and strategic understanding the logic completely escapes them as to "from who" and "from where" they will all buy this bullion so quickly? As if each and every one of them has the secret timing and will beat out all the other Gold Bugs when conversion day comes. And still, somehow, someway the world bullion price will accommodate their gathered profits from playing these other "near gold" securities?

My friends, it was Another that always said "this gold market it be not as before". Perhaps this is the hidden perception that so scares Gold Bugs. The possibility that our physical gold market could jump well into the many thousands before their waited purchase. A jump in dollar value that never reverses. A jump that stops the contract function of this market in it's tracks! Frozen because the other side cannot supply the gold or the cash to cover their bet against you.

Then there is the Euro question. Many American Gold Bugs say it's just another fiat currency. But, in the same context I ask them "if that's so important to you , how did you just pay to fill up your car"? Others ask how I can trust the Euro. Well, I don't trust it any more than the dollar, or any other major world fiat. I just use it for the life function we all enjoy. Further, I ask back, how can you not trust the fiat you use?

The whole Another thrust about the EMU was to delineate the political shift that had been in progress for some 20 years. And how this ongoing shift would effect the currency valuations of everything we use. The price inflations that are coming that no one has ever deemed possible!

This shift revolved around the major world political players and their use of international trade vehicles to forward their own agenda. The very vehicles that impacted economies, and therefore our lives the most. Dollars, oil, gold the EMU, etc.. The discussion was much deeper and long-term in nature than many could grasp. It's focus was especially attuned to the coming change in the value of gold. A change so real, so profound that it's dynamic just couldn't be believed. We will indeed have to see it to believe it!

Even more so, it's all about the illusion of wealth that manifests itself so well at the very end times of major currency failures. Perhaps this is also a fear hidden in the Euro skeptics. The possibility that they will one day lose the wealth and lifestyle their dollar valuations afford them. Once again, the simple are warned from wise words, "your wealth, it not what your dollar say it be"!


It wasn't always this way.

Gold, that wonderful metal that has all the unique qualities to function as our one and only wealth medium, and we just can't use it without altering it's purpose. You know, the Lydians had it right, back around 430 BC. They didn't struggle with the concepts of money, like we do today. They just stamped whatever pieces of gold they found laying around and kept it for trade. There was no need to clarify for certain that their gold money needed properties of "utility", store of value, medium of exchange, etc. etc.. They didn't need to identify these qualities were in gold before they stopped questioning if it was safe to use gold as savings. Gold was owned and the knowledge that people owned it and carried it for trade was alone enough to make it "worth it's weight as wealth".

Why then and not now?

You see, back in antiquity there existed another property that could override our need for modern definitions of tradable wealth. That property was found in the one identifying mark of wealth that transcended all ages; real possession!(smile) This factor and this one factor alone had the ability to activate all the other modern attributes of money properties, even when the knowledge of these attributes was unknown in the ancient era. Come now, Alexander the Great didn't know about "utility" did he? (grin)



As a means of example; think about art work for a moment? That fine painting that graces your main prominent wall. It's tradable for something, isn't it? Perhaps that Renoir for the acreage down the street. That use would cover some of the medium angle, right? A little bulky, but the large value makes it no more or less cumbersome than five gold bricks.(smile) Utility? Just watch your friends stare at it for hours. Store of value? A Renoir? We don't even need to discuss this .

But, one more thing, is it wealth? Of course it is. You see, it is wealth because you possess it, and the very knowledge that you possess it is held by others. One, a few or perhaps many equate your value for that painting by your possession of it. That understanding starts a need / desire valuation in the minds of your friends and associates. This social dynamic flows through relatively close groups of people and can eventually stretches across the world as it activates this worth equation in us all.

These paintings command a value, a price, a demand, precisely because everyone of them is possessed by an owner. In the world of wealth, worth is enhanced because the supply is lessened by this "possession attribute". And possession is how most people in antiquity, understood wealth.

Think now, could the worth of all the Renoirs in the world be the same if say, half of those wanting such paintings could own a credit for one? And further, they considered that credit account as the same as the real thing. No! The publicly known art value could not be the same because the demand would be lessened and the value decreased. Satisfying the wealth need of these new owners with "almost Renoirs". In this way the owners of this true wealth, represented by those real physical paintings, could not see their worth value expressed in the marketplace. However, the inherent value would still exist, just not quantified "for all to see". A situation not dissimilar to our gold market today.

So, if the attribute of "possession" is a major component and identifying mark of wealth, why does it play such a roll to enhance the modern contemporary properties of real money? Because, with money, once possession identifies the item as wealth, that alone can represent the unique utility function money must have. In this light, we can see where money need not have a commodity use to satisfy it's utility function. The wealth function alone is enough when applied to money. Wealth is the utility.

