Gold Trail Update (04/23/01; 20:30:05MDT - Msg ID:52424)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (04/23/01; 20:30:04MT - usagold.com msg#67)
Replies and Custodial Gold
,,,,,,,Two French men were fishing in a boat, just off of Nice. Several other boats were within close sight, always watching to see if these guys found anything. All of a sudden Henri hooks a huge one and brings it to the surface while Pierre nets it. Both of them look at the fish in the net and hesitate, not wanting to bring it onboard. "What is it", Henri asks? "I don't know, can't make it out, but it's a good one, I'm sure" says Pierre. By god, whatever you do, don't haul it in. If we can't name it the other boats will laugh at us. Let's just keep the net in the water, pointing at it and talking loud while we circle the boat. Eventually, one of the other boats will get a look and blurt out it's name,,,,,,,,,,,,,
,,,,,,, Eventually, the ruckus attracted hundreds of other boats (the miracle of marine radio and the internet) and they stormed in close to see the news. During all this action, none of the other boats saw the fish very well, therefore no identifying name was mentioned. Eventually, tired from throwing out various possibilities of the significance of the catch, Perre and Henri pulled the thing in for all to see.,,,,,,
,,,,,, To their amassment, no one else knew the exact name or significance of this exceptionally fine fish! You see, there just wasn't enough details about it, "floating around" (smile) to know it's purpose. But still, all hailed the duo as superior fishermen and brought them drinks and dinner in port!,,,,,,,,
The moral of this story: In this game of life, we all fish from time to time. But, to a sportsman, the size or type doesn't matter because it's the art of catching that counts. Besides, every catch has a name and we will eventually find it's "namer". (bigger smile)
-------------------------------
elevator guy (04/23/01; 00:07:49MT - usagold.com msg#: 52371)
second thoughts
------ I seem to be caught in an internally conflicted spiral of wealth logic, due to my having grown up in Dollar Land. When some prominent poster here said that GATA was "barking up the wrong ree", I felt GATA had been given short shrift for their efforts. Now ----------------
Hello Elevator guy,
Thanks for attempting to understand it all. If you follow our lead, we will not change your mind about anything. Rather, you will have the "luxury" of seeing things in a different context from the usual Western Gold Bug fixation. With that perception becoming part of your "Total" overall understanding, as events occur, you may choose to interpret their impact differently.
After my above story about Custodial Gold, more in a min.
============
ET (04/22/01; 21:30:40MT - usagold.com msg#: 52361)
Hey FOA - thanks for your thoughts. You write in part;
"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."
I happen to know from history that your idea will fail. It will fail because there is no difference between wealth money and man's money, despite any forthcoming "new age" management. You see, FOA, markets can't be managed, and every time it's tried, they fail. Yours will be no exception.
Hey ET,
I think yourself and anyone else that takes your position on my posts should reconsider my thrust. Our libraries and history halls are chock full of records that endorse our perception fully. All of your great money thinkers engaged the very same problem; trying to force society's power structures to use gold and it's decline as official money.
It's not the management of money that was the problem, it was the management of man's authority to maintain gold and it's decipline. Over and over, we watch good monetary theory fail as society fails to control their controllers. Then, your good scholars document the "every reason" and "what for" of why it failed. We read it all, teach it all in schools and once again, history repeats. The money presses come on!
The road before us is to not manage gold. Rather, stop it entirely. Forget about calling it official money and let it seek it's own level against every fiat as a worldly wealth. In every other asset, we now have countless examples of other forms of wealth that walk side by side with our current dollar system. Practically all of these have far outperformed (thanks Mr. G.) our pure fiat dollar. Some doing so at incredible rates! And to date, none of them have obtained more settlement use than our digital currency. Even the underground people go back to currency eventually. This ongoing fact is an enormous experiment happening right before our eyes. For twenty+ years this has happened as our dollar is proclaimed, unusable! Yet, Gold Bugs loudly proclaim that gold would supplant the Euro if allowed to seek it's own level as wealth.
My friend, you should also read your scholars books again, for they tell the very same tale we do. We have read a few (smile) and embrace their position, but our position stands aside the needs of a modern Gold Bug that prefers a "fiat" gain on leveraged gold investments. We present it from a Gold Advocate's stance, that holds gold itself as the wealth while embracing society's pennant for fiat.
==============
Elwood (4/22/01; 11:17:14MT - usagold.com msg#: 52335)
Trail Guide You write:
-------
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!
----------
---does the ECB intend to hold works of art, boats, land or any other wealth items as part of its reserves? Will they officially mark their currency against any of these other wealth items? Can you understand my skepticism regarding this attempt to "un-money" gold? -------------
Hello again Elwood,
My analogy using various art works was meant as an example of how other wealth holdings currently ride next to our dollar system. Just as above in reply to ET, wealth can and does outperform fiat and people do not short circuit the system in a major way.
The ECB is treating gold completely different than the dollar faction. Where the US has seen gold as a competitor for their failing currency, they tried to destroy it's "known dollar market" value through paper manipulations. Something we have been chronicling for years, now. Prior to EMU, gold was the dollar's only replacement and because of the dollar's massive, overwhelming printing, was a major threat. Understand that it wasn't just the printing of this fiat that threatened it's replacement, it was it's one-sided management in a many sided world. For the US, keeping the dollar price of gold down was, for a long time, the only way to keep some nation states using it. Allowing the markets time to cycle gold for dollars at ever lower exchange rates.
The ECB is using the current leveraged paper gold market as a way to force the dollar faction to break itself. Their marking gold to market is a hangman's roap, just waiting for the prisoner to climb the stairs. When the US "WALKS" FROM HONORING CUSTODIAL GOLD, once again like in 1971, that will be the end! The system wide banks of the ECB will allow the dollar gold market to soar. Creating a wealth reserve not unlike their holdings of other currencies, only far more true to human perceptions. As the dollar crashes on foreign exchange markets, these CB dollar holdings will be just cast down, as Another said. No need to spend them.
Elwood, they are not trying to Un-money gold! They are going to un-Westernize gold so it performs it's historic function of acting as a tradable wealth holding. No longer following the Gold Bugs view that governments need to control gold so it acts like real money in the fiat sense. Truly, the BIS and ECB are today "Walking In The Footsteps Of Giants"!
Elwood writes my words then comments:
---------
"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?"
--------------
Yes! This is what we need to fix. As long as man believes that he can (without cost) create value, capital or whatever by making a bookkeeping entry in a ledger, we will live in a world possessed by the ìcopper into goldî illusion, no? But there is nothing wrong with credits and contracts as long as they are backed at par by real money, because there is no illusion in this. We are capable technologically of creating such a system, and we will have a prime opportunity politically when the dollar reserve function dies.
Sir Elwood,
Today, our perfect gold system has been bastardized into it's current form. Over a half century or more, we eventually came to this. No there is nothing wrong with hard credits and contracts, based on the discipline of gold. But, we as a society cannot create a force strong enough to save our children from the eventual inflation this abuse creates! Gold or no gold, as with peace and war we end up with fiat anyway! The illusion is in our calling gold money and using it in a fiat credit function. For thousands of years, from baskets to computers, carts to cars, guns to rockets,,,,,, this new prime opportunity of which you speak,,,,,,,, has always been blowing on the wind!
Again Elwood writs my words, then his:
-----------
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 fiat 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.
-------
No! Fiat is used only through threat of force. ANOTHER implied as much when he stated that this was a way to get oil off the dollar without war. I ask you, sir, look around you. See all the things in your life brought to you by voluntary exchange through the market economy? An economy capable of all this is certainly capable of producing a free-market medium of exchange, no? This is what I mean by sound money (the Rothbard way).
Elwood,
Your note of Another is out of context from the discussion and events of that posted time. I completely agree that our market economy is a sophisticated, remarkable thing. However, Rothbard tells the way it should be done and history tells the way it was done. Indeed, while we may never overcome the human failures of war and fiat inflation, the wealth of common man does not have to be expended while society tries yet another time.
Thanks for your thoughts, sir. (smile)
===============
Mr Gresham (4/22/01; 14:01:22MT - usagold.com msg#: 52345)
Book 'em, Dan-o!
===========
BH (4/22/01; 13:53:50MT - usagold.com msg#: 52343)
TRAIL GUIDE---ESF/Bundesbank-----
===============
Hello Gentlemen,
I suspect the gold in West Point was reclassified in a show of good faith to those that own some international gold paper. I'm talking about people who's reasonably priced product you cannot live without. I doubt the gold has outright swaps written against it or was swapped into the enemy's camp (so to speak). While the ESF has the right to trade currency swaps against other's gold (and they do do this). Our gold has yet to be possessed by others. Just as in 1971, when many dollar holders thought US gold was "in custody" for them, so to does the current world dollar gold markets. However, this open certification shows just how tight the system has become.
We have said for some time that the dollar faction has inflated paper gold and done so with very limited actual bullion of their own. We maintain that most of the leverage created in this arena has been done with the gold of private Western owners. Modern GoldBug owners that once held physical gold but now seek gold leverage and gold industry investment instead of gold wealth. That gold has now been leveraged for all it's worth as it filled the use void. Today, we are reaching the mathematical end that that game can be played. Others know this and the West Point business is an attempt to counter this perception. Even if it was only a political move. We are getting close though (smile).
There is no logic in that the Bundesbank would risk it's gold. They were major supports of the Washington Agreement. Counter to perception, the entire EuroZone CB system awaits the day when they can convert failed paper gold borrowers into Euro borrows. As our paper gold market fails to function, shuts down and physical gold soars, there will be no bookkeeping market to offload these paper positions into. The conversion ratio into Euros will then be something to behold. Along with the demand for currency Euros and physical gold! The BIS /ECB is delighted that the dollar faction is lending all the "gold on paper" the dollar market can stand. Eventually, the US will walk right up to the gold window with the intentions of selling, only to fall away as they stair at a mountain of foreign CB dollars.
"""We watch this new gold market together, yes?"""
Thanks
TrailGuide
Trail Guide (04/23/01; 20:51:15MT - usagold.com msg#: 52425)
Comment
abudahhab (04/23/01; 18:15:47MT - usagold.com msg#: 52412)
@Trail Guide re Arab free trade zone
------
Thank you abudahhab,, fine observations! I just read the forum and found yours.
TrailGuide
abudahhab (04/23/01; 18:15:47MT - usagold.com msg#: 52412)
@Trail Guide re Arab free trade zone
Trail Guide,
This one has been in the works for some time now and indeed, there is a direct tie to the Euro zone. The economic and trade news from the region as has been quite remarkable as of late. Indeed, we have the beginnings of a natural gas grid between, Egypt, Jordan, Syria, Lebanon and Turkey. The same countries have also agrred to a common electrical grid. The free trade zone has gained momentum since the end of the Lebanese civil war in 1990. There has been much talk in the Arab press (Jordanian in particular) about reviving the pre-WWI "Greater Syria" concept on an economic monetary and trade level. The EU officials have been making the rounds in the countries and discussing free-trade arrangements.
As well, earlier this year there was a important summit meeting between the Gulf Co-operation Council and the EU. The idea of including the Gulf States in the EU trade zone while allowing for payment of oil in Euro was openly discussed at the summit. I have a hunch that this deal is now basically in play and much oil is being sold in exchange for Euro.
Perhaps the most compelling feature of the Euro is the queaterly mark-to-market of its gold reserves as measured in $US. Once the on-going gold default begins to affect the $US price, it is highly concievable that the Euro could be made fully conertable into gold. This would solidify its use in the Arab speaking world.
On another point, is the Treasury - Budesbank swap the ultimate trap for the US? Perhaps its ultimate maturity is the trigger for the coming hyperinflationay tsunami?
Abudahhab
Gold Trail Update (04/24/01; 06:03:57MDT - Msg ID:52445)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
ANOTHER (THOUGHTS!) (04/24/01; 06:03:56MT - usagold.com msg#68)
test
thank you
Trail Guide (04/24/01; 06:53:27MT - usagold.com msg#: 52448)
Comment
Sir Belgian,
We have partial evidence that a gold swap between the US and the Bundesbank is considered legal. But no evidence the event occurred.
We have evidence that the Bundesbank has lent and sold some gold. But, their accounting over time does not show any drop of gold stocks larger than expected. Further, their gold lending could have been (and probably was mostly) in "nominee" form for the BIS.
We have evidence that the ESF can do swaps of their currency assets for other's gold. But no evidence that they have attached the West Point gold in exchange for other's gold.
The only "big fish" that was caught (and it is a very big one GATA should be proud of for sure!!) was the actual reclassification at West Point. Truly, this "event" is right in line with our view of current "political actions".
We shall see.
TrailGuide
Trail Guide (04/24/01; 07:10:41MT - usagold.com msg#: 52449)
Recession still on the cards
http://www.usagold.com/DailyQuotes.html
From USAGOLD news feed:
-----Recession still on the cards despite Fed cut----
by ANDREW SMITHERS
The US economy has several problems. Among the most
serious are too much investment and too much debt. The
stock market bubble has been the root cause of both.
Capital has been too cheap.
The Federal Reserve has just cut interest rates, saying it hopes this will encourage more investment. If it does, it must also mean more debt. As the adage has it: 'Those whom the gods wish to destroy, they first
make mad.'
Investment is unlikely to stop falling just because borrowing is cheaper. Companies have invested too much, so there is lots of spare capacity. There is no point, even with lower interest rates, on building more plants. Already, businesses can make more than they can sell.
If investment keeps falling, the outlook for the economy is poor. The big risk is that consumption will also weaken. This would turn a weak economy into a full-blown
recession. ------------------------
http://www.thisislondon.co.uk/dynamic/news/top_story.html?in_review_id=384044&in_review_text_id=330122
=========================
Randy, keep up your good work of noting the Fed's money printing! As this recession bites, you may need a full crew to document the cash flow (smile). What a combination;
hyper-inflation,,, cheap contract gold,,,, and exploding prices for physical gold. We just got to see it to believe it!
Thanks for all you do
TrailGuide
Trail Guide (04/24/01; 20:23:14MT - usagold.com msg#: 52494)
Replies that help articulate
Parsifal (04/24/01; 01:13:36MT - usagold.com msg#: 52434)
Comments/Questions on Latest Trail Hike
Hello Parsifal, you write:
--------Me:
If the U.S. held gold in custody for others, and then reneged on the custodial arrangement and denied the rightful claims others had on that gold, that would be outright fraud, theft, no? I expect that theft of gold has been going on since forever.-----------
Sir, We need to remember that most of this "showing off of gold stores, from this point forward will employ a lot of political gamesmanship. Not unlike the BOE auctions. In that case they aren't really selling that much gold into the market. The BIS could have taken it all real easy, but England wanted to drag it out for effect. That way they got the most exposure and time. Allowing some of their favorite BBs to escape before the Pound goes EMU.
In the same light, most of the real gold that has left the CBs ended up in other CBs as statistics show. Political gamesmanship! Same thing is in process with our West Point business. Political jockeying for more mileage. As an example; watch a newcomer ride into town pulling an open
trailer of cash. Every real estate broker from miles around will be at his feet. Now. that cash isn't in their possession, is it? Yet, it sure looks like it's been put on a trailer format for easy spending (grin). Custodial gold has the same effect in international gold paper players. Like these real estate agents, gold players now think they have USA bullion in the bank just because it's been placed in a trailer! (big smile)
Ha! Ha! Forgive me, I am laughing at my own story. My wife hates it when I do that while talking in public.
Parsifal, to more relate to your point; today, it's almost impossible to prove legal intent in the paper gold market. So, whether gold paper is backed or not is not worth asking. It's become so convoluted, the paper trails lose even the BBs. Note: If you want to own gold in storage, forget the
boiler room, leveraged shops that lure you in only to sell you something else. They will only sink with the flood tide that's coming. Deal with a straight, clean operation that traces your ownership in an unbroken line, right to the vault. In allocated storage. I saw the name of one of those dealers just a min ago? Starts with a C.
You write
-----Why do any of the EU CBs lend any of their gold at all? If it is so valuable, why lend it a such low rates (into certain default?) and why are they so anxious to sell it? It seems the sales quotas were met very quickly.------
Go back and read through the archives. We went through a lot of storage space on that one. Even so, we will return to that subject as this all unfolds.
You write my words first , then yours:
------Trail Guide:
Eventually, the US will walk right up to the gold window with the intentions of selling, only to fall away as they stair at a mountain of foreign CB dollars.
Me:
I don't understand this part. Would that be the U.S. govt. doing the selling? What would the U.S.
be selling, physical gold or paper gold? And what would the U.S. be trading for, ????? ----
Sir, It's all just political games, as in my analogy above. We will hear of the US getting ready to sell
as the the end time comes closer.
Thanks
TrailGuide
===================
Mr Gresham (04/24/01; 11:18:01MT - usagold.com msg#: 52459)
Belgian, Econoclast, Trail Guide
Hello Mr. G,
You said: ----- It looks like the German document (which I haven't more than glanced at yet) is an "example" of possible transactions, and under the ECB umbrella at that, and that the press release made more of it than it should.---------
Sir, you may have hooked a "big one" yourself. Such wording being possible transactions under the ECB umbrella is a prelude to some big time card dealing between the US and ECB. How about a gold for currency swap? US gold for Euros? (smile) Don't laugh too loudly, this may come yet!
Thanks
TrailGuide
============
USAGOLD,
I read in your Commentary & Review page that requests for info is way up! ------- Over the past weekend we received a flurry of requests for information packets -- one of the top weekends in USAGOLD history. -------------
That is very good to hear, indeed. The more we investors get the message and help ourselves to your services, the longer we can talk in your back yard (huge big smile)
Thank You, MK, for all your fine efforts
TrailGuide
Trail Guide (04/24/01; 20:25:28MT - usagold.com msg#: 52495)
Replies that help articulate
Simply Me (04/24/01; 03:46:37MT - usagold.com msg#: 52439)
Welcome and Thanks----
Welcome back Another and Trail Guide!------------
Thank you for reading, Simply Me. Hope it all has some impact on your thinking.
TrailGuide
===============
Econoclast (04/24/01; 08:35:58MT - usagold.com msg#: 52451)
-----I feel discouraged right now. Not because the gold price is low, not because of what is happenning in the gold market, and by extension the financial world, but because of the fact that what I see for the future is more of the same.--------
My friend, our message and our position is that we are in one of the most exciting times of all the history of gold! We have seen that during times with the most radical transitions, the majority are usually defending the wrong asset. This unfortunate situation need not impact everyone today. If better judgment is the result of a full understanding, then some who read here will be exposed to
tools that could help them avoid the mistakes of our Western hard money majority.
For Western Gold Bugs today, their culture, their system and their recent knowledge is all ensconced within the last 30 years of paper wealth. Yet they are using a hard money defense, written by masters preceding our modern era. They struggle to use that logic out of context, as it is thought to apply to this gold market today. These two precedents are leading them to reflect their gold values in some form other than physical ownership in possession. This mistaken detour from gold's true purpose will once again prove, by reality, the value of owning real gold.
Standing aside this group is the Physical Gold Advocate. For them, for us, these times will contain the greatest gain in real wealth ever seen. For those who are falling behind, gold is still within your grasp.
TrailGuide
================
Belgian (04/24/01; 09:17:49MT - usagold.com msg#: 52454)
Official Gold
Trail : Do agree with your correct observation. And...
Hello again Belgian,
you write:
----------We still remain completely in the dark as WHAT the intensions of the Official Gold-holders (OGH) are !--------
This is always a primary reason to own real gold, in possession. Gold Bugs talk endlessly about how these OGHs cannot forever manipulate the currency price of bullion. Then they go out and place themselves at the mercy of our warring OGHs, by owning gold investments that totally
depend on the OGHs not holding the currency price down.
My friends, wars evolve battles and battles destroy weapons. In this case, the main weapon of the dollar faction is their control of the paper price. As the ECB strikes this stronghold's credibility, that pricing structure of gold will completely fail. Throwing most Gold Bugs into disarray and their investments into valuation uncertainty.
Sir Belgian, I bid you success in your quest for security in physical gold. But disagree in your comment of: ------- We must all realize that there is NOT ENOUGH gold to permit a free market.------
There is enough gold in one ounce to service the entire world's wealth needs. Broken into single atoms and alloyed into coins (MK may agree on this (smile)) that single ounce would work for us all. At the right price, a free price, all the gold owned now could be enough. No more gold would need be mined for the rest of humanities time.
It is the price of gold that has been managed and distorted into a perceived commodity value range. Because gold does not fit into man's credit money systems, man always will attempt to use substitute gold for added supply. Even in a pure gold system, if gold is lent between two humans
they will try to alter the metal's purity to ease the pain of repayment.
thanks
TrailGuide
======
Trail Guide (04/24/01; 20:37:31MT - usagold.com msg#: 52496)
Comment
Randy (@ The Tower) (04/24/01; 12:17:45MT - usagold.com msg#: 52461)
Trail Guide, you in particular may get a smile out of this...
Hi Randy,
Nothing holds still for long, does it. Good post, sir! I'll be back later to comment on more of the fine words said here today.
Thanks all
TrailGuide
Randy (@ The Tower) (04/24/01; 12:17:45MT - usagold.com msg#: 52461)
Trail Guide, you in particular may get a smile out of this...
http://www.imf.org/external/np/exr/facts/gold.htm
since it coincides with the latest discussion regarding subtle changes to verbiage of official gold reporting.
Naturally, you remember we discussed the IMF's late-1999 through early-2000 off-market gold operations conducted with Mexico and Brazil. It seems the IMF, in small degree, capitulated to the better "international practice" of recognizing gold's market value rather than maintaining the arbitrary fictional valuation of SDR35 per ounce.
It now seems that the IMF is *****smoothing the way**** for other future steps in this direction toward recognizing the free gold market value. In March, the IMF changed the language on its website regarding the balance sheet valuation of its gold holdings. Instead of the old proclamation that the majority of its gold was held at SDR35 on the balance sheet, the IMF now states its gold holdings are valued on the balance sheet "on the basis of historical cost".
While this is valuation remains numerically consistent with the prior method due to the original arrival of much of this gold at the SDR35 equivalent "cost", it certainly cracks the door a bit further toward easily and openingly recognizing the higher free market value for gold, and might thus signal full capitulation in this regard all the sooner.
Trail Guide (04/25/01; 15:04:48MT - usagold.com msg#: 52536)
Comment to Randy
Randy (@ The Tower) (04/24/01; 10:38:48MT - usagold.com msg#: 52458)
Follow-up on my comment last week that China has lately been a net been seller of silver
------Philip Klapwijk, managing director of GFMS, explained at Monday's conference of the Gold and Silver Institute that China sold near 60 million ounces of silver in 1999, with additional sales of 40 million ounces per year likely over the next couple years. Continuing...----------------
Your words:
--------China is simply lagging by one Century in performing this act. Many of the other nations of the world unleased their silver reserves near the arrival of the 1900's when the usage of silver was abandoned as redundant within the banking sector. And in contrast, not surprisingly, global gold reserves have GROWN since those days. Further, the dollar can be expected to suffer a worse fate than silver when it, too, loses its particular reserve and settlement role within the international banking system. And gold? All reasonable signs show that it shall maintain the king position as THE reserve asset par excellence for a long time to come. Get you some. ------------------
Hello Randy,
You know, your thoughts got me thinking (grin). I have time to do that right now as my files are restored.
Following your chain of thought about China silver,,,, I noticed a comment from Bush that we would fight them over Taiwan. Then silver gets hit real good. Could it be they are unloading silver so as to buy Euros and gold prior to calling it splits with us? They do have more silver than their needs require (possibly more than all of us require).
If they are, indeed, going to run with the Euro later and the ECB is marking gold (not silver) as their main "wealth reserve", then it makes sense for China to position themselves this way. It also makes sense because as an addition, Hong Kong has so many dollar reserves they, too, could never unload them. Following the Euro system lead, they could afford to let their dollar reserves burn as
long as they had even 15% of that value in gold prior to full "Euro roll-in".
Further,
If any EuroZone based gold paper they own that had a US originator defaults, with China's approval, that paper could be restructured to pay back in Euro currency assets. Courtesy of the ECB /BIS. Forcing the US originator to dump dollar based gold hedges (that's a lot of paper gold) as they buy Euro coverage to ensure exchange matching. Of course, extrapolating this system wide, we would see paper gold credibility plunge (therefore it's bid price also) aside the Euro exchange rates spiking on the dollar. All the while out right trade in physical gold or "five day" (super spot delivery) would spike to the heavens.
I do wonder if we are, as I said a number of days ago, seeing history in the making with lease rates doing strange things now? (smile)
Thanks Randy
Also welcome back Sir ORO!
TrailGuide
Trail Guide (04/25/01; 15:17:21MT - usagold.com msg#: 52537)
Needs clairty before reply
Tree in the Forest (04/25/01; 14:53:58MT - usagold.com msg#: 52535)
Hello Tree,
When I spoke of how all the current gold in the world could be enough to act as a wealth reserve if the currency price was high enough,,,,,,,,,,and expanded on that position,,,,,,
How is that in context with your:
-------------
1) Metal sits at Comex; there's plenty of gold
2) Lease rates up; there's a shortage of gold
3) Trail Guide says; there's plenty of gold
4) CB's tighten sales; there's a shortage of gold
Now, is that clear as mud?-------------------------
You are right Sir Tree, not very clear? What is the thrust of your argument in respect to my position?
TrailGuide
Trail Guide (04/25/01; 15:57:37MT - usagold.com msg#: 52540)
Question
Fair enough Econoclast,
How would you outline a method of locking society into an honest money system? If you were our ruler, how would you make us stay on a pure honest gold money system?
Monetary laws don't help, the evil ones will go around them. We could kill all the government officials and most especially bankers? (smile)
How do we stop this ages old evolution of "thinning our gold" when our economy slows.
What is to stop "me" , an evil private gold lender, from lending paper credits instead of gold? Especially to people who don't qualify got real gold?
Tell us your thoughts?
TrailGuide
Trail Guide (04/25/01; 16:19:14MT - usagold.com msg#: 52543)
Comment
beesting (04/25/01; 13:33:39MT - usagold.com msg#: 52530)
How do We The People Arrive At a Fair Honest Price For Gold?
----- So, the question remains, how do we keep each other honest,----------
Good thoughts beesting. But aside the daily buying selling using cash (gold coins and gold receipts in your context), how do we default on our borrowed gold? How do we stop the voting public from demanding that our leaders demand of our bankers, that more borrowings be allowed. To cover what we could not pay now? Some extra fiat gold credits, perhaps? Just until we get back on our feet? Does it not always evolve this way? Even during the glory years of the old gold standard?
You see, credit and honesty do not mix well in humankind. Better let the fiat show go on while the average person retains his wealth in Free Gold, no?
TrailGuide
Trail Guide (04/25/01; 18:00:42MT - usagold.com msg#: 52549)
Comment
(Sir, this was written before reading your recent post I'll read it also and reply later.)
Journeyman (04/24/01; 13:39:01MT - usagold.com msg#: 52464)
Mr. Journeyman,
Excellent presentation of your position! Thank you.
The main point I am making about gold and money is directly related to your first statement.
You write:
-------we DON'T need fiat, and neither "the people" nor "society" decided to go from the classical gold standard to FED fiat. That change was foisted on "the people" AND "society" by the banking-government cliques, with the express purpose of profiting these two groups at the expense
of the rest of the population. --------
Absolutely Journeyman. Your articulated account is regarded as an unshakable law amongst our Western hard money crowd. Indeed, it is this very perception that drives the rethinking today about fiat's relationship with gold. That thinking is spelled out in self evident form in this passage from the trail:
"" It's not the management of money that was the problem, it was the management of man's authority to maintain gold and it's discipline. Over and over, we watch good monetary theory fail as society fails to control their controllers.""
This is the root problem we face in advancing another of your classical gold standards. The people could not rebuff the forces that "foisted" the evil upon them. The problem is not deciphering whether someone else did the deed, it is in the understanding that it can and will happen again.
Society nor mankind itself can manage those that can and do these changes for their own gain. This is what we face, this is what we address.
As a further measure of defining and rebuffing this dilemma, I went on to say:
"" The road before us is to not manage gold. Rather, stop (to stop managing) it entirely. Forget about calling it official money and let it seek it's own level against every fiat as a worldly wealth.""
Even if the charge of returning us to a "classical gold standard" was given unconditionally to Sir Journeyman, this person would face all the exact same pressured his predecessors faced. The account of history and our experience with human nature all say he would do no better.
Further, to mitigate the loss all of us experience as this repeats, I made this point:
"" Indeed, while we may never overcome the human failures of war and fiat inflation, the wealth of common man does not have to be expended while society tries yet another time.""
That simple reply, my friend addresses all our experience with moneys.
Also, to your point of:
-------As far as the euro being backed by gold,,,,,,,,,, and But is their currency tied to that gold in any meaningful fiat-supply-limiting way?-----------
We do not in any way consider the Euro gold reserves as being tied to that currency. For the benefit of everyone, gold will be a free priced reserve once the paper dollar forces are cast aside. If the Euro fails, as the dollar has, it will do so in a world where gold in the hands of man will balance the loss. With no incentive to match gold to any form of currency exchange rate, the Euro will for the first time a world reserve that's valued for it's collective management alone.
Thanks
TrailGuide
Trail Guide (04/25/01; 19:38:57MT - usagold.com msg#: 52560)
Comments
Econoclast,
I see that more than a few are taking a shot at this problem. Still, we all look forward to your answer also. (smile)
---------------------------
Henri, I forgot you were a poster here. How does it fell to go fishing in someone else's story? Ha! Ha!
----------------
Journeyman,
I have a reply for your 52546. But, before posting it would you please indicate if you are in any way connected with E-Gold. Or communicate if your passion for this company is overly strong. Understand, this site is provided by another gold based business and I am uncertain how I should tread this ground. I could restructure my reply so as not to
attack the merits of this enterprise (E-gold)if this is personal to you.
Thanks for your answer.
TrailGuide
Trail Guide (4/26/01; 05:19:39MT - usagold.com msg#: 52599)
Comment
ALL:
I decided not to use my completed reply about "electronic gold". And will rework it for posting
later. It will hit on some of the good points our Randy just made (and then some).
Elwood, Now you are pulling all the parts together (smile). Nice post.
Black Blade, all of your fine documentation of our ongoing energy problem is highlighting the structural control oil has today. In this position that power has the ability to shift economic stress onto the most weak of our two current fiat systems. Both affected with only one surviving. The
transition continues.
Thanks all, be back later
TrailGuide
Elwood (4/26/01; 01:20:05MT - usagold.com msg#: 52598)
Of Austrians and Arabs
Hello, everyone. Trail Guide, I think I'm beginning to understand finally. Thank you. (smile)
"gold and oil will never flow in the same direction"
A simple statement, but one which I don't think I really grasped until recently. It simply means that as long as Arab oil flows, the Arabs will use that flow, or part of it, to buy gold. As long as Arab oil flows. Be it 10 years, 50 years, 100 years or a thousand.
Being a frugal shopper, the Arab is like us all. He's in the market for the long run, and he's always on the lookout for bargains when he can get them. Today, the Arab, he has a problem though. Everywhere he looks he sees "low gold prices," but, being a big buyer, he finds very little "low-priced gold." It's like a sign in a department store window: $40,000 SONY STEREOS!, TODAY ONLY $270. You go to the counter with your money, but the clerk says "sold out, want a raincheck?" When you say yes, they never call you back. If you complain they'll gladly offer your money back, but you can't sue them for delivery of a $40,000 stereo which doesn't exist, eh? This is the problem the big gold buyers, the Arabs, face today. The world dollar gold markets say "Sale on gold today!" When the big buyer Arab arrives they say, "Sorry, want a raincheck?"
Now all you "Austrians" out there, listen up. I have a sneaking suspicion that Trail Guide, even though he be American, he's a little bit Austrian, too. We Austrians say, "Fiat be bad, gold be good," for all the reasons we, as Austrians, know to be true. But let's lay that aside for the moment and think about what Trail Guide says. After all, he has earned that much from us, no?
As Austrians, we dwell much on mediums of exchange, fiat and government intervention, etc. Let's look deeper, not at the medium of exchange, but the *object* of the exchange.
Leaving aside the medium of exchange we could say that today's worker (us average joes) exchanges his labor for food, shelter, electricity and everything else which he consumes, invests or saves. The Arab trades not labor but oil for all these things. He also consumes, invests and saves, but…..after getting all the Mercedes, palaces, common stocks and what not that he can use, there's still more oil to be exchanged. He exchanges that for gold.
But wait! Didn't Elwood just say he's going to leave the medium of exchange out of this? Gold is certainly a medium of exchange, history says so anyway. But the Arab is thinking differently. To him gold *is* the object of the exchange, not unlike your house to you. The gold is the object of the exchange to him, not a medium in the way we think of fiat or in the way we think of a gold medium.
You would have to be pretty hard up (hungry?) to be forced to trade your house. Why? Because you have your labor. Likewise, he would have to be pretty hard up to be forced to trade his gold. Why? Because he has oil.
To him, gold is a medium of exchange, but only in the same way that your house is a medium of exchange to you.
We trade every day for bigger and better houses, but, for the Arab, is there a "bigger and better" gold? (If you said "silver," you get the booby prize. (smile)) Yes, thinking like this, he would have to be very hard up indeed to be forced to sell gold. The Arab is correct to think this way, for there is nothing in the world he cannot buy today with his oil……except gold.
Think, there are people in the world today who have become so rich…..who have become so wealthy, that gold (to us, a medium of exchange) has become the *object* of their exchange. Hard for us common folk to imagine, isn't it? Trail Guide's task be large, no?
Ok, let's toss back in the role of money now. Let's get to the fiat! We Austrians say gold be the best medium, history says this, no? Yes, history does say this, but there be no oil in history! History says (at various times) more people need cows than need trinkets, so cows best medium. Then more people need wheat than need cows, so wheat better medium. Then world becomes richer and people say this wheat different than other wheat, and this cow different than other cow, so use gold as "standard" or "benchmark" medium even though no one "needs" it.
Today oil is a better medium, because ALL people need oil (even more than need cows and wheat), and oil "standard" is good enough. Gold returns to luxury, "wealth" item as second-best to oil. And silver? She be a base industrial metal, tarnished with age.
Oil is the best medium, but can't buy a diet soda and Doritos with oil (too inefficient), so Arab agrees to use fiat as long as fiat creators keep gold price reasonable (gold is object of their exchange, remember?).
Today, Dollar gold price very reasonable, but where is gold? Tomorrow, Euro gold price still reasonable and there be gold.
Austrians say "Gold trade next to fiat? Fiat will die!" I think now, this Euro trade next to gold and survive……if Arab agrees.
Austrians say "Why not force direct trade: gold for oil?" I think, then gold price in oil not be reasonable. It be too high.
When Arab well runs dry or oil's timeline be ended by technology, on that day Arab wake and wish for higher gold price, because then he becomes seller.
What say you, Austrians?
Elwood
Trail Guide (4/26/01; 17:57:30MT - usagold.com msg#: 52647)
Reply
Journeyman (04/25/01; 17:32:04MT - usagold.com msg#: 52546)
Keep'n 'em honest @Trail Guide msg#: 52540
Hello again Journeyman,
Your comment on my question to Econoclast was an excellent example of the mind set I have been pointing out. It seems that with each step up the ladder of economic sophistication, we also perceive a need for a more sophisticated way of using our money. It is here, at this nondescript moment in the minds of men that we always attempt to combine receipt forms with wealth forms.
Throughout history, each one of these new ideas were embraced as a way that was sure to undo the prior problems. Each time the wealth of common man, his life long savings, is risked and then squandered once more as the world tries to make gold something it isn't.
It always starts off as a fine idea, a reasonable method, a way to better define our security of wealth and surety of payment. With each invention and improvement to our economic lot comes a better way to use gold without giving up any of it's historic principles. Principles of wealth form that
serve us by not cheating us. All done as we proclaim that "us humans" would conform to not cheat these principles in exercising this new process. Such a proclamation is repeated relentlessly until the ears of countless generations become numb from poorness without real wealth.
Truly, as mentioned on the GoldTrail, the money of our ancient fathers was not money unless it was wealth and it was not wealth unless it was possessed. Yes,,,,,,,, that one law of money that so convolutes our souls today as we struggle to contrive a way around such an unsophisticated rule of common sense. As surely as breath and air complete the circle of life, gold in hand, underrepresented by a claim, is the money we children have never known.
---------------------
Sir, you write (condensed for space):
------I think I know how the baser human tendencies ---------------------------------- with the
added advantages modern technology makes possible. We may perhaps best begin this particular trail with the French paper money experiment -----------------"To reach the climax of ferocity, the Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of 'having asked, before a bargain was concluded, in what money [assignats or specie (gold and silver)] payment was to be made.' The great finance minister, Cambon, soon saw that the
worst enemies of his policy were gold and silver. Therefore it was that, under his lead, the Convention closed the Exchange and finally, on November 13, 1793, under terrifying penalties, suppressed all commerce in the precious metals." -Andrew Dickson White, Fiat Money Inflation In France ----
--------Simple self-interest caused the French people to discount the paper assignats vs. the precious metals, so much that the "authorities" had to attempt to drive gold and silver out of the market places in a vain attempt to save this their latest paper scheme. It took the French about 10
years, door-to-door to clear things up and get back on honest gold. In fact, Napoleon was the follow-up to that paper experiment, and he fought most of his major battles financed directly by gold. You see, history is _not_ the paper context punctuated by sporadic honest hard money we all assume because we've all lived in the midst of the paper. It is rather, honest hard money punctuated by relatively short bouts of shakey paper money. --------------
Sir,
This account is but one portion of the story. The corruption of wealth did not begin or end with this moment in time. Walk backwards from 1794 and view the context as it is punctuated with debasement of the metal itself in between and before these bouts of shaky paper. A search of our
manuals will indeed pinpoint the exact time when gold the money wealth became the object of wars and revolutions. That year was when man decided to combine the wealth concept of gold with the credit concept within him. From that moment on gold began it's troubles.
Now, walk only a short step forward from the French period as they strive a resolution of their money problems. Here we see where it all began again, even into this day.
You write:
----- It's our misfortune to be near the tail-end of the latest and most wide-spread paper experiment in history. So far, in pure form, it's lasted only about three times as long as the ten-year French experiment 200 years ago. It's longer because it's more wide- spread.---------------
Sir,
The British before us were lending and printing credits long before the US learned how. We should not judge their gold period a sucess either. Just because they brought the world a long period of gold based money did not hide their inflation. Political styling, as it were then, demanded a constant search for subjects so as to steal through warfare that gold they did not have. Inflationary expansion
through expropriated gold is inflation by any means necessary and the same mind would print for the same purpose, if needed to achive a political end. Hard money historians would have us think the King would not have printed gold receipts if he had no gold. When gold is money, it will be inflated by a society unable to controll their controllers.
You write:
----- It's a little different this time. Things are daunting for other reasons, but the out-come will be the same, reinstitution of transactional gold.-------------------
--------TG, you already know gold shines as the premier wealth preserver. If title to it can be transferred securely and easily from person-to-person, it once-again becomes the odds-on favorite for the inflation-proof transactional medium it has always been. It's the very fact of the ease of
electronic transfer of title made possible by the internets, combined by the legendary advantages of gold money that nearly guarantees this outcome.--------------
Sir,
I do not consider gold as a wealth preserver. Nor does any other Physical Gold Advocate. We consider gold itself as wealth. Indeed, "odds-on favorites" you say? Our history is full of new forms of paper receipts that would better work as the transactional medium of their day. As I told ET and
others on the Trail, man cannot control his controllers, nor can he discipline fiat with gold.
To young ears, (and I know Another will smile while reading all this) this speed of electronic transfer sounds like new news. Yet, with each new form of paper currency came the next generation of faster settlement. None of these advancements, including your latest item, addresses how it will avoid the political stress such systems face during downturns, crisis and war. As the turn of these events is marked, so to is the national money also marked. The cry goes out, if fiat is our money, we must borrow it. And if gold is our money we will borrow that too. We will make money as needed!
While it's true that all wealth is appropriated during crisis for the good of all, anything that is fiat and
receipt in nature is inflated the worst. Your "electronic gold" is nothing new in function, only new in promotion. It will succumb to the same human faults all gold receipts fall into, greed, corruption and paper inflation. No matter the safeguards in place. The Physical Gold Advocate moves forward in modern times to use and embrace the same fiat society will tamper with. All the while owning the wealth of ages as the ancients did, in your possession. In this way, the average family will know their wealth is real while society at large fights their historic war with man's credit money.
Thank You all
TrailGuide
================
Trail Guide (04/27/01; 06:13:36MT - usagold.com msg#: 52685)
comment
Cavan Man,
Thank you for your comments on our discussions here. You mentioned that I was a class act,,,,,,, Well, you should see the look in my wife's eyes when our large dinner functions conclude with a silent room and me talking about politics. HO! Ho! No thoughts of class in those eyes! (grin)
LeSin and Lafisrap,
Speaking of eyes,,,,,,, at our G7 coming up,,,,the ECB will be getting a case of the dry eye (no blinking) while everyone else in the house is crying! I'll do my part to console them in their hour of "transition". (smile)
Journeyman,
OK, my friend,,,,, you have made your case and I mine. Now we watch this all unfold and weigh the evidence. By the way, didn't the electronic gold companies have a major problem making any market at all after the Washington Agreement? I think MK or Randy may have commented on that item because customers were complaining that E-Gold (or one of these) couldn't buy or sell for a while. Funny, there was a 24/7 market for my gold during all this. (big smile while digging for old bones) Natural for me because I do a lot of digging for,,,,, old gold,,,,,, gardening and,,,, peoples
perceptions and intentions.
Thanks all
Later
TrailGuide
Trail Guide (4/28/01; 07:59:31MT - usagold.com msg#: 52738)
China Gold!
http://www.usagold.com/DailyQuotes.html
From the USAGOLD News Feed (see link above):
Parts of article -----
China to Reform Gold Management System
------China is going to abolish its planned management system for the unified purchase and distribution of gold and to set up a gold market in its stead, said Dai Xianglong, governor of People's Bank of China.------------
----------For a long time, China has instituted the planned management system featuring "unified management, purchase and distribution"---------------- the problem featuring the lack of pressure and vigor for gold production and operation brought about by planned management has become increasingly conspicuous and has, to some degree, hindered the further development of the industry in gold production, processing and sales. It is therefore imperative to reform this system. ----------
--------Dai said that the basic ideas in reforming the system are: to set up a !!!!! gold market !!!!! to replace the aforesaid planned management system-----------
--------The main contents include: first, to cancel planned management of gold. set up a gold swap market in Shanghai ---------in the form of a membership system ----------
(MY NOTE: Not to be confused with a paper ownership swap in the context of our recent discussions)
---- Second, to abolish the licensing management system for the business such as retail, wholesale, processing and management. ------ Third, to relax control on !!!gold imports !!! in light of the process of !!!!! foreign exchange system reform!!!!. ----
(My Note: Don't you just wonder what they mean by that? Almost makes one think that someone,,, somewhere,,,, has decided to use gold in a different context. Almost like using it as a wealth reserve asset that's market to the market every three months. Strange, though, there is no
mention of a "redundant" (thanks Randy (smile)) metal helds as this asset???)
-----Currently, the People's Bank of China is actively carrying out various items of preparatory work in line with the general arrangements for the reform of the gold management system---------
----- it will start up the gold quotation system as quickly as possible, formally carry out the purchase and distribution of gold; it will intensify efforts to adjust the current gold management policy, to ensure that the gold retail business license system is abolished in the first half of this year. ----------
http://english.peopledaily.com.cn/200104/28/eng20010428_68866.html
Ok,,,,, looks like they are moving towards the "big Bang" coming in the second half. Come to think of it, the EMU is making plans to circulate currency at the end of the 2nd half??? It's time for me to talk to a few friends. later
TrailGuide
Trail Guide (5/3/01; 04:48:34MT - usagold.com msg#: 52966)
Comment
Hello again!
Had some interesting conversations with a few friends recently. I'll try to convey those talks into a trail walk this weekend. Another sent me a letter and has offered a new reply post to the forum. I intend to convey that letter and his letter also. As a change, we are going to post his Thoughts on the Gold Trails page.
Now that my computer is finally back up to speed, will begin replies and comments to some of the great posts offered here a few days ago. Will return tomorrow!
TrailGuide
Trail Guide (05/05/01; 20:46:10MT - usagold.com msg#: 53119)
a little late
USAGOLD (5/3/01; 19:40:36MT - usagold.com msg#: 53004)
Randy. . . .Argentina
-----FOA, maybe you'd like to get in on this??? ------
---------------------------------------------------------
Hello Michael and everyone!
Oh yes, I not only would get in on this but think I am "in it" up to the old arm pits already (smile). This world of ours is changing fast these days.
Actually, I only just now had time to copy several days worth of the Forum for reading. I'm late to my own invitation here, I know,,,,,,,, but as they say,,,, better late than never! I took the time to finish several things so as to clear up my writing schedule. Have a lot to say and reply to,,,, and this coming week will be very, very free. Oh yes,,,, one other thing,,,,, ET,,,, did you (or anyone here) ever drink in the "monkey bar" in central Oahu (Hawaii)? I know it's long gone now,,,, but there was something up on the roof of that place that you may be interested in. Much more interesting than that huge jungle cage of monkeys behind the bartender. (big grin)
OK everyone,,,,, I'll be back here as soon as I unpack and take care of some things,,,, then it's time for some real give and take.
TrailGuide
Gold Trail Update (05/06/01; 20:30:53MDT - Msg ID:53184)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (05/06/01; 20:30:52MT - usagold.com msg#69)
A Tree in the Making
Hello everyone!
Let's gather around and begin with a talk first, then an extended hike. I'm sorry to be so late and am also happy you didn't decide to start without me (smile)!
It's good to see so many familiar faces. It looks like the whole forum is here! There is MK with his warm cup,,,, Randy away from his tower,,,, and Mr Gresham who is just back from a historic visit to the "The Pearl City Tavern". His visit there (see #53150) was in response to my recent return post [#53119]. More on that in a moment.
I brought something with me today, as an example of human foresight. Yes, this fine ancient rosewood Bonsai tree. It's one of a collection I own and is quite old. Some of you may have already experienced these "works in progress" at The Bonsai National Arboretum in Washington DC.. Or perhaps you traveled to Elandan Gardens (in Bremerton, Washington State), where Dan Robinson has collected and displayed some of the oldest Bonsai known. Indeed, he has collected them from all over the world! They are priceless.
It's important, for our talk today, to understand the difference between many of the Elandan Garden ancients and most of those at traditional museums. Mr. Robinson retrieved many of his specimens from mountain tops after they had been growing for hundreds and hundreds of years. Untouched by man's hand, they formed most of their shapes by fate of nature long before Dan found them. The more traditional Bonsai, started by people, were formed and trained from birth. Hence, their more standard styling.
So,,,,, what does all this have to do with the old "Monkey Bar" at the Pearl City Tavern? The same bar that our Mr. G just paid a mental visit to? Well, many years ago I was there for wine and dinner. The place was rumored to be a hangout for spies and international intrigues, but I didn't
happen upon any (smile). Later in the evening, I was taken up on the roof and given a private tour of their Bonsai collection. One tree, in particular, was a spectacular item that had been passed through over ten generations of Japanese lineage. It was here, on the roof of the Monkey Bar, that I first began to understand how societies endeavor to manage the events of life yet never fully control it's outcome. And further, it seems the difference between great leaders and simple manipulators is perfectly demonstrated in the art of Bonsai.
The blatant controller will twist and turn, cut and destroy,,,, in an effort to replicate an image he has seen in the past. The beautiful landscape scene he remembers as perfect,,,,, all good and all right for himself and perhaps society at large; this system he strives to repeat as the bonsai grows. In the end,,,, he fails,,,, unable to reproduce what once was. Killing the system,,,, the tree,,,, the old currency. The very thing he and we all wanted so much to grow.
But, greatness is within those that know life is dynamic,,,,, what we do is never certain and subject to the leadership of nature. That person will spin the Bonsai on a table for hours, days, and even years as he styles what will work for that period of growth,,,, perhaps planning the timeline in a currencies development. A cut here,,,,, a change there as time grows the next limb. In the process creating something we all recognize, can use, understand and enjoy,,,,, yet,,,, different in many ways from what we knew or saw before.
Onward a bit
Thank you Michael, for your outstanding post today (#53135). I suspect, my friend, you have always raced before the wind! Perhaps a fine example for others to see as they drag anchor on the rocky bottom of history. It's sometimes good to seek safe harbor, I know, but this time the prize will go to those that outrun the storm (smile).
I see that our poster ET has gone away for a golf trip. Too bad, I wanted to remind him to be sure to bring plenty of currency along to pay his travel expenses (grin). In this world we all need much; blessings from above,,,,, family,,,, home,,, friends and good health. But after all that, one must have currency and an enduring, tradable wealth asset that places our footing in life on equal ground with the giants around us,,,,,, gold! Understanding the events that got us here and how they will unfold before us is what this GoldTrail is all about. Everyday our political world is pruned like two Bonsai, in an effort to shape a more healthy future. The dollar tree is failing because it needs so much dead wood cut off,,,,,, but if it is pruned it will not resemble the mighty Bonsai it once was! The Euro tree is growing as it is being styled,,,,,, what it will look like we have an idea,,,, but not a complete picture. It's hard to imagine that anyone can look at an early Bonsai and shape it's future some 20 years out? But, that is exactly what someone did with a tree on the roof of the Monkey Bar in Hawaii; indeed, this is what has been in process for so long with our changing money system.
OK, it's late for me and I plan on walking for some time this trip. So, let's camp here and rest. There is more trail ahead.
Thanks
TrailGuide
Gold Trail Update (05/08/01; 09:59:55MDT - Msg ID:53233)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (05/08/01; 09:59:55MT - usagold.com msg#70)
A Tree in the Making #02
Well good morning everyone!
Waking up on the trail is always a great experience. Our thoughts are fresh and the air is clear. Indeed, clarity is something that us real Gold Advocates are now fully experiencing in these latter days. Over a fresh cup of coffee, we can look around and for the first time begin to place the GoldTrail landscape in proper perspective. A perspective that breaks the old illusions of gold's paper worth and replaces it with an understanding of it's coming dynamic value as real wealth.
Down the trail,,,,
gold will no longer be able to successfully carry the Western name of Money so as to allow for it's political price fixing. A process that, it seems, has been with us for generations. Enslaving millions of hard workers by always officially classifying the terms and value of both their paper currency and their metal savings. Always inflating both items for the good of society's never ending political agenda. Then, never allowing Another currency to command an equal reserve position so as to engage and weigh the motivations of more than one political arena. Engaging and weighing these fiats not just within the exchange rate function, but additionally against the real wealth function of gold. (see MK's post below)
Allowing FreeGold to circulate as a wealth asset would denominate it's true worth through the much larger real demand of "Wealth Possession" instead of paper possession. Such a gold scale would measure our world reserve currencies against each other instead of against our Western concept of gold as official money. But, in addition, on a more higher level, prevent any one country from subjugating other nation states through fiat dominance. To more fully grasp the impact of "Possession" and why ancient gold was worth so much more as FreeGold; hike again that part of our trail (FOA (04/18/01; 20:20:06MT - usagold.com msg#64) Lombards, Normans and Franks.)
Both as official wealth and private wealth, physical gold will march with us into a future at values the likes of which we have never known. Understanding the how and why this would all come about took time and personal reasoning for each of us to sort through. Much of our background building would not have been possible without this modern internet. Further, without the fine folks at CPM, this unfolding story would not have been defined in mass, for all to see. Events now slowly build the story on their own as we become ever more secure holding physical gold for the acts that will follow.
Onward a bit:
I'm handing out these reprints of two important explanations of what we have meant and the perception that has been created. These are perceptions built upon not only our ongoing discussions and hikes here but also the refining input of the thousands that walk with us on the USAGOLD forum. Below defines their authors take on Another's thrust. I would say they are very much on the mark. First, from Randy at the Tower (USAGOLD sitemaster):
-----------
Randy (@ The Tower) (04/17/01; 13:37:02MT - usagold.com 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.)
-----------------------------------------------------------
Absolutely, Sir Randy!
As clear as mountain air. Next, the most recent treatise from USAGOLD (who is this guy? smile):
--------------------
USAGOLD (05/06/01; 09:48:35MT - usagold.com msg#: 53135)
ET et al. . . .On Currency Competition Quote from ET:
Randy asked me the other day what I thought about the "suffering" that has been caused by the US currency hegemony. Why do you think he would ask this? My guess is that he believes great suffering has come to pass and I certainly agree with him. However, he then goes on to say we should adopt another version of the same thing, apparently so the suffering can be spread around a bit. ---------
I have spent more than a small amount of time analyzing and interpreting the Another/FOA message, and I think you have reduced their message to a very narrow interpretation that falls short of of the mark. The statement above is indicative. As a result, I thought I should comment on the subject because I think you've missed a great deal of their message. I hope to add to your thinking as well as to others who may have fallen into the same misreading of their analysis. The danger in this sort of thing as always is that I may not be saying things with which FOA and Another agree, but I think my recapitulation accurate and if I'm missing something, I hope the other participants will fill in the gaps. I will not comment beyond this on this subject, because, as always, I am sensitive to playing too large a role here at this esteemed table. Those who are bored with this sort of thing, I beg your indulgence. Those who revel in it, I think you will find much to chew on. . . .per below.
Onward. . . . .
You and Randy are correct in pointing to dollar hegemony as a source of much suffering in the world -- intended or not. In fact President Bush has expressed the same reservations, more or less in a backhanded way, in his criticisms of the IMF during the campaign. So none of us are alone on those concerns. I think however that you need to expand your understanding of what Another/FOA are trying to convey, because it is not a simple advocacy of the euro over the dollar -- but a much deeper and important advocacy of competition in currencies, much as we have competition in other realms within the economy. This lack of competition is the problem with dollar hegemony and makes it possible for New York based multi-nationals and international banks to make bad (non-repayable) loans in the third world and then turn around and impose stringent conditions through the IMF that strap the local economy and eventually send the people into the streets -- ala Indonesia a year ago -- agitating for "economic" justice. (And of course that's just one example of the excesses of a monolithic reserve currency) Years ago, such injustices would have been fertile ground for Communist agitators, but now with the fall of the Soviet Union perhaps the multi-national crowd has been unjustifiably emboldened. In the long run, competition for this market from Europe, with an agenda of its own, would be good for the dollar and the international economy as well as the U.S. and Europe, and therein lies the real thrust of the FOA/Another analysis.
Let me take this a bit deeper:
I do not believe that Another/FOA are advocating a fiat euro which would "replace" in toto the dollar. Instead they advocate the euro, dollar and gold should "compete" for the hearts and minds of ordinary people (in terms of the currency they employ to store wealth), important financiers (as a hedging methodology), and, yes, central banks and nation states (as a reserve asset). In the case of nation states, the competition would inherently create circumstances leading to each doing what is necessary to make their "reserve" better than the other "reserves."
Under such a regime, the importance of gold ownership, for nation states, as well as individuals, would not be diminished because any nation state is capable of dalliance along the road to currency inflation making it necessary for the other participants to "hedge" their holdings. It is in fact a novel concept built closer to the von Hayek foundation of competing currencies -- including gold -- than possibly your own reliance on a gold standard as the ultimate and only magic dart that will find the target's center.
In fact there is a danger there that you might have overlooked. Take for instance the widely disseminated Kemp/Polyconomics New Bretton Woods proposal of a gold standard being bandied about in the conservative press. That proposal pegs the price of gold at $300. A major problem quickly surfaces: Whatever's left of the U.S. gold supply would disappear completely within six months of posting the $300 price -- the work of Continental Europe begun in the 1960s/1970s will have been fully rendered. The danger of course is the gold standard you would like to see is not remotely connected to the gold standard others, more politically inclined would like to see, so you always end up with this warmed-over version of a gold standard that gets right back where we started.
As a matter of fact, I see the FOA/Another currency concept as closer to the tenets of libertarianism (and Jefferson) than a gold standard because of the exchange restrictions which inevitably follow. In other words, we would very well be right back in 1971 with the United States once again facing the prospect of shipping its gold reserve to Japan and Europe in defense of the over-produced dollar. (Unless of course, the price were set at something like $3000 to $5000 per ounce -- then you might have some equilibrium.) Idealistically the gold advocate would most certainly would like to see a gold exchange standard -- but at what price and what would be the economic consequences if it were to be set where it should be? Polyconomics offers up this
arbitrary $300 price because it wouldn't break the current international system, but when it comes to real political/economic policy ideals and practical reality often clash. It's always nice to hear someone like Jack Kemp speak glowingly of gold, but before we roll over and cast adoring glances at the politician perhaps we should better understand what the politician is actually stumping for, and in the Kemp/Polyconomics case it is more currency hegemony under the guise of a free international gold standard, a hegemony paid for by the American people in the form of its gold reserve.
Currency hegemony is precisely the opposite of competition -- it is, in fact, the imposition of a currency, even gold (at a stated currency price, of course), on the population. As such the euro is important in that it challenges that hegemony, and does so with the key concept of utilizing gold as a "currency without a country" to act as a reserve for interventions if required -- a breakthrough. Re-read Mundell on this. You and I and the rest of this forum could be talking about the need for a gold standard now, tomorrow, the day after that and for all the days remaining in both our lives, and I do not believe we will be any closer to its imposition then than we are now -- thanks to the wayward and half-baked thinking on the part of some of the very gold "advocates" who are supposed to understand economic history well enough to anticipate some of the consequences. In
other words, the gold standard probably isn't going to happen. In the meanwhile, practically speaking, the best option is for all of us, including the various nation states to own gold as a talisman against our own worst instincts.
If Randy is concerned about hegemony and its effect on various populations, I don't think it's because he would like to replace that same hegemonic error with another. I think he agrees with FOA/Another that competition paves the road to a better international monetary system. I do believe, as FOA/Another do, that with the euro we are talking about the currency of the future here, and I believe that the dollar will eventually be modeled after the euro. Not only that, I believe we are talking about, not just the currency of the future, but the international monetary system of the future -- for what its worth. Sometimes the world heads off in a direction even if we don't want it to.
Once again I'll reiterate what PH hinted at in his post: For most investors the world over, the ownership of gold is a pragmatic undertaking, and what FOA/Another are advocating is a practical, hands-on solution for the average investor -- personal gold ownership. I think Randy agrees with this position, as do I. I can envision private gold ownership as a necessity even under a gold standard -- because there is little doubt in my mind that if the government were to undertake a gold standard even under the best intentions, with Lewellyn Rockwell serving as Chairman of the Fed, it eventually would botch the whole scheme -- politics being what it is. (By the way, I can't imagine a currency regime at this late date that would allow only the circulation of specie. Therefore, you will always have various derivatives in circulation along with the government largesse, currency printing, tinkering with the gold price which threatens the value of the paper. Gresham rules.)
In the end, he who owns the gold, makes the rules. And it is the personal ownership of it that will carry the day on a practical level while governments will do, well ...... governments will do what governments do.
--------------------------------
Ha! Ha! Now, that was good! What chance do us poor hikers have against a mountain climber like that? Legs like tree trunks and a mind the size of Bolder (Colorado?). (grin)
My friends, think carefully about these while I go over to see what Econoclast dug up on the trail. I asked him a question on 04/25/01 usagold# 52540 and I think he found something! A little later today we will continue the hike as I address the views above. Even later, I will post Another's latest Thoughts here on the Trail. Events are unfolding and it seems the BIS is thinking of making some changes.
Thanks
TrailGuide
Gold Trail Update (05/08/01; 20:54:49MDT - Msg ID:53254)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (05/08/01; 20:54:48MT - usagold.com msg#71)
A Tree in the Making #03
Across the high pass,,,,,
The other day I came upon Econoclast working the Trail. After asking him to define what his actions would be to defend a modern gold standard, he replied and his answer hit some gold! My initial #52540 request in summary was: ---- How do we stop this ages old evolution of "thinning our gold" when our economy slows?---------
Hello Econoclast,
I'm going to take parts of your find and comment on it out of sequence. You write in #52646:
------Any system that could possibly be thought of or proposed must include the use of law. Part of the answer (transparency) includes a complete treatise of the "new" laws written in simple, direct English (8th grade level-2 pages instead of 2000). The laws would be directed towards controlling the bankers, not the people for a change. The laws would be written with input from bankers, but not by bankers. Penalties for financial fraud/counterfeiting/etc. would be severe. ---------------------------------This new gold dollar system would function alongside the current FED system. Any large debts (mortgages, business debt, most importantly, govt debt) would be denominated in fiat dollars. That way govt could continue to operate (maybe, ha ha) and the banksters could still have their play money to manipulate and try to capitalize on. A free market would exist to redeem back and forth as necessary. This free market would show the relative worth between the two currencies. ---------------
===================
Excellent thought sir. Econoclast, using your thrust as my platform:
One of the major problems faced by past hard money planers was that any time real wealth, gold, is denominated as credit money, it always placed the relationship between the rule of law and the rule of gold at odds. If our laws defined gold as official money, and lent it, then by association the law had to define a portion of gold that did not exist in circulation. That portion was the contract asset held as bank savings. Yet, a person's claims against it identified said gold as real. This was and is an inherent contradiction because no law can define the value of real wealth held in contract.
This particular fiat form of hard money owed it's existence upon a continuous function of the economy. What the above means is that you cannot take something real and lend it over and over, as banks do when lending fiat, and still demand that the law recognize said contract moneys as hard legal tender.
I would state that no form of lent gold be recognizable or enforceable in the court of law as a legal tender contract. One may borrow gold, relend it, or even borrow against it, but that gold would not be valid in the payment of all debts both public or private. It could not, by law be legal tender. This is not to say the trading of gold would not somewhat supplant currency in function. It could and most likely would to a degree, but it would no longer carry a credit quality that fiat would in the form of a time function. Indeed, in our modern economic structure, a credit time function is very valuable and gives digital contract currencies their demand.
To deal in the future,,,,, to borrow,,,,, to capitalize would require the use of a fiat function. Gold could / would be a final trade; I'll give you ten cars (or gold) for your house,,, deal done. If I want more time to pay, I and we must engage a fiat loan.
==========
You write:
-------weaving OUR gold supply, literally, into gold dollars--------Contracts could be denominated in gold dollars, however these "gold notes" are strictly non-transferable. If someone wants to sell their gold note, they can't. It is only enforceable between the parties that entered into it originally. All forms of paper gold are illegal-fraudulent. Any debt larger than the legal tender law amount has to be denominated in fiat, smaller can be negotiated.------------
Well sir,
Once again, it looks good at first but later evolves. By mingling your gold currency into the contract / credit realm, it once again creates gold loans that are at odds with human nature. Yes, the gold notes may not be transferable, but the lent gold currency is. It is at once someone's asset while also another's liability. The gold currency in circulation expands thru the nature of loans. When these loans fail on a national scale (major downturn) the legal tender laws defining our new gold currency will be changed. We thin our gold again in an ages old cycle aimed at covering debts that are the common citizen's savings.
Still, we are not far from the position you see. We must remember that neither currencies or gold define society's economy. Business can function using fiat alone. We have been doing just that for a number of decades. Installing a trading medium outside lawful money that acts as a wealth savings and a final trade will not destroy the bankers, governments or paper credit inflation. But, it will allow society a way to judge political efficiency. A nation's productivity will then have two scales to measure with, one it must live with (final payment) and another it cannot live without (future payment).
We shall see (smile)
Thanks for digging deep
TrailGuide
Gold Trail Update (5/9/01; 07:20:23MDT - Msg ID:53279)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (5/9/01; 07:20:23MT - usagold.com msg#72)
A Tree in the Making #04
Sun's up, time to move:
We have covered a lot of ground and this framework, when viewed in context, helps explain much of what has happened with gold over the last twenty or thirty years. Even more so over the decade of our 90s.
Many hard money investors drifted with this evolution, right into it's most volatile decade. Thinking they were part of a much more efficient, changing, paper marketplace. A market that was utilizing all the modern trading system in order to not only advance gold perception but add profits to their accounts. It's been a painful mistake for many.
Our modern gold market and the price illusion it creates, is little more than a fiat dollar system that denominates gold credits in contract form. Is it a free market? Why yes, very free. But only free in the sense that supply is unlimited. Investors and the industry in total, brought into paper based gold and yet they fully well knew 90% of it had only cash equity as the collateral on the other side. Then, somehow expected that those contracts were limited in creation by the fixed amount of gold in the world. Their mistake, not the markets.
Clearly, anyone schooled in classic hard money Thought should have known that this was but Another inflation, a transitory era between systems. This was a time to gather gold over years, not invest in the leveraged aspects of gold's new fiat versions. Nor, to buy into the gold industry that owed it's life and cash profits to the maintenance of such a system, transitory as it was.
Onward,,,,,
In USAGOLD #53135 (see earlier), the perception was stated that; -------As such the euro is important in that it challenges that hegemony (my note: dollar's), and does so with the key concept of utilizing gold as a "currency without a country" to act as a reserve for interventions if required -- a breakthrough. --------
=========
Indeed,
a currency without a country! In order to implement such a currency, gold would require laws that would keep it within it's wealth concept. Gold in possession would be wealth in possession as long as governments could not use it as credit money. In my discussion with Econoclast, I took his legal meanings and applied them to this "wealth without a country" position.
Keeping gold out of the fiat arena would be more simple than many hard school advocates envision. The key to that is found in the implementation of international law. The leading economic countries (EuroZone in the future) would have but to establish a protocol that forbid the enforcement of collateral attachment anytime physical gold is traded, lent or involved in a trade. In this context, no banker would lend you gold to buy a house if, in a default, he could not claim your house in a court of law. Even private parties would never lend gold if the asset behind the loan could not be claimed for nonpayment. It's that simple. With a stroke of written law, the trading of gold as wealth would become a final payment with no possible credit implications. Our official fiats and wealth without a country would never again function as one.
When USAGOLD went further to say that; ------that competition paves the road to a better international monetary system. I do believe, as FOA/Another do, that with the euro we are talking about the currency of the future here, and I believe that the dollar will eventually be modeled after the euro. Not only that, I believe we are talking about, not just the currency of the future, but the international monetary system of the future -- for what its worth.----------------
Yes Michael, this future is before us. As hard money advocates, I think we failed ourselves by falling out of the loop of economic evolution. Truly, we have circled the earth and now return to our roots. Only, once unearthed after all these years we cannot recognize them.
We lost our ability to advance with the advances,,,,,, to grasp that ours is a credit society compared to none before. Even the world's gold dealers operate on credit,,, on loan,,,, on fiat! It's our accepted way of life,,,,, to function within this era,,,, as loans both personal and official live and fail. We gamble,,,, we bet,,,, we play at life. Sometimes suffering the loss, no matter the gain.
We are no less than the citizens of Rome, only they knew how to keep their wealth aside the "games people play". They understood the "possession of gold"!
Further on we walk,,,,,,
Within this perception we can separate the actions of goldbugs and gold advocates. Western goldbugs strive to fix the current system. They hasten to make right the paper markets that have failed their gold industry investments. In doing as much, they push for a return to a status quo that never existed, failing to see that this past decade was but a passing,,,,,, an evolution,,,,, a transition that started long ago. I doubt Gata will ever see the end they seek as our gold market will fail sooner rather than "in time" for their legal resolution. They fight a good, worthy fight and call needed attention to the situation. But fail to "seize the moment" by clinging onto the past. The gold industry is lost as time and marches past. As events transpire, gold in the ground will be of less importance to common man and officials alike that gold on the surface. Gold will be produced, but it will be a far less profitable experience than our future gold price will dictate. Truly, it's a gamble no different than guessing the future of dollar fiat. Perhaps a small win, but more likely a large loss.
The future a Gold Advocate seeks is not found in Euros, Dollars or just gold. Rather it's found in understanding the Euros impact on the dollar's value and how that will change the gold markets,,, forever! The political motivation in all of this is the show of the century and worthy of our respected attention. Even now, the oil card we have discussed for so long is changing our dollar way of life and quickening it's fall. As seen in the Black Blade chronicles. Was this connected to the planning for gold and Euros? You bet, grasp it or no, we will feel it's full effects later.
Onward, my friends, this trail is only just now becoming extremely interesting. Truly, the ownership of physical gold will make this trip even more so,,,,,, perhaps even,,,, fun? (smile)
More later
TrailGuide
Trail Guide (5/9/01; 12:07:17MT - usagold.com msg#: 53295)
Comment
ORO, everyone,
I was going to comment more before moving on with some of Another's recent political thoughts. But it looks like I have said enough to warm the fires (grin)!
OK,,, ORO let's talk some on this forum. (smile)
Be back later
TrailGuide
Trail Guide (5/9/01; 18:04:25MT - usagold.com msg#: 53314)
Comment
Hello ALL,
ORO made some interesting comments and I want to take issue with a few of them. I'll start with his first post. (also, a big welcome back to you sir!)
In your post ORO (5/9/01; 11:40:43MT - usagold.com msg#: 53294) FOA - NO LAW,,,,,,,,,,,
you write:
--------My take on Europe and the Euro are that they are desperate attempts to save European governments from competition among each other and the rest of the world, and of their trying to maintain the political hegemony of the small bureaucratic and political elite within Europe.------
No ORO, that view does not hold water. Europe, along with imput from many other non dollar nation states, has been working on currency union from the most early days of the "European Economic Unit (EEU). That one thrust alone dates back into the early 70s and even before that they have tried to match their economies by presenting united exchange rate mechanisms.
If their current objective is the object of a desperate attempt, you will have a hard time defining desperate over such a long period. My take and that of quite a few Europeans is that their union has been well planned yet very complicated to establish. Indeed, most any political analysis would describe their drive as remarkable given the enormous roadblocks the US / IMF / dollar faction has
thrown at them. Truly, if "political hegemony of their elite" was all they were after, they would have scrapped all dollar support at the Jamaica Accords conference. They could have easily matched the economic deterioration that action would have caused, against the cost of no longer supporting
the dollar. These countries inflated their own internal currency systems in order to maintain a world dollar standard. This alone flies in the face of hegemony on their part, both then and now.