The store of value function of money is further enhanced because the possession of real wealth also continuously maintains or increases it's worth over time, across generations. And that worth or value is relative to all things.

Further, a medium of exchange alone can apply to many metals, but it must be wealth and therefore owned outright by all who use it ""if it is to correctly function in it's ability to denominate real value in commerce"". This last thing is something we Western peoples have virtually no concept of and will one day suffer for it.

Today, all forms of cash money and most financial assets do not function as wealth because their ownership is second party at best. Fiat dollars, in every form including cash only represent something owed to you. A credit of goods or effort performed. It represents nothing owned at all. Their function in society does work but it works for us by providing a lesser valuation in trade than real items would produce. We accept this concept and reduction of worth as the price for modern high speed commerce.

Many hard money philosophers have pointed their finger at others for the fiat situation we use today. It was the bankers and governments, the kings and cohorts, big business and robber barons or some communist manifesto that forced us to use this type of money. Well, you may not like the process and consider yourself above or apart from it all. You may even declare all of them evil. But, in the end, one fact remain; society may govern itself in many ways over thousands of years, but it has never stopped the evolution that corrupts the use of real money as official money.

Over time and life spans gold has been brought into official use countless times. Only to be bastardized by forces, we as peoples can never control. After every failure and ruination of much wealth, the cries always return to bring gold back as money. Once again to begin the long hard road that leads to the same conclusion. Gold coins then bank storage then gold lending then gold certificate use then lending of certificates then certificates are declared paper money then overprinted then gold backing removed then price inflation then,,,,,, we begin again. But this time it's different the hard money crowd say. Yes, it is. Only the time has changed.

For the better part of human existence, gold alone has served all of the best functions of tradable wealth. But as soon as we call it our money, human nature takes over. Yes, we can call it a stock or a bond, a piece of land or a painting, a car, boat or antique, but just don't label it as money.

Up the hill and thru the pass!

The Lydians, Greeks and Romans all held gold. From Parthia through Rome and on to the Visgoths, Lombards, Normans and Franks, they all held gold as wealth. It was wealth first and traded as what we call money second. Possession identified that gold as real wealth, even if that ownership was for but the moment of a trade.

From the earliest times right into the Old World periods of Europe, gold served as the most valued wealth asset one could use in trade. It was by far the largest unit of tradable wealth in circulation that could be counted on to bring a premium in trade while shopping between cities. It moved, it flowed and it traveled. It was indeed, always "on the road"! Lesser metals and other tradable wealth assets always competed with gold for it's trading function, but only gold made the best "on sight" trade. When given the choice of other "almost moneys", gold would always bring an extra slice of meat or fuller basket of cloth.

The irony of gold use over most of it's earlier periods was that few average people kept it for long. Hence the seldom discovery of gold coinage where average people lived (see my earlier posts). Be sure, it represented wealth to these commoners, in good form and to the highest degree. Yet, their possession of this wealth usually constituted only a short time period. This short ownership occurred because gold did, would and could trade so much better for the needed things in life. For the worker, service wages paid in gold meant you just got a bonus or raise and the time had come to finally buy what you couldn't afford if paid in other means. If these people saved at all, it was usually in the form of the lesser metals (see my other posts).


If gold was so valuable back then, there must have been a bunch of it saved and transported into our modern time?

No, not really! We used to try and extrapolate all the gold that was mined and turned into jewelry, bullion or coin. If it was so good for coin and trade, civilizations must have saved every ounce, we thought! But something kept nagging at our conclusions. Something that kept turning up over and over at our digs.

Some of you have seen the Gold of Troy pieces or other fine examples of old gold craftsmanship at other museums. Ever notice how good they were at making gold so long ago? From intricate bracelets to rings, head dress items to fine cups, even the most thin of leaf. Some of it was so small we had to use magnifying glasses to see the work clearly.

This gold in jewelry and art work form was the other major form of traveling wealth. In many of our recent findings we now think that jewelry and coin traded places as easily as getting your check cashed today. Throughout the ancient land, gold centers occupied the trade routes. Any gold that rested for too long, was quickly recruited into a form that worked for the next traveler. In fact, evidence now points to all forms of gold ownership, not just coins, being a short term proposition for the average man. Indeed, contrary to what we thought, the fingers of all mankind did, through the ages, touch gold!

Now place yourself in that time. You work for Rome in the army, a fighting man. Not all of you were paid in lesser metals, many of you were relatively better off. You did carry some of your wealth with you in the form of gold coin or jewelry. In the case of a Roman soldier, a gold ring was very probable. When you went into battle, did you leave your few gold items laying in the tent? Or did you wire them back to a Swiss bank for safekeeping until after the battle? (big grin)

What we are finding, in the form of molecular fragments at battle sights, leads us to believe that most wars were fought with most wealth possessions worn or in pockets. Gold included. To make a long story short, we now believe that a great deal of early gold was scattered on trails, in the sea and during every war. In fact, rubbed, scraped and powdered to the four winds.