You write:
--------The purpose of the Euro is to trap capital and trade within a political block controlled by this elite ----------- It has only to do with political power attempting a last ditch effort of governments of Europe against the forces of globalization and economic and technological progress.--------It has nothing to do with any of the following: political subservience to the US, the
cost of using the dollar for international trade, the dollar's wobbly past or future, trade efficiencies, free trade or liberty of any sort.---------
That's a pretty broad statement. Sounds like the history of the world from beginning to end. (smile) Yet, I can find nothing in European culture, ideals, nationalism or society in general that I do not find here in the US. Usually the motivation is functioning under a different name, though the effect is the same. Americans have in the past thrust their protocols upon the Old World culture. In this light, some of us think this shouldn't effects a Euro policy response. Hello? Good perception comes with understanding and loose observations are useless when seen using tunnel vision.
Consider:
------We Americans trap world capital through dollar hegemony and call it "Americans for free trade" ------- We shutter at the thought of Euros in our pocket, as a second currency, and would impose any amount of foreign exchange controls to limit such. But we are very open to globalization at any time. ---- Trade efficiencies are great as long as they favor our lifestyle above other nations.
----- Further, our liberty is a good thing, but the liberty of others is unimportant if it interferes with our national interest. --------
Still, if the Europeans are trying to attain our same position in international affairs, it's seen as their elite power block holding on? No, that doesn't clean the laundry either.
Perhaps the difference of perception is seen on our last Trail Walk; --- As such the euro is important in that it challenges our (dollar) hegemony-----. This alone, ORO, is enough for us to structure for the outcome. Whether one can see the political motivations correctly or not, their Euro
will re-balance the world of currencies and have an outsized effect on the US.
You write,,,,,,,,,,
--------The legal provisions you talk of will not destroy or prevent a future gold banking system that might compete with the fiat insanity. It will destroy the countries that sign on to it, which are likely not to include the US and most of Asia unless taken over politically by EU influences (which
are not that strong there). -------------
Sir,
First of all, you should stay within the context of my discussion with Econoclast. We were presenting positions, not launching ICBMs. The position I presented is valid in limited circumstances that would include a fallen dollar. This has been discussed by others "overthere", among other criteria. You speak of fiat insanity? I point out to you and ET and Journeyman that hundreds of millions of us have been living with such a currency for some time. Insanity is a bit
cheap of a description when the world has endured wars and multitude human infliction for thousands of years. If this whole transition fails, we will still live out our lives with fiat, like it or not.
When you state the following:
-------The attachment of collateral to gold is innate in the action of trading gold. Without that, there is no trade in gold possible at all. All trade involves the creation of a debt, at least temporarily. The debt may be secured by the items traded, but transactions must involve a debt. Transactions also must involve a contract. Ownership of anything is title, either assumed through possession, or
documented. A system that does not allow collateral backing a contract denominated in gold is a system that does not allow gold to trade, and endangers title to gold not in possession. Doubtless, the purpose of such law would be to allow governments to confiscate gold held in custody (not in
possession) if the attempts to prevent monetary use of gold fail.-----------
You are right, it is innate to this current fraud of a dollar gold market. I know you are thinking in terms of the current dollar gold market function because the rest of this thrust sounds like it is right out of our current bullion bankers notes. Both past and present and is completely based upon a continuation of the same. We have no intention of traveling that road again.
Further you write:
------It is another attempt by EU governments to block the exits from a future Europe they imagine they can control. If implemented successfully, it will be Europe that will be destroyed by the absence of an efficient credit system keyed to effective gold denomination of debt. --------
The world has traveled this road before and failed to control it's controllers. Gold as official money is dead at the starting blocks, my friend. Send your best salesman around the world to sell that position for a living. Most certainally he will die of old age or lack of commissions before anyone will deal with him. If gold debt is what you strive for, then carry your torch and do your best. Just
don't ask the common man to suffer wealth loss again while we try to do it one more time.
Further by your hand:
---It would mean that the only interest rate available would be the innately incorrect one set by monetary authorities.------
Where is this at odds with a functioning fiat Euro that's controlled by the ECB? I will tell you, it is set with one/half an eye on the Euro price of FreeGold. Far different than the current world rate being played off a failing currencies economy and set by a paper gold market.
ORO,
All of the rest of your argument is an endorsement for gold debt in our constant fiat world. It has failed before and will fail again if allowed to be mingled into a political arena. The world's first gold coin was never money and yet was a perfect trade for another good. No debt was involved then at the time of trade and should not be now. The hard money school that has lead us down the gold / money path never stopped to consider that banking and gold do not and cannot coexist without corruption. We have learned from them. We know now what not to do!
Explain your position in point by point fashion and it will not amount to a "sellable conclusion". That's because the Old World culture chooses not to close a gold window again. We will, indeed, see how this all plays out as "time will prove all things". I will own physical gold and scoff at your bankers pleas for "one more try".
As always, thank you very much for your impute and opinion. (smile)
TrailGuide
Trail Guide (05/10/01; 12:55:28MT - usagold.com msg#: 53354)
(No Subject)
ALL,
I have not gone anywhere and will be posting more as soon as I can. Don't take our (ORO's & mine) comments to each other as burning down the stage. My goodness, we can take morning
water balloon shots at each other across the backyard fence and still share ice tea in the evening.
(smile)
TrailGuide
Trail Guide (05/11/01; 14:32:34MT - usagold.com msg#: 53425)
Of ORO's World
Hello again. I'll try to address several posters with this.
More comments on our current discussion, proceeding from my #53314.
ORO (5/9/01; 12:53:15MT - usagold.com msg#: 53296)
--------If Europe continues to expand and deepen regulation (as it has of late) while the US simplifies and thins regulation, the advantage would play in the favor of US industries despite higher dollar exchange rates.-------
Of ORO's world:
All of his conclusions above the closing (that statement is printed above) are based on the ongoing dollar reserve system as we have known it over several decades (even further back). Included during that time are all the excesses and faults dumped on the fiat money world by our nation making the best of it's dollar dominance. Also, included in that period were all the defensive plays
taken by other nation states. To be sure, those plays were also filled with excesses and faults, but what else do we expect from political societies.
The ongoing over taxation, deficit spending, fiat inflation, deficit trade balances and mismanagement of private economies has always been with us. Yes, under different names and different degrees, that's true, but no recent period in money history, gold or not, was without an ongoing effort to cheat the system. It was always in a process of decay, no matter what the books tell you. To think otherwise is to disclaim humans as they are.
How often have we heard that some special "hard school of thought" has all this terrible process documented and neatly explains where it all went wrong? Then, goes on to show us how to set it all up again so as to start over on the right foot.
So, trying to present the society as a whole, as "the awful, all controlling big government" on one side and the "good private economy on the other side" argues the lesser side of the larger issue;
-----hard money policy cannot work for long in a credit based system----!
It makes absolutely no difference if we are even on a 100% gold use money system, if we as a society engage in credit
commerce, we will break links with gold.
Consider:
I borrow 100oz of money gold from ten people so as to spend that gold doing commerce business. The hard money theory has us thinking that if I fail and cannot pay back the gold, this little portion of the money supply contracts. Thereby the gold system is perfect, as it slows the economic excess.
This is a minor example of gold banking. On a tiny scale. It works, as long as we don't act out our motions in a political way.
Conversely, if gold was not part of a banking,,,,, credit,,,,, lending system,,,, rather it is just a tradable, non-lendable non- official money asset,,,,, then those ten people would have given me their gold and became part owners in my (ours now) enterprise.
When it fails, our gold money is gone and no credit contract is lost in the process. Society at large will not come to our collective defense, no matter the scale of the loss. You see, we lost our assets, not society's official money!
The difference:
When gold is lent,,,,, when it's part of the banking system,,,,, when it becomes the object of a credit contract,,,,,, this whole hard money system falls into political RISK! No matter how perfect the "schools" have show this to work, in real life, political risk degrades our perfect credit money. This is the gray area that's not ironed out because we cannot iron out society's emotions. Let's see:
In the above, the ten people I borrowed gold from would be holding my IOUs for that 100 ounces. Be they private citizens, banks or corporations they have effectively lost their gold money. The very money of the nation state!
Rather than see their losses made final, and cause harm, they partition the government to intervene by recognizing those money (gold) loans as good on the books. Further, the government is asked to lend some of it's gold (collected through taxes) to me to extend my business life. I continue to function in a small way as I pay on those gold (money) loans. Further, those loans (held by ten lenders) become marketable as they become seasoned. Then, at a discount to their face value, they can be sold or kept as collateral assets. Over time, this is the political risk that seeps into any hard money system. Over time, even a gold credit system is expanded,,,,,, inflated,,,,,, until outright fiat
must come into play.
It never starts out as "big corrupt government and their awful bankers" controlling the "good honest people",,,,,, rather,,,,, it's when a large enough segment of the "good honest people" are threatened with losing enough (gold) money that it could take down the economy,,,,,, they demand (elect into office) that their government and therefore bankers, expand the (gold) credit enough so as to slow
the fall.
Further,
Now, if this remained on such a tiny scale as the above ten, nothing politically would change. But, modern economic structure is never on such a little scale. This is why I say "we are them"! Many are indignant that they be placed in such company and proclaim they would never be part of such
fraud. Well, that is the very nature that splits the society into the same half's ORO sees today.
His closing statement comes at the tail end of a drama that was played out over decades. His small slice of context completely excludes how the USA dollar,,,, gold,,,,, reserve system was parlayed into a cost advantage that will not exist once the dollar falls. We will be the ones,,,,,,, much more so than Europe,,,,,, who ""expand and deepen regulation"" as our "advantage falls away"!
PH, I want to comment on your posts and will do so next. Be back as able. (smile)
TrailGuide
Trail Guide (05/12/01; 09:57:47MT - usagold.com msg#: 53470)
Comment
ORO (05/12/01; 00:19:12MT - usagold.com msg#: 53458)
FOA - NO OFFICIAL MONEY NEED BE DEFINED
FOA, you are missing the point of my disaffection entirely.
I'll get back to ORO's, but first PH.
--------
Hello PH, long time no discussion (smile).
In your recent: ------ PH in LA (5/10/01; 10:49:57MT - usagold.com msg#: 53345) Just a mere interjection into the tirade.----
You write:
-------------Rather, he is trying to prove the viability of his thesis, much as we all love him (smile, smile). You put your finger right on his weakest link when you say, "Gold as official money is dead at the starting blocks." Unfortunately, this is ORO's one agenda. So, of course, he is perfectly willing to loosen his ICBMs to defend it. ----------
PH,
I kind of agree with you, but I don't think this is his singular objective. He has a wonderful presence here as his commentary is coterie with the objectives of the forum. Still, I feel this is his most passionate objective and that's why I always hesitated to oppose it. Not that we would be the object of a tirade, rather that our thoughts would be rejected without "in context of the times"
consideration.
-------------For my part, your proposed solution just resonates right. In the present fiat system, there is really no refuge. The lords and masters have every tool at the ready to debase the product of my labors (ie savings) and the only defense against them is risk. --------------
Oh boy! Don't you know it, PH! This is where I say that all of this is an evolution. Not so much in the changing aspect, but in the slowness of the process. Over years we (most especially Western minded savers) have come to accept the necessity of the "fiat settlement" function as it is needed in our modern economy. Ok, well enough, we can all buy that.
As such, we even understood the inflation price such a system's use places on us. People rebelled against it at first, as it started as an evil throw-back into the past experiences of fiat gold systems; where price inflation meant that the money was about to be destroyed and redenominated. Then, over time, as the dynamics of our world trade became better understood, this price inflation was
seen by most users as more of a tax that the system required to function. As long as it was low enough that we could out-gain it thru other investments, the benefits that our fiat trading economy provided was accepted.
We at first feared it, but in the longness of time we have grown numb to the slow hidden increases of this fiat inflation tax. In the US, especially, the full price of the tax is way, way above anything we imagine. Most of it hidden over many years in our "Dollar Reserve" function so as we do not conceive it's full impact upon our net worth.
Again, this world "fiat settlement tax,,,, this price inflation tax, would have been somewhat acceptable in an immoral sort of way, as society stole the productivity and efficiency gains (from those that could provide such) to pay for it. But, hidden theft is just too good of a process for our political system not to expand on. Just as I said in # 53425:
"""" It never starts out as "big corrupt government and their awful bankers" controlling the "good honest people",,,,,, rather,,,,, it's when a large enough segment of the "good honest people" are threatened with losing enough (gold) money that it could take down the economy,,,,,, they demand (elect into office) that their government and therefore bankers, expand the (gold) credit enough so as to slow the fall."""
PH,
When "We",,,, "this Us the political system is",,,, need someone else to cover our economic failings, the government does just what the "MAJORITY" demands and expands the inflation tax just a little more to cover it. Over the recent US dollar experiment, from 1971, "us Westerners" have built up an enormous inflation tax debit upon our dollar based assets. The full debit is unknown because the
dollar's reserve function has masked it's exchange rate value, there by covering up the real value of our dollar denominated assets. So,,,,,,,,,,,, to expand on your next:
-----"Invest in ________s!" they say. Fill in the blank with stocks, bonds, real estate, IRAs, (whatever) for all of which they have their fingers on the controlling strings. This is patently unfair. Once earned, the individual needs somewhere to put his savings where he can have control over
them... somewhere beyond the managers' inflationary reach. In our system of voluntary slavery, they hold our noses to the grindstone and make us all work out our lifetimes. ----------
PH, you are so right in this perception. As per my above, we invest in these assets, thinking that our out-sized gains are keeping well ahead of the inflation tax. Basically, people don't want or look for that special "somewhere to put his savings where he can have control ", because they don't think there is a problem. Can we blame them? Some of us even acknowledge that the CPI being so low is a fraud, but our other gains were so large we are still ahead! Still, just look at the lifestyle we all have because of our continued use of the Dollar Reserve Fiat.
Well, that's fair enough. We Westerners play at this game of currency cheating, but don't want others to think of it the that context. Further, if something is wrong, it was the fault of that big government and banking cabal that I never had anything to do with??? (smile)
I know that far too many think the system is healthy enough to go on forever maintaining their lifestyle. It won't. Currency systems come and go with time and our dollar is being phased out. Eventually, as the next reserve system unfolds, our US inflation rate will spike into hyper status. Not because the dollar or our economy is suddenly nonfunctional, but because all the past "inflation tax
deficits" that we built up over decades will come due. Then, not only the price of using our fiat system will be exposed,,,,, the price of all the political bailouts and American lifestyle enhancements will come due also. It will require a hugh devaluation of the dollar to cover this debt. It will appear to us as a sudden, hyperinflation, imposed on us by an unfair, European government,,,, out to get us. This is the perception ORO is, in a very small way, already bringing to surface.
Many hard money investors have evolved into "morphed goldbugs", no longer the real K-Rand carrying physical gold advocates they started out as. Now, they are wanting the dollar reserve to remain so that their dollar based gold industry investments can survive. Even wanting their leveraged paper gold to make it through the game intact. It won't.
Some of these "morphed goldbugs" want the paper gold
system fixed so it's fictional gold price can rise just enough to make their gold business investments pay off. It won't.
Not only will their "fighting the last war" strategy fail, they rile against any Thought that the Euro may cause all this convulsion to come about. So, they hurl everything they have at it as events play this drama into reality. In the process, our modern goldbugs sound more and more like
dollar advocates,,,,, and in effect their investments say they are.
The system will, in the end, completely fail to function in a way that reflects the physical price of gold bullion. Most of these goldbugs will eventually get some price gain as it all unwinds, but they will be standing at the fence looking in at real gold far out pacing everything in sight. Wondering why they even played such a game anyway. You see, our Western gold bugs are doing nothing more than your other investors, just trying to make some more dollar currency to beat the fiat tax of price inflation. They should be considering owning some of that "currency without a country" we recently heard USAGOLD talk about.
They, like most all the other dollar users will be in the same boat as our dollar's reserve function fails in a "game change" no one understands. The dynamics will rewrite our history books in:
""""what to do when the worlds one and only fiat currency is replaced by another fiat currency based on a gold wealth reserve instead of a gold is money reserve""".
Again, as MK pointed out, this new concept will create a "gold wealth without a country". Only most will perceive it as a new gold money without a country. That's ok, too.
You write:
-----Your proposed system at least holds out the possibility of an asset designed to hold its value in the face of their inflation. Seems logical to me. Seems like a system we could live with. The only system that we'll ever get, will be one that we can all live with. Maybe not anyone's perfect system. Not ORO's utopian gold standard. But at least one that most can tolerate. Who among us can really tolerate a system that sucks the value out of our savings through their insidious inflation if their is no refuge? No defense? -----------
You have a good political brain, my friend (smile).
-------why not declare your advocacy------
In the singular context that your question was asked,,,,,, I ask you, why should we? What would be added to our effort, what would be gained? More gold or fame? At this stage of life have enough of both. No, the basic value of the message would be diluted. Truly, I add that in this world the gift of understanding is expensive to package and the art of producing it is has no measurement of pay. For myself, it's priceless.
Thanks, PH
more to you later
TrailGuide
Trail Guide (05/12/01; 19:54:32MT - usagold.com msg#: 53492)
Comment
Cavan Man,
Thank you so much for your kind words and respected interest. Onward, my friend! (smile)
Journeyman,
--- Apparently I've been left out of this discussion as far as the-----
If you will just check your back to see that it is all wet. (smile) Not dry yet because of that water balloon I tossed at you in a recent post. No sir, if you write here, you are not out of it(grin).
Thanks for writing, I'll (and others) will be replying !
Black Blade,
Are you, by chance one of those people in the TV show "West Wing"? I'm always amassed at your ability to gather and organize so much material. Thought you were one of the upper level fellas?
Thanks for sharing.
Now, once again, back to PH:
PH in LA (05/11/01; 09:52:22MT - usagold.com msg#: 53412)
Fiat legal tender vs abolishment of futures markets by fiat
------"This note is legal tender for all debts public and private"------So sayeth every FRN used in commerce. This is a topic that has been elucidated here at great length... even and especially by ORO himself. ----------Now, one supposes that any legal system that specifies that gold interest can be settled with any "note (which) is legal tender for all debts public and private" that no contract
could be enforced in gold. -------Does this mean the abolishment of gold as a monetary instrument? ------Are all gold transactions thereby abolished?-----
PH, you sure don't need any Gingko - Biloba to clear your thoughts. This post of yours hit the logic I was straining for,,,,, right on the head! I edited it to do like Randy (thanks Randy) sometimes does to mine. To allow for an expanded point.
Pulling from the thrust of my last comment to you; we all accept, use and somewhat prosper by using this fiat money called legal tender dollars. Further, we all pay our price inflation tax as a cost of doing business,,,,,,, as long as it doesn't get out of hand or we can cover it with other
investments. Or, at least, as long as we aren't able to see the real value destruction this tax is building up under cover of it's "currency reserve" power. However, for the purpose of grasping our reasoning here,,,,, concerning my recent trail walk talk about changing the collateral rules of gold,,,,,,,,,,,, lets look at your counter point to ORO.
He made a long reasoned post, expanding his thoughts on why no authority could enforce such a law. Yet, your point above presents the essence of this concept, in real life as we have lived with it for decades. Fiat dollars, as legal tender, are our money because court after court has upheld that our laws declare them so.
Some say that international law and protocols cannot have an impact? Well, they do when it's in the reining powers best interest. The US now and the EuroZone later. In present context; here we have 200+ million westerners and countless other world citizens,,,, all having lived a good portion of our lives using this very system,,, working under legal tender status,,,, and all doing so under our American law.
Yes, this legal tender fiat money,,,,, this concept of digital trading wealth,,,, is used by most as an "International Protocol" contract,,,,, made common through the IMF and the Jamaica Accords! It's the same US dollar system that made the settlement of debt in gold almost illegal and the common use of of our money a world wide obsession! How about that for not being able to make something stick?
Now; when I proposed to Econoclast (on the GoldTrail); that an understanding could be projected that gold could not be seen in a court of law as attachable collateral in any contract form,,,,,,,, some pointed out that this couldn't be done. Yet, in opposite reflection, it almost already has (smile)!
Our thrust is that; by taking physical gold out of any and all performing credit structures, one enhances the fiat credit process,,,,,,, but more importantly,,,,,, frees the ability of gold to value any and all currencies ---- against each other----- not against gold. Once in place, physical gold value would soar, but not do it as money,,,,, rather as an asset. In this fashion, raw gold value could not be inflated or deflated and in doing such would reflect it's possession value as wealth. Tradable wealth that you or any government could use to buy anything,,,,,,, as long as it was a payment in full without credit.
Some fear that a congress of laws would be required to control such a position? No, just one,,,, kind of like our legal tender law. How about "gold is not subject to collateral attachment of any debts public and private". Of course, gold loans could be written and entered into,,,,,,,, gold options could be created,,,,,, Bullion banks could do a huge business in lending gold and governments could lend it all! But, if any of these contracts defaults and ends up in a court of law,,,,, it dead at the door! I'll leave it to you to figure out how long this business would continue.
PH, we are staring at one of the biggest paper gold lending games ever created on the face of the earth. Further, it's about to completely fail as the main currency it's all written in "craps out" (had to throw in some of my gutter talk (smile)). When all of this washes out, how do you think the next reserve currency owners are going to preserve their hegemony? That's right, I knew you already understood all this.
Thanks
TrailGuide
Trail Guide (05/12/01; 22:36:34MT - usagold.com msg#: 53498)
Comment
Hello ORO,
I know I keep talking about your presentations, but as they say in hollywood; "that's the price of fame"!
ORO (05/12/01; 00:19:12MT - usagold.com msg#: 53458)
FOA - NO OFFICIAL MONEY NEED BE DEFINED
You write:
------FOA, you are missing the point of my disaffection entirely. In my preferred rendition of a monetary system, there is no particular official money, just a legal recognition of a commonly accepted money (and no limitation on it being only one or many, if the markets leave one surviving money – probably gold – fine, if not then two or more are fine). Bankers have no charters, and their liabilities stand on their own. This is not a gold standard unless it turns into one.---------
ORO,
Your heart is in the right place and you have a brilliant mind to keep it pumping. (smile) But, what this entails is us starting creation all over again. My friend, I have studied a little bit about old gold, it's progression throughout civilization's timeline and how we got to this point today. Yes, we may and most likely will return to a period that recreates what you say above. But, that will happen after this bunch of humanity gets through experimenting with it's fiat creations. ORO, the world is just not ready to go again where you are pointing right now.
You write:
-------Lenders and equity investors do not have the expectations you presented. Only bank depositors do, even then only those who think of a bank as a depository and clearing house rather than an investment fund like a money market. For savers interested in a gold vault and clearing
service the markets have long known to provide a service with minimal or nearly no risk. For everyone else, who is investor and saver, it is a traditional bank he seeks. No bond holder would ever imagine the promises in hand to be money or a good substitute for it. They are investments,
NOT savings. They are a fruit tree owned for the future fruit it is to bear, not dried fruit that will last
generations.-------------
I agree. However, we are living at the very tail end of what we have called "this currencies timeline". True you are,,,,,, our current world of lenders and investors don't seek a separate wealth form in singular gold. They presently need only the one dollar currency to play with. This view is
indeed the extrapolation of their life's money experience, as they have know no other. I don't blame them and group their perspectives into one, calling it the "Western Thought".
To them, our present currency system will not fail to deliver their wealth, intact, against all odds. In this they save their assets in the position that the dollar's contract will stand. ORO, our society does not grasp the gut feeling that comes with currency default. When an icy stare of a contract specialist leans across the negotiating table and says "what if we walk"?
They walked in 1971 because of political circumstances (oil figured largely in this), they did it then because they wanted to. This time, the US will walk because it has to! Run the printing press, full out, and retain a super inflating currency system,,,,,, or drop the ball and be subjugated to entirely using the money of another nation block. This is the eventual checkmate.
In this, your investors and lenders will understand the need for Another asset beside their fiat. Another fruit that "will" last generations.
You say:
--------- You may have come across a Barron's article-------------It is not that people first had banking and then government came in to bail out the depositors by forcing everyone to accept bank paper instead of gold. It is the other way round, bankers were incredibly cautious when they were not granted any privilege, the few happy go lucky Wild West banks were not at all characteristic of the situation when the central bank was closed down (both the first and second banks of the US did not have their charters renewed).------------Your view is of a world in which people start out with groundless expectations to make foolish decisions after which they cry to government to bail them out. That has never been the case. It has always been government that made promises that it could not keep knowing that the people have no alternate government to turn to if the promises are not kept, and it is this same government that gave privileges and subsidy to banks so that they could
make promises they could not keep with impunity because all banks were governed by the same rules, leaving customers no choices and little opportunity (and therefore incentive) to practice judgment. The rules were not made to fit the customers preferences within the confines of the reality, they were set into law in order to frustrate him.----------------
But ORO, lets reason a moment? You are absolutely correct in the above and more! Yet, that portion of the story has made the case of every hard money author and it's still only part of the human play. Better said, it's only part of the perception.
Why do you think there were banks at all, back then? They existed to provide a service private people would not perform very much of,,,,,,, lend gold. Back then, nobody wanted to lend their money. Not to strangers, not to schisters,,,, and certainly not to family members (smile). Gold money was cash money and credit wasn't offered in mass. People were suspicious of each other and rightly so. We are all a bunch of crooks! Ha! Ha!
Now banks were, as they are today, just middle men taking your money, lending it to others and trying to profit from it. Back then, there was certainly a growing demand for credit, it's just that no one wanted to take the risk to lend. The same as today, there is (was) a dynamic growing demand for credit that is over and above the function of cash trading. (that is wealth for wealth or gold for
goods commerce) Banks were seen as filling this gap and taking the risk the private sector would not provide.
In this context one can understand that society created the demand for banks by wanting credit. By extension, our nation demanded banks and the service they provided. The very nature of society was to want to borrow and accept the risk of that credit, but not to lend with the the risk of losing
their own money. Both then and now this is a basic human trait. One of the reasons most would not keep their money in a bank without FDIC insurance. Don't mind borrowing it, but damn if I'm gona lose it???
So,,,,, this creature that was forced upon us was really something we demanded. You said above that:
-----this same government that gave privileges and subsidy to banks so that they could make promises they could not keep with impunity because all banks were governed by the same rules, leaving customers no choices and little opportunity (and therefore incentive) to practice
judgment.-----
Oh boy, that paints them poor customers as little "darlings",,,,,, Cowboys, New Yorkers and Denver society that just lost their way? (smile) My friend, gold coin was money back then, you didn't have to use the banks for transactions and you didn't have to borrow it's money! We created the demand for their service then, because no one else would lend to us, period! There was choice,,,, there was opportunity to practice judgment,,,,,, you didn't have to borrow! However,,,,, when those little "darlings" lost all their money in railroads, cattle and silver mines (grin), they screamed to high heaven for more credit and damn the gold supply. Had they done their credit business with the wife's father-in-law, they would have been hanging from the nearest tree. Instead, they asked the government to "make them bad banks" lend more, no matter if they had it or no.
You state several questions:
------ Is it structured into human society that political representatives be crooks? ----
Almost as large a percentage as the electorate that chooses them.
----Is the balance of power between the people and their government fixed in nature so that government can always pull the wool over their people's eyes? ------
No, nature gives equal wool to everyone, both public and private.
----Are the people always going to be overwhelmed by government? ------
Only the ones that cannot out think government.
----Will people not learn from their own experience and from history? ------
Most never have and never will.
------Has the availability of instantaneous information and thoughts not changed anything?-------
The answer is no.
ORO, my trite answers are unfortunately true to reality. Ever more so today, we must deal with what can be done, not what should be done.
Next:
Further you went on to use my two examples, one of a gold loan and the other of paying for an asset. However this went out of context in the second as I was establishing an example of paying cash for an asset,,,,,, for a business,,,,,, for anything. The contrast was in not taking on credit to conduct commerce.
You say:
-----In the 100 oz loan,-------
-----In joining a partnership-------
---------I am sure you are aware of the difference between a loan and equity ------
Well, yes I am. In a further extension and clarification of my point; in paying cash for anything we are establishing equity in what we buy. Most financial thinkers try to limit the equity expression to mostly business or financial asset ownership. However, there is equity in any cash purchase. From shoes and cars,,,,, coats and houses,,,,,,,,, electricity (Black Blade) and natural gas,,,,,,, even
enjoyment equity in the theater ticket because of the great play one gets to experience.
The problem today is that few of us have established in our minds the dual nature of using our tradable wealth. Credit, we are all aware of as credit cards,,,,, debit cards and bank loans,,,, can and does buy our way. But the closest comparison to using gold in a final, non credit trade is seen in paying cash for everything. In this context, most people could relate to using gold as a trading asset where credit is not wanted.
However, in the gold not as collateral position; Greshams Law would do the work that our ancient gold owners understood. Gold would travel and trade on the road,,,,,, in our day that would mean buying what was dear and most wanted. Gold would be dear, super valuable and saved, in
possession as a wealth of ages. Giving legs to whatever fiat the world needs credit in. Fiat would be spent and valued for the credit qualities a digital currency could provide, right beside gold.
In closing I say,
Gold, the money it never was and the wealth it never forgot to be.
Thanks for your great mind, sir. Your comments are always welcome on this trail we walk.
"We watch this new gold market together, yes?"
TrailGuide
Trail Guide (05/12/01; 22:48:10MT - usagold.com msg#: 53499)
(No Subject)
Hello ET,
You say:
----FOA, I prefer free markets over your socialism. The idea of international currency laws is most repugnant. Seems to fly in the face of any kind of gold advocacy.----
Well, you certainly expressed you complete grasp of it all in that. I commend you sir, few can show so much with so little. ??
Good night all
TrailGuide
Gold Trail Update (05/15/01; 09:50:12MDT - Msg ID:53655)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (05/15/01; 09:50:11MT - usagold.com msg#73)
Fed - BIS - ECB - China
Hello all!
Boy, things are shaping up for a real good Trail hike in a week or so! Let's look at some recent items and try to come up with a plan for our walk. Consider:
There was a little mention in some circles about China buying gold recently. I think Gata got wind of it, too. Here is an old post I made at the main forum:
---------------
Trail Guide (04/25/01; 15:04:48MT - usagold.com msg#: 52536)
Comment to Randy's post of:
Randy (@ The Tower) (04/24/01; 10:38:48MT - usagold.com msg#: 52458)
Follow-up on my comment last week that China has lately been a net been seller of silver
------Philip Klapwijk, managing director of GFMS, explained at Monday's conference of the Gold and Silver Institute that China sold near 60 million ounces of silver in 1999, with additional sales of 40 million ounces per year likely over the next couple years. Continuing...----------------
Your (Randy's) words:
--------China is simply lagging by one Century in performing this act. Many of the other nations of the world unleashed their silver reserves near the arrival of the 1900's when the usage of silver was abandoned as redundant within the banking sector. And in contrast, not surprisingly, global gold reserves have GROWN since those days. Further, the dollar can be expected to suffer a worse fate than silver when it, too, loses its particular reserve and settlement role within the international banking system. And gold? All reasonable signs show that it shall maintain the king position as THE reserve asset par excellence for a long time to come. Get you some. ------------------
(TrailGuide responds)
Hello Randy,
You know, your thoughts got me thinking (grin). I have time to do that right now as my files are restored.
Following your chain of thought about China silver,,,, I noticed a comment from Bush that we would fight them over Taiwan. Then silver gets hit real good (the day the comment was made). Could it be they are unloading silver so as to buy Euros and gold prior to calling it splits with us?
They do have more silver than their needs require (possibly more than all of us require).
If they are, indeed, going to run with the Euro later and the ECB is marking gold (not silver) as their main "wealth reserve", then it makes sense for China to position themselves this way. It also makes sense because as an addition, Hong Kong has so many dollar reserves they, too, could never unload them. Following the Euro system lead, they could afford to let their dollar reserves burn as long as they had even 15% of that value in gold prior to full "Euro roll-in".
Further,
If any EuroZone based gold paper they (China) own that had a US originator (US financial institution) and that defaults; with China's approval, that paper could be restructured to pay back in Euro currency assets. Courtesy of the ECB /BIS. Forcing the US originator to dump dollar based gold hedges (that's a lot of paper gold) as they buy Euro coverage to ensure exchange matching. Of course, extrapolating this system wide, we would see paper gold credibility plunge (therefore it's bid price also) aside from the Euro exchange rates spiking on the dollar. All the while out right trade in physical gold or "five day" (super spot delivery) would spike to the heavens. I do wonder if we are, as I said a number of days ago, seeing history in the making with lease rates doing strange things now? (smile)
end
------------------------------------------------------------
OK everyone, could it be that Europe and China are linking more closely? With China not only playing the Euro card, but also seeing this future economic powerhouse (EuroLand) as a two way market for their goods? Lets look at a more recent item out of the IHT:
---------------
Europeans Grab a Piece of the (American) Action
Mark Landler New York Times Service
Tuesday, May 15, 2001
China Has a Change of Heart on Bond Sale
HONG KONG For American investment banks in China, politics has often been a handmaiden to business, enabling the more savvy firms to elbow aside their rivals with comparable credentials for deals.
Now, with the debut of a potential $1.5 billion bond offering by China, the Americans have gotten a taste of their own tactics. And politics, far from being subordinate, may have played a decisive role.
On Thursday, the Chinese government announced that three top U.S. investment banking firms - Goldman, Sachs Co., J.P. Morgan Chase Co., and Morgan Stanley Dean Witter Co. - would handle its first overseas bond deal since late-1998.
The next day, three European banks - Barclays Capital Group, BNP Paribas SA, and Deutsche Bank AG - issued a statement saying that they had been awarded the portion of the offering that would be denominated in euros.
end
------------------------------
OK. Next, we move to an excelent commentary in the COMMENTARY & REVIEW portion of USAGOLD (get your password if you want to read all of it). In this, Michael Kosares notes how the latest LBMA volume seems to show that the gold lending business is unwinding. He writes:
--- """LBMA April gold turnover was down a steep 12.5%. That could very well be the largest drop since the LBMA started publishing its daily volume figures. If nothing else it clearly signals that something is changing, and perhaps changing abruptly, in the gold lending business.""" end ----------
Combine this with a recent,,,,,, almost permanent overall rise in gold leasing rates,,,,,,,, the start of which began with a rate spike that was only lowered when England was forced to reduce it's London gold sales to 20 ton from 25 ton,,,,,,,,,,,,, then, the ECB no longer following the FED and continuing it's responsible management of it's money rates,,,,,,,,, our Euro creation spawned this new high world oil price from currency competition and that's beginning to bite the weekest financial structure (USA),,,,,,,,, and some thing is indeed changing!
We have completely agreed with the ECB policy, in that they see the EuroZone as the stronger (in overall economic function) between them and the USA. Stronger, in that they could handle a short term dollar oil rise if it lead to Euro settlement. In fact, the recent 1/4 point cut by the ECB, as opposed to the several cuts by the FED, is enforcing that note of distinction upon producers as the FED will and must cut much further. They (the FED) now risks exposing that their purpose of lowering rates is a effort to save the bookkeeping side of it's derivative bloated financial structure, not rebuilding of the US economy at all.
All this, in an effort to slow the dollar killing effects of sharing the currency reserve function with the EuroZone. Only one step in the complete loss of reserve currency altogether. We will see this spelled out as they pump dollar reserves from now on,,,, over and above any possible economic need. The result will be a slow and steady slide into higher and higher price inflation inside the US.
(Look to Randy at USAGOLD to repost this progress)
Further,
The pressure may be pushing toward a colossal "transition" of financial power later this year as the Euro begins it's final stage of EMU; the distribution of circulating Euros. Once complete, EuroZone economic dynamics will lead them to no longer need Dollar reserves for international use or the backing for their currency. A fact not lost on China and other major dollar holders. If events proceed as expected, they (EuroZone and or China) may just discard these assets as worthless. Especially given that with the US running a tremendous trade deficit, dollars cannot return on a "net / net" basis without plunging it's exchange rate to nothing! Perhaps it's worth further watching how our long bond treasury paper is sold ahead of the fact!
With all this in the background, we now feel a disruption in the force (old line from star Wars movie). The recent BIS meeting may have set the stage for an eventual monumental change in the way gold is traded, owned and valued. The very fact that a major portion of the US gold stock has been changed in status in a way that would allow it's movement (ownership); means that the US has now entertained the same position as England is doing regarding gold and the EMU with Europe. We (the US) are preparing for the destruction of the dollar's gold world. In this, some players will have to be saved (with real gold) if the dollar is to have any existence at all in the new Euro reserve function.
At some point, our dollar denominated paper gold system will crack and plunge in value as it's credibility to be converted into real gold is destroyed. In the process taking down most of the gold industry. An industry who's stock equity value is daily market to and closely follows said dollar gold system. In time, we will all understand the currency supporting function and the industry killing nature of a Free Gold price. As it's surging value more than compensates the dollar's lost value in the hands of foreign CBs.
This particular line of perception is being driven home in recent ECB commentary as their President, Mr. D., has discussed the very mechanism to delineate foreign held Euro money assets. (see Randy's recent ECB news) Assets that, per my above to Randy, will explode in numbers as our busted paper dollar gold market drives these institutions into Euro financing arrangements. These new, increasing, non expansive assets will be balanced by their system's surging gold price and exported bullion from other nations. A process that in part allows the US to adjust it's gold ownership just to stay in the game.
The world is changing and the Physical Gold Advocate will be the ones keeping score!
I'm going fishing now. Both, for the real item and with one that knows the name of our recently caught prize fish. I'll make a few more comments on Centennial's forum before going. Rest up, the big walk is coming!
TrailGuide
Trail Guide (05/15/01; 11:36:06MT - usagold.com msg#: 53662)
Last Comment for a while
Hello all, I have a few replies and comments to make (smile).
Journeyman (05/13/01; 08:26:15MT - usagold.com msg#: 53512)
Human nature and the gold standard @Trail Guide, ORO, beesting, Turnaround, ALL
You write:
----1. According to Trail Guide, "Gold money was cash money and credit wasn't offered in mass."
So, you didn't borrow against future hours of your life to go to a fancy resaurant (and give more of your future hours to banksters in the form of interest). Instead you saved-up from the past hours of your production, had the same meal in that fancy restaurant - - - and _didn't_ pay interest to the
banking establishment. You kept the amount you would have paid in interest - - - which gave you the appetizer in next month's fancy dinner. What's wrong with that? (Of course! - - - The bankers don't like it!)
end
---------
Well, my self evident point was that without banks (back then), people didn't want to loan their money. This is and was a fact. As our world society has matured over centuries, one item has stood out; people want to borrow and borrow a lot. In some ways this is good, in most ways this is
awful. It's our nature to make a mess of our financial lives with borrowed money. Still, this does not negate the reality that credit demand is a somewhat driving force in us. We are willing to pay the relative cheap returns (interest) in order to borrow fiat, but always rebel at the high real returns required to borrow gold. It's been that simple.
No, there isn't anything wrong with paying as we go, and that item was not the thrust of my point. The direction taken was to note the reality we as an economic body have evolved into. That reality requires that we be provided with a fiat currency to borrow, even if it's cheap interest (relative to gold) is adjunct through eventual price inflation. And the tax on our wealth such represents.
You write:
-----Perhaps, you're thinking, "But there would be no money available for capital equipment and development. How then do you explain that the period up thru 1913 (the year we clandestinely went off the gold standard because of the passage of the Federal Reserve Act) was perhaps the
most prosperous in American history with a growth rate well above 4% per year? Without modern credit, people would indeed be more careful what they gambled on, ah, invested in, but history strongly suggests that didn't mean they didn't gamble, ah, invest. There probably would not have
been a .com mania, etc., if we were still on the gold standard. What's wrong with that?
end
---------
Well, you have absolutely made my point (smile). Our economic function, prior to 1913, was constrained by the fact that no one would pay the high rates said gold system demanded. Any type of gold discipline drives down credit expansions once they hit the credit limits that limited gold
demands. This is, as I stated before, perfect in the eyes of our hard money masters and I agree completely.
However, I and we hard money people does not a total society make. The very reason hard money systems fail is because they all engage credit lending. Hard money and credit do not and will not mix because:
!! the economy "us people" built on "this credit" will fail and destroy "our assets" if said credit extension is stopped by a gold standard. That is the exact reason the fed left gold in 1913!!
Once again, every thing yourself and ORO state only builds my case. That is because all of your examples and demonstrated positions are built upon a singular gold money system that must include credit.
You write:
------2. I don't know who Trail Guide has been hanging-out with these days, but I do know that while I've run across crooks in my day, there are nowhere near the percentage of crooks among my friends and family - - or even among my acquaintences - - as there are in Washington D.C.
end
------
Well, I have none in my family (that I know of smile). But I have to ask, where have you been while gaining your fundamental economic perspective? I know that in my earth, crooks are everywhere.
As an adjunct, let me repost an earlier relevant post I made to you:
Trail Guide (04/25/01; 18:00:42MT - usagold.com msg#: 52549)
Journeyman (04/24/01; 13:39:01MT - usagold.com msg#: 52464)
Mr. Journeyman,
Excellent presentation of your position! Thank you.
The main point I am making about gold and money is directly related to your first statement.
You write:
-------we DON'T need fiat, and neither "the people" nor "society" decided to go from the classical gold standard to FED fiat. That change was foisted on "the people" AND "society" by the banking-government cliques, with the express purpose of profiting these two groups at the expense
of the rest of the population.
end
--------
Absolutely Journeyman. Your articulated account is regarded as an unshakable law amongst our Western hard money crowd. Indeed, it is this very perception that drives the rethinking today about fiat's relationship with gold. That thinking is spelled out in self evident form in this passage from the trail:
"" It's not the management of money that was the problem, it was the management of man's authority to maintain gold and it's discipline. Over and over, we watch good monetary theory fail as society fails to control their controllers.""
This is the root problem we face in advancing another of your classical gold standards. The people could not rebuff the forces that "foisted" the evil upon them. The problem is not deciphering whether someone else did the deed, it is in the understanding that it can and will happen again.
Society nor mankind itself can manage those that can and do these changes for their own gain. This is what we face, this is what we address.
As a further measure of defining and rebuffing this dilemma, I went on to say:
"" The road before us is to not manage gold. Rather, stop (to stop managing) it entirely. Forget about calling it official money and let it seek it's own level against every fiat as a worldly wealth.""
Even if the charge of returning us to a "classical gold standard" was given unconditionally to Sir Journeyman, this person would face all the exact same pressured his predecessors faced. The account of history and our experience with human nature all say he would do no better.
Further, to mitigate the loss all of us experience as this repeats, I made this point:
"" Indeed, while we may never overcome the human failures of war and fiat inflation, the wealth of common man does not have to be expended while society tries yet another time.""
That simple reply, my friend addresses all our experience with moneys.
end
----------------
This is our direction and thrust. Society would, as ORO makes the point, always pick gold as their tradable wealth. However, it is society's "lot in life" to always want credit,,,,,, then rebel in paying back said credit by diluting the payment terms. Usually by changing the rules so fiat replaces the very gold they borrowed. Hard money thought has always tried to paint the government and
bankers as the villain in this and tried to structure rules and laws so as to control them. Then it all happens again. After all these years of attempting to manage gold as a medium of exchange, we define gold simply be a tradable wealth without credit availability. This lone action would replace thousands of laws and rules our past experiments required. Yet, they failed anyway.
Even ET lays out that such a proposition is in his eyes is "" socialism"" ET (05/12/01#: 53493).
---------I prefer free markets over your socialism------- Seems to fly in the face of any kind of gold advocacy.
end
------------
I say that the only socialist mind is the hard money one that must dilute gold's value through credit. All done for the purpose of extending their Western power structures. Structures that could not achieve the dominance in currency they did without defrauding gold by combining it with credit. Truly, the wise gold advocate can see the socialist slant that motivates a hard money advocate's need for credit. Like tomatos, they start out green and eventually turn red! The same for Egold, sold as pure gold untill credit demands ripen it's creators appetite.
Journeyman, you write in: Journeyman (05/13/01; 00:07:43MT - usagold.com msg#: 53501)
---------"Yes, this legal tender fiat money,,,,, this concept of digital trading wealth,,,, is used by
most as an "International Protocol" contract,,,,, made common through the IMF and the Jamaica Accords! It's
the same US dollar system that made the settlement of debt in gold almost illegal and the common use of of our money a world wide obsession! How about that for not being able to make something stick?" -Trail Guide (05/12/01; 19:54:32MT - usagold.com msg#: 53492
That's the type of thing people always think (or at least say) when they institute their fiats. And especially reiterate strongly when their fiats are reaching the end of their time lines. And some are duped and many opportunists go along for the ride.
They said it of French assignats - - - up through their first nine-and-a-half years. They said it of German marks - - - until after WWI. They said it of the Brazillian currency just before the "real" and of the Ecuadorian sucre - - - until last year. They said it of the Turkish lira. Etc. They're saying it of the dollar. But if Trail Guide is correct, a similar fate awaits the dollar as well. And it's just around the corner.
end
------------------
Well, my point was that if society can institute the dollar as our trading fiat,,,, and do it for as long as they have,,,,,,,, it would be a far simpler proposition to exclude gold as collateral for credit. Did you somehow think I was promoting the above items as proof for the Euro (or dollar?)? I doubt anyone was duped by my statement, especially when read in full context as given.
you write:
--------So what's different today than ever before in history that makes some folks here so optimistic about modern fiats??? In the above contexts, why is it so hard to imagine transactional gold?
end
------------
Everything we have given demonstrated that the Euro will inflate. Only inflate less than our dollar will or has in the past. In this light we are not optimistic, rather realistic. We encourage a floating fiat, full ensconced in all it's government's credit glory. Failing as it will against itself and every other currency.
Further, we do not imagine Free Gold,,,, we embrace it now along with it's creation,,,,and the correct value this system will display for our future generations. Gold held and traded as wealth, not mired in your past credit world Western minds seek to instill.
In closing, I repost my note to Econoclast:
----------------------
Econoclast (04/24/01; 08:35:58MT - usagold.com msg#: 52451)
-----I feel discouraged right now. Not because the gold price is low, not because of what is happenning in the gold market, and by extension the financial world, but because of the fact that what I see for the future is more of the same.--------
My friend, our message and our position is that we are in one of the most exciting times of all the history of gold! We have seen that during times with the most radical transitions, the majority are usually defending the wrong asset. This unfortunate situation need not impact everyone today. If better judgment is the result of a full understanding, then some who read here will be exposed to
tools that could help them avoid the mistakes of our Western hard money majority.
For Western Gold Bugs today, their culture, their system and their recent knowledge is all ensconced within the last 30 years of paper wealth. Yet they are using a hard money defense, written by masters preceding our modern era. They struggle to use that logic out of context, as it is
thought to apply to this gold market today. These two precedents are leading them to reflect their gold values in some form other than physical ownership in possession. This mistaken detour from gold's true purpose will once again prove, by reality, the value of owning real gold.
Standing aside this group is the Physical Gold Advocate. For them, for us, these times will contain the greatest gain in real wealth ever seen. For those who are falling behind, gold is still within your grasp.
end
---------
Thank you all
TrailGuide
Trail Guide (5/16/01; 05:51:48MT - usagold.com msg#: 53709)
(No Subject)
Just a note and quick comments. Last post, packing to go,,,,,,, will send in Another's (plus updates) when I return.
Beesting, your note about electronic gold is interesting. Ha! Ha!,,, It seems Americans (and most Westerners) never can quite keep their hands on physical gold. Even in the past when minted by their governments. They are always setting themselves up for some paper fraud or eventual credit saving transition that grabs their wealth with a rules change. Could be your lot in life??? With gold ownership reasoning following your paper gold route, is it no wonder the Governments and Banks, that hard money
people always blame, find it so easy to eventually "fiat" the citizens. We ask for it in our rationalizing of physical money / wealth concepts. Demanding a convienense we don't need?? Truly, in the future, why own paper gold when the real thing will do,,,, especially when a paper Euro fiat will fill most (if not all) of our daily buying,,, on credit or no???? Besides, even though we agree that official gold will never again be part of our money system, these same EuroZone officials will promote and endorse ownership of Free Gold for all. On second thought, perhaps it is only in the West that paper gold is always at risk,,,,, who knows???
Things are heating up! Expect this lease rate rise to run for a while,,,, trending higher. With the ECB rates now 1/2% above Fed rates,,,,,, the dollar transition will explode into full bloom. A few news points:
----Traders said talk the Taiwan central bank had been buying euros started the rally-------
------The well-flagged U.S. rate cut had seen the dollar notch up modest gains against the euro in Asia. But it failed to hold its advantage as talk of central bank commercial orders to buy euros --
------"The bigger issue is, we're four-and-a-half months into interest rate cuts in the States and we're still getting some powerful medicine. People are going to have to start asking, what exactly are we fighting? ----------
Off to catch the big one!
TrailGuide
Gold Trail Update (06/04/01; 09:36:55MDT - Msg ID:55314)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (06/04/01; 09:36:54MT - usagold.com msg#74)
Back On The Trail!
Hello everyone!
Well, it was some trip,,,,, and yes I did catch some fish. Person has to eat you know (smile).
Now,,,,, fishing is a slow sport at times and leaves time for conversation with others on deck. And because this little boat had room for more than two,,,,, there were a lot of Thoughts to talk about,,,,,, even during the dinners of our catch.
So, I be reading some of your recent conversation on the USAGOLD FORUM, and return to deliver some promised letters, thoughts and hikes. Good to be back (smile).
Thanks
FOA / Your TrailGuide
Gold Trail Update (6/9/01; 16:36:43MDT - Msg ID:55766)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (6/9/01; 16:36:42MT - usagold.com msg#75)
A letter from Another to me.
My friend, I must now walk your trail in closer step. Events are closing that bring the changes we have long seen and prepared for. The time grows short as these conclusions prepare to make appearance. The last of these Euro price ranges are in sight and even the Duisenberg hints his work is done for this new currency. A hard task was completed by him, his acknowledge to the French in May 98 was with a timeframe few could understand. Now his containment is done. With introduction of notes and coins, this money will become it's own director and his work will be well received. A good day, indeed!
All were present at the meeting. I think contractual conversion became topic of some urgency. This BIS must now consider the values these forms will hold in ours and their new futures. Values that will no longer be dictated in dollars, rather realigned in conversion and gold market failure. Truly, this failure of current gold will be reflected as anguish in these western goldbugs, both bankers and investors. All done as the saving wealth for your gold advocates and new reserve bankers finds it's new mark in our time. Your work, good man, has been as trying to reconcile the religions of this world. Telling both they are just while only one can be right in the end. So it is in this day of gold.
Some knew what was coming from the beginning. With the Hague Conference of Heads of State in 1969 sprang Copenhagen Report of 23rd July 1973. We pointed and all continued to turn away to follow where power was, not where it was going. With the Solemn Declaration in Stuttgart (1983) closely followed by the Single European Act (1987) even the BIS then understood the final goal. Margaret (Thatcher) soon expressed that signing that proposition (the Solemn Act) was her greatest mistake in office. While I do agree with her on a strategic political basis, such reflections by British leader only exposes the ignored, nearing failure of their shared singular currency dominance (both USA and England). Little is expressed of the wealth lost of our peoples and that of most Western economies as these government's efforts to preserve this failing system drains real wealth from our world.
Now these leaders full attention must focus on this money transition itself as Blair's next initiative (the Euro) will lead to a realignment of contract values of all kinds. Before the fact! The Maastricht Treaty allows that by Jan. 2002, all contracts will be converted into euros and new contracts must be denominated in euros. Because Blair has overseen the signing of both Amsterdam and Nice Treaties, his closest people understand the full impact Britons intentions will have on this world's paper gold market. As it be contractually expressed in dollars. The credibility of these to not only represent gold but to maintain loan collateral on books will lead to several high level agreements to address this loss. Indeed, how does one transition a metal contract without moving the metal once again? Especially if the Euro suddenly, without explanation, rises in value. A rise that leaves only the door of metal fulfillment? All eyes must now search for a way to transition this beast as it's use and function will fall away as the Euro further expands. Some of your American gold must come into play during this game of kings. It must, as the BIS will sanction a complete disposal of contract liabilities from metal into Euros unless some real US gold is given up. Something your Bush will endorse but not without a price! As contract gold falls in price while expanding the physical price. I suspect it (official US gold) will be given up at the exchange rate of many thousands and even that will be the little drop of water that allows dollars to remain in this game. Our time arrives, my friend. Even as fools make effort to gain wealth in a gold market that will soon exist no more.
Tested now are the economies of both EuroZone and DollarZone with high crude values. The response of both is known. The ways of dollar wealth hasten their demise, even in the face of ECB restraint. Open and outright are they (FED) to discredit their position. This test is done and the verdict arrives soon. As with gold and oil, Dollars and Euros will neither any longer flow in the same direction.
Another
Gold Trail Update (6/9/01; 19:32:22MDT - Msg ID:55771)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (6/9/01; 19:32:22MT - usagold.com msg#76)
Onward!
Hello everyone!
Keep an eye on any lose rocks and boulders, an earthshaking event could come at any time. While our walks follow historically proven paths, the destruction of many of today's fake trails may hinder our progress of understanding for a while. Big loses by people, both large and small, who don't own what they thought they own, usually cause them to panic down the hill sides. Right into our little physical world! (smile)
I know there are some hikers here that understand the flow of water and how it expands over a "flood plain". But, many do not or cannot perceive how physical gold will rise to seek it's own level. A level equal only to other gold, in the hand and very physical. Or at the very least, gold owned, deeded and individually partitioned in a secure account vault.
Onward:
I am taken by the mind that processes logic for it's own financial advancement. Usually, it (the traders mind) does a good job of gathering the facts, then inevitably it sees said illusion where reality appears. Even to the point of selling this same illusion to others that know it isn't there (smile). Our present gold market is just such a cloud on the wind.
All over this mountain there are guides that promote the huge overhang of contract gold. An overhang that has no real metal supply to settle it, if push came to shove. Even if a large portion of official gold was brought into play, the world paper gold market just could not be traded for real metal. On this most agree. Still, these same traders that understand and sell this concept, spend their days trying to know the exact time the default will occur so they can buy a bunch of paper contracts and profit. In their mind, they see that a major default will bring in an unlimited number of buyers. Both to get new contracts and to close out short positions.
In a very broad way, this view extends well into the rest of the not so visible gold market. The problem is that today, a timeline change in the currency markets is about to completely undo the end result of this strategy. The end result of this colossal change will break the gold markets into valuations of different amounts. Just like water, gold wealth of different properties cannot attain the same level. In the event of a large enough default, the entire world of paper gold trading will be forced into full cash settlement. The question will be presented: "if there isn't enough gold around to settle these commitments, then there isn't any point in letting the price rise further to effect still no metal settlement",,,,,,, " This was a contract trading market anyway, not a gold market"! Further, the international banking industry, in accords with their governments, will enforce a kind of "position limit" on the amount of gold liability they or their customers can carry. Both long and short. It will have nothing to do with the exchanges, rather it will be a bookkeeping problem being addressed by the banks. Still, it will impact the illusion price we use for gold,,,, downward. The net effect of this will be just the opposite of what paper gold players expect as positions are "force liquidated" prior to even a "cash settlement". This sudden dumping of major contract commitments onto the markets will drive the cash settlement price of gold,,,,, ?.
This is the reality of the political banking world we live in. Neither the EuroZone or DollarZone banking world is going to let the destruction of the Anglo/Dollar gold market shut down their financial system. Take some loses? Sure! But this portion of the pie is nothing compared to the troubles to be managed by the US (our Fed) as the dollar's roll as reserve is removed. Granted, once the game is underway a true Free Gold market, trading noncolateral gold, will come about. It will be endorsed as governments settle a small portion of their political scores using physical gold reevaluated up into the "low oxygen zone". Mostly it will be US gold being moved.
Further
These goldbug guides (mentioned above) are mostly playing for a currency profit, not gold. The same is true of "in the ground" gold advocates. While their profits and loses grow and fall in line with most gamblers, slowly, these players are losing credibility as the paper markets out play these goldbug's net worth. As events they expect to repeat are rebuffed by massive "cash backed" selling of paper gold, the expected "big" profits always fail to arrive. It's been this way for as long as Another said it would! Yes, something could change and send paper gold through the roof before anyone can stop it. If it does,,,,, good! Physical gold will do very well! But, I doubt these profits will ever be sent out as checks in the mail. Believe it!
Witness the recent long blowout of paper players on the comex? The so called "big traders" these guides thought were about to demand delivery. They were not the real "Big Traders" (I know) were they? If they were they would have demanded delivery even if the short side sold 500,000 contracts short. Even it they (sellers) drove the paper price down with empty sales! The reason these real gold advocates (Giants) buy physical gold is because they are waiting for this dollar casino of a gold currency market to shut down. This reality will end in a locked, no delivery market! Once again, Believe it!
Truly, this recent move was long "little traders" wanting to make currency profits without the real assets to back it up. Nothing more. We will see more of this as it all comes to it's end. When the real gold run Another points to comes,,,,, no one will profit anything near the amounts physical gold advocates will.
Keep climbing:
As I have said so often, the numbers we look at for today's gold price are an illusion. Because there is no real physical market large enough in scope to balance the paper trading settlement price. The price for physical gold unknown. To our advantage, gold is sold by past and present owners and this supply helps lend credibility to the market. Without it, we could not buy any gold, only cash settled contracts. A type of settled market that, if you read Another's letter, is not far away.
We all have trouble understand how there is no value known for physical gold. Yet, if we look at another market we could grasp this issue. Take American real estate:
We all have an idea what that house down the street sells for. But consider that that price does not reflect the true value of the physical house. Just watching the 30 year loan rate tells us where most home prices are going. I think (as an unreal example) almost every person would agree that is the fed went into the market to buy any and all 30 year house loans until the rates fell to 1%,,,,,, home prices would explode! Conversely, if all credit for houses was shut off,,,,,,,,, cash deals only,,,,,, home prices would crash!
How does this reflect on our gold market? We can see where a cash house is worth one price while a credit house is at a different level. The physical is the same even though means of trading and owning it generate an illusion value. You don't truly own a house brought on credit, in this light we can see that you live in something actually owned by the bank. But, you benefit by trading it if the price rises. Actually, currency profits from ownership illusion.
Our gold market has been in this same illusion fog for decades. The gold so many in the industry think they own and trade is truly just a commitment of another entity to supply you with said gold. By far, we buy, sell, lend and borrow something of an illusion. Paper trading dwarfs physical by an incredible amount. Mostly because the majority of us investors do not want to actually possess, and therefore use the physical gold. This price illusion is exactly the opposite of my above example. The credit gold price is driven far below the real gold price because supply is easily expanded to extend to anyone wishing to trade an illusion. You have just seen such an event on the US comex recently.
Other guides all point out that this cannot go on forever as eventually "Real demand usage" catches up with available "real supply". I agree. However, society has a way of changing the rules when the economic wealth that their savings are based on comes into risk. Our fiat banks will not be allowed to fail. Just as in 1971, when that real gold demand suddenly expands it's boundaries to include ordinary gold investors, the supply rules will be changed again. Fortunately for us Physical Gold Advocates, the next rule change will evolve from a reserve system that has no threat from a rising dollar gold price. Even if the contract markets crash and physical gold traded in Europe goes into the thousands, the Euro will find strength from such an occurrence. The ECB will embrase it and promote the same.
Dollar gold in the thousands,,,,,, USA inflation going hyper,,,,, The EuroZone dealing with the changes as the BIS settles all our gold dealings,,,,,,,,, And cheap Euro oil making sure Europe doesn't fail too.
Do I wish for this? Only a fool would comment to ask such a question. Am I preparing for this transition? Another would be happy to see that I am! (smile)
Thank you all for walking
I'm here for a while and will be adding more over the days
TrailGuide
Gold Trail Update (06/12/01; 11:23:22MDT - Msg ID:55926)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (06/12/01; 11:23:21MT - usagold.com msg#77)
A discussion
-----Cavan Man (6/10/01; 19:35:39MT - usagold.com msg#: 55822)---It's getting dark on the gold trail.----------
Hello Cavan Man, let's walk a bit!
I just looked outside my cabin, here on the trail, and everything looks very bright to me. (smile)But one has to allow me that view as I saw this "New Gold Market" a long,,, long,,,, time ago and began making adjustments. Adjustments in the kind of wealth I own that would carry me for the whole trip. Not just these little side trails (trades) so many Gold Bugs are still trying to make pay off.
It is difficult for us to define, in explanation form, a new political perception as it evolves. Especially with old Gold players still presenting their gold views in a "has been context". Trying to explain the latest paper pricing moves as if it will fit into their past game plan. It doesn't and as time passes everyone is slowly seeing that something is changing. Michael Kosares has the best game for new advocates and I think some of them are now going that way. Just buy gold from a dealer that sees thru the fog and forget the stories of "has been leverage". True, that leverage payoff may somehow show up for a while, but none of these players will get much of a check compared to what's coming.
Yes, it is frustrating for anyone that cannot see the whole picture. Gold Bugs watch as their portfolios are further impaired as a result of investing habits that cannot evolve. Again, all based on old perceptions about today's gold. While I, too, enjoy watching TI (technical interpretations) and daily movements in the price functions of "gold substitutes",,,,,, none of this has any bearing on what "real gold" values are today or will later be as this all plays out. You see, the drama is in the political game and that game is what will determine how soon and by how much the "real value" of gold is displayed. Non the trillions of paper gold trades made around the world today, on this failing dollar gold market, can define the real value of gold.
Onward
By now everyone should understand that for every dollar that can be bet on a rising price of "paper gold"; three dollars can be made available to create and sell them the other side of that bet. When the big political moves come later and change our currency game, therefore our gold pricing game, this very same fiat contract creating ability will stand against your receiving the later value of physical gold. As expressed in a paper price.
Truly, the market is not manipulated so much as it has found a short term opposing balance. A timely political balance that has used this unlimited fiat creation as the gold price controller. A force being used to smooth a transition from one currency to another. Gold Bugs use this very same fiat creation to buy long "fiat gold contracts" and then complain because the banking reserve system, we all use can do the same. These "Anti Gold Bug" traders can create and supply just as much fiat power to sell us gold as we can use it to buy gold. Then when our futures / paper price remains the same and it's a cabal killing us. Actually, it's the modern Gold Bug's desire to shun physical gold ownership that's killing him as that desire was discovered and exploited for political means. It's free enterprise,,,,, Gold Bugs created a demand for something paper and a paper supply creation is delivered.
I marvel at how advocates of paper investing spend their time trying to determine when someone is going to buy up and corner this kind of paper market. Forget it, it's not going to happen. No one can force a paper market that has unlimited creation potential. And only a fool would try to demand delivery of a good he doesn't have the assets to pay for,,,,,, and do it in a market he knows doesn't have the metal to deliver. I know this, you know this, the government knows this and the Giants know it. Far better to just keep buying gold that will one day be correctly valued when this market's political use is done. So, have you somewhat positioned yourself for the great cornering of this "gold printing press",,,,, or are you more smartly playing the Kings game?
A few comments on your post items:
--- 1. Comex defaults.------
Yes, once again, here is an area that brings out the most impassioned analysis of most gold bugs. They all watch and wait for this big event so their paper gold substitutes can finally get them back to even. (smile) Still, everyone has their leveraged bets, in some form, waiting for the big one.
On a side note:
I smile at this because we read about the great percentage gains leveraged people are enjoying every time "paper prices" make a little move. Lost in the discussion is that this "New Gold Market" has removed such a tremendous percentage of their wealth already, that several 100% moves in these "gambles" would not make them close to whole. On a complete, long term Net / Net basis.
Someone points out their paper purchase at the lows of say, just a year or so ago, and they are now ahead and you could be too if only your ears could ignore Another. Ha! Ha! Or even buy the lesser metals, as that's where we will make it all up. Always lost in the logic is the fact that these "Gold Bugs" don't or won't advertise their previous adventures. In Hawaii (where I had lived in a small place for some time) the locals have a name for this "thought process"; "Ocean Money"! It floats in on the tide, rots a while, then floats out. (smile) They say:
"Look at that new guy, he's leaving town with a million! Must be a real successful Bro caus he only lost 9 mil to beach rot! Managed to keep some! Came here with ten million and now is on the airplane bragging to his friends. Talking about how they could leave the islands with a million too,,, if all those listening would follow his lead ////// they be rich too!
Ha! Ha! Cavan Man, I think you (and others) get my point as this connects to our new traders at the forum. With good instincts, they will rot only a little also.
(huge, oversized smile)
Climbing now
So what are we looking for when I watch the paper gold prices and comex? What gets me excited when the market begins a little move? Well, it's not the fact that it's going up, rather we are looking to see if the impact of political change is working the gold derivative's credibility yet? I am looking for some wild spurt of trading that lasts for several days or weeks. Open interest rapidly surging hundreds of thousands of contracts, then just as fast plunging away. A paper gold market, containing tremendous price changes ($100++ or more per day, both up and down) that begin to call into question the ability of Comex to function. Not so much question it's function as an price setting exchange, rather question if it can later function at all in the metal settlement process.
Where the big positions on the opposite side of the longs (shorts) find themselves in a changing world market without physical supply,,,, at almost any price. Brought on by a currency transition. Where big physical bullion dealings (one tonne ++) between real buyers and sellers,,,, outside and away from the exchanges,,,,, begins to run at a huge premiums to our contract based paper trades. Perhaps hundreds of dollars or percent higher,,,,, even impacting the ebb and flow in the coins world as misguided investors quickly sell for profits only to find no market goods later at twice the price.
In this environment, the big shorts on all paper based exchanges will be selling these new "cash created contracts" to the very limits of their capital. And trust me, they will not reach those limits because an unlimited amount of credit will be made available to them. Remember,,,,, for them,,,,, regardless of the supply,,,, the demand,,,, or the price of physical traded metal,,,, as long as the paper contract price doesn't close "up" too much,,,,, there is no risk or call on their capital. They can just keep on selling.
But, eventually (perhaps over only one day!) the outside the exchange demand for physical and it's escalating premium, will most likely see legal force from their physical buyers driving long players to demand delivery. Even if it cannot be delivered. Long,,,,,, longggggg,,,, before these delivery demands ever fully surface, comex will state position limits, cash settlement and trade for liquidation only. For you new people, this is exactly what they did during the Hunt silver fiasco. They have to do this because the articles these exchanges were created under manifest these trading places as price setting and price hedging establishments. Where the greatest majority of their trading is meant for cash contract settlement, not physical delivery settlement.
In this light, only Gold Advocates understand that default on Comex is really the forced non metal settlement of a contract at a contrived paper price. A price far below the physical traded price. Most likely a last day of trading price that settles out hundreds of percent below the world price for physical metal trading,,,,,, as it appears the very next day.
The big difference today (from the HUNT problem then) will be in the nature of this default. His was brought on by private investors buying a commodity. Today, gold market default and failure will be forced upon the dollar gold world by a sudden lack of "price setting" credibility. And that loss of credibility will stem from the stressed conversion of dollar contracts into Euro denominated units that demand "market based performance" (physical priced valuations) or an escalated (higher) Euro based cash settlement. This all will manifest in a lack of credibility in paper dollar gold trading that can no longer be marked to the market at the same value of physical gold.
This failure of price matching,,,,, this failure of contract conversion into metal,,,,,, this failure in the world gold market to any longer be able to correctly price real bullion,,,,,, will lead to a wholesale dumping of all dollar contracts that have US based performance,,,,,,and start a fall away of all dealings based on present protocols dollar market gold exchange.
As a side note: This will not apply to the paper silver markets as silver will not have the Euro vs. Dollar political struggle. A struggle where the ECB members are trying to loosen their main asset (gold) as a reserve wealth backing to replace the massive loss of dollar reserves. Remember, further back on the trail we covered how these reserve dollars will be simply cast down. In this light, silver trading will bear the brunt of selling in an effort to balance loses from a gold exchange that no longer works. Because silver has no hope of an official free market, it's paper pricing system may run amuck until it's price plunges to??? This is the reason so many countries that are contemplating a switch from dollar to Euro use are selling physical silver and buying gold (China, India, etc). It also explains to movement of gold between countries that planned outright Euro conversion.
Back to gold's paper pricing breakdown:
It will not lead to the collapse of world banking so much as it will lead to a reallocation of value between assets vs reserves. Which are and which are not. Further, a loss of paper exchange trading will drive gold to it's true physically traded price. Gold in the tens of thousands per ounce will represent:
First
,,,, it's real currency value in today's expanded fiat world,,,,,,, then later it will advance further on the price inflation coming to the USA. This is where so many thinkers cannot see super priced gold. They are seeing the present illusion of gold value as it's base. Later, a gold move from say, $10,000 to $20,000++ will only represent a 50% rise. Liken to an oh so understandable $300 to $600 today.
Second
,,,,, the total rejection of owning gold in any form except the real thing,,,, no amount of gold supply will come close to equalizing this current ownership imbalance built up over many decades. If anything, sellers will be confounded as nothing keeps pace with the gold rise. Once sold, it only costs double to rebuy.
Third
,,,,, a return of old world values in that gold is worth owning as a lifetime wealth asset beside your cash and other investments,,,,,, While the US will experience a massive retrenchment of it's wealth perceptions, our move into gold will be chaotic and traumatic. Other parts of the globe will fare well. Life will go on. Remember, people talk about how the US makes a quarter of the worlds products and services and say the rest of the world cannot do without our operating as usual. But, they forget that we consume all of it (that 25%) and then import more. Our production fall away will mostly be at the mercy of our own slow down. As the dollar tumbles on exchange markets, so too will our cost rise to produce anything (massive hyper price inflation). Rendering a net / net non gain in world trade advantage. In other words, our goods may very well rise in price faster than our dollar falls. If anything, we become even less competitive with Euro based production.
Further Onward
This new realigned price of gold will offer no threat to the Euro as it does to our Dollar. The open gold value calculations by the ECB proclaim their intention to allow gold to rise as a Euro enhancement. Not a Euro replacement item. Remember, old world values dictated that gold was
not a competing money any more than Microsoft shares are against the dollar today.
Gold, from times past was a wealth asset more so than it was in the form of money. Granted, it became the fastest moving form of wealth, but as it traveled on the road it was still simply seen as a tradable wealth. It has been American and Western ideals that made gold a lend able money and forced it's competition against failed currency systems. We set currencies in fixed gold amounts and then inflated the currency. No wonder gold competed against currencies. The ECB will allow gold to go to the moon and everyone will love them for it. People will use the Euro whether gold is at 1 Euro or a trillion.