Because gold was so valuable in long trade, extremely small creations were carried as jewelry. Much smaller and much more able to be lost than other larger units of the lesser metals. The nature of so much of this gold was that it was easy to be lost and dispersed. Especially considering the modes of travel back then. We as museum visitors see all the magnificent pieces displayed. What we don't see are the countless broken, partial and fragmented items that are never offered for viewing.

Knowing what we know now, we believe that a very large portion of gold was lost and scattered on a yearly basis. Add to this the fact that most gold mining brought almost the same return as making many of the goods it purchased and we can see how gold was and is over counted. Where it was once taken as fact that all gold was looted and remelted, we now think that gold stocks were lucky if replaced.

By the time of the great gold coinages in Europe, the gold that flowed into these major commerce centers was all there was left in the world!.

Let's rest here for a few nights. There is a lot to consider before we go on.

Trail Guide (4/19/01; 14:04:33MT - msg#: 52186)
auspec (4/19/01; 08:48:52MT - msg#: 52175)



I'm going to outline some replies to you on the trails page. Am working on it right this moment. Along with some comments.

thanks for taking the time to read and consider.

Gold Trail Update (4/19/01; 17:50:30MDT - Msg ID:52199)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (4/19/01; 17:50:29MT - msg#65)

Hello again everyone,

I thought it would be a good idea to make some clear comments and replies regarding my perceptions. Using some questions and thoughts from the main forum will also help. This may make it easier for us all as we "follow in the footsteps"!

Auspec makes several points and contention for me to address. Please read his complete post first (and all the others I'll address). Hello auspec, you write in reference to my hike #61 here on the trail:
auspec (4/19/01; 08:48:52MT - msg#: 52175)
-------*If the dollar's status is now so similar to what it was in 1971, why would we see the Brazil type hyperinflation now as opposed to the simple ongoing degredation of fiat that we have all come to know and hate? Why the extreme portrayal of the dollar? It's clear the dollar is an old toad and there are young stallions waiting in the wings, but it's hard to see this as an all-or-none issue where the dollar {banana} goes from being the world's reserve currency to being "nada". Where's the middle ground with dual and competing reserve currencies in common use?*

Well sir, I'm going to try and reply in context to the way you asked these questions. Considering well all your prefacing stated before asking for info.

Using the 1971 dollar incident is a perfect way to engage common ground thinking about our contract gold market today. No it's not a perfect analogy, but it's real, real close and sharpens our understanding and ability to see the subject clearly. Especially considering the tremendous number of different hard money people that read this Centennial Forum. But we must not confuse the point by thinking a similar break today will cause the coming price inflation we speak of.

Yes, after the 71 dollar gold break, we did see some good price inflation. But was that caused by the wholesale cancellation of international dollar convertibility into gold? No! That price inflation was not gold backing related because we had already, years before, been printing dollars far beyond our stated gold to dollar conversion ratio, $42+/-. That spell of price run ups was the result of to many dollars being printed before and after the 71 gold breaking event.

Sure, the gold price run up after that didn't help the dollar's image. But, by then it didn't make any difference what the gold price was. Even if it want back to $10/oz. we were never going back to governing the volume of dollars in supply. Not by using gold, not by silver, not in any way that would fix or slow the presses! We couldn't. Any long term slowdown, then or now, in such an established fiat was well past the politically survivable stage. This is the way fiats work, rather gold backed or not, they always break from strict printing discipline. The history behind us says so and the future before us says so. As an example in dollar terms, look at any five year average of money supply growth from 71 till now? Truly, we were and are printing our way towards the end time of dollar use. The only question was how long would the world keep using dollars? How much longer
would the timeline extend?

Some hard money people thought that the world would simply convert to gold itself, in place of dollars. But, the simple fact, as I and most especially Another have made so often, is that the modern world must use a fiat form of currency to operate. And, considering that point, after the 71 gold break, there was no other strong, fluid currency for us to revert to. It wasn't until the end part of the 70s that the Europeans started down the long road of creating something else.

There were times when our foreign trading partners were thinking of breaking away. This is when the US spiked rates. Again, we confuse this action with stopping the inflation presses. Quite the contrary, the killing rise in rates was just a signal that we would not go completely hyper. On our side, the only reason we could afford to take this economic killing gamble was because oil was still priced and settled in dollars. But that is a whole Another book.