Arguments against this new logic (by failing Gold Bugs) are little more than a throw back to their outmoded Western money logic. ET (a USAGOLD poster) even thinks that by freeing gold to rise to whatever level it wants,,,,, we are somehow governing it??? That direction of thinking is caused by "promoted investing". The logic is to somehow invest in gold (the industry or it's paper leverage) more so than owning the metal. Leaving the agenda of physical gold storage to be something the official governments or private enterprise should do for us. They base their concepts on a return of gold recognition as a somewhat official government money after price inflation discredits the local
currency (Dollars).
Such logic suggests we buy into the various SEC sanctioned (government) paper gold substitutes while governments somewhat allow a devaluation of their money against gold. Say to $800? In this way the dollar is saved a little while the gold exchanges continue life as before. This, my friend was a failure in the past and the future will provide a very different rendering.
Higher we go
We have named our big fish and it is Allan himself! The old Gold Advocate, from way back, that knows how to use gold as a system saving tool when backed into a corner. They have reclassified some of the American gold for use later. It is still ours now, to be sure and has not been swapped or sold. It was renamed with the full intentions of our ESF buying dollar reserves from Euro CBs (and others) as the Euro later gains usage (and value) independent of the dollar. In light of the Blair vote, I would rate their move as very smart. This was done (and will be done more so later) to provide backing and settlement against US paper gold commitments owed to and already delivered into oil ownership. This paper is mostly in Euro banks.
This was "part" of the price we paid for oil to flow in dollars this last decade as the Euro was born. This was the price we paid for an extension of dollar use in oil settlement. It will be moved when gold trades at a much,,,,, much higher price. It backs Another's point of long ago that oil was traded for gold in the thousands at that time,,,, we just had to wait for the real price to be shown. It will!
This is the decades long game we are playing for, my friend. This is the big one we own gold for. This will be the defining moment in our time that changes perceptions about the value, reserve currencies and the wealth of ages. Watch with me now, as events prove all things!
Thanks, Cavan Man
TrailGuide
Trail Guide (06/12/01; 14:26:11MT - usagold.com msg#: 55936)
Comment
Hello RossL,
You write in:
-----RossL (06/12/01; 12:35:52MT - usagold.com msg#: 55932)
FOA gold trail msg#77 - A discussion-------
-------This is a misrepresentation of ET's position. ET stated that the (FOA proposed) restriction on using gold as collateral was a limit on the free market, and thus governing the gold market. ET's argument is for a totally free market.------------
No sir, I contend that "his position" itself is a misrepresentation of a free market. Attaching the rules
of credit principals to any tradable item subjects it to local contract law. As we have seen over the centuries, local laws inspired by the society of nation states always end up mired in further control issues. Usually it begins when someone or some large group cannot pay back the loan. In this case it would be gold. So the majority or most powerful institute round about measures that in the end
dilute the freedom of the market.
As it is, we as a people have not been exposed to the essence of free trade of almost anything for some time. It's no wonder that we rile against a concept that says we must be free, we cannot borrow or lend this sacred wealth of ages. In this day in time, a free market must have laws to truly make them free from themselves,,,,, less the advocates of "gold as money" storm the gates with entanglements that can only entangle further.
Promoting gold as money, even credit money is the very socialist ideas that always start out good to the ears and later cause men to chafe at the yoke of slavery.
Free Gold,,,,,, traded without credit,,,,, without the rules of men.
Thanks
TrailGuide
Trail Guide (06/12/01; 15:10:36MT - usagold.com msg#: 55941)
Comment
Hello again RossL,
You also write in:
-------RossL (06/12/01; 12:35:52MT - usagold.com msg#: 55932)
FOA gold trail msg#77 - A discussion http://www.usagold.com/goldTrail/default.html
------Also, in the gold trail msg#77 - A discussion, FOA stated:
"Such logic suggests we buy into the various SEC sanctioned (government) paper gold substitutes while governments somewhat allow a devaluation of their money against gold. Say to $800? In this way the dollar is saved a little while the gold exchanges continue life as before. This, my friend was a failure in the past and the future will provide a very different rendering."
Using the prior gross misrepresentation as supporting evidence for this statement renders it a non-sequitur. Et suggested nothing of the sort.--------------
Well Ross,
You took the above item right out of my post and failed to attach the prior. Here is how it should read with the proper leading context:
-----They base their concepts on a return of gold recognition as a somewhat official government money after price inflation discredits the local currency (Dollars).
Such logic suggests we buy into the various SEC sanctioned (government) paper gold substitutes while governments somewhat allow a devaluation of their money against gold. Say to $800? In this way the dollar is saved a little while the gold exchanges continue life as before. This, my friend was a failure in the past and the future will provide a very different rendering. -----------
Now,,,,, that's much better! (smile) My point was to reject the persons basic thrust of having gold as money again. Most of the modern ideas of "gold is money" advocates always want gold to be endorsed and stamped by officialdom to somehow make it "more real as wealth". They talk a lot about gold but always in the end return to these basic themes. Themes that always require more rules to enforce them.
This has been the killing problem for gold from the beginning. Men following a socialist slant while hiding behind the cloak of hard money. "We must lend gold" they declare, for it to truly be money. In effect these declarations plagiarize the wealth of gold by expanding the effect of it's use almost like inflating it! It's lenders have gold in the form of loans while the new ownership spends it until that expansion, too becomes permanent. Then we embark, once again on the road to inflating fiat
gold and breaking down the official money. The very thing hard money types always say can't happen but always does. Truly, if you want hard money, stop the socialist from borrowing and lending it. Think that hurts their basic thrust? Just listen to them rile against giving the people Free Gold to save and fiat to spend. Kind of kills the very leverage Western power was built on, doesn't it? (grin)
Further:
Using the prior gross misrepresentation, you presented Ross, as supporting evidence for your statement, also renders it a non-sequitur. Beside my poor wordmanship, bad english and rushed trail walk, I suggested nothing that didn't correlate against ETs views.
Thanks
TrailGuide
Trail Guide (06/12/01; 15:19:44MT - usagold.com msg#: 55943)
(No Subject)
Buena Fe (06/12/01; 14:31:14MT - usagold.com msg#: 55937)
TG
------Hear Hear Mr. Speaker........I second that motion!------ Amen
Well! Well! There is one with a sword! By the sun that shines, I'll stand the same ground weapon in hand.
(smile)
TrailGuide
Trail Guide (06/12/01; 15:40:16MT - usagold.com msg#: 55945)
Comment
Randy (@ The Tower) (06/11/01; 14:36:10MT - usagold.com msg#: 55874)
"Dawn of a New Gold Market"
Hello Randy,
How does it feel to do the thinking of 50 men and turn it all out under the name of one? Ha! Ha! Very good job, sir.
Your title above is so very fitting to the evolution at hand. I think things will begin to move considerably faster now that Blair is in the drivers seat. He is getting some moral help from Spain and Italy as these two members side more with opposing forces against the ideology of Germany
and France. This is so very healthy and is the basic foundation that makes the EU a world apart from single republic rule. Out of such broad based design comes a more equal system that all nations can hope to deal with.
Here is a sample of some recent commentary:
-----------------
CNE NEWS - May 21st 2001
Spain Alone No Longer
It's always good to have friends in high places and with Berlusconi leading Italy, Spain's Jose Maria Anzar will finally have some conservative company in the EU. John O'Sullivan, editor-in-chief of United Press International, who previously held posts at the London Times and the London Daily Telegraph, notes that "Until now Spain was the only major nation in the EU with a conservative government. Now he has a powerful ally in intra-European disputes." O'Sullivan further notes Berlusconi is "an Atlanticist as much as he is a Europeanist" and that both Berlusconi and Anzar have more politically and ideologically in common with America's George W. Bush than with Germany's Gerhard
Schroeder or France's Lionel Jospin. ------------------------
Good stuff, right? This kind of balance will allow Blair to sell the union in a better image. England truly will not be the only non conforming member. I also think that the time is right for the ECB to gun the Euro. Another said as much and suspects the recent BIS meeting was a prelude to this new initiative.
Now with Bush being killed in their public opinion, especially with his "socialist steel" stance. Oh boy, the shoe is on the other foot now. Expect our gold markets to begin to reflect these incredible power struggles by locking down the real supply as this year runs by.
Thanks
TrailGuide
Trail Guide (06/12/01; 15:55:40MT - usagold.com msg#: 55947)
Reply
Camel (06/12/01; 15:36:17MT - usagold.com msg#: 55944)
----I have not had the temerity to ask before but I have often wondered why the U.S Government couldn't adopt a similar policy, that is , mark the US gold to market and therefore cover a lot of the excess dollars. I guess you hint as much as when saying that Greenspan knows how to use Gold when backed into a corner. I can't quote the exact figures,but the U.S. theoretically still holds quite a lot of gold( valued at $42?). Not quite as many tons as the combined European totals but still quite a lot.-----------
Hello Camel,
The US could have did this very same revaluation in 1971. But they blew it! The problem then would have been that the dollar would have been marked way down on the common exchange rate systems in force at that time. We would have had a gold backed dollar at say, $3,000 oz, but also a tremendous price inflation as the dollar's buying system repriced itself via other trading blocks. So we decided to stiff the world because we wanted to retain the great life style our overprinting of dollars brought us. Simple yes?
The problem was, and still is that the world started working on a new currency right then and there. It took a long time. Today, no other nation in the world will accept the US's promise to back our dollars with even $20,000 gold. Because it would be meaningless. We would just do the same thing again. After all this work, better to arrive at the door step of a better system and just walk on in (grin). Couldn't be any worse. Besides, at least the ECB is flashing the gold light at everyone that wants Free Gold. Believe me, that bunch includes a large segment of world population.
Further, besides,,,,,,,,, would the US really ship their gold out if asked? (smile) No, my friend, we will be forced to ship gold slowly as dues to just keep out dollars as trade vehicles. Lesser vehicles to be sure, but sovereign money never the less.
Thanks
TrailGuide
I'm going to eat and be back in a bit.
Trail Guide (06/12/01; 19:26:58MT - usagold.com msg#: 55977)
Comments
Several replies:
======
RossL (06/12/01; 15:59:25MT - usagold.com msg#: 55948)
---------Your point is well taken. However, I believe that the viewpoint you are countering is more often voiced by Jude Wanninski or Alan Greenspan-------
Ok Ross, fair enough. But worth a thought anyway. (smile) thanks Ross
===========
Camel (06/12/01; 15:36:17MT - usagold.com msg#: 55944)
One more thing Sir Camel,
It would be almost impossible for the US to defraud investors holding an IOU for gold in the form of a gold backed currency (the dollar),,,,,, then later return this very same currency back into gold loan status. As I understand it, every BIS member (outside the US of course) would demand their dollar reserves replaced at the old gold rate. Now, that ain't gona happen. The best the US could
do would be to print a new currency. Still, once taken,,,, never again? (grin) Thanks Camel
=================
Max Rabbitz (06/12/01; 15:53:48MT - usagold.com msg#: 55946)
Some Australians know what's coming
Hello Max,
Yes, the whole mine sector is up to it's ears in bank dealings. Even the US fund favorite, NEM, has enormous debt. Yes, it's regular debt but we have to expect that every financing function in the industry will be in hot water once these BBs start suffering. Loans, both good and bad will be
called because everyone will be exiting a sector that is suddenly seen as in turmoil.
Once the largest cross segment of our gold market starts to fail, taking paper prices to the pits,,,no one will want to chance holding mine paper of any kind. Even if physical is soaring. Fact is, at first, no one will believe the new price is real and will not bit the mines that credit. They will mark the mines to the comex price first.
Let's face it, industry supporters unleash their strongest attack at the notion that the marketplace could be in trouble. This is the area that they know is their bread and butter as far a stock valuations and new credits are concerned. We will never get an honest take on the risk with that much on the table.
Gold Bugs like to point out that the mines could just use their metal as money. But, with all the cross ties in the gold lending business,,,,,,, the various governments tax policies at odds with non legal tender accounting and in general the failure of knowing what price of gold would be,,,,,, this avenue of metal use would be closed for some time. The banks would forbid it.
This is the reason I invest a very small portion in the best of the industry. I expect it to pay off, only after the mines valuations fall far away first. Later,,, after big taxes,,,,, the very best mines left may make some fantastic profits on the last $2,000 and ounce. That's giving at least $18,000 to the government. (grin). Besides, what a head throb? Just buy gold outright.
Thanks Max.
===================
Randy, I will discuss your post next.
===========
Mexpat (06/12/01; 16:55:28MT - usagold.com msg#: 55952)
Trail Guide
"Free Gold,,,,,, traded without credit,,,,, without the rules of men."
Hello Mexpat,
you write:
------I like it! I like it a lot. But I find myself wondering just how the wealth value of this free,
tradablevgold would be determined vs. other assets, and vs. the fiat currencies which would still be used for daily commerce. Would you see some type of Exchange still existing which would handle transactions in physical Free Gold between miners and end users, for instance, at which a daily
price in some fiat currency would be set? Or how would it work do you think?------
Well,
I expect gold to be a wealth holding no different than,,,,, stocks that pay no div.,,, antiques that have no earnings,,,,,, diamonds that buy us love,,,,,, treasury bills that are brought at a discount and appreciate over time,,,,,,,,,, raw land,,,,,,, and cash in a box!
I do not expect it to be used as daily money any different than shares of IBM are used to buy food. I think we will hold it for it's record over time as the best trade able tangible asset one can own. I expect taxes will be levied on it's use if it is traded. No different than the taxes people record the world over when taking and paying cash in commerce.
Your post:
-----If I want to trade some of my shiny gold eagles for a beach front condo in Veracruz, priced in pesos, how am I going to determine how many of my eagles to give up? I'm trying to envision just how things might work on a practical basis once physical gold breaks free from paper gold.
Perhaps you could comment.-------
If you have a good relationship with a physical gold dealer he would sell the gold for you or perhaps just charge a trading fee to record and ship the gold to your property's seller. Your paper records would suffice for paying the correct taxes. Not much different than trading physical now???
One big difference will be that Michael will most likely be part of a physical gold dealers group. Perhaps called the EGBE (Euro Gold Bullion Exchange). An organization of world physical dealers that buy and sell gold for their customers. MK would, instead of checking the comex price, simply call a nearby (in denver) member and deal the metal or get a going price.
From South Africa to Shanghai,,,,,, from Berlin to Dubai,,,,,, the new physical exchange will change the dynamics of gold as never before.
Will this work for you, sir (smile). Thanks MexPat
===========
Hello Megatron, your words,
megatron (06/12/01; 17:26:20MT - usagold.com msg#: 55958)
Reality check
------I wonder what happens when TG or Another go through the checkout at the supermarket and are forced to pay fiat money to live day to day. "I'm sorry ma'am, this fiat you call money is worthless, and the gold I'm holding has no value that you could understand'silver is worthless I've
decided, so what I will do is work off my debt, in euros, to the store"......................"Your going to have to put those groceries back'sir".--------------
Meg,
do you know how many national currencies in the world today experience an average of over 20% inflation rates? Do you know how many of those nations also experience almost hyper rates? More than a few, my friend. The point is that even in super inflation dynamics, modern people still use the fiat. Even as the governments lob off zeros weekly. Sure everyone has gold and hard dollars,,,,, but they don't spend them as much as they do their currency notes.
My point is that we will all be doing just as in Mexico; spending pesos while holding dollars and gold. Only in America we will be saving gold, putting aside Euros and spending inflating dollars. When the dollar goes completely hyper, we will resort to Euros, not gold or silver. The times have changed, my friend, you are fighting a war that will not begin. The world will use only one hard metal as wealth, gold! Because as Randy puts it: " we don't need a redundant wealth asset to hold in reserve". Silver is a good commodity but has no future in the either the Euro System asset structure or my private wealth. Gold is the place to be and the events to follow will show this to be true.
"Time will prove all things"
Thanks
=========
TrailGuide
Trail Guide (06/12/01; 20:51:08MT - usagold.com msg#: 55984)
Comment
Hello again Randy,
Yes, Duisenberg will be leaving and will have guided the hardest portion of Euro formation; the initial expansion. Once the currency is finally in circulation, this balancing act will end. I think Trichet will then have the most satisfying portion as he powers the Euro into world class status. It's hard to believe that this group of nations is such a power house. This bit of info makes a startling point:
"When the national aid programs of the 15 member states are included, the EU provides 55 per cent of the world's development aid and 66 per cent of outright grants".
So much for the idea of a broke bunch of countries.
Also; yes again that the ECB is holding firm in it's position of being non political . No grand show of cutting rates to pump the economy at the expense of the currency. Traders like to dismiss this body as ineffective because they have not produced the currency valuations that put money in their personal derivatives trades. Instead this Central Bank is following a course that is putting them in
good standing with major dollar reserve owners. Owners that are now voting with their feet to exit the dollar as markets allow. It doesn't take much view to see that a further rise in oil prices is about to push the US well over the cliff. To date the impact has been muted with the EuroZone showing
about as much impact as the US. It will be the next rise the shows the difference and much more greatly impacts the dollar's standing.
With Blair beginning his Euro pitch, expect an all out effort out of Europe to remove gold off the market now,,,,, a certain firmness in the Euro and an outright overt push by the US fed to gun the money supply at all costs.
The combination of all this should break the US paper gold pricing system, drive US inflation rates well past the Euro rates (even making a joke of the CPI numbers), raise all prices in local US investments such as Real Estate, and the Dow. and drive real bullion premiums through the roof
(over paper contracts).
We have been on the road to high priced gold for some time and now should begin to see the results spill over. It's going to be some history lesson.
Thanks Randy,
TrailGuide
Trail Guide (06/12/01; 21:00:47MT - usagold.com msg#: 55985)
Reply
megatron (06/12/01; 19:56:48MT - usagold.com msg#: 55979)
TG
If a mining junior had ******** what would stop the person
with a 2 digit IQ from figuring out this is the thing to own? ********* a person would be stupid NOT to buy. They cannot be forced by anyone or gov't to do anything. They can sit on it practically for years. You MUST QUALIFY your statements about mining. Many will go the road you say like 'miners' Barrick, Eldorado, Normandy etc. but many won't and you are doing a dis-service to the people who follow your posts, by making such patently WRONG predictions and gross generalizations.
=============
Ha! Ha! My sir Megatron, to all of your 2 digit IQ people I say but one thing that will QUALIFY my statements:
-----Compare an investment in bullion to an investment in
--------------BRE--X --------------------------- the one that sounded just like your baby but wasn't!
thanks TrailGuide
Trail Guide (06/12/01; 21:24:43MT - usagold.com msg#: 55987)
Reply
goldfan (06/12/01; 19:45:38MT - usagold.com msg#: 55978)
Trail Guide ( msg#: 55941)
--------However, I cannot agree with you that in such a regime, gold to save and fiat to spend, there will be no gold loans. If it is in people's interest to borrow or lend gold, then they will do that, no matter what the government proscription against it. If the pressures are great enough there will be a black market. -------------
Thanks for reading sir!
Did you know that in most countries around the world, the US dollar is not legal tender? Yet, it is brought, sold and traded just like it was. Central banks own dollars as reserves and allow their local use do to IMF treaties and accords. Still, most major countries don't legally recognize our currency as money in their economic system.
All this and we can circle the globe and use dollars almost anywhere. Why is that? Because the dollar is covered by a US law that makes it the money within the domestic US. It's not a law in any other land but it binds the dollar's use as a protocol of understanding.
Now, if gold was to be declared non tender and non collateral in Euroland, the same force that binds us to use dollars the world over would also repel us from contracting in gold. The world over. The legal status of a major reserve nation can have the effect of internationalizing a law into policy with respect to the conducting of business.
In other words, I'll lend you some gold here in Brazil, but you will not get a good rate because of the risk I take that you may end up in Europe where I could not enforce my right to that collateral. Better you borrow these pesos or Euros at a lower rate, yes?
This is how a local law becomes accepted protocol in business dealings the world over. Besides, why would it be in anyone's best interest to borrow gold when they could borrow fiat? Truly, if fiat is the money, like the dollar fiat is today, modern people will borrow it first, no?
Gold find's itself in it's current predicament because it still competes with the dollar. In a Euro world, it won't be in that box.
Thanks TrailGuide
Trail Guide (6/13/01; 04:49:08MT - usagold.com msg#: 56014)
State will not seek to alter the Nice treaty, EU told!
http://scripts.ireland.com/eurotimes/geneurotimesnew.plx?http://www.ireland.com/newspaper/front/2001/0612/fro1.htm
All: This almost sounds as bad as American politics?? Does this mean the Europeans are now just as good as us Americans? Sure they are! (smile)
------The Government has told the EU that Ireland will not seek to renegotiate any part of the Nice Treaty in advance of a second referendum on the issue.
The Minister for Foreign Affairs, Mr Cowen, told a meeting of EU foreign ministers in Luxembourg that the Government will seek to ratify the present treaty before the end of 2002.
In a joint statement, the foreign ministers reaffirmed their commitment to the process of enlargement and said last week's referendum result would not affect the pace of negotiations with candidate countries.--------------
ORO, good posts. I have a few comments. later
TrailGuide
Trail Guide (6/13/01; 07:29:00MT - usagold.com msg#: 56021)
Comment
ORO (06/13/01; 00:09:42MT - usagold.com msg#: 56002)
FOA, Another, and the use of force
Hello ORO,
I have a few points to make. You write:
============
--------- I say again, no financial system has survived the span of three years, and most had not survived a year without trading gold at a set par to financial assets. The future euro system presented by Another and FOA is no different from its failed predecessors. ----------------
The problem with this comparison, ORO, is that no financial system has ever been introduced where gold is included as a non money reserve asset. Taking your point further; this oversight is the reason "every financial system" has failed. Not just those lacking gold. In this light the new Euro
system is different from any major reserve fiat ever employed in modern time.
Through out history "hard money socialist" always fought to include gold in the currency / banking system so they had an escape rout. None of them ever could live with gold moving through society as a singular wealth asset that was traded next to cash. Making it an alternative pay as you go, non
credit, pull up your own bootstraps way to survive man's money systems. Sure, taxes would be paid on this very asset every time it was used. But, that fee is no where close the wealth tax burdened upon the economy by an exclusive arrangement that combined gold and money. Then common people had no recourse to own a wealth that could offset the social printing press as man inflated the official gold backed money.
In hind sight we now know that the flaw in the system was in allowing gold to be entangled in the basic purpose of banking,,,,, lending. This opened the door to social engineering; in that lent gold could become a permanent fixture in the national money supply by simply printing more gold than was held.
===========
--------- The core of the argument from Another and FOA is the FORCED liquidation of contracts having dollars on one side and gold on the other. The mechanism for this is not related to performance on the dollar side, nor to the particular degree of leverage in the bullion banking
sector, or any market set rate of exchange between euro, dollar and gold, but solely and completely by action of law (the EU treaties) to FORCE GOLD CONTRACTS IN LONDON
TO BE CONVERTED TO EURO.-------------------------
Oro, this is the core as you see it. A distinct Western view that incorporates the need for inflating qualities in a money system. We never said that this drive was about bringing the Anglo based gold lending system to justice? I'll leave that to GATA. We seek to dismantle it entirely and hang the cost upon whoever will carry them. Looking beyond your closed understanding one can see the need for change.
The USA initiated the idea of "Forced liquidation of contracts" in 1971, when they defrauded the world of it's gold. Their's was also a "sole action of law" that forced gold owners the world over to become US fiat holders. Further, this was done while the US kept it's gold ownership illegal for American citizens. So much for a Republic that plays a tune to the world of how a money system should run? To the Europeans credit, the destruction of this current breed of "American gold Tender" will at least offer a new currency that recognizes the asset value of gold and encourages it's ownership by the masses.
This combination was not contrived lightly and is the desire of peoples the world over. Nation states that wish to thrust the American experiment onto it's home turf. Truly, I don't blame them. Let us Americans print our own destiny, but leave the world to it's gold.
Besides, how else could one divest themselves of Dollar gold paper without moving into gold itself or another currency unit large enough for the task.
============
------The reaction to this plan would not be the one the EU intends. The contracts would not convert into euro but instead leave the EU jurisdictions even if the UK joins the euro.-------
Your position is based on current context. This drama will appear different as it unfolds. US inflation will be driving upward, it's economy slowing and our Fed printing like mad. This very trend is currently on track as we and others have been pointing out. No one thought that Allan would embark on such a confidence killing rout and it is the bankruptcy of American financial policy that is driving this. The dollar is at the end of it's timeline and our expansion of derivatives was but an effort to save the system for a while.
Let's see; you have a gold loan on the books, physical supply dries up forcing a premium on metal over contract gold, the contract and futures markets freeze up and your asset in the form of loan paper is worth zero. Then the ECB in conjunction with the Euro faction of the BIS offers to restate the now worthless gold loans into Euro denominations and you are going to walk? Where? To the US?
In this context, the next reserve system is saving a portion of assets that were already destroyed by US special interest. US policy destroyed before the fact as much as the US printing presses destroyed the dollar gold ratios in 71. Think again, my friend.
================
------------There is nothing that would force gold producers or buyers to go to London or Zurich to do their trade. As both groups would prefer to go to alternate jurisdictions. Seeing the forced redenomination of contracts coming would simply leave the euro using jurisdictions which threaten
to change their contracts by force. -----------
As I said above, no one is going to force anybody. Producers and buyers will head for the best system and in this case it will be the only one in operation.
------------Furthermore, the contracts remaining in EU jurisdictions would be hedged into euro liabilities of ECB member banks long before the fact. This is something I believe was done leading into 1999, whether this hare brained plan goes through or not. --------------
At the very least gold assets will balance a portion of this. We never said that the Euro would not have to expand greatly to cover the dollar's removal from reserve status. It will. It was never intended for the world to lose trillions of dollar assets and not have at least a few trillion of that replaced by Euro System liabilities. As I pointed out so many times, the coming rise in gold will at
first only be reflecting past dollar expansion that took place without real gold pricing to track it. The illusion of gold price we today call accurate will give way to recording just how much the US over borrowed itself. This rise in gold is the real base the Euro will expand on in an effort to fill the world hole left by a fallen dollar. At the very least the EuroZone is not trying to create an illusion of Euro power without gold rising to reflect that. All so very contrary to past American dollar policy.
-------Thus a euro - gold pump would have been created with FURTHER EURO AND DOLLARS being created for each rise in the gold price in either. Thus a gold market boom would be against the interests of both the ECB and the Fed. -------------------------
Again, your idea of a Euro gold pump completely misses the root cause of this new gold price in the first place. It will be but a recognition of dollar failure and a replacement of those lost values through high priced gold. Both official and private gold the world over will represent asset wealth lost by the dollars demise. At first inflation will have nothing to do with $10,000+ gold. The dollar has already seen to that. To say this is against the interest of the ECB is to ignore both logic and our modern economic reality. Yes, there is a major problem being fixed and the FED and American Social engineering at the world's expense is that problem.
-----------Contrary to the thinking in political circles in Europe, the markets are more powerful than they are and will move to destroy the credibility of their plans just as they destroy the credibility of the Fed if it continues to inflate beyond debt repayment demand. --------------
No sir, contrary to political thinking in America, Europe and most of the world sees how the US market is manipulated in a way that ignores all past Fed inflation. We continue to move the money supply bar upward in an action that says "you just inflate one more time and it's all over boy"! As if all the past dollar wealth destruction is ok. Truly, the feds credibility is already destroyed even as they now embark on the final inflation. Your observation of markets ability to destroy credibility is a joke that has been circulating for decades now. Your faith is in a market that exists in illusion for the good of political advancement. Witness Bush's backtracking on numerous items of ideology
importance. And he is the best conservative this nation can put in place.
--------------That the ECB member central banks were supplying this physical gold liquidity at par with the paper would make the ECB (and EU and the euro) more suspect than the paper gold - future dollar exchange system they are trying to destroy. ---------------------
Who said it was at par? If you are speaking of the current illusion of price, then par is most certainty above that. You don't know who brought the gold if it moved outside the world CB system and you don't know the full extent of assets traded. Both gold and currencies are traded with perceived future value in mind. Especially gold that is known to be revalued later.
-----As FOA indicated, the paper system is such that unavailable gold is traded for unavailable dollars - future gold delivery is traded for future dollars earned. As the (previously) future dollar earnings do not appear, neither does the demand for making good on the contract with physical gold delivery.----------
Yes, and this structure is the market you promote that can shake governments to the ground. Truly, once the gold supply is locked down, the demand side of these phantom price setting contracts will dislocate the entire gold market place. Your capital seeking the best return will, at this time of stress, opt for any market that works at all. Much less works at a profit.
---------There is always a difference between gold (savings) and other financial assets (investments). Gold holdings remove consumption demand from current goods and services, thus allowing their use in investments that produce future goods and services the excess of future products over those used in investment is the return. The value of gold credit vs physical gold, as is the case for all credit, is simply the reflection of the ratio of expected future production of goods and services to current production of goods and services.----------------
Not true in the context of today's economy. These rules have been rebuffed by the markets failure to destroy non performing assets in the face of government bailouts. Fiat policy under our reserve system expands and retains all forms of created production, no matter the return. Capital has no risk basis to regulate it's flow. We expand until the currency is dethroned. All the while common man has no wealth storage unit to transcend the process.
In today's fiat systems, consumption moves right thru gold holdings as the assets used to buy them are deployed by the metal seller. Gold credit is not needed in our fiat world because it's function is replaced by fiat credit. What is lacking is gold in a non credit stance so savers can store wealth outside it's relationship with money. Once gold is removed from competition with fiat, the return on gold is in regaining the inflation wealth lost to credit and the wasted production assets such credit made permanent. This is the reality of our common money world today. We will never return to anything that decreases our creations. With this concept now a law of human function we strive to live with it. In this, gold will be our anchor in the present, future and beyond.
----------Gold is and has been the only money of substance. A currency not attached to it will not be borrowed because it will not be lent. None wish to hold a perpetually diminishing asset such as a currency denominated contract detached from gold would be. Countries that impose capital
controls lose in the financial market place and become economically isolated. Even the EU can not afford that.------------
Credit money systems will be with us for our lives and beyond. They will all fail, taking gold with them if gold is entangled in man's credit schemes. In modern minds money is not money unless it is entwined with credit. In this perception lays the trap that renders gold to never be a money substitute again.
The fact that our Dollar use has expanded the world over for almost 30 years without being tied to gold rejects the logic ORO implies above. There is a whole world of people, savers and businessmen that have and still use our "perpetually diminishing asset". Even as it is detached from anything hard. Further, Capital controls are only controls when they prevent socialists from inflating gold for their self serving interest. For the benefit of our present world trading structure, let's strive to replace the flawed, failing dollar with one that allows savers the right to retain their hard won wealth. Let the these Western Capitalists work the fiat tools they enjoy and for them may the best gamble win. Just leave my wealth so it may travel the trail I seek it to go.
For Gold Advocates, the Gold Trail is the only road to security.
Thanks
TrailGuide
Trail Guide (6/13/01; 09:26:14MT - usagold.com msg#: 56029)
Comment
Once again, we talk,
ORO (6/13/01; 01:10:10MT - usagold.com msg#: 56006)
FOA, Another - Fallacies in economic arguments
--------The crux of the matter is that the unit of savings dictates the unit of contract denomination (including debt), which dictates the transactional unit. The markets function best when all are the same units, and when the markets are free to switch between monetary units as reality requires. ------------
This "crux of the matter" is that Western hard money proponents always use an ill-defined definition of peoples wealth. Such ideology segments our savings into money form. This makes the distinction that only money can be the topic and concern of a societies ability to determine what it's worth is and what it can spend. Reasoning that units of savings do have to be in the form of transactional bits
enslaves us into some form of money system. This thrust ignores the fact that our total wealth is just as spend able and tradable for other wealth and therefore is our life's savings also. Money is but a function of denominating said wealth. In this light, history has proven that when real wealth units are combined with our credit money, credit inflation blurs our ability to measure our worth.
To say that markets function best when free to shift denomination power between fiat and gold ignores the fact that when combined there can be no shifting. Further, credit money has always been in a process of credit inflation decay and can hardly be seen as "functioning best"!
---------- The idea of separating the unit of savings from the units of contract and transaction can only result in no contracts and no transactions, or no savings in the unit dictated. In reality, transactions and savings would move out of the euro into gold (all transactions in euro would be
followed by exchange into gold), and contracts would simply not be signed within EU jurisdiction where they could be annulled, but signed under a "tax haven" law-------------
No one has this idea in mind. Your point is given in the context of gold being some form of money unit. It will not. I will be free. Once again, we have been contracting in gold - less fiat dollars for decades and no savings have rush out of this currency away from dollar contracts. The logic is lost in that a blind man can see where contracts and transactions have continued. If this was true the world would have ran from US legal tender jurisdiction and traded in all the other forms of money. Especially after our 1971 repulsion of gold as a contract able US money substitute. The rest of your paragraph rebuffs a condition that will not exist once gold is outside the money arena. Besides, once again, if this loss of function didn't happen to the dollar why should it suddenly happen to the Euro.
-------The similarity of the Indian gold and contract markets to this UN-free-gold idea goes far beyond goldfan's observation. The limitations on contracts, business formation (80% of Indian business is done without license and without enforceable contracts), and private property in India are exactly what has kept so much of India in its poverty stricken state. That is the true alternative to the so called "Western" view of money. That is what you say Europe is working towards. If so, I wish them a quick and painful demise such as they intend to impose on their own people and those of the world at large.---------
Your wish for destruction stands you at odds end against the desires of a good portion for the world. The alternative to our Western experiment with money is to retrieve gold from the clutches of this same Western banking establishment. The very same group your failed hard money position seeks to have us all try once again. Europe is working to place gold in the hands of common man, not again on the books of credit lenders.
On the contrary, to have the world's money system remain attached to the social policies of USA socialist interest would indeed place us in the same stricken state of India. To connect to complete economic policy of India to the proposition of Freeing gold from Western inflationist completely out of context.
------ The dollar gold market of today allows a fixing of the profit of any dollar investment into gold. That is the key for its survival. The euro system as you present it does not, and intends to make that impossible. Furthermore, as a direct consequence of its purposely inflating the gold
banking system, and its intended puncturing of the paper gold bubble it induced, the EU and its financial institutions will destroy confidence in them as all will know what they did, how they did it, and that they are as honest and trustworthy as the Gandhi's and Nehru's political progeny.------
"the key for its survival"?? Knock, knock,,,,, is anybody home there? Am I talking to the same person? (smile) No comment on that one.
As for your "purposely inflating the gold banking system", I made the point in the last reply that this is but a reflection of dollar expansion, not Euro inflation.
Time and events will prove that the world wants and needs a currency governed by a varied group of nations. Collectively able to leave their ECB central bank to reign in on Western style inflation as it see fit. With free gold to gauge that success and an already obvious passion to under inflate our
Fed, the trend now points to the next choice the world will run to. The Euro. Honesty and trustworthy will be judged in relation to the US, I'm sure.
------As to the legal status of the dollar as a gold unit, it is not. -----
That's obvious now but was not the case in 1971. Would anyone accept the dollar as backed by gold again. It would be a laughing stock.