The prestige of many international dollar holders took a real bath because they held dollars in place of gold. When they tried to initially bid for gold, the US and London made sure the price rose fast enough to tell a story to these dollar converters. That is; "bid for gold and it will soar" cutting off your conversion. Sure the US made all sorts of noise about how awful and incorrect the rising gold price was. Even showed their hand at managing the price a little so it didn't go up too fast. All the while saying they were fighting for all they were worth to keep it down! Truly, the last decade shows naive Gold Bugs just how much in control they were and are of this so called "free commodity market in gold". Oh well, back to your point.

You see, the dollar is going to fail now because a good alternative is available now. All this has something to do with the coming new gold valuation, but that new price level is not related so much to gold backing a currency again. (more on that in a min). The dollar is toast because most of the world doesn't like the management policy. They didn't like it in 71, but tolerated it because gold was suppose to keep flowing in repatriation payments. And if they didn't like it back then, they god awful hate it now!

We like to think that the dollar is what it is because we are so good. (smile) But, the truth is that for over a two decade period +, none of our economic policy, our trade financing policy, our defense policy or our internal lifestyle policy has pleased anyone outside these borders. We managed the dollar for us (U.S.) and the rest could just follow along.

Our fiat currency has survived all these years because others have supported our dollar flow in a way that kept it from crashing it's exchange rate. We talk and think like we are winning the tug-of-war when, in fact, they just aren't pulling to hard. Waiting for their own system to form up.

Truly, most of the world likes the most conspicuous aspect of the euro that we describe as it's biggest weakness; it's management by several varied nation states. All supporting different thoughts, cultures, backgrounds and perceptions of government policy. Some compare it to the many nationalities in the US, but it's much more competitive than that. It's thought that this mixture will produce a more good for all management of a Euro world reserve currency. Truly, because gold plays no part in today's dollar management or the Euro, then political styling is all that's left.

My friends, a national fiat in our modern world only functions if the whole world uses and supports it's flow and most importantly likes it's management (political styling is the catch word). This support and use of our dollar can and will change faster than many think possible once the Euro is finished. Our dollar is not going to become a "banana" or "nada" in the future, as auspec notes. It already is and has carried this trait for some time now as does every fiat today. The only thing that keeps them from cascading away is world support and use.

When most of the major players that styled the Euro decide to swing even 1/2 support toward that new money, the exchange rate for our dollar will plunge to it's true worth! That dollar value is there now, you just don't see it yet. The price inflation that many (auspec) don't / can't see happening, will be the result of our currency management changing to confront the nature of all the above. The world economic financing, pricing, saving, settlement and opinion is shifting toward the Euro. As this happens the US will have to raise rates ever higher, even as it massively prints more currency to support our internal economy. Our entire economy will slow and fail as this price inflating process moves on. Some will call it stag / flation, but will change that description as the it becomes more of a crash / hyperinflation.

Right now, the actions of our fed is telling this truth. We must inflate while we watch the Eurozone enjoy it's basically internal trade economy. As other nation blocks embrace that zone, they will pull economic function from us.

You write:
*Comments: Again it is easy to see the dollar as losing a large piece of the action, but hard to see its total demise or its falling out of use. The US as the largest military force in the world certainly has its overriding benefits. The US has enormous resources; physical, financial, and spiritual. American creativity and "know how" has changed the world. This country will not turn over and simply give in! Let's look forward to the next 5 years and place probabilities on what is likely to happen as far as the dollar/euro is concerned. I will rank these various scenarios in what I see as their most likely odds of happening:
Auspec, before I list your most likely odds, I would like to comment on your above.

We must not confuse a currency's "total demise" or "falling out of use" with a "loss of identity". In our time there have been few major moneys that went away. Today, we have a whole world of national fiats "in use" and "not demised" that still carry their nations identity. They lose value at an incredible rate, are mismanaged to the highest degree, are laughed at and despised. But, still they are "in use" as they function for their governments and economies. Usually, they function along side whatever major reserve currency is in vogue. Today, the dollar, tomorrow the Euro. Make no mistake, the entire internal US sector can and will function as it's currency runs a price inflation just like these third world countries. We will adapt as they have by dropping our living standard accordingly and adopting the Euro as our second money. Also:

The prestige that we have the largest military force in the world does not help our money problem. We talk as if we will let any country die that does not use our money or support our currency. I point out that the British also made such comments and it didn't stop their downfall. Nor the Russians. Also:

I point out that many, many other countries also have the same "enormous resources; physical, financial, and spiritual" that we have. But the degrading of our economic trading unit, the dollar places the good use of these attributes in peril. Besides, the issue beyond these items is our current lifestyle. We buy far more than we sell, a trade deficit. Collectively, net / net, using our own
attributes and requiring the use of other nation's as well. Not unlike Black Blade's Kalifornians sucking up their neighbors energy supplies (smile). We cannot place your issues up as example of our worth to other nations unless we crash our lifestyle to a level that will allow their export! Something our currency management policy will confront with dollar printing to avert. Also:

NO, "this country will not turn over and simply give in" as you state. But, we will give up on our currency! Come now, let's take reason in grasp. Our American society's worth is not it's currency system. Around the world and over decades other fine people states have adopted dollars as their second money, only to see their society and economy improve. Even though we see only their failing first tier money. What changes is the recognition of what we do produce for ourselves and what we require from others to maintain our current standard of living. In the US this function will be a reverse example from these others. We will come to know just how "above" our capabilities we have been living. Receiving free support by way of an over valued dollar that we spent without the pain of work.

Your "various scenarios" with mine notes added :
1}Ongoing MODERATE debasement of US Dollar. {Brisker} Business as {than} usual.
----Near term, yes.-----
2}Gold and/or Oil breaks away from the dollar.
---- Oil is already doing so for a year now. The gold market is in the process of self inflating it's paper side of the function. The first minor lease rate signals are already behind us. The ECB and BIS are coming more in control as the dollar faction must either sell it's gold also or begin to fold. If they want the game to continue a little longer the US must not put it's gold on the market or the BIS and ECB would bid it with their dollar reserves. Ending it all then and there.------
3}Dual and competing reserve currencies. "Co-Currencies" in Reserves. The currency war that is in clear sight {thanks to ANOTHER and FOA}.
----- I would add that the vision of co-currencies is just a passing function as we get from here, dollar reserve, to there, Euro reserve.-----
4}Status quo.
----- We have not been here in our life times (smile).--
5}All out war that distracts/rescues the dollar and extends its life. Wag the dollar.
------ As we enter the down side of our economic function (like we are doing now) the massive money printing by the fed will risk the dollar's slow slide to becoming a super slide if a war breaks out. People run to the best managed world money in a war, not just the one with the current best exchange rate value. In the past the dollar was the one, today the Euro would receive the flow. The US would be risking killing it's last bit of dollar timeline with any war today.---------
6}Dollar merged with euro/backed by euro.
------ I know a few people that make a lot of sudden money wealth and give almost all of it to the church (or charity). Others are much more smarter and support the church (or charity) for the rest of their life. Retaining some control over how the charity is used. This is how the EuroZone would handle us. Actually, it's the same way we handled them after the war. We didn't just merge our checkbook into theirs, did we? Net / Net, they will have the wealth to be offered, not us.------
7}Brazillian or Weimar style hyperinflation of the USD, the Big Banana, or the 'little banana'.
------- Full on, wide open, in your seat, flat out! It's in the pipeline!------

You write and I comment:
Debt is designed for default as fiats are for debasement.
--- My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationist get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)
At $30,000 POG the US as we know it will be no more, agreed?
-----Agreed, but still in use. Just like all those Pesos around the world! But remember, at the very least, the first $10,000 of that figure would represent the current purchasing power of the dollar today. We will most likely get there long before price inflation jumps way up. Once the current dollar gold market fails and gives way to a free physical price, we will see that figure even as our
economic function drives all other hard money metals into the toilet. I talking about .50 cent silver. while gold races past it's first grand. When we see it we will understand it.-----------
What advantage would it be to the Power Elite to destroy the dollar.
-------- Wrong context. What advantage does the Power Elite gain by expending assets to save an already failed currency. Better to do what major players have done for centuries and are doing now, buy gold and evolve your power base to use the next reserve.-----------
The end of a currency's lifetime always ends in gold debasement?
---- In almost every case. Sometimes in the open, sometimes hidden.------

Ok, this is going overtime (smile). I will try to cover more (and others) in a day or so. Also, the question of Another at his keyboard? I reword things from him quite a bit for bare readability. But, his delivery is pure. I don't always pretend to understand it. Then, that's a whole other story (smile)

Trail Guide (04/20/01; 09:28:07MT - msg#: 52252)
ET and Elwood:
I'll try and address your points next (full day today, don't know if I can?)

Thanks for your efforts, both on and off stage (smile)

Chris of GATA:
Oh boy! That one's out of the bag! Now we can do some real discussion about what's ahead!

You people better read MK's news letter. Make's you smarter!

Search Engine:
After all that Centennial has done to build and maintain this hall,,,,, a search engine should be made avaliable to clients of CPM only or, by extension in return for doing business. Perhaps password based? After all, buying gold from CPM at these levels is like paying them a free fee for an outstanding venue, yes? IMHO


Trail Guide (04/20/01; 14:28:01MT - msg#: 52270)
Quick note

Thanks all for your reading and your nice comments. Even more so for your own points of view.

Looks like I can not make it back today. I'll try another time.