--------The legal gold unit is the Eagle, and the dollar is legally silver. All of the congressional commitments of the dollar as a gold unit, and of the various administrations making Executive Orders, were purposely kept strictly illegal so that a future Supreme Court could annul them and all treaty obligations that involve a connection between the dollar and a particular quantity of gold--------
Yes, apply your 'honest and trustworthy" to that one.
Thanks TrailGuide
Trail Guide (06/14/01; 09:45:29MT - usagold.com msg#: 56100)
Later today
ORO, ALL,
I had to pull away to take care of a few things yesterday. I should be back to our discussion and make a few replies to others later today. (smile)
TrailGuide
Trail Guide (06/14/01; 19:35:42MT - usagold.com msg#: 56149)
Discussion
Hello again everyone.
Before restarting my comments on ORO's posts, I want to define some thought. I'll begin with a portion of earlier posts that actually marks the ground in my struggle to open ORO's position. With Econoclast first, then expand from there.
---------------------------------------------------------
Trail Guide (04/24/01; 20:25:28MT - usagold.com msg#: 52495)
Replies that help articulate
Econoclast (04/24/01; 08:35:58MT - usagold.com msg#: 52451)
-----I feel discouraged right now. Not because the gold price is low, not because of what is happenning in the gold market, and by extension the financial world, but because of the fact that what I see for the future is more of the same.--------
My friend,
our message and our position is that we are in one of the most exciting times of all the history of gold! We have seen that during times with the most radical transitions, the majority are usually defending the wrong asset (added note: and often hard money position). This unfortunate situation need not impact everyone today. If better judgment is the result of a full understanding, then some who read here will be exposed to tools that could help them avoid the mistakes of our Western hard money majority.
For Western Gold Bugs today, their culture, their system and their recent knowledge is all ensconced within the last 30 years of paper wealth. Yet they are using a hard money defense, written by masters preceding our modern era. They struggle to use that logic out of context, as it is thought to apply to this gold market today. These two precedents are leading them to reflect their gold values in some form other than physical ownership in possession. This mistaken detour from gold's true purpose will once again prove, by reality, the value of owning real gold.
Standing aside this group is the Physical Gold Advocate. For them, for us, these times will contain the greatest gain in real wealth ever seen. For those who are falling behind, gold is still within your grasp.
TrailGuide
-----------------------------------
OK, with that thought in place let's go further.
I have, in the past, both here and on the trail, offered a small bit of our perception of gold as it was understood by mankind of the ages. Gold use from the very beginning and covering hundreds and hundreds, even thousands of years ago. Those partial glimpses of our research are of a timeline in
history that far out lives the life of our present era. In truth, we are living only a tiny portion of mankind's experiment away from using real wealth and assets for buying and selling goods and services.
In today's society, ours is a grand trial of pushing reality behind and has gone far beyond the conservative money movement's limited condemnation of present policy. Yes, we as a society and even this hard money school have bastardized the very thought of gold. Standing logic on end in an attempt to give gold a better taste to the masses. A "taste" that has ended in both hard and soft money failure time and again.
Gold was given over to the sway of bankers and expansionist, long before we thought fiat money was bad. Gold was renamed money by those who in our present day would be considered "the iron work" of hard money thought. The name change was not intentional but the effect was the same. The ancients could not condemn or stop this transgression as it blurred the distinction between wealth and money. Over time they called it wealth no more.
This is the real war, the real threat to gold and it's lifelong attributes that thru war and life saved generations of our forefathers from poverty. Yet today, our experiment has ran far beyond even that early fraud. For so long have we been without gold as wealth, we look back and see gold as
money as the safe place to be. It is not and never was.
From this understanding we know that our present grasp of man's view of gold is far different in scope than back then. As I pointed to above, the culture of Western Gold bugs today is completely embodied in monetary rules, laws, human interactions and history as it is known to them during this
age. Yet that knowledge is a school of hard money that was built on that shaky foundation that preceded it. Again, "gold is money" does not bring us sound money. It only sets the stage for another round of the failure of man's idea of how a money system should be.
Yes, we struggle to use this hard money logic because it is out of context, as it is thought to apply to this gold market today. A "New Gold Market" I might add that confounds every expert in the field. Indeed, our logic today is out of context with what gold was always needed for; a wealth held
by mankind because it so much reflected the opposite of our human failures with credit. No matter if we lent pigs or goats, wheat or steel, bonds or stocks, fiat or houses,,, carts or horses to rocks and fire,,,,,,,,,, credit is the failure of man's control of himself. And always will be. The one item of wealth that so stood the storm of our greed was the same item that most marked that failure to market,,,,, Gold! Yet, even gold will not do the job our creator made it for if it is entangled in man's evil nature.
It is from this rock I make my stand,,,,, It is here where we thrust our sword deep!
Onward to ORO's post.
TrailGuide
Trail Guide (06/14/01; 21:31:39MT - usagold.com msg#: 56159)
Comment
Hello ORO,
------
ORO (6/13/01; 03:47:52MT - usagold.com msg#: 56010)
FOA, more Fallacies - the "Western" view-------
------- The alternative to the "Western" view of money is millenia of decline and stagnation. Which is what we had before we had the "Western" view and the "West".------------
ORO, it's important to understand that most of what the "West" is built on is financial debt without human assets. Only people can create wealth with energy, thought and movement. Without a populous standing behind our huge American debt, it's payment reverts back to increasing the
bookkeeping value of all tangible wealth through fiat inflation.
All this debt we created brought us a lifestyle that is an illusion built on the backs of those that brought that debt. They traded real efforts to enhance our position and no will receive inflated assets that reflect said inflation. Even the gold at West Point will be inflated to match some of that debt.
Truly, the expenditure of so much of the worlds productive efforts on producing our Western Way,,,,, cannot be in any way be less than "decline and stagnation" before the fact. Yes, it is indeed our view of money that created this fraud and the whole world will pay something to end it.
--------------As I said earlier this early morning, the role of money is to be held not for its own utility for its holder but for its utility in conducting trade over time and space - particularly over long distances and times. Whatever it is that is used as money - for savings, concurrent transactions and contracting (transactions completed in the future) - will be used predominantly for that purpose, and
its value will be set by the markets at a sufficiently high price (relative to everything else) to keep it in use as money rather than an industrial, consumer, or collectible good.------------The whole idea of money is that it is what you hold instead of holding "wealth": the goods you intend to buy at some point in the future or in some distant location. -----------
Ha! Ha! I could not have said that more eloquently. What you have described is the exact workings of a modern fiat system. This is also necessary for the very financial foundation that modern man has created and demands your same present fiat credit structure. I have pointed to this
many times. Modern fiats are the life blood of modern commerce and even modest inflation is accepted as a tax to pay it's way. Nothing else could explain this evolution better than for us to witness the dollar's demand evolution during the last 20+ years. Even our dollar bears are
confounded by it.
Our dollar would have worked very well within this framework if we had only allowed gold to run outside the money system. Priced as wealth not credit money. But, then again, such a setup would not have brought The American Experience others envy so much. A constricted money supply and low dollar exchange rates would have measured our profligate ways quickly and driven us into the very decline and stagnation you mentioned above. A fitting judgment for a nation that would not pay it's own way.
As a side note: Yes, many fathers in this land, no doubt paid some form of war blood for the world to be better. But how can we measure the wealth loss placed upon everyone by our system of exchange robbery. For how long is the financial pay back? Would it not have been better to reign
in the dollar long ago? We cannot judge what was not done.
-----Anyone holding anything as money - or a financial asset - will be holding it for what it may buy rather than for what it is. In your old demonstration of the people in the audience of an auction saying "I could afford this" while reviewing in their minds their financial holdings you missed the point entirely; that is the perpetual condition of the saver. Whether he saves in gold or in dollars (a poor choice) or in euro (if what you say pans out then it is an even poorer choice), the saver is making the decision not to buy the Strad at the auction. He is the one making it possible for the price to be as low as it is. If he had no confidence in his savings (and investments) whether gold,
currency, or anything else, he would most definitely have bid the whole of his holdings for the Strad, perhaps even pooling his money with others at the auction to bid together at the limit of their assets. What you are, in effect, demonstrating is the role of money as savings.----------
ORO, if that were fully true then the dollar system as it is would have been decimated long ago. True, we hold and value a fiat currency today for it's use, and value in this modern society. What it can do for us, yes. And this need has evolved as our economic structure has evolved. Still, our
human "credit use flaw" is the force that even tremendous economic and financial advancements cannot neutralize or overcome.
Mankind, as we are designed, needs a tool that can both save and measure his and his countries "credit fault level" before it destroys his wealth. Gold is that saving grace but can not and will not work it's magic if entangled within the same credit structure we strive to control. Most leading
currency advocates (even Allan) look at many private use items outside of fiat to see how their money control is working. Real estate, cars, oil, food, you name it and none of these are part of the money structure. Gold as a private and official wealth asset, instead of money credit asset can also serve that function and more so. But we have to get beyond this wreck of a dollar system that's speeding out of control.
The only thing that did not bring down the dollar sooner was it's societies lack of said measurement tools to see their miss allocation of credit. Let's face it, in the same light as I pointed out further up, we continue to think that we are leading the world in lifestyle example. Because gold is mired in it's own financial evolution that started with money credit, it's price illusion tells everyone we are the
best! ORO, even a crazy society will back away at some point, especially if they have some saving asset we know will make it through any storm.
We have gone so god awful far off the scale of how even a blasted fiat should work it is stunning. And it can all be laid to rest at the door of gold is money theory. From that point our ability to manipulate both fiat and gold values ran amuck. And will do so again. History proves I am right on this count.
Still, a fiat can and will work for us if it's modern use demand is harnessed. It's value can be somewhat maintained without locking down our governments and societies needs for flex ability. In this light Free Gold can slow a car (future Euros) gaining momentum down a hill. But, given the speed this train (dollar) is going down the mountain is it no wonder evan gold is cast aside as an anchor.
-----Money obtains a premium valuation over its value as a "wealth" item, like a sofa or a jug of olive oil. "Moneyness" is a shared mental state among the people using something as a money. It is not inherent in the item being used so. To the extent that something is used as money, such is the degree of the monetary premium it obtains.---------
In my post just prior to this one, I addressed some of this concept. To the ancients long ago, gold was but something you owned and traded. Yes, it trades so much better than other things it commanded your premium, especially over distance(on the road). But, as I stated in those ancient
posts, gold within the city gates often had equal or less value than any other quantity of goods. Because those people traded wealth not money. And in the case of gold, it's distance utility gave it more value, not because it was money.
The crucial factor to use in understanding a comparison between then and now is that there was no fiat or other money of any kind. Just tradable items. In today's world, your "Moneyness" mental state means "credit" shared with more "credit". All of our perceptions of money revolve around terms of payment. This is the way our "just in time" economy must function on a global scale. If gold is entered into this function, it is quickly revalued far below it's physical worth through the same credit expansion fiat demands. It loses any and all of it's wealth premium. In this process it comes into competition with official money and must be inflated as needed or it will bring down the entire credit structure.
---------The argument that the value of financial assets is imaginary is equally applicable to gold as savings. When held for its direct usefulness to the holder, the item is not a financial asset, not a money, and obtains no premium.-------
To the contrary, gold held in possession creates a demand for it's limited supply that's far higher than when it's part of an expanding credit structure. It's value tends to be in relation to the total wealth of a nation as it becomes a proportional holding that can be sold to replace lost paper wealth. This real demand for a limited physical wealth creates a value based on substance not illusion. It subjugates the wealth of financial wealth illusions and forces their discount until a real return is created from them. Business is then financed more on return and built on up front ownership. Shares can no longer run to PEs in the sky. In general, a nation's total assets become more stable.
------In short, when you claim that gold as anything other than a "true wealth asset" (of "world class" stature, no less) has the wrong valuation, I will agree. As "wealth" it is valued as an industrial commodity or a piece of costume jewelry, at the lowest bottom of the range of valuations it can have. In this view you have stood the concept of money on its head and as the dresses fall away from its legs you get to see some things you would rather not. -------------
Once again, current hard money thought assumes that gold has only a commodity value outside joining it with a credit money system. This is the concept that is on it's head and another reason all gold money systems have failed our modern task. Indeed, strip the money clothes off gold and we
will see a beautiful form. (smile)
I'll pick up later where this leaves off. Thank you ORO and everyone. I will return tomorrow.
TrailGuide
Trail Guide (6/15/01; 06:05:44MT - usagold.com msg#: 56179)
Fisch
For what it's worth,,,this is a very old address and phone but it still may work. Perhaps we should call CPM for their thoughts about these little tools? I know many (myself included, long ago) that have used them over the years for checks of small numbers of coins.
Fisch Instruments
1 800 824 2222
Dept B1105
Box 160332
Sacramento, Ca 95816
Trail Guide (6/15/01; 07:37:21MT - usagold.com msg#: 56185)
Reply
Hello Journeyman,
I have a dinner function to attend later so I'll limit myself to yours and the next installment on ORO. They will be serving some pre-release Napa wines that are not available anywhere. I don't want to miss that, of course! The political discussion and arm twisting (there)is suppose to be the real reason for the dinner. (but after all these years I have developed the ability to sample good food and wine while arm wrestling and never let on to my passion Ha! Ha!) (huge smile)
You write in:
Journeyman (06/14/01; 22:35:12MT - usagold.com msg#: 56161)
Beating a (soon to be) dead fiat. Again! @Trail Guide, ALL
------You state "Once again, current hard money thought assumes that gold has only a commodity value outside joining it with a credit money system. This is the concept that is on it's head and another reason all gold money systems have failed our modern task." -----------First a minor point:
I don't know which hard money thought you are assuming, but my hard money thought assumes only transactions denominated in gold,-----------------
--------Now the major one: Can you elaborate on what you mean when you say "all gold money systems have failed our modern task?" ---------------
They only way I'm aware any gold system TEMPORARILY failed, from your previously stated viewpoint I beleive, is that gold didn't arm itself and shoot the banksters who counterfeited it and thus apparently assumed we humans would have enough sense to do so instead.------------
Or is there some OTHER ways you feel gold has "failed" and is thus inferior as a medium of exchange to "modern fiats??" ------------------
Journeyman,
No form of gold usage in our modern money vernacular has lasted against the tide of human intervention. (Again, note the "vernacular" as the object of my thrust)The moment gold was called money, and credit was issued against it, the entire money system starts down the road of decay.
Yes, pure gold transactions were and are successful and self sustaining. That system has worked and would work again in a simple world. But then again, within that system we would not have to call it money would we???? No, we wouldn't. Perhaps wealth barter?
I would work, except that mankind's socialist needs demand that we expand any form of money thru the use of credit. Once it's "money" we seem to evolve a need to borrow and lend it? So, the ancient process of trading units of wealth, back in the good money years perhaps multiple hundreds of years ago,,,,,, really entailed the use of gold wealth barter not money credit!
To date, in modern times, every attempt to link gold to fiat credit money has failed. As stated before, I don't care who is at fault or who is more the evil player in all this. The main thrust that ORO, yourself and so many of our money masters missed in all this was that;
society could not and can not "control it's controllers" when it comes to any tyoe of credit.
Even when gold wealth is linked in some way to the money, and it is written that said link will control the system, we still corrupt it. Sure, take the process out of official hands as ORO wants? But then who is going to buy that? No one ever did in the past! Perhaps a hand full of hard money promoters would like it? But, who are we going to sell
that to, Bush, China, Russians? Who and how? What common elected body or populous will buy the hard money school of thought? What common elected body or populous would allow such a system to hold us to our debts??????
You see, it won't happen no matter the pain. The majority of people accepts that modern economic structure needs fiat credit to function and they are right in many ways. Placing gold in the mix is ok, but once again kills any chance of allowing common man a way to return to saving gold wealth as he did in the ancient times. Wealth that would match the asset savings of our world.
Again, gold systems don't TEMPORARILY fail. What fails is our perception of gold as "moneyness", as ORO uses it. This perception does not allow for the use of gold wealth buy itself, without any money system at all.
"We must have money and credit or it isn't a money we can use" the cry goes out! And so we demand the same! And the moment we use gold as money again someone will borrow some and the human credit cycle of failure goes to work on the system.
So, calling for a return of using gold as the only money again will not work for modern society. Because during the times that it did work, gold was not thought of or used in the image of money as we think of it today.
Thanks
TrailGuide
Trail Guide (06/15/01; 16:03:00MT - usagold.com msg#: 56209)
Comment
In my post to journeyman a correction in this:
+++ I would work, except ++++ should read: +++ It would work, except++
Hello everyone and ORO.
To finish up where I left off with your:
ORO (6/13/01; 03:47:52MT - usagold.com msg#: 56010)
FOA, more Fallacies - the "Western" view-------
---------- In your treck through the ancient world you had demonstrated exactly the opposite of what you seemed to think, that gold was a "wealth" no different from a jar of olive oil. Gold found its best use as a transactional medium for long distances and the intermediate range times that were inherent in trade of the time. That is why silver and other lesser metals were used for savings. But these secondary metals too obtained a monetary premium as much more of them (in terms of purchasing power) was needed for savings than for long range trade. They obtained a lesser
premium than gold had over its value as a jealosy producer on a wife's neck, but obtained a substantial one ----------
True, we demonstrated that gold was the best tradable wealth there was. But notably, the entire ancient world was, then, on a wealth barter system. As I pointed out to Journeyman today, their thought of this tradable wealth was in no way anything to our concepts of money today.
No fiat existed nor was there much banker activity. Gold wealth became so good at being used for "on the road trading" that it actually lost much of it's personal savings attributes. Common man, of that time, saved little beyond actual daily use items and gold was just too good a trade to save. In some ways, as I pointed out, evidence exists that in towns usable goods were worth more to a person's life than gold itself. So, they sent gold packing back on the road. It didn't rest long.
Further, because it was an import trade wealth that could be depended on to bring in the goods, it's value remained "on the road"during most of the early periods. It was too scarce and always being dispersed to the for winds thru ware, tear and just plain being lost,,,as it traveled along. Such is the reason so little of this ancient gold made it to this day. Our digs confirm this completely. Cutting the
estimated gold bullion reserves many think came forward on mankind's journey through life.
On the other hand, the lesser metals retained little trade premium on or off the road and became the object of saving solely for their real commodity value. A value that was and is today far less than Free Gold's would be. Workers could afford to allocate their savings into these, precisely because they were never like gold in the minds of men. Hence the reason so much silver coinage made it as it was buried in the back yards of Rome.
------------- With time and the development of banking, most of the gold needed for a long range transaction could stay in a bank vault and as one shipment arrived at the far destination, another would arrive at home port and the only amount to be settled is the small difference between the
draw on the home bank and the draw on the far away bank. Only that much gold as the difference needed to travel the distance and stay on a ship or a camel caravan. Thus gold could remain at home and be used as savings because the quantity needed in long range trade fell on a per trade
basis. Gold was priced back into savings and displaced silver and lesser metals as most international trade was transacted with bank draws rather than physical gold being transferred on each leg of a trade trip. Much more efficient.----------------
And so was born gold banking! Even prior to this time, when governments made gold a consistent "wealth barter" by standardizing it's coin weights,,,,,, the seeds were born to inflate gold by clipping and diluting it's purity. This same inflation concept was common and applied to barter of all wealth as it moved within economic trade. Even the village idiot knew to open the barrel of oil to make sure it was full before buying? (smile)
Cheating is inherent in mans dealings with each other and it was easy to later mask such evil into primary gold wealth barter as it evolved into banker control. Especially if it could hide behind the same bank storage concept your hard money teachers so admire. Bankers were quick to seize the
day as they proclaimed the concept of money in the form of gold storage receipts. Equally quick were they to mix the concept of "wealth barter" in gold with the need for credit. With little fanfare and no examination people accepted that this new bank "hard money" was only available if it came
with their concept of credit. Later our contemporary schools of hard money thought branded gold money and credit one in the same and the saviour of all the failing fiats. Truly, it was more like the saviour of finance!
In many ways, my friend, bankers, governments and power players through out time have made a silent point to never allow a return to hard money without it being entangled with credit. This is the very string they can use to attach and inflate gold before it becomes a pay as you go "wealth
barter". Your money as the ancients knew it. As you say "Much more efficient"! You bet, but for who?
---The interest rate history on gold demonstrates ---------
The remainder of your discussion can be countered in that it all records the actions of a bastardized gold plus fiat game. Rates of return, fiat money contracts and the like do not explain or negate the constant decay that sets into hard money systems. They more so only record the human costs.
I'll move on to your:
ORO (6/13/01; 04:46:26MT - usagold.com msg#: 56012)
FOA - Another's letter
-----In the letter from Another the path of transition from dollar gold contract to euro denominated gold trade takes a detour from that with which we are familliar from prior posts. In prior posts the path was through a "natural" deflation of the over-leveraged gold banking system, in the way of a bank run; where physical gold is prefered to paper because the paper lacks credibility of delivery. The over-leverage was a result of: (1) Gold lending expansion induced by a false promise of liquidity by the EU central banks at absurdly low interest rates. (2) Political support from the US side allowing a supply of "infinite credit" to accomodate potential losses from paper selling by bullion banks. (3) That oil interests might bid for physical gold with the whole of their revenues rather than with a small portion of it - that portion that is intended for "savings".
At the currency end of it, the deflation of the dollar debt system of its own extreme leverage was to be met with wild dollar printing by the Fed, which would cause a hyperinflation.
In this letter, Another implies a different path that is completely unrelated and arises from actions of law through treaty and has nothing to do with the degree of leverage in the bullion markets. He seems to say that upon the joining of Britain into EMU, the dollar denominated gold contracts
traded in London would have to be converted to euro contracts, though none of the legacy currencies of the EMU are involved in the contracts. Furthermore, the letter implies that the only currency denomination allowed in new contracts within the EU would be in euro. That would force
settlement at the BIS with either the non-existent gold or with euro, that are supposed to be unavailable to the bullion banks, and that their gold denominated assets would not be recognized to back the contracts.
The precondition for this scheme is that Britain joins EMU in order to put London gold market contracts under jurisdiction of the treaties supposedly dictating this. However, Britain may not join at all considering that Britons are 70% against joining EMU at the moment (this may change, of course), and the Irish had just slammed the door for Poland by referendum, with many fearing agricultural subsidies for the Irish would be diluted by Poland's rather large agricultural sector.------------------
I would point out that all political changes are fluid. But nothing in the area of your note has changed. All through out these discussions we always allowed that a good portion of these gold contracts would be honored with actual gold ownership. Those that had the resources the world needed could demand this preferential treatment. Granted, this is a negotiating tool but even allowing for a very small portion of these contracts to settle in kind would strip most of the available bullion. Completely. This was the gold corner Another spoke of as being in place. It was and is an
official corner, if you will.
Most readers assumed he was talking about taking on the bullion banks, exchanges or whatever and tried to use his comments to leverage their bets on these very same paper markets. He called certain price levels that were specific to the game evolving onward. Without such progress, the
sudden values of bullion would have appeared. Breaking the system.
Not understanding that "for our paper gold market to burn", it's illusion price of gold would have to tumble as the Euro advanced in status. The record marks these traders loss to the paper world as most of Another's price levels will be reached and beyond. Only, it's the owners of physical that
will share in these gains.
As this unfolded, the EU banks were happy to sell their paper commitments into a known failing anglo gold market. As the prices fell, signaling the first levels of such destruction, their sold paper made money. I don't blame them as they simply sold into a fraud that was going to fail. No different than watching others take US dollars for goods produced, pre 1971, and watching that market for gold IOUs fail. The US knowingly sold these gold-less dollar IOUs in the same fashion that these EU banks are selling gold-less gold market paper to US buyers. The world goes around, my
friend.
As for all the Euro system gold that was lent at low rates, most of it went into other CBs or oil accounts. Only the local rumor mill distills these movements diferentally. In many ways this was the EUs part of their portion of the deal to maintain oil dollar settlement until the Euro was complete. Their loss of physical will be nothing compared to the gain of having their Euro become the next reserve. In addition, much of that very gold will be returned to them via the US gold stocks in Fort Knox and other places.
To repeat your above:
---- At the currency end of it, the deflation of the dollar debt system of its own extreme leverage was to be met with wild dollar printing by the Fed, which would cause a hyperinflation.-------
Absolutely. We are watching this play out as I type. However, the hyper printing and resulting price inflation was always deemed the result of our losing the reserve status. As oil prices have risen post ENU and Euro use now expands, our (USA) ability to control the game is diminished. Allan knows this and is preparing for it. Gold's bullion's eventuall shortage, a falling price for paper gold and the paper gold price illusion that dictates,,,,,, is but the signal that all is failing.
The next step was always pointed to; as at some point the anglo alliance of Britain and the US would suffer the loss of it's gold marking exchange. England has no choice, even if their public does not understand it. If they refuse to join, oil settlement will shift to Euros and demand a tiny, tiny, tiny physical gold kicker for all dollar payments. This would absolutely explode in price and freeze all
physical gold and explode the paper gold price untill it was locked down. Forcing a sudden shutdown and forced liquidation of the anglo gold system. If England does not join, this will be the result. That would set off a rush to redenominate gold loans into Euros before it's exchange rate
spikes. Besides, the euro system would be the only game in town then.
Hopefully all this will help you reevaluate the rest of your post. I'll move on to your next after dinner tonight. I'll try to post tomorrow or so.
Thank you for your discussion, it is my pleasure.
Thanks all for reading and helping to support this venue provided by CPM.
TrailGuide
Trail Guide (06/17/01; 15:30:32MT - usagold.com msg#: 56300)
(No Subject)
Test
Trail Guide (06/17/01; 20:39:31MT - usagold.com msg#: 56317)
Discussion
Hello everyone!
I'm going to cover some of ORO's points made over many of his posts. To anyone that is following this, ORO's were given during, before and after my last address, which was on Trail Guide (06/15/01; 16:03:00MT - usagold.com msg#: 56209)
For bandwidth sake, I'll be commenting without marking each post. Just taking his comments in order. I'll make reference to only the first sentence or so then marking his words with my usual ------ before and after. For reference, the order is:
ORO (6/13/01; 05:25:22MT - usagold.com msg#: 56016)
ORO (6/13/01; 05:26:35MT - usagold.com msg#: 56017)
ORO (6/13/01; 05:28:05MT - usagold.com msg#: 56018)
ORO (06/13/01; 12:42:47MT - usagold.com msg#: 56047)
ORO (06/13/01; 14:07:01MT - usagold.com msg#: 56052)
ORO (06/14/01; 23:58:39MT - usagold.com msg#: 56164)
ORO (6/15/01; 03:51:40MT - usagold.com msg#: 56171)
ORO (6/15/01; 06:41:30MT - usagold.com msg#: 56182)
ORO (06/15/01; 14:00:40MT - usagold.com msg#: 56200)
ORO (06/15/01; 14:20:54MT - usagold.com msg#: 56204)
Let's begin:
Once again, to further expand the central element of my position; I'll refine further a partial from #56185 to Journeyman. And conclude with #56021. This is the central context I am addressing. It is the object of ORO's many replies. Some of which are out of this context. Randy, I'm certain you follow this well (smile).
#56185 (refined) see old post for original.
Journeyman,
No form of gold usage in our modern money vernacular has lasted against the tide of human intervention. (Again, note the "vernacular" as the object of my thrust) Even back during the moment gold was called money, credit was immediately issued against it and the entire money system started down the road of decay. That decay was in the form of inflation. Better said, the expansion of the number of original money units though some form of fraudulent actions, even in gold.
Even ORO's history teachers have no evidence of an exchange system that could last once the unit of exchange was determined to be "money". Whether it was solely gold or fiat or a combination of gold and fiat,,,,, once the ancient concept of "Wealth Barter" became "money in use" the socialist of the era made sure that money was attached to credit use.
Yes, pure gold transactions, way back then, were successful and self sustaining. That system has worked and would work again in a simple world. But then again, within that system we would not have to call it money would we???? No, we wouldn't. Perhaps, once again, wealth barter?
It would work with that name and function if used again. Except that mankind's socialist needs demand that we expand any form of money thru the use of credit. Once it's called "money" we seem to always evolve a need to borrow and lend it in an inflationary way? So you see, the ancient
process of trading units of wealth, back in the ancient good money years perhaps multiple hundreds of years ago,,,,,, really entailed the use of gold wealth barter not the credit inflation as we know money today!
To date, in modern times, every attempt to link gold to fiat credit money has failed. As stated before, I don't care who is at fault or who is more the evil player in all this. The main thrust that ORO, yourself and so many of our money masters missed in all this was that;
society could not and can not "control it's controllers" when it comes to any type of credit issuance.
Even when gold wealth is linked in some way to the money, and it is written law that said link will control the system, we still corrupt it. Sure, take the process out of official hands as ORO's school would direct? But then, who today in this modern economic machine is going to buy that? No one ever did in the past without starting the inflation presses the day after it was declared! Perhaps a hand full of hard money promoters would like this action? But, to what end would that bring us? After so many failures, who are we going to sell a controlled credit system to, Bush, China,
Russians? Who and how? What common elected body or populous will buy the hard money school of thought? What common elected body or populous would allow such a system to hold us to our debts??????
You see, it won't happen no matter the pain. The majority of people accepts that modern economic structure needs fiat credit to function and they are right in many ways. Placing gold in the mix is ok, but once again kills any chance of allowing common man a way to return to saving gold wealth as
he did in the ancient times. Wealth that would match the asset savings of our world.
Again, gold systems don't TEMPORARILY fail. What fails is our perception of gold as "moneyness", as ORO uses it. To him, his hard money school and countless millions of today's
spenders,,,,,,, money and credit creation are one in the same! This perception does not allow for the use of gold wealth buy itself,,,,,,,, in the Ancient way of "wealth Barter",,,,, without any money credit system at all.
"We must have money and credit or it isn't a money we can use" the cry goes out! And so we demand the same! Governments and Bankers don't cram down our throats what we crave? And the moment we use gold as money again someone will demand to borrow some,,,,,, and the human credit cycle of failure goes to work on the system,,,,,, once again.
So, calling for a return of using gold as the only money again will not work for modern society. Because during the times that it did work, gold was not thought of or used in the image of money as we think of it today.
==============
Now a partial of #56021 (little refined)
Through out history "hard money socialist" always fought to include gold in the currency / banking system so they had an escape rout. None of them ever could live with gold moving through society as a singular wealth asset that was traded next to cash. Making it an alternative pay as you go, non
credit, pull up your own bootstraps way to survive man's money systems. Sure, taxes would be paid on this very asset every time it was used. But, that fee is no where close to the wealth tax burdened upon the economy by an exclusive arrangement that combined gold and money. With
that entanglement in place, common people had no recourse to own a wealth that could offset the social printing press as man inflated the official gold backed money.
In hind sight we now know that the flaw in the system was in allowing gold to be entangled in the basic purpose of banking,,,,, lending. This opened the door to social engineering; in that lent gold could become a permanent fixture in the national money supply by simply printing more gold than was held.
===========
Onward!
From ORO #56016 Black Blade reposts, Euro survival:
------------ The euro is a political beast rather than an economic one. Thus its economic performance is secondary to its political performance. So long as it is not a total and utter failure, it will survive in European use, if nothing else, then because it will be required for paying taxes, sort of like tally sticks --------------- The EU isolationist concepts of taking the EU onto a single currency in order to gain independence from the dollar and of them being "self sufficient" are both wrong
economically, though they might make sense politically --------- (through the end)
Oro,
What "money" has ever been more than an political beast? To this end, money, and the credit structure it is built upon is nothing more than a social unit. Even gold's use in a physical money form has always had it's credit use subjugated to the needs of the state! Of course that's bad, but it has been no different from the beginnings of "money". Just as one of our posters here pointed out, Rome paid off the invading armies with gold. A good portion of that gold, was indeed borrowed from various subjugate states on terms of the withholding of Roman protection if it wasn't lent.
Once again, credit expansion for social good. By the way, the inflated fiat money those gold loans represented,,,,,, were never paid back!
You speak of the Euro as if it's some form of new currency no one has ever known? Yet, it's simply a basket of moneys that have been around for countless years. Some in that basket, were before the dollar? Why, even the Pound was before the Colonies? Actually, the dollar fits into every one of your counter points and does so perfectly. For 30 years, the dollar has been nothing if not a political money? You have been using it all this time whether in actual form or indirectly in it's IMF reserve status that backs most foreign currency machines today. So, here we have a fiat
currency, working for decades as nothing but fiat,,,,,,,,, being used the world over because it's just the result of a legal item as the legal tender of the US,,,,,,,,, and demands ownership to pay taxes in America also,,,,,,, and the Euro could never function in such a way?
All these years of dollar use sets a precedent that, alone, demands an equal currency function for the Euro. All of your economic sense pales in the face of such political reality. Taking all the financial laws into ACCOUNT creates no power standing that's strong enough to resist the needs of "group national identify". If nothing else, a review of all the sound economic forces that were trampled in the race to create these "United States",,,,,,, will testify to the absurdity of watching for financial precepts to lead the way to the future. Europe will join my friend,,,, therefore the "Euro IS".
================
From ORO #56016 FOA - Black Blade reposts - continued
In this post, I saw nothing that addressed the issue of gold and fiat association. The subject of my comments. All the discussion centered upon what is common in the fate of every fiat currency system. All the documented abuses and contentious comparisons of monetary rate adjustments only
further presents our reasoning; the need for gold ownership that's separate from the money system.
===========
FromORO # 56018 FOA - Black Blade reposts - continued - 2
--------- Europe also still undergoing a transition of its internal debt from dollar denomination to euro denomination. As it does so, it needs to import dollars to pay down the debts, and produce euro as contracts are re-denominated in local currency. Despite the low growth in euro monetary
aggregates, which are largely irrelevant to anything in particular, the process inevitably produces an excess of euro assets, and a shortage of dollars. -------------- Europe is also suffering from this as it exacerbates the oil problem with higher crude prices for the Saudi and North Sea Brent --------------Despite all we read from FOA on Europe's monetary discipline, its isolation and its potential deals with Arab oil and even some dealings with South America, the current reality of Europe is quite dyspeptic, and much more so on the financial side than any other. They are suffering
the inevitable outcome of their currency union which has to be inflationary, while pointing the finger of blame at the US for the inflation despite two decades of largely deflationary domestic monetary policy. In the meantime, Japan, the true international inflator, is being ignored as irrelevant and "trapped into producing for the American markets" while it actually runs a slight and falling
monetary trade surplus and a growing real goods deficit. ----------------------
Well, you have read Another's reasoning and understand my take on it. But within your posts, in general, your thrust contains a definite trust in all things dollar. Everything you have written points to an eventual reuse of dollars. Perhaps combined with an eventual return to gold backing or gold used as money itself somehow benefiting the Dollar / American. Either from the pain of US deflation or inflation, the world will somehow walk away from any attempt to use another system. Almost as if Arabia and the world respects the dollar as it is and wants more of it and our political
system?
I find this remarkable, but typical in Western Thought. This casting the entire play into distinct currency struggles aside from political goals imparts a shallow reasoning that misses the point. That is; that society groups and the non economic power structures they build create the eventual
success of their fiat moneys in the short run. Not the outright gist of how appropriate these moneys are at following the rules. Once again, the dollar's record throws down all your accounting attempts at defining proper fiat conduct.