Randy, MK, hope I didn't place the wrong idea here about the search feature. I meant it as a thought only. My thought may have been completly out of line and off context to your business plans. My mistake, my friends.


Trail Guide (04/21/01; 16:44:58MT - msg#: 52312)

I'm making some green tea, then back to further carry on our dissusion (smile). Be here a little later.

Gold Trail Update (04/21/01; 21:12:53MDT - Msg ID:52319)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

FOA (04/21/01; 21:12:52MT - msg#66)
Of Money and Men

Hello again!

Continuing along with our discussion, clarifying some points and positions, we once again offer some straight talk. Elwood has some points in his Elwood (04/19/01msg#: 52225). Sir, you referenced our last full hike on the GoldTrail #64, quoting first this portion:

"Many hard money philosophers have pointed their finger at others for the fiat situation we use today. It was the bankers and governments, the kings and cohorts, big business and robber barons or some communist manifesto that forced us to use this type of money. Well, you may not like the process and consider yourself above or apart from it all. You may even declare all of them evil. But, in the end, one fact remain; society may govern itself in many ways over thousands of years, but it has never stopped the evolution that corrupts the use of real money as official money."

Then you write:
------ Thank you, sir, for sharing your deep thoughts. True, your words are, but why is this a reason to abandon the fight for sound money? Surely you must be aware of the massive inefficiencies that will accompany a system with two moneys. There will be two prices for every good, one stable, the other not. Would not the timeline of such a system be extremely short compared to that of a system of sound money even though the sound money eventually becomes corrupted? How is this system better (or even different) than what we have today?---------
Hello Elwood (smile),

The fight for sound money is not dissimilar from the ages old fight for peace in the world. Mankind has been striving for peace over our entire existence and still it does not come. Countless lives and fortunes have been lost and the same battle continues. Perhaps we should reexamine our collective needs and try something different. Truly, what is to be lost? This is the same mind set our new political styling is shooting for. It's a good effort because history is on their side.

Yes, it's a noble effort to try and get the world on a sound money program, but after failing at it for centuries, a little side trip cannot hurt. (smile). Most people, like yourself, say sound money and think sound currency. Usually it's some form of gold backing that makes the currency sound. The trouble is it cannot be maintained. The logic in my words above are evident and the last part of the statement demonstrates the selfreplicating nature of our dealings with "sound money". Again, in a restructured form:

"""Society has never stopped the evolution that corrupts the use of real wealth (gold) as it strives to use it as official money""""

Elwood, I don't care if all of it is legal or illegal, moral or not, right or wrong, because the larger issue overwhelms these arguments. That being; we have never been able to control our power structures in a way that disciplines the printing of currency. The Romans alloyed other metals into their gold in a form of modern day paper printing. Even in the so called wonderful days of the various gold standards, be they actual coins or paper substitutes, the world debased the system from the start. Also you write:
----Surely you must be aware of the massive inefficiencies that will accompany a system with two moneys. There will be two prices for every good, one stable, the other not.-----
We never intend to have two moneys. The concept is better seen as the Euro and a wealth reserve. Still, to defend against your thrust, what do we have now? Travel the world, my friend and mingle in the world of currency. In almost every country of the planet there are several prices for ever good sold! All depending on what nations currency you choose to use. Today's system is working with perhaps hundreds of moneys!
------Would not the timeline of such a system be extremely short compared to that of a system of sound money even though the sound money eventually becomes corrupted? -------
My goodness, we have used a dollar system that has been debased and on the way out for 40+ years. Well before our 1971 gold break, this country was printing IOUs as if they were currency. Yet, the thinkers of our time, the same ones that employ two week trades on the stock markets, all ask for guarantees of decades before considering a new currency? Planners simply cannot employ the logic of a group that trades options, futures, strips and swaps, then asks for longevity before the fact.
-----How is this system better (or even different) than what we have today?---------
The real issue is our misunderstanding and misuse of the term "sound money". That thought has been bantered around for hundreds of years. Truly it does not exist except in the minds of men.

Money, the term, the idea, perhaps the ideal,,,,,,, is something we dreamed up to apply to one of our chosen units of tradable wealth. Usually gold. We could take almost every item in the world and use it in this same "money fashion". Still, this form of trading real for real is just exchanging wealth. It isn't exchanging money as we understand money.

Gold is no different than anything else you possess as your wealth, it just so happened to be the most perfect type of tradable wealth in the world. So it evolved to be used the most and eventually labeled in the same function of what we consider to be "sound money".

Now, consider that all wealth is represented in and of itself. You cannot reproduce wealth through substitution, like giving someone five pieces of copper for one piece of gold and then have then think they now have five pieces of gold! This is the process we try to perform within the realm of man's money ideals. We have always debased trading wealth by duplicating it into other forms and calling all of it, collectively, "our money".

This duplicating, this replicating, this debasement is the result of taking the concept of a credit / contract function ( paying in the future) and combining it with the concept of completing a trade at the moment. Think about that for a moment?

As an example, I'll give you a paper contract to pay you later for some oranges and you give me the basket of oranges. Better said, I just gave you modern man's actual concept of money.

Or I trade you a basket of apples "or gold" for those same oranges and the deal is finished, done! We have been taught to think that this is also the concept of money trade.

The first uses what our currency system has evolved into, what is really money in our mind. Where the second uses no credit form at all and is more comparable to trading real wealth as the ancients traded using gold.

Contemporary thought has always blurred these two notion; saying that these two methods of trading are one in the same and both forms use the same idea of what we think money is.

Further refined; we evolved our money ideals into a perception that credits and contract payments can be used as if they contain the same value in payment as trading real wealth. They could and can if managed correctly. But, we have never managed credit money to match the same proportions as existing real wealth (gold). We have tried to manage this combination of wealth trading and money credit for as long as we have been seeking "peace"!

We use, today, many forms of wealth holdings, all standing right beside our dollar use. Many of these wealth items have and do perform much better than our fiat currency. One has but to use one stock holdings as an example.

You may have $5,000 in cash in hand and in a checking account, while also owning $200,000 of ,say, Microsoft? Obviously, the stock is a competing, dual form of currency wealth. It's value rise has overshadowed the gain on your fiat. But, is it driving your currency out of circulation? Seen anyone recently using this superior form of competing wealth to pay for a fillup at the station? No?

We all need and must use some form of fiat currency to operate in this modern world. It makes little difference if MSFT went to $10 or $10 billion, you would still use the currency system in trade as a more efficient form of modern trade. Society now uses these " money" systems without any form of gold backing, not because they are "strong" or "stable", but because they work more than they fail.

Still, over the last several decades, we now have come to expect an attempt at "political styling" our fiat money that benefits more than one nation block. Further, we expect a wealth asset to not so much stand behind the system but to measure it's speed of failure or success. Knowing full well we will accept and expect some loss of value as payment for this use convince of Fiat Euro.

This is the road ahead. A fiat no different from the dollar in function, yet a universe away in management. A wealth asset that also stands beside this money, yet has no modern label or official connection as money. In this way modern society can circle the earth, to once again begin where we started. Having learned that the concept of wealth money and man's money were never the same. We shall see.

Trail Guide (04/21/01; 22:32:50MT - msg#: 52322)

da2g (04/21/01; 12:12:17MT - msg#: 52302)
Trail Guide- Silver

Hello da2g,

You write:
-----Is not a hyperinflation ultimately deflationary in that there is a dearth of credible means of purchase? Why would silver not benefit from this, at least temporarily? Could this be a means of transiently parking purchasing power, superior to paper that is quickly losing value? Could not
silver benefit from demand as money? Could silver be a means of barter that changes hands in commerce, whilst gold is held in the background as a wealth asset?------

Well sir,
The coming super inflation of our dollar could more accurately described as a super currency devaluation. Where the Euro becomes the dominate settlement currency and our dollar reaches a level to match it's long term history of over creation. In making this point before, I pointed out that the dollar is going to reflect it's "unsupported value", where it is no longer propped up on world

During this type of devaluation, the internal price inflation, within the US will have all the attributes
of a real hyperinflation. With one compelling difference; another currency will be available for use. Foreign exchange controls will be in play, I'm sure, but will not reflect a total freeze on currency flow. The same will ultimately be true for gold. Mostly because we must import oil and other
necessities and gold will be tradable as the one true measuring asset officially market to a free market. I also fully expect that our government will endorse the ownership of physical gold by it's citizens, if for no other reason than to blunt the rush for Euros. Still, as in my last reply, US reactions could be uncertain for a time. Therefore, the holding of rare / old coins is absolutely a

So, in this montage of events, in time, there will be ample dollars, Euros and gold for ownership. All reflecting their own values, of course, but trading never the less. Considering this point, this blunts one of the main attributes of owning silver as a trading vehicle in place of a usable median. More than anything, silver will reflect it's industrial use demand of which the US is the current major user by a wide margin.

Further, comparing the worth of an ounce of silver against an ounce of gold today is liken to balancing two entirely different structures. Such as asking which is heavier a ton of bricks or a ton of feathers? Obviously, they weigh the same but the weight comparison is worthless. Today, I could easily say that gold is much more a bargain than silver because an ounce only costs $260 where 100 ounces of silver cost $450. Any fool could see that gold is the cheapest and what a bargain for sharp investors! (smile) But, we don't do this because it isn't a valid value comparison. No matter the unit weight or size. Yet, the silver bulls try to sell this to anyone that will listen.