Sure, oil costs are a current problem in EuroLand. But your words indicate it's just an economic problem that should be and is being addressed thru economic adjustments. More so in how it relates to the dollar world. No political initiatives before or after the fact? Same for the current state of Euro exchange rates? I think you will be impressed at just how much the world does not follow the terms of your script. We shall see.
=================
From ORO #56047 FOA - Re Assignat
-------- Again, a non-monetary role for gold means that it will not obtain the monetary premium valuation. It's market value would be at its lowest possible point. Lower than in today's market where much of it is held as money. ---------- If people use gold as savings (a liquid "wealth asset"
intended for exchange in another time and place), then they are using it as money. -----------
No, the Assignat is not in context because gold was considered part of the money credit universe then. In addition, their economic structure had not reached a level like today. A level that demanded a singular high speed digital fiat.
ORO, all wealth savings are in a liquid form as anything can be sold or traded. If your view of man's relationship with wealth was true, then stocks would trade for the same yield as bank CDs. Rent houses would trade for a price equal to the rent they receive,,,,, not the negative cash flow
level prevalent in so many cities. Antiques and art would become almost worthless and dollar fiat would be used for the bathroom.
Your point almost sounds like the great statesman that said gold would fall to zero is the dollar was removed from it! Ha! Ha! Remember that? I hope you do?
----- Hayek proposed this "side by side" concept long ago.-------
In no way did he propose gold be used as a wealth exchange outside the function of money! Wrong context.
---------The expectations of gold at multiple tens of thousands of dollars and gold not being used as money are mutually exclusive. -----------
Then I guess Warren Buffet's company stock should be worth about ten bucks? Indeed, there is just no way a wealth asset can rise in price if it's not tied to a currency? No class of wealth can have value unless backed by or attached to a credit expanding unit??? Who in the world would trade dollars for gold at ever higher prices if said gold cannot be inflated through credit lending????? Who would do such a thing? My goodness man? How did you come up with that
one? (smile)
------------The idea that gold is a money-substitute is ludicrous, currencies are a substitute for real money: gold, just like gold backed bank notes were (whether fully reserved or fractionally reserved), and as electronic gold is becoming. Like a bank, a currency system is never liquid, the reserves never there to cover all the liabilities, the cash never there to cover the debt. -------------
Once again, it seems you are wondering about. Where did I say my gold context was a money substitute? A good wealth asset, yes! Once again, the main component that drives the value of "wealth gold" is in the demand for it's possession. Once again, the hard money socialist bankers want to keep gold where it can be easily lent. Once again, storing gold, calling it a money system and letting mankind hold paper credits. Yes, if you own electronic gold, you will own the very same thing you hold in a modern bank account,,,,,,,, it's a credit to your name,,,,, Or by definition, it can
be nothing else than a gold contract that defines your ownership. Very much like a 1971 gold dollar! Try it, the hard money bankers will love you for it!
---------As to the Fed and the US practices past and current, I will not make the slightest excuse or justification.-----------
But sir, trying to declare that gold should be money again,,,,, denominated at a much higher dollar price,,,,,,,, only justifies the fraud by initiating it all over again? OH No! We made a mistake say the gold bankers, let's settle up everyone's loses and do it again?
No thanks.
----------While the Fed and the US monetary policy of today and of the past were motivated by an opportunity to steal and commit fraud, much of the support and the actual running of the system started out with actual belief in the absurd theories behind the justifications for the system. No such
claims can be made on behalf of the ECB and the EU.------------
Let me see,,,,,,,,, The EU wants to mark gold to the market and let it rise to it's own level as a physical wealth reserve. Holding a portion to cover the loss of their dollar reserves during the coming dollar tumble,,,,,,,,,,,,, and the Fed was just taking advantage of an "opportunity"???
Can't blame them for that? So, now the world doesn't want anybody to control gold as a credit money and ,,,,,,,,,, ?????? Oh well (smile), I'll leave this to the readers to think about.
More later
Thanks TrailGuide
Trail Guide (06/18/01; 08:09:56MT - usagold.com msg#: 56346)
Comments
Back for more (smile)
===================
In ORO # 56052 FOA - more on the distinctions of money and government
--------In the interest of avoiding multiple transaction costs, including bid-ask ratios and transaction fees, and for the purpose of conducting economic calculation and accounting, people tend to avoid exchanges they conduct in the process of trade over time and space so that the number of transactions between the sale of one product or service and the purchase of another years down the road and in a different place - is minimized. The alternative is barter.---------
Absolutely! This is the basic reason modern economic systems use a fiat as their trading unit. Barter along with it's finite payment is no longer wanted as a trade vehicle. You see, once society has a "money" unit declared and usable, the credit expansion qualities of said fiat money is restrained by tying the "transfer of ownership" to some physical barter unit. In other words, gold only gets in the
way of man's socialist credit expansions. We did and will again manage the value of gold to allow for our credit cravings.
--------- Because fiat credit money must be managed, it must be subject to concentrated errors because the imposition of the manager's decisions as to money supply and interest rates are a single decision at any particular point in time.--------------------Whatever decision a monetary authority comes up with will be inherently wrong. What it is supposed to do is simply impossible.-----------------
Your basic position, here, is describing the flaws in a fiat managed money system. Still, just because our money managers cannot handle the job, and we hate them for our wealth destruction from their inflation,,,,,,, we so much more so crave the immediate wealth such credit illusions buy us. Again, governments, bankers and power players don't cram down the throats of their constituency a bitter pill that's not craved by the masses!
-----------Where you are right is that broadly speaking, governments want a "multilateral currency". Not because it would do any people other than government officials themselves any good, but because most organizations are mediocre or poor, they want to be free of competition
from superior performers who provide more stable financial conditions, more successful monetary policy, less taxes and regulation, courts that are faster, more predictable, just, and honest, and through these superior protection of life, liberty, property and contract. --------------(thru to the
end)------------------------
This is the ideology most hard money people take. Somehow it's as if society is in some struggle against the credit makers. When in reality, we love the wealth our nation can rob from other nations by paying them with inflated credit paper.
The points above play well and paints a beautiful picture of our struggle to overcome the evil placed on our backs. Hard money socialist can then stand behind this wall and claim themselves pure and wanting what is best for these common business travelers and plain workers. All the while they are
trying to keep the only wealth asset, man has ever won the war with, Gold, within the banking credit structure. Once again, presenting the illusion that credit wealth and it's illusion of real gains are in societies best interest. "You need hard money", they say, "but you will also want the credit inflation lent gold brings, too"!
===========================
In ORO #56164 FOA - roles of money
------------You seem to think that money can only be a paper or electronic form consisting in value entirely of its function as money. You seem to think that a pricing mechanism using money - i.e. the only effective means for trade - is forcing people to value their wealth in terms of money. ----------------------------------
No,,,,,, that is not my view. We present the position that money, in today's "vernacular" is seen in the form of a credit item. Modern people will not buy the idea of a gold that cannot be inflated. Better said, if you cannot borrow it, lend it or inflate it,,,,, it's not a money we can use.
By extension, in today's world it's almost impossible to inflate any money unit outside it's being in a paper contract form. Hence, your assumption that we view "today's money as a money that can only be in a paper or digital form".
Electronic gold, either in Central Bank function or private banking business is this same perfect vehicle. This is the very essence of the whole concept that we use to tie gold into a credit inflating system. Just as the early bankers did by; at first promising to issue singular gold storage notes instead of circulating bullion.
It didn't take long for the basic cravings of humans to demand a subtle change in the workings of that system. That is, "lend us some of those gold receipts so we can buy a better lifestyle today as we pay for it tomorrow". "If later we cannot pay for it, all of us will get the rules changed so you bullion storage guys can just print some more gold storage receipts".
Again, we as a society make the demand that drives the buy now pay later illusion. So, our demands were meat with bankers supply in the form of credit IOUs for gold that didn't exists. Both then and now!
Further, people today, never value their wealth in terms of other wealth. Such as within a "gold wealth barter" context. Western thought cannot conceive it because there is no standing wealth medium that can mark to the real market all forms of real value. Gold is and was that only wealth
asset that could do that function well. Again, as long as gold is tied into a money credit system, as the dollar reserve still tries to do,,,,,,it's value will be subjugated by the credit inflating needs of society. In this, gold cannot be saved as a "wealth asset" that measures our true worth. A worth that carries our savings from generation to generation. It will again,,,,, soon.
----------- Money is a role. It is a usage of a commodity (or an imaginary accounting unit without substance such as fiat) for trade for any or all of the following: transactions, savings, denominating contracts. As a particular item it is an instance of the concept, not the thing itself.-------------What "forces" us to use a money is our own benefit of its use. -----------------------------
Yes, indeed! In today's "moneyness", fiat is the item. As for savings, money is but one of many things we save. It just so happens that a digital fiat is poor for saving and great for trading.
-----------------------Your statement (FOAs):
"In this light, history has proven that when real wealth units are combined with our credit money, credit inflation blurs our ability to measure our worth." (#50629)---------------------------
------------ORO says This is wrong.-------------You are reading history upside down. Gold and other wealth were used successfully for ALL THE ROLES OF MONEY INCLUDING CREDIT
during the bulk of our history since the revival of trade volumes within Europe, and between Europe and the rest of the world WITHOUT inflation.---------------------------
You should reexamine your thoughts, my friend. You are the one that is trying to sell us a definition of "inflation" as being in price function only! If one does not see the monetary inflation in past history as real inflation, then all perspective is lost.
All gold systems were given over to monetary "inflation" just as soon as "credit" was issued against the system. In some cases the discipline of gold was used to deflate the over extension of credit then,,,,,,,,,,,,,,, but, by far and wide,,,, the money was inflated until it either crashed the banking system through deflation (failure) or it created price rises that further destroyed the system's gold
backing comparisons (credibility). Especially as the gold values were fixed against the supposedly fixed currency units. It all failed to work and in the process deceived savers to hold wealth values that were in illusion. (in today's world stocks are a good example) Instead of real gold!
------------------You say (FOAs):
"To say that markets function best when free to shift denomination power between fiat and gold ignores the fact that when combined there can be no shifting. Further, credit money has always been in a process of credit inflation decay and can hardly be seen as "functioning best"!" ---------
------I(ORO)agree.------ The best system does not have fiat credit money at all.-----------------------
I agree also, ORO! But, who in this era is going to return to the singular "Wealth Barter" as gold's use back then represented. It wasn't money then, it was a fiat free world with the real wealth of gold being traded along side all other items. If we lived then we would not call it money. Certainly not credit money! Without this distinction, modern hard money thought is doomed to strive for another go at a process that society will not let work. The loss is for all of us.
==========================================
From ORO #56171 FOA - comments to your recent post, part 1
-----------FOA says: ORO, it's important to understand that most of what the "West" is built on is financial debt without human assets. Only people can create wealth with energy, thought and movement. WITHOUT A POPULOUS STANDING BEHIND OUR HUGE AMERICAN DEBT, IT'S PAYMENT REVERTS BACK TO INCREASING THE BOOKKEEPING VALUE OF ALL TANGIBLE WEALTH THROUGH FIAT INFLATION. ---------------
---------ORO says: Here you have hit on the problem. There is not "populous" standing behind debt. It is not a collective. The debt is not collective, and its repayment is not a collective responsibility. "We" are participants, not a single unit. Each of us has his own obligations and assets. They are individually owned and owed. The collective view is an Eastern, and a Central European idea born of too short a time between tribe and state. ---------------------
Well,,,,,,, let's see. The thrust of my above comment was to point out that there is no "populous" standing behind the American debt. I meant the American debt in it's entirety and made no distinction between public or private debt. The fate of our dollar (or any fiat currency) is directly tied to the ability of us Americans to service this debt. In total! Truly, it makes little difference to the viability of the system if 10% of the people can pay their way while leaving the other 90% to fail their responsibilities and crash the system, does it?
The nature of every money system it to become extended in timeline as it's logical socialist use comes to an inflated end. On this I do not waver and see the Euro as timely to replace the dollar fiat. Still, the credibility of any fiat system, this dollar also, is maintained right to the end by the "total" ability of the "populous" to cover all the debt. The real problem you have failed to hit on is in the inability of the "participant", not the "collective" to have a wealth item that transcends the debt inflation every fiat produces,,,,, and it's wealth illusion. Gold outside the banking / money system does just that. However, it will not be available on a mass scale before most of our Western wealth illusion is destroyed. Something the ECB hopes to change for their better future.
Truly, the Western idea of money today is that big government, that is all of us, can save the system. No where do we see evidence that the US is operating within the "participant" working order you introduce here??? This may be your hard money school's goal, but it is not the reality of our US life styles. In the US our mentality is all business with a "I'm gona get mine and to heck with
the system" attitude! This will not be good for the children as it all unfolds,,,, believe it!
Where as the "Eastern" or "Old World" views see each person maintaining their own way so as not to hurt society's ability to function economically. This entails a responsible savings level that is of quality, enduring wealth. Not just the Western idea of some financial money wealth. Certainly this drive is behind the need to withdraw from the dollar and re introduce gold savings to common people.
--------------------------FOA says:
All this debt we created brought us a lifestyle that is an illusion built on the backs of those that brought that debt. They traded real efforts to enhance our position and no will receive inflated assets that reflect said inflation. Even the gold at West Point will be inflated to match some of that debt. Truly, the expenditure of so much of the worlds productive efforts on producing our Western Way,,,,, cannot be in any way less than "decline and stagnation" before the fact. Yes, it is indeed our view of money that created this fraud and the whole world will pay something to end it.
ORO says:
The debt did not buy us anything that would not have been there. If it did, credit expansion would be practiced widely and everywhere, and everyone would be astoundingly rich. What has gotten us where we are since 1980, and particularly since 1987, is a RELATIVELY contractionary monetary policy within the US, which has forced dollar debtors outside the US to export their goods into the US in order to obtain dollars that are swallowed into erasing their debts – which also erase the dollars and make them that much scarcer. Where the dollar system was inflated was from outside the US. ---------------------------------------
Sir, you say "The debt did not buy us anything that would not have been there."? This begs the point; "without debt our productive jobs could not have afforded to buy the wealth"! Our lifestyle is, indeed, robbed from others in a world that cannot print debt behind a reserve currency illusion.
Think about that before you expand this fraud of a theory too far. All of your statistics are rendered useless as fact when based on value assumptions denominated in dollar fiat today.
===============================
From ORO #56182 FOA - comments part 2
--------- Most of all, I find it odd that you reflexively associate with fiat credit money the natural function of gold in all monetary roles that provide it with a value beyond that which comes from the demand for its use as jewelry and as the best electrical contact enhancer. For some reason you drop the fact that modern finance developed before fiats were (semi) successfully floated – with
credit contracts, transaction clearing, futures contracts, merchant and investment banking, bonds, etc. with church and state screaming bloody murder with every new development. --------------------------------------------
My friend, gold has no "natural function in a monetary role". It was a wealth barter item and nothing more. Your school seems to distance itself from that fact. Is it because banking is doomed to a lesser profit level if gold is allowed to mark the credit cycle. By valuing every extension of credit to it's true level all bank performance would be a "real" pittance!
Once again this school of thought tries to follow the notion that the function of "credit money" is what gives gold it's "wealth barter" value. A notion shot down every time a credit fiat claims that gold is worthless if not tied to it's money paper. In 1971 the US said the same thing; " gold will go to zero once the dollar is removed". Tell me, were you around then,,,, do you remember that address? I bet MK does? (smile)
-------------FOA says:
Our dollar would have worked very well within this framework if we had only allowed gold to run outside the money system. Priced as wealth not credit money. But, then again, such a setup would not have brought The American Experience others envy so much. A constricted money supply and low dollar exchange rates would have measured our profligate ways quickly and driven us into the very decline and stagnation you mentioned above. A fitting judgment for a nation that would not pay it's own way.
ORO says:
Let me restate that as the opposite, which I am convinced is the truth: Our full gold money system would have worked very well within this framework if we had only kept gold as the core of our money system. Priced as money rather than "wealth".------------------------------------------
Tell me ORO, exactly how does a nation keep gold as the core of it's money system while printing currency far and beyond the fixed gold to currency rate? Every "money credit system" has done exactly this no matter the law. In this perfect system you advocate, it is "wealth", in the form of gold
that is managed so as not to reflect man's savings.
We could drop the dollar and return to your gold banking system tomorrow. Place all the rules and laws in force that you require and,,,,,,, once again,,,,,, the societies cravings for more credit would cause us to move the bar a little higher. Print just a little more and to hell with gold value. This is the world order you direct all gold advocates to seek,,,,,, this is the failure of hard money to the benefit of power bankers you so despise.
The rest of your post attempts to place the blame for America's debt inflation upon others. Look in a mirror and see the enemy,,,,,, it is there for the view.
===========================
From ORO #56200 megatron - only once
---------The proximity of the behavior to that of the end of the Federal reserve's version of the gold standard (through to 1929) is a distinct indication that a gold standard of some sort is in operation (someone is providing the markets with gold at a previously set contracted price - a par).--------
It seems that every possible angle will be used to explain why the dollar is failing and gold use is not the problem. Every angle except the fact that this dollar is on it's last legs.
===========
From ORO #56204 Cavan Man - because there is a way out
--------Despite FOA's protestations to the contrary, the period of the past century is rather unique, and has no effective precedents in history. That it happened once is the only reason we have to believe it could happen again. ------------------------
This has to be the narrow direction your view takes. Because once gold is seen in it's ancient use as a "wealth barter",,,, outside our modern credit money definition,,,,,,,,, the entire argument for us to return to a gold money system is voided. Once that ancient perception is understood, anyone can see that gold used as money has always fallen into a credit inflation that eventually destroys gold's value as savings for common man.
The logic of our thrust is clear to anyone that stands aside these faulty hard money concepts. The failures of this same is the reason for our thrust to a new gold market. Free Gold as the ancients knew it. Free Gold as the wealth of nations. Free Gold that blocks the bankers from their constant goal. A goal that replaces the wealth we produce and save with an illusion that credit money can buy us the world.
No more! No more we cry!
I'll now try to reply to several posters and eventually detail the logic so many cannot see.
Thanks
TrailGuide
Trail Guide (06/19/01; 05:40:54MT - usagold.com msg#: 56417)
Britain to buy 25 'Euro army' transport planes!
http://www.usagold.com/DailyQuotes.html
Almost sounds like some kind of a "United States Of Europe", doesn't it? And with each day passing England just keeps moving further into this economic group. Today they are part of the EU (European Union) tomorrow part of the EMU (European ""Fiat Money"" Union)(big smile)
Some replies on the Trail, later today
-------------------------
Ministers from EU countries are to commit themselves to buying more than 200 military transport aircraft which will be used by the "Euro army".
Britain will pledge to buy 25 of the Airbus A400M planes and
Ministry of Defence sources say the project will secure the future of around 8,000 British jobs, mostly in Bristol and Derby.
Defence Secretary Geoff Hoon will sign a "memorandum of understanding" at the Paris Air Show this afternoon to commit Britain to the deal.
Belgium, France, Germany, Italy, Luxembourg, Portugal, Spain and Turkey are also signing up to the agreement which means a total of 212 aircraft will be ordered. ----------------
Gold Trail Update (06/19/01; 19:26:31MDT - Msg ID:56450)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (06/19/01; 19:26:30MT - usagold.com msg#78)
Time for a rest!
Hello ALL!
We are a little bushed from all the recent path clearing, here on the Gold Trail. So, rather than walk the trail today, I want to just speak a little about some various things that may interest some. Let's rest here on the porch and consider:
Of Credibility
A long time ago a gentleman told me; "go ahead, use your mind, speak for me as I give to you. Tell them our thoughts, it be good for all to know these things". With that comment, it all started. Even further back, long before we had these internet forums the logic and efforts behind this push was flowing..
Presently, I write almost entirely for myself. Another shares with me when and if as he sees fit. Often, to my consternation, and some embarrassment, his Thoughts do not arrive for copy when I say they will. Truly, this is as it should be.
I (we) expect none of you to consider anything said here as credible. Everything is given as I understand it. If you came with a notion that I am someone who sees the future; grab the children and run far away. For these Thoughts, and my ongoing commentary, are meant to impact exactly as the "gentleman" said they would. People hear them, and whether believed or not, the words leave a mark. A mental mark on the trail, if you will. And later, after the world turns, our little "stacks of rocks" will be easier to understand next time you are passing this way. In fact, your ability to find your own way will forever be enhanced for having seen this path in a different light.
Of Myself
I seek nothing and am paid nothing for this effort. CPM allows my discussion for their clients consideration and perhaps entertainment. It is not given as fact. To this end I offer this as Another has done; so these works are as free as the wind. My word is to remain, here only, until finished or as long as MK will accept me. That is all that binds my hand.
I have an old world kind of logic that requires me to stand upon or feel anything I invest my wealth in. And indeed, my wealth is partially what I know and speak. So to that end, I myself, some long time ago, have stood within the door of CPM's office! Just to look around. I spoke only to the woman at the front desk and was known to no one. By my word, this was my only contact with this fine company.
===========
Now back to the task at hand: some comments and replies.
Instead of writing to every person that has commented to me on USAGOLD Forum over this last few days, I'll just reference a few and their
---- good words ----
and reply further myself.
======
------ "Thanks for working so hard for us, as always" ----
Thank you, Mr GRESHAM (smile)
=========
------ "Can ya imagine the parallel to UAW autoworkers in the 80's who were smashing foreign cars?? How about out of work financiers rallying in downtown Flint against those "Euro lovin' traitors" who own gold just to undermine the great USA?? I'm beginning to wonder if finding some cozy place in Europe might be a wise move someday." ------------
Ha! Ha! DRAGONFLY, don't be too hard on humankind! If you decide to go to Europe, keep a place here also. We are not so bad, just like most of our extended families,,,,,, hate some and love the others! (grin)
=========
------- "And not to forget MK's latest essay - it's a-(u)wesome." --------
COBRA(too), don't ever make the mistake of debating MK! I can see his mind and those letters stand for "Money Knowledge"! (smile)
==========
--------- "Dollar use has expanded in the world over for almost 30 years without being tied to gold, therefore Euro use should do the same. Dollar used the idea of forced liquidation of contracts in 1971, therefore EU should the same in 2002.---------------
GE, just follow your own trail, sir. It will connect to ours soon enough. See you there.
=============
---------Professor von Braun's latest update at The Rocket School of Economics,,, Excerpt from "Lecture 38"-----
Hi there, RANDY at the TOWER! Your input did not go without thought. The professor is real sharp and understands political power. Just look at how Placer Dome has just been forced to formally relinquished it's holdings in a major south american property. Between Bre-X and government grabs?????? what a place for us to put our wealth?
Further,
People forget to consider that taxing power is greater than takeover power for governments. When gold was money in the US, it didn't generate much tax revenue on it's sale. So, they grabbed the cash that at that time was in the form of gold. They didn't make any friends, but you have to admit it was a smart move.
But now it would most likely be reversed. Especially if the wealth reserve (gold) most world nations hold (the US will have a lot less a little later) becomes better taxable as the result of rising prices. In other words, there is no way governments today will grab gold if they can tax it's trade and production at far higher rates to gain fiat bookkeeping income. This avenue is part of what is behind the Free Gold drive that so few can see.
ORO rightly argues that high official taxes are what drive away all economic business endeavors and kills the tax paying goose. However, if the world's greatest wealth asset (gold) can be put in such demand that it's price starts a long steady climb,,,,,, without it competing with fiat money,,,,,, the mines will stay in production even if production is taxed to death and controlled by a new "Texas Railroad Commission". (Thanks Randy #56039!) Let's see, years from now, a mine produces gold at a gross dollar cost of $1,300 and ounce,,,,,, then sells for $27,225 an ounce,,,,,, the government taxes $23,000 an ounce,,,,,, Yup! they will make some good profit on the amount of allocated production they can do.
Just like oil today,,,,,,,, Free Gold is a good deal for tax income. And most gold industry workers will stay in their jobs (although some layoffs will happen) even though it's a dirty, almost break even deal for mine owners. Their business would only get a fraction of the profits from a huge rise in gold bullion and their shares would wallow in uncertainty as gold soars. But, then again, didn't your buddy Will Rogers say something about American risk takers,,,,like:
"staying out of the governments path with your investments is the second national pass time behind baseball"
Ho! Ho! That Will was something!
So, the future may just be a great deal for bullion owners as gold rises! Yes? Even old Aristotle would not have to sell and pay taxes,,,,,, at least until he wanted to sell to buy a better lifestyle. Yes, this is the reason that gold production is today and will be later such a bad investment.
Compared to bullion and rare coins, that is! *[With their regular capital gains tax rates.] *(Ed. note: appended according to following post)
============================
---------------- "CALL ME SIMPLE, CALL ME WHAT EVER...... BUT THAT BAGS IT FOR ME" ---------------------
OK, BUENA FE! You are on the team,,,,,, onward! (smile)
=============
------ "I do not understand FOA's statement that because the ECB decrees it, gold will not be anywhere, lent or borrowed. Seems to me that what I do with my gold is outside any jurisdiction of the ECB, and the same is true of many others" ---------------
Actually GOLDFAN, your feelings were easily comparable to those of drinkers during our American prohibition. Alcohol was against the law but people did it anyway. In many ways people's actions are the free market that is so powerful against government laws. During the war, everything from cigarettes to rubber was rationed and outlawed from typical use. Still, the market often overcame the law. Heck, even today, drugs and any number of other illegal activities are done as the law has little ability to stop the same.
But that's not the kind of law what this vision of a Free Gold market will depend on. These examples above outline rules and laws that restrict actions. For any wealth law to have an effect, it would have to be a known official protocol on the recourse side of disputed claims. Almost like how the dollar Legal Tender is a law in the US and mostly a protocol in the rest of the world. It regulates how you settle currency debts everywhere but has no real jurisdiction overseas. Except through IMF agreements.
On gold settlement, the comex did as much when it changed it's rules on silver during the 1980 hunt fiasco. By stopping the hunts from settling their futures contracts in physical silver, they stopped real people from dealing silver thru contract. At least on that exchange.
I don't expect the EBES (Euro Bullion Exchange System or whatever type name they use) to act exactly, but in the same spirit. No one is going to tell anyone they cannot enter into gold contracts. Sure, we will be able to borrow, lend, option or sell gold all we want. But, unlike those overt alcohol laws during prohibition, today's gold party people be able to drink all they want. (smile) That is deal in all the gold collateral you want. But, if any of those deals go bad because the other side wants to walk, instead of deliver, you will have to settle in cash. In a Euro court of law, no one could bind you to physical settlement if the deal was in Euro Legal Tender. Even if it was in the contract. You would have to accept cash, if contested.
Now, some say this will simply drive all gold deals outside Europe. That's thinking in the present context. But in the future the dollar reserve and it's credit gold market will be in a shambles with people running all over the globe just looking for a place to deal gold at all. Credit gold will be a joke by then as trillions of losses will be outstanding.
The effect of all this would be to drive most every portion of physical gold dealings into "on the spot" buying and selling. Mostly in Euros. A mine could still borrow, using the value of gold as collateral, but it would only be the "cash value" of that gold that could be used in settlement (if the deal went to court). OR physical settlement if both sides had no problem (and stayed out of court).
This kind of legal protocol change, not unlike changing comex rules of trade, only affects the financial side of gold and in no way restricts investors from cash spot dealing in physical gold. Again, it would force the world gold markets to adjust away from copying the old dollar markets that so manipulated the physical gold price in the first place. Of course, no one would be trying to deal gold in dollars then anyway.
In reality, very little physical gold would be borrowed, either ahead of production or from world stores to sell into the spot market. If one owned gold and wanted to liquidate to buy something, you would sell it, pay taxes and use your dollars ,,,, errrr Euros! Gold would, over time, rise to reflect it's real reserve value to both central banks and private owners the world over.
OIL, governments, corporations and families would once again all be buying real gold for the historic wealth value such a metal imparted to a portion of their total asset savings. The demand for gold would once again be generated for it's main "historic utility";
"a wealth no social group could inflate thru monetary credit use"
Gold would would then become a moving tradable asset that tended to value currencies in parallel. A wealth without a country or sponsor. If one preferred to see as MK might, as a money without a country, that's good too!
The effect would be the same. The physical price on gold would respond to the ebb and flow of a rare metal no different than the ebb and flow of currencies today. As the always present inflation tax took away from fiat, as it has done from the beginnings of time,,,,, so too would the various gains taxes take from gold as it was traded for cash to buy things. There would be no monopoly of either over the other. The wealth utility of gold would be matched by the necessity utility of digital money. Fiat would be inflated at "whatever rate" as it stayed in settlement use. Investments would be made and lost, no different than today in our largely "ungold" fiat money world. Only for gold, then, it would be purchased for it's longer term ownership by both official and private interest.
If there is one redeeming consideration here,,,, it is that gold, separate from all money issues, would rise to reflect all the wealth inherent in the world. Just as it's value did in ancient times. But remember, when trying to compare values back then, that bottle of olive oil was worth so much more to life than an equal item is today. However, our modern world has a 1,000,000 times the total wealth as existed back then. Truly, gold has a long journey of price appreciation before it even begins to slow. Our children will not see it's full value reached.
Will such a transition be stopped? Not if it benefits the purpose of everyone and this certainly will. Is it the best? No, I think ORO's directions are the best, but the world has proven we will never live with it. Much less even try to return to it. War "times 2" will not bring us to gold money again. Besides, we live in today and tomorrow, not the past and we have changed our economic dynamics far too much for gold to ever be used as credit money again. Yes, the dollar will fail and it's whole economic system will slowly (or quickly) fall away. But, we are an energetic lot and have already planned the next replacement.
So onward we hike to see how the path turns.
===========
OK, enough for now. (smile) I want to thank everyone that read, commented or considered these thoughts. Both here and on the main forum as well as OROs great works. I'll reply more to other's posts when I return in a few days. Perhaps then Journeyman and I can go out for some burgers and beer on the USAGOLD Forum,,,,,, while we talk about our differences on gold (smile).
it's true they say, and now I know,
no one can teach where nations strive to go
we can only grasp this power of mankind
what conviction to conclude the thoughts of their mind
you hear others who cry so longing for an end
but only history marks that point with a pin
so make this is my task
to give on the chin
the Thoughts of Another from this
Western Gai-Jin
Thanks ALL
TrailGuide
Gold Trail Update (06/19/01; 19:47:46MDT - Msg ID:56453)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (06/19/01; 19:47:46MT - usagold.com msg#79)
correction
Oh boy,
Left am item out and messed up my poem. Here is the corrected:
So, the future may just be a great deal for bullion owners as gold rises! Yes? Even old Aristotle would not have to sell and pay taxes,,,,,, at least until he wanted to sell to buy a better lifestyle. Yes, this is the reason that gold production is today and will be later such a bad investment.
Compared to bullion and rare coins, that is! +++ With their regular capital gains tax rates.++
and
it's true they say, and now I know,
no one can teach where nations strive to go
we can only grasp this power of mankind
what conviction to conclude the thoughts of their mind
you hear others who cry so longing for an end
but only history marks that point with a pin
so make this my task
to give on the chin
the Thoughts of Another from this
Western Gai-Jin
OK, good day to all
(smile)
Trail Guide (6/27/01; 05:08:39MT - usagold.com msg#: 56956)
return
Hello everyone,
I'm back from a nice trip into the mountains. I'll have a few comments in a bit.
Trail Guide (6/27/01; 05:22:07MT - usagold.com msg#: 56957)
ECB's Duisenberg says likely to step down before term ends!
http://www.usagold.com/DailyQuotes.html
The above is from the USAGOLD news feed. All the readers here can access this area anytime.
This item of news only confirms part of Another's letter. Duisenberg was the point man in engineering the initial insertion of Euros into use. A delicate action that required the exchange rates we saw during this period. We are now leaving this period and with the 2001 distribution of actual
notes, the Euro will be ready to advance. This era will require a different character in their ECB position of leadership.
-----Wim Duisenberg on Wednesday broke silence over his tenure as president of the European Central Bank, saying he was unlikely to serve out his term but did not elaborate.-------------
-------Mr Duisenberg is said to have agreed at the start of his appointment in1998, under pressure from French officials, to only serve half of his eight-year term before stepping down in favour of a French candidate. ----------------
http://markets.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT32X80XGOC&live=true&tagid=ZZZHS5ZD20C&subheading=europe%20equities
Trail Guide (6/27/01; 05:48:19MT - usagold.com msg#: 56959)
Dithering over euro will harm London, says Mayor
http://www.usagold.com/DailyQuotes.html
ALL,
Once again, our point through out all this discussion is the impact on the current gold market and it's pricing / values further down the road. One small portion of this ongoing currency / power transition is seen in our position that;
*** in following the eventual certainty of British entry into EMU (Euro use), that their entry will be part of that dismantling of the Anglo gold pricing structure.***
Once again, our reasoning in pointing to this political movement is for the readers to follow the trail and see it's purpose in Another light. We point out the "reality" of what "is" happening in a way that allows readers to understand it as these news "events" mark the path. We do not so much wish to promote what "is" happening, rather build the readers ability to grasp why certain people are making this happen. In building that ability, I often present why I (as an American) have structured my wealth to make ready for this change.
It is not my position to endorse what "should" be done in order to build a better world. I do offer a rebuttal as to why past "economic" reasoning is being side tracked to travel this different path. In doing this I do "discount" the logic many Western hard money advocates use. I do this to show the "why", not the morality of it all.
---------- Ken Livingstone has warned Tony Blair to stop "dithering" and campaign for Britain's entry into the euro. In a damning attack, the Mayor accused the Government of squandering the opportunity to make progress on the euro afforded by its election landslide.
Despite Blair's attempts to keep the issue on the back burner, the Mayor will spearhead a vigorous campaign to warn of the damage which could be inflicted upon London if the Government remains outside the eurozone. -------
http://www.connectingindustry.com/news_story.asp?story_id=9338
Trail Guide (6/27/01; 06:28:39MT - usagold.com msg#: 56961)
Comment
Hello Cavan Man,
I'll discuss some of this London stuff with you a little later today.
Thanks
TrailGuide
Trail Guide (6/27/01; 06:42:39MT - usagold.com msg#: 56962)
comment
Hello ORO,
You write:
ORO (06/21/01; 00:52:37MT - usagold.com msg#: 56545)
FOA - rough words I have quite a few comments I prepared, but am refraining from doing so because they would present both of us in a negative light since they are rather nasty in conclusions, argumentation, and manner. They will come off as a personal attack, which perhaps they would be.
I tried to tone things down and dress them more nicely, but that did not "do the job". Therefore, I will refrain from posting these comments until you agree to be exposed to these rough words and criticisms.
Sir,
There is no possible reason for our discussion to include personal attacks. In all my replies and rebuttals I tried to attack your position,,,,,, not your personal character or personal reasoning for taking that position! If you (or I) have certain political thinking that is helping to present the case, good! But, their involvement does not prove the workability or validity of said position.
Through out the political world it is a common, lesser man that must resort to attacking his opponents "agenda" instead of his opponents "position". Often, when a person runs out of fuel (thoughts)or is being corrnered,,, they must "sink" to build some perceived "political agenda" as the object of their thrust to discredit their opponent. Such reasoning is thin, shallow and as such is seen through by others. This does nothing for the audience, nor does it give them anything logical to ponder as they still are left with no logic as to "why" to reject the actual "position".