------ unless I am mistaken, I seem to recall ANOTHER stating years ago that silver may have some value in this situation.------------

Well sir, Another does hold this view and he has a grasp for the human dynamic like nothing I have ever seen. But, I will at least take a middle position in that this transition, from a US standpoint, may not politically follow my outline. There is always the unknown when at the peak of financial
crisis. Still, most major players, both historically and today, hold gold bullion for such a situation.

Just as investors ran to bullion (and dollars) in the past, they will run today with their currency portfolio into the best managed currency. Right now the ECB has the best ship to sail during the storms preceding the coming transition.
For the hard position of their wealth they will run for
the most officially supported free market. In the near future, gold will hold that position, hands down.

Further, when in a crisis, you don't want an investment and that is what all the statistics about silver are all about. In a major international currency war, you want a wealth holding that the world is running to. Not some idea about a return that will work this time yet, has failed more than a few billionairs in the past.


Trail Guide (04/21/01; 23:06:29MT - msg#: 52325)
Mr Gresham (04/21/01; 17:01:59MT - msg#: 52314)
Trail Guide: Silver

Mr. Gresham, hello,

I own some silver and everyone here that has read my posts knows it. But, just like gold stocks, it's a minor position compared to gold bullion.

More importantly, I have talked endlessly about the possibility of our paper gold market falling in price as these contract securities are sold into oblivion because of default fears and the piling on by shorts. Enforcing a situation where physical gold runs in the opposite direction.

There is a whole world of people out there that are leveraged to the hilt in silver waiting for the big event. If our paper gold market tanks, the pressure on the silver price will be enormous! In many ways reenacting the very leverage these bulls are looking for, but all of it in the other direction.

There are few people that will retain a position in an "investment" like silver if the paper pricing market is hit, bigtime. Forcing the selling of everything. Where as in gold the world community will grab all the free bullion available (jewelry included). Because gold is not perceived as an investment nor as an investment with an industrial use component.

In the initial crisis, silver could hit the floor and stay there for some time. It all depends on how this plays out. For myself, with the explosive potential of physical gold to show it's real value, I don't need silver. (smile)


Trail Guide (04/21/01; 23:21:44MT - msg#: 52326)

ET (04/20/01; 08:42:22MT - msg#: 52251)

Hello Elwood,
You write:

-------"But, sir, none of these things are gold. Is it not the *label* of money, but its *use* as money that makes a thing money? How can we officially deny the use of pencils for writing, yet still maintain the "free market value" of pencils?" Yes - despite the volume of words, this simple point is left unaddressed. Thanks for your keen
observations! ----------

Can you use a "promise" as money? Sure you can and often do today, because that is how you paid for your last fillup. You use it, but that doesn't make it wealth money, just a fiat money. My talk to Elwood on the Trail covers this deep concept. (smile)

I'm gone now

Trail Guide (4/22/01; 13:43:32MT - msg#: 52342)

Trail Guide (04/21/01; 23:21:44MT - msg#: 52326)

I made a blunder in this post (above)when addressing it to Elwood. Actually it was to ET, who was commenting to Elwood. But, I suspect most of you were able to read through that mistake (smile).

I have a large function to attend now and cannot comment on the next series of points from you. Even though they make a good connection for me to carry the discussion right into the West Point business. That's the first real break in the dam that shows the game in play. Not exactly as it was explained, but close (grin).

Mr. G,,,, Elwood,,,,, others, I will comment later.


Trail Guide (4/23/01; 06:18:34MT - msg#: 52387)
Mediterranean Arab Free Trade Area (MAFTA)
Just a few items. Looks like it won't be long before someone sees the advantage of using Euros only in the settlement of trade! Could oil trade settlement be far behind? And all of this started in 1995, before EMU,,,,,

Arab states look to create offshoot of Euro-Med free trade
agreement By Rana Awwad

AMMAN — Arab member states party to the Euro-Mediterranean Association Agreements are set to study the possibility of establishing a Mediterranean Arab Free Trade Area (MAFTA) during their next meeting in May, officials said on Sunday.

The meeting, to be held in Brussels, will also examine the harmonisation of rules of origin amongst the Arab partners as a first step towards achieving the trade area.

The Jordanian-EU bilateral agreement was developed under the Euro-Mediterranean Partnership, a governmental forum comprised of the 15 EU member states and 12 Mediterranean countries, including Jordan.

The 1995 Barcelona Process which established the Euro-Med partnership, calls for gradual trade liberalisation between members, with the ultimate goal of establishing a Mediterranean free trade zone.

Meanwhile, European imports will be granted preferential treatment depending on the agreed schedule of reducing tariffs.