If I have presented your concepts in a way that you did not offer them,,,,,,, then take those items one at a time and refute my take on it. Remember, I do (and will) refute your position as I or others may perceive it. Not necessarily as you wanted me or others to understand it. If that is not how you wanted those views seen,,,,, then dissect them and explain so we may proceed. In the interest of the audience, take it one item at a time.
Further along,
I once was on stage before a gathering as we were trying to debate a topic. My opponent had lead off and was killing me! (smile) Indeed, I am far better at speaking than writing,,, so his ability in real life was something to behold. He did such a good job that I went blank and was about to go off in a foolish mud tossing direction.
Then, watching the faces of everyone,,,,, as they were waiting for something real to chew on,,,,, I realized that it was what "they were thinking that counted" not mine or his personal feelings on the subject. I started off by telling the group that I agreed with everything he said. Ha! Ha! Then, item by item, I listed his points. After each point, I would then suddenly remember why I disagree and told the people that I was the one that was "incorrect" for agreeing with such nonsense,,,,,,, and explained
why.
Ho! Ho! I won the tide of opinion! (smile)
So, ORO,,,,,,,,, one must strive to gain the tide in this political world if the game itself is to be won,,,,,,,, not just the first quarter of a mud match.
thanks
TrailGuide
Trail Guide (06/27/01; 16:42:58MT - usagold.com msg#: 57002)
Comment
Hello ausome,
you write:
--- ausome (6/27/01; 06:42:44MT - usagold.com msg#: 56963)
British entry into EU - NO WAY! Trail Guide with due respect sir, I do not believe Britain will ever join the EU. There is incredible opposition to such a plan from its people. Remember they speak English and are not European!--------
Well ausome,
I'm not sure I grasp your point? You see, the last time I heard the British talk,,,, they didn't speak english either!! Ha! Ha! Ho! Ho! (huge smile) Just a good joke!
I have a really good friend from Ireland. Every time she visits us that woman can go off on the very best rendition of "down home" British you ever heard!! I told here once that more Europeans speak better english than the British ever have and she agreed. Now,,,,, I'm not even going to mention the communication mode those Irish have,,,, Eh Cavan Man? (smile)
Seriously,,,, if one does their history work on Great B ,,,,,, that Island has been trading with Europe far longer than with America. The language has never been a point of ideology or social contention. In many ways, the recent building of the Chunnel (Channel Tunnel) only strengthened their physical ties with the continent.
I pointed out in another post that they won't join because they want to,,, they will do it after fully understanding the economic implications if they don't. Later, they will hurry to join,,,, before the fact.
---------Nonetheless I agree there will be a dismantling of the Anglo gold pricing structure but this has been set down already in the WA regardless of whether Britain joins or not. --------
Well sir, as our Cavan Man pointed out earlier today, London is a big chunk of the world's financial game. It has also evolved into the only remaining major support for the dollar's rule. They have used that position for some time to slant much of world finance into dollar holdings. Gold was but one tool in that chest.
This whole EuroLand shift has, all along, included a plan by European leaders to bring England (that's London too(smile)) into that fold. All for the purpose of breaking the last dollar post.
In a further light, few can grasp just how much oil wealth is centered in London. That wealth is also geared to making the Euro project a success and does exert an enormous influence on opinion there.
Once the tide turns, and England is seen as slanted to EMU, no matter if it's years away,,,,,, watch the whole gold market sector fail it's ability to put a price on real bullion trading! When that part of the dollar game is lost ,,,,,, when that post of dollar support is gone,,,,,, the washout Another has always pointed to will start.
more
Trail Guide (06/27/01; 17:14:35MT - usagold.com msg#: 57003)
Comment
Hello Usul,
-----Usul (6/27/01; 07:09:15MT - usagold.com msg#: 56964)
Britain and the Euro: Opinion is divided, but many consider it inevitable----
Yes, it's true that most people over there think it's inevitable. I don't know if it's from a good understanding of the dollar's problems or from plain old common sense,,,, but many can see the end of our dollar's timeline.
Certainly, neither the pound or Britain's economic structure can stand alone in this new era of world trading. Then must join with someone. Quite a few thinkers over there see the fix our fed is in now and also understand just what Allan's game plan must lead to. With the Euro now in full
"Rut Season"
the dollar must stay strong or be completely dropped. In order to keep the greenback strong we must play the game of "see everybody,, we are dropping rates to gun our American financial structure"! The message that sends also includes;
A. to hell with long term stability of the currency
B. to heck with the eventual super inflationary downturn such an act will bring
C. who cares about the industrial backbone of the American nation if our exchange rates render it profit less. Just as long as our financial sector (stock market included) attracts dollar flow.
Even Bush is forced to backtrack on the Steel issue. This and any number of other recent political reversal rumblings smell to heaven like the socialist beast dollar supporters tag Europe as. This begs the question; if the US really turns down, will we suddenly shut our long proclaimed free trade doors? Blocking a return of our trade deficit dollars? The answer foreign reserve dollar holders say is,,,,,,,yes! At some point they must realign into another trading block?
You see, with the Euro standing in the wings,,,, the ECB has but to wait out our final inflationary act. Allan is blocked from any other recourse by the very existence of the Euro. (note: I have spelled Mr. G's name with two LLs for so long I see no reason to change now. (smile)
more
Trail Guide (06/27/01; 17:51:32MT - usagold.com msg#: 57005)
comment
Hello Michael,
-----USAGOLD (6/27/01; 08:10:42MT - usagold.com msg#: 56965)
Behind the Barrick/Homestake Merger: A Shotgun Wedding Based onGold and Dollar Fundamentals------
In my view, you are absolutely right; "Barrick is covering their shorts with HM". We can also see this in a deeper view.
ABX has evolved into little more than a banker's extension. One that trades gold for their gain. On ABXs side,,,,, I see their massive paper short position as a financial tool that allows them to make a return on in place reserves without mining them in total,,, at once. That is all their program is really doing. It's a product of banker's games.
The greatest risk for them could be that a good portion of their dealings may not have involved CB gold sold short,,,, and they didn't know this for a long time. The other side of those trades were real cash buyers that simply wanted to work their money in government debt while waiting for the mine to produce gold. The buyers were willing to do this because an outright buy would have gunned the market. In addition, their cash would have not earned a return while waiting for the Euro to free gold. So, some of their smaller, non official buying was channeled into mine paper while hiding behind the big BBs.
Ha! Ha! It's kind of a joke when one thinks about it. The mine was leveraging their unmined assets to produce a simple return and telling their investors it got a higher realized price for gold production (and it was) ,,,,,,,,, while locking out any chance for profit if gold ran.
The opposite side brought the future gold assets of the mine at cheap prices and paid the mines investors that same little simple return to gain all the future profit. Future profit, I might add, that would make those little ABX gains look tiny!
Now, some smart cookies are putting the puzzle together,,,, so, they must get some uncommitted gold at any price so as to cover those real players that were suddenly found to be there,,,,, on the other side.
This is the dilemma most gold mine investors face. Some brought HM years ago at $8++ and were waiting for gold to rise. Now, with the game coming to an end, their assets are taken below par and become paper support if the physical market locks up. The combined companies would never
keep up with physical in that run.
Further,
Yes, the market is in a changing mode (just as you say) as the countdown begins. Players are more and more understanding the true dynamics that will mark ""all"" paper gold assets down once this runs. Physical will be the only game in town then!(smile)
More
Trail Guide (06/27/01; 18:01:06MT - usagold.com msg#: 57006)
(No Subject)
Hello Sir Randy,
I smell rumination in the air (smile). I'll wait to see where this scent takes us travelers.
Trail Guide (06/27/01; 20:19:58MT - usagold.com msg#: 57019)
Comment
Hello Leigh, Tree in the Forest,
GoldFields (gold) be taken out like HM?
I don't think so. However, to place my view in context; I own some goldfields as a small percentage of total physical gold wealth. I also own it with little consideration of it's trading value now. If the shares went to $100 or $.10 I would not consider selling it. They remain a lifetime
holding,,,,, (burned for my duration).
The logic in my allocation is to gain the eventual value it would carry after physical gold has been revalued by market forces. A free market, outside and unattached to the banking, money, credit world. That would take the metal far beyond anything we consider normal,,,,, and keep it there for decades. After South African places considerable new taxes on this gain, Goldfield's operation would still turn out a very good long term dividend over the life of it's reserves. But nothing close to the projections many gold Bugs would place on these shares if they thought such prices could materialize.
My reasoning employs a return on this risk that is unacceptable to most,,,,, if they understood the dynamics of the process. You see, those shares may not show any market value in the heat of our paper gold market being torn apart. Indeed, they may not trade for a year or so. Only to trade
once again after physical gold trading is fully reestablished at a hugely higher level. You see, there
may not be a point to cheaply reenter after the fact. This is the main reason why I picked a company so richly endowed.
On this political ground I base my reasoning. South Africa will not allow GoldField's production to be taken over to support the bankers behind Anglo (or any other). If Anglo (like barrick) is forced to deliver $10,000++ / oz gold into a $300+ hedge book, they would mostly fail and pay little
taxes. Considering that inflation, in general will force production cost above $1,000/oz, the clean gold reserves of GoldField makes it a political keepsake. The only owners that will benefit from the mine share game are the ones that can own the company thru thick and thin,,,,, and even then own it solely for the dividends it will produce. Such is the "New Gold Market Dynamics" we face.
Still, for one with understanding, the most risk free and most profitable wealth to own today is pure bullion or coins. Rare and near rare coins will seldom trade in the future and if they do at all at a tremendous premium.
We shall see (smile)
thanks
TrailGuide
Trail Guide (06/27/01; 20:48:48MT - usagold.com msg#: 57020)
Reply
Hello ORO,
You write,
-------ORO (6/27/01; 08:57:24MT - usagold.com msg#: 56969)
FOA - criticism
The withheld posts in question are attacks on positions. However, the extent of the criticism and its its intensity may appear to the reader to turn an attack on positions to an attack on their holder.
Again, do you wish for such a set of criticisms of your statements on matters of economic principles, monetary history, and economic significance of portfolio allocations to be aired on this forum, even if these criticisms are likely to be interpreted by a casual reader as attacking your online persona?-----------
=====================
A direct reply to: ------do you wish for such a set of criticisms ---------even if these criticisms are likely to be interpreted by a casual reader as attacking your online persona------
No. You, ORO, are above that and always have been. I will not engage a discussion with someone who usually requires me to rise up to their level and then changes the attire. Restructure your criticisms into logical reasoning that will stand the test. If I know where my week points are (and they do exist) you, ORO, do also.
I'll stop for today.
Thank you
TrailGuide
Trail Guide (06/27/01; 20:50:47MT - usagold.com msg#: 57021)
note
Hello to Max Rabbitz,
I'll reply later (smile)
Thanks all
TrailGuide
Trail Guide (06/28/01; 07:43:10MT - usagold.com msg#: 57060)
Big Scoop!
ALL,
I had (and have) a number of things to cover today but this article in the WSJ needs attention more than anything. Please get a copy and read "Our Economy Needs a Golden Anchor" by Jack Kemp. Read the whole thing, right to the end. The subtle expressions clearly hint that someone "up
there" has read the "Euro vision" on gold and how it will impact the Euro Project! Not to mention the dollar.
MK, Randy, be sure to note the shift to a "Free Gold" anchor as expressed in:
"There is nothing mysterious about how gold would be used as a reference point or how a NEW MONEY STANDARD FOR A NEW MILLENNIUM would work."
and
""With the dollar defined in TERMS of gold and with American citizens FREE to buy and sell gold at will"
(note: he said terms,,,, as in gold's value,,,,,, as in gold's market price,,,,,, as in not fixed to gold!!)
and
""the fed would forget about raising or lowering interest rates --------- Markets would determine interest rates"
and
"There would be no need for the government to maintain a large stock of gold ---------- people would be FREE to do so on their own in the marketplace"
(note: opening the door for a transition of US gold to cover past dollar expansion)
and
"I believe Britain would soon follow to make the pound as good as gold and AVOID HAVING TO ADOPT A SINKING EURO"
(NOTE: It's almost as if we are trying to stop England from joining the EMU by adopting some of the evolving EMU qualities! Currency war in progress!)
-------------
Ha! Ha!
Can any Western Hard Money Advocate imagine such a system (smile)???
Taking gold out of official price fixing hands and allowing it to trade FREE next to the currency!!
Boy,,,oh,,,,Boy!
After this trial balloon the next step would be in trying to fully copy the whole project.
The only trouble is that if we try this,,,, and don't dismantle our anglo gold market's connection to "paper credits in gold",,,,,,, the Euro free market in physical would fully rob all the US government's bullion.
And most of it's private bullion. Mostly by using dollar reserves outside the USA to buy it.
The upshot would be a "bullion-less" paper dollar gold market and a surging dollar price for physical. Who in the world could have seen something like this comming?
You would almost think someone(s) was thinking about all of this (smile)
(Robert, we are almost there!)
TrailGuide
Gold Trail Update (06/28/01; 17:36:01MDT - Msg ID:57111)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (06/28/01; 17:36:00MT - usagold.com msg#80)
Sunrise
Hello all,
The sun begins to rise!
Reading Michael's Commentary & Review, posted today at:
------USAGOLD (06/28/01; 09:01:37MT - usagold.com msg#: 57063)
On Kemp, van Eck, and Dogs Who Know When a Storm Is Approaching-----
I seems some thinkers are seeing what is happening now along with the implications this will have on our economic structure. MK is right, Mr. Kemp is coming around. So too must any one that considers the big picture. Truly, our Randy is not the only person that is tabulating this incredible pace of money creation.
Today, US money authorities are caught in a trap that can only lead to a real inflation. Not the little 10% to 20% runs so many were frightened by in the past. Rather a price inflation spiral that marks the closing era of our dominant currency system,,,,, the dollar reserve.
After all these years of expanding our debts, our business and our leverage in this economy, there now comes a time when it will expand no more. This is such a time. Once pushed over this hill, our economic train ride takes on a different feel. Official strategy, policy and thrust is all at once changed to maintaining the system's function with little regard to long term economic results. Money quality is abandoned for just some measure of continued money demand. All eyes are trained on maintaining financial asset values with little regards to saving the main economic structure's profitability, such as in the manufacturing sector.
Rates are lowered time and time again as money substitutes expand at ever higher rates. Suddenly there is now no room for a fed induced business slowdown. Because such a change would not just slow the economy, as in the past,,,,,, it would wreck the actual currency structure.
We have but to notice the reverse reaction present in today's exchange rates, compared to years gone by. All at once, the currency must have inflationary policy to keep the exchange rate up. Where in the past such a lowering of interest rates along with a money expanding drive would have driven the dollar down. With this understanding alone, we can know our system is over the hill,,,,,, past the end of our currency timeline,,,,,, heading down into the final inflation.
As long as the Euro can stay behind the dollar on exchange rates,,,,, our trade deficit must grow,,,, our internal manufacturing sector must weaken,,,,, and our financial structure must have ever more money aggregate expansion to stay solvent. This is the deadly cycle we are in. To escape, we would have to lock down our money expansion in a way that, today, would crash the dollar and cede it's reserve function to the Euro. Our bet is that we will inflate until the system fails completely. Truly, the ECB and most of EuroLand has made the same bet.
On the subject of dollar strength:
This is not the first time investors have picked the bones of a dying economy. The examples are there for reference. During the fall of Rome, traders flocked into the city to trade property and do deals,,,,,,, even as hell approached from the north. Today, the world is biding up our currency in the same insane attempt to catch the last trade before the golden goose is gone.
Where will wealth travel:
The Euro system did not build this trap. We built it ourselves by demanding a lifestyle that only debt could produce. As the years passed, our trap only grew larger. The Euro project is the result of planers seeing our trend and making ready for it's eventual finish. Yes, they are just like us but the only difference is that their train is only a small way up the hill while ours is already on the other side,,, picking up speed to the bottom. Will investors jump ship later, as big time dollar price inflation begins to mark our system to the market? Some say they won't. I say the same mentality that drives traders to buy goods in our burning dollar house today will easily send wealth to EuroLand when everything here is on fire. Look around, consider the Western perception and you judge for yourself.
Further along
Michael's mention of Bill Gate's wealth being enough to almost buy our gold reserves should speak volumes to Western Gold Bugs. Still, most of them still talk of $500,,, $600,,, $800 gold as a worthy level. It's as if they were lost in some time warp of years gone by. Truly, our money inflation has soared so fast and so far gold's real price implications are completely off their radar screen. With comments like; "$1500 gold would mean total financial destruction in this country",,,and ,,, " the gold price will only match inflation, so there is no gain in it",,,, it's clear they are lost in time and space.
Physical gold will soar when our burning dollars render the anglo paper gold credit system unworkable. Real bullion will never be able to service existing paper gold credits. Most owners will be forced to accept trailing currency payments that come in at hundreds of percent below actual bullion prices.
Because our dollar reserve structure has shielded us from a true price inflation, gold players keep looking at modern production costs as an accurate gauge to judge even the commodity production price of gold. Using that as reasoning that gold can't rise to far. Using the old logic of: " if we can produce gold for $350, then $2,000 gold would bring tonnes of it out of the woodwork and the ground!"
Well, if the dollar reserve function was removed, real goods price inflation in the production cost of gold would drive it's base dollar cost into the $0,000+++ range. And even that would only accommodate the price inflation currently in the system. With the end time drive of dollar inflation, we are now entering, gold production costs worldwide,,,, in dollar terms will soar.
Just this small area of gold's commodity function should send signals that gold prices are far removed from even Western Gold Bug reality. Truly, it will later rise to a level beyond imagination.
Still further
The fact that people are thinking out loud (in the WSJ) about allowing gold to go free ,,,, even clearing out the US reserves,,,,,, indicates the enormity of any workout to balance the current Bullion Bank mismatch. Free Gold and Credit Paper gold cannot coexist once the credit side has expanded for so long. The markdown within the banking credit system would discount all credit gold for years to come. The anglo dollar system for expanding gold credit assets would be gone for a long, long time.
In reality it should be clear to anyone that knows how governments react when the system cannot balance. Everyone goes home with what's in their hand,,,,,, as laws are abrogated and contracts are dissolved. Settlement comes in the form of something less than real, mostly cash below the mark. Stationary assets in the ground are tagged to pay way more than their fair share of the workout. Leaving the owners in the same boat as the paper players.
So, on we go,,,, as events give shape to a ghostly illusion "noone" could see from afar. The world turns and a new currency is formed,,,,,, and a new gold market takes shape.
We not only watch,,,,, we watch with understanding!
TrailGuide
Trail Guide (06/29/01; 09:47:53MT - usagold.com msg#: 57160)
Money
Exceptional post Randy! It makes a very clear statement that's easy for us to understand:
--- Randy (@ The Tower) (06/28/01; 18:07:52MT - usagold.com msg#: 57115) Sierra Madre and the obscurities of a concept called "money" -----
I want to enter this discussion a bit and use both yours and other's statements. I'm following your lead when you wrote:
-----It's one thing to discuss money or monetary systems generically, but it's time we give the actual concept of "money" (in and of itself) some of the intense attention it
deserves, particularly here at a gold discussion forum. ---------------------( Randy #57115) Gold is definitely wealth; its a highly liquid, immutable, tradable tangible asset. For that reason some of us can never have too much of the stuff. But is it "money"? In your comment to von Braun, you indicated that our units of "dollars" were once upon a time defined as a definite quantity of gold.---------------
ALL:
the above thought creates the correct mindset for grasping just what money is. Gold is not money and never has been. No more so than hats or any other physical item. Back when we had no form of currency both hats and gold could serve the same function in trade. What was that function? The using of an item of wealth,,,,,, the using of some real thing to trade for something else we wanted.
I challenge the readership, including ORO, Journeyman and all others, to search history and show me anywhere that physical gold was traded as money. In every instance you can present, I'll show you gold used in "wealth barter" and incorrectly labeled money.
Further
The only thing that separated gold from hats or any other wealth object was gold's rarity, beauty and unique physical properties. Indeed, a hat's value was worth something in trade, no different than a gold coin. Just not worth as much as gold's value in trade. Neither gold or hats were money
then, or money now. Rather just items of wealth we trade for other items of wealth.
This very concept is what so confounds modern Hard Money thinkers and corrupts their efforts to regain the high ground of money thought and legitimate money process. It's also the mutation of this concept that, from the first introduction of "money", bankers and officialdom used to snare the hard money world.
Notice Sir Stocks, Lies, and Ticker Tape's #57150. In his post he makes a point that's perfect in example and truth of the above. But, I doubt this was his logic in making the statement. I'll reorder it for clarity.
-----Every culture upon discovery has quickly learned this monetary truth. Only in gold is money quantified.-------
Exactly, sir! Gold is the very tradable wealth that we can quantify money with. How? By giving everyone an exact amount of tradable "VALUE" to identify the currency's tradable value. The gold itself is not the money,,,, it's the tradable wealth we can value money with. In this, we know a
currency money's exact value in our economic world of trade by tying it to a real wealth piece of that economic world. Gold!
Our world today is no different than it was in ancient times. We trade things of value for things of value. We barter with each other, things for things. Only, for modern speed and convince, we use money to denominate this barter trade. Mostly paper money.
It's well known that many of us conduct only half of this barter transaction. Preferring to keep, therefore save, the paper money our barter brings us. We chose to do this instead of finishing the deal by trading the currency for something else,,,,, for some other thing. The other side of the barter deal is left open by our retention of this paper money. This is the concept of a "Money Supply" in circulation! In our modern world, we own and save the unfinished side of a barter deal.
In this we risk the loss of value said money in circulation can experience. This is the entire theater of our years of political scrambling over money. We act out the play; of trying to make this circulating money retain value. From the beginning, man has entertained countless ways to lock his "money" to some form of "fixed barter able wealth, like gold. All done in order to keep it from falling in value
before he completes the other half of the barter trade. That is spend his money. This is called price inflation and is the result of printing to much paper money. This process of tying our money to some form of tradable gold wealth does not make gold money,,,,,, it only ties the tradable value of gold to the money in a effort to slow the printing press..
We have a choice.
We can use physical gold , not money, to trade for other goods. It makes no difference whether the gold chunk is in official coin form or in pure unshaped gold form. When we use gold, outright, we are bartering wealth things for wealth things. No different than if we used the hats mentioned above. Two hats for one chair is the same barter as two chairs for one piece of gold.
The use of gold in a trade does not make said gold money in that trade. No more so than the use of hats in a trade would make hats "money". Gold is but one form of wealth that's been held throughout the ages and held for it's tradable value. It's not money. When governments mint gold coin for our use; they are minting an unit of wealth for barter trade and sanctioning it's use within our "money concept". The gold coin itself is not money and spending it constitutes wealth barter in lieu of trading money.
The other choice humankind has had is to use money to denominate all of our barter trade. In this form paper money,,,,, currency,,,, plain official coins are all just receipts of barter trade. That is what money is. It truly has little determined value outside what we can trade it for. I will give ten dollars for a hat because I have seen hats trading for around ten of those dollar receipts before. I can then use that value comparison to trade said ten bucks for a chair. This is the use of the money,,,,, the money concept.
The money concept mostly works as seen in our use of plain money for over 30 years. None of us Western users attach our money's value to gold. We attach it to what others trade it for. Yes, it has robbed us of much wealth value by saving and using it. But, even the use of gold in outright trade
barter has some historic risk. See further below.
-----Money is not real wealth. It has no real wealth anchor outside what our use makes it. We and the majority of people use modern paper money for it's convenience in trade for wealth,,,, not it's ability to be wealth. We try to make our paper moneys be worth a fixed value of real wealth by tying it to a real tradable value, gold. Our paper money's value can be as stable as our printers deem it. They can print only a fixed amount and it would retain value. Or they can print as much as possible and it's value goes down.
It has no fixed, denominated value
This is the problem of money,,,,, the problem of the money concept. Grasp tightly upon this notion:
"" The use of money is the process of trading outside of barter. Money is a concept of "denominating a wealth value" whereas barter is "trading the actual value of a real thing"
For sure, neither has a fixed long term value. Even we have a time worth limit. We all become dust at some point. Still, the tradable value of both the "money concept" and "of real wealth" can and does change with man's wants and needs. However, real wealth trading has a long history of bring
the most in trade over long time spans.
From mention above:
The barter of gold has a fine example of not holding value forever. That can be found in history when vast gold stores were brought into Europe long ago. Still, the record of
our "money concept" holding value is zero!
So, back to the problem at hand
-----( Randy #57115) But soon after, the bell ceased its clear peals, and somehow gold (under the bulk of its dollar weight *ha ha!*) got unfortunately mired down in the concept we call "money". As it turns out in the end, the "dollar" could morph itself into the "right shape" for money, but
despite gold's supreme ductility and malleability, the metal could not.---------------
Thanks Randy!
Absolutely! No currency,,,,, no money,,,,, in our history has been able to withstand the socialist expansions of man's printing press. Even his minting press had expansive ways! When we used physical gold coin alone,,,,, that barter able wealth,,,,, and labeled it money,,,, we immediately
expanded it's circulation by lending it from banks. Once it's labeled money, people will lend it and once it's lent your receipt for gold is no longer a barter able wealth,,,,,, it became part of the "money concept".
Make no mistake, mankind has before and will again use physical gold in barter by trading it wealth for wealth. But once we try to morph it into money, it's function is diminished by socialist design.
This is why the Kemp story is so important. Modern economics has come head to head with the drive by our socialist hard money school to place gold within the money world of credit bankers. A school of thought born of bankers and instituted so bankers could inflate money with no measurement by Free Gold. Once within the banking money world, the limiting nature of a "gold fix" is quickly printed away through the use of credit.
Completely opposite from what hard money thought teaches,,,, the trading of Free Gold,,,, when separate from the banking function of money,,,, enhances the utility of gold as a tradable wealth item. Ancient history proves this out. This history of barter trading of gold existed far longer than
any currency ever has,,,,,, and did so whether a money traded by gold's side or not!
That utility function,,,, the trading of god wealth thru barter,,,,, is what creates it's real demand. Such real demand for trade and savings is what makes gold rise in value, step by step with the speed of any printing press of money. The hard school notes that gold would rise way to high! I say measured in what? It would not rise at all against other things,,,, once it's utility price was reached!
From there it would mostly stay the same in value,,,, it's the moneys of the world that would fall as their never ending bubbles find their proper place in time. This was and is the only way to measure our printing press speed. It's needed, for we will never again stop those presses as they now have a digital function in this modern world.
Free Gold would allow both citizens and private investors to set the proper exchange rates for currencies and what free market interest rates to place on the same. Mr. Kemp has placed his finger exactly on this point! He is not the first to see this.
Our worldly trade function has finally hit the end of it's ability to coexist with gold and money being morphed as one. Even though the dollar left the standard years ago, gold remained in the official money credit grasp as our ongoing manipulation indicates. We can no longer afford to bastardize a wealth so important in it's trade and wealth saving function by tying it with our money concept.
This has been the thrust of the Euro Project all along as it replaces the failing dollar. The failing dollar and it's war on gold. The thrust the US is now trying to use to save it's failing system. To little, to late!
Thanks MK, Randy, ALL
TrailGuide
Trail Guide (06/29/01; 14:04:24MT - usagold.com msg#: 57176)
comment
Tree in the Forest,
I your #57162, it mentions -------Police will shoot, Salzburg summit protesters warned------ and other noted crimes of the day. What does this have to do with this forum? The top of the page says that this site is an ------International Discussion of Gold and the Economy------.
Do you think that the tens of thousands or readers that come here,,,,, come here to read the daily police report of who killed and robbed who in the US and Europe? The discussion here is not about whether either of these societies are evil are not. It's about how their economic and monetary
moves will impact gold and our econnomic lives.
To others,
this forum is privately owned. MK can throw me and all of us off any time he wants. The format to discuss here is at his discretion,,,,,,, not ours. Further, anyone can disagree here and every poster knows that.
So, when:
---Stocks, Lies, and Ticker Tape # 57170)-----
is making a case that one cannot disagree,,, that is a worthless statement in the eyes of every thinking person. Also, Chivalrous conduct was the manner of presentation and speech that was chosen by the owner and for us to stay here we must debate in a similar orderly civil fashion.
Otherwise there are many other forums to go to and get you head bit off! If one thinks such discussion promotes the finding of deeper truth,,,,,, then try them out?
Also, why do you think we have a "pretense of chivalrous conduct"? For myself and many other that read here, this IS the way we are! Are you telling us you are at a different level?
--------------------
VanRip (06/29/01; 13:01:02MT - usagold.com msg#: 57171)
Ross and Another's 60253
I wonder just what Another was thinking when he made that ------"Gold is the only money the world has ever known" Sounds like a simple thought but it isn't"??
I do wish someone would explain that post for us and how it refutes our "Money" discussion.
--------------------
Perplexed (06/29/01; 12:45:38MT - usagold.com msg#: 57169)
You say
------history has proven that those in a position of authority or power have defined money for those under their control.--------
to carry that thought further,,,,,,, the only reason people are under the (economic) control of authority is because they save their wealth in the form of the defined money! If they saved their savings in gold, and spent the money as it was earned,,,,, there would be far less control over their
economic life.
Perplexed,
We stick with the defined money because we enjoy the credit qualities it offers. Western people trap themselves because they crave the lifestyle a buy now and never pay "money system" provides them. If they did all their dealings under a wealth gold system,,,,,, cash barter on the barrel head,,,,, they would be very unhappy and throw out the officials in power.
you say
------A law defining money in the context of a given quantity, as well as quality of gold or silver as contained within our Constitution creates gold and silver money, and the only way it may be dethroned is by amendment.-------
Here you endorse the very law creating authority needed to identify money,,,,,, yet, ET and others riled against this same position when I mentioned the Euro System declaring gold a pure wealth asset without credit qualities. Do you want government in this business or no?
---------------
Hello KarenSue and welcome!
TrailGuide
Trail Guide (06/29/01; 19:50:55MT - usagold.com msg#: 57203)
comment
Turnaround
in your:
-----Turnaround (06/29/01; 14:51:45MT - usagold.com msg#: 57178)Trail Guide- the role of force------------
Well sir, the note of the "European Union rapid reaction force" is in line with noting the development of a political union and hardly goes into the details of what such a force is used for. We are all learned adults here and understand the effects of force. That is far different than your
repeat and noting ----"Iron fists in velvet gloves have much to do with our economic lives".--------
Your marking of police state actions, noting brain-washing of children and them mentioning the culling honest intellectuals from academia has no purpose on this forum except to shout tabloid sensationalism! Indeed, you lack even a shallow explanation of how these intertwine with a
currencie's development. Each and every one of your comments carry absolutely no analysis of how these items affect any stage of monetary development. Hence, my objection.
Even your statement of ------Some folks are just not going to voluntarily comply with the totalitarian dreams of would-be masters, not now and not ever---- leaves nothing for the reader to consider. We all have ideals of freedom,,,,,, yet this forum is about how the mechanics of politics and economics is impacting our gold markets and how those same will work out. That is the stated reason this forum is here. ----------
==============
---Stocks, Lies, and Ticker Tape (06/29/01; 16:00:08MT - usagold.com msg#: 57182)
Trail Guide ---You have tap danced around the question behind my post. It was simply, what was in ET's post #57125 that warranted his code being pulled?-------
No, I didn't tap dance around anything and your simple reply indicates your reluctance to address my point. You were ""making a case that one cannot disagree on this forum"" that is not true and I pointed out your oversight in making that note. I pointed out that the decor on this forum was to
debate in a civil manner.
Your expression that ----"Differing opinions and healthy skepticism stretches the imagination"------ leaves out how said posters break the rules and said rule breaking
is the reason they are pulled.
When you say ------"The best well along the internet highway has been poisoned' ----- you are twisting the truth for your own benefit and that cannot stand.
When you say -----" If the forum is merely supposed to be a platform of solid agreement with USAGOLD, Randy, TG/FOA, Another, etc. regarding all things gold, then please drop the pretense of chivalrous conduct."--------you are the one proposing such a position and that is simply false. Anyone can differ here if they follow the discussion format and do it in a civil way.
Further you say:
-----As for your crack at my being "at a different level", perhaps I am. I can withstand criticism. I also admit when I believe I am wrong.---------
Sir, this forum is not built on a platform that requires anyone to take criticism. No one here is required to withstand such as a prerequisite to staying. When you stated -----"then please drop the pretense of chivalrous conduct."------ that remark reflected your own perception of
discussion here. It was also an insult to many of the contributors that work so hard to share their understanding. Again, ingesting your insults may be required on other forums,,,,, not here.
you say
------ANOTHER clearly states that "Gold is the only money the world has ever known", so when you claim I am wrong to say "gold is money", you must support your position.------
Sir, I did most clearly in ------Trail Guide (06/29/01; 09:47:53MT - usagold.com msg#: 57160) Money-------.
Still, I found no refute from you concerning my post. Only hollow shouts!
===============
further in:
---Tree in the Forest (06/29/01; 16:05:32MT - usagold.com msg#: 57183)
I will reply to each of your assertions:
------First of all, differing systems of government definitely have an effect on economics. Do you believe that the economics of the former Soviet Union was the same as the economics of the United States? ---------- No!
------Do you believe that a capitalist nation such as the US will achieve the same level of wealth as a communist nation such as North Korea? --------- No!
-----Do you believe that the Jeorg Hader incident and opposition to political parties by the EU will have no effect on what happens with the Euro?------ Yes!
----Do you honestly believe that a war will have no effect on our economic situation?----- No!
------Do you believe that a war will have no effect on gold?------ No!
------Trail Guide, I did not post information on drive-by shootings or drug deals gone bad. This was not a police report! These people were shot in the back by their own countrymen while protesting an economic forum! --------
Sir, This same sort of event happens around the world countless times a day. Your noting it begs the question, do you think myself and other people that come here to read and discuss gold issues are lost to receiving this sort of news?
------This is about a system of government that is rapidly showing us it's fascist bent. I am vehemently opposed to such systems-----
Sir, I am confident that we could find at least as many stories that confirm your same "fascist bent" in the USA if this forum was structured for such reporting. Just as I noted to Turnaound above, your report lacked any conclusions to connect it to gold or Euro / dollar policy and reeked of
tabloid sensationalism. After reading your statement again, I note that it also supports your political slant. While valid, it was not for the betterment of this forum but for the expression of your "vehement opposition". Again, we are not here for that!
----What I have posted is very much about political upheaval and history tells us that this will indeed effect economics and gold.------
Again, Without giving us some conclusions,,,, or at least pre supporting your assumptions ahead with other posts,,,,, you sir are insulting us with tabloid sensationalism!
------We are just starting to see this mayhem now as a country engaged in a currency war tries to force it's political and economic policies down it's own people's throats.-------
Sir, This is your perception and perhaps of a few others. I and many other readers do not accept your big brother scare innuendoes and feel the prudent allocation of wealth assets will see us thru most of this.
------ I intend to continue to bring up the political situation in Europe when I think it applies
to our future monetary problems.------
Well, I for one hope you do, but only if leaves out the obvious blood shed and sensationalism and
contains some form of discussion to explain how it will impact the gold and currency markets.
=============
Further:
Journeyman (06/29/01; 16:14:35MT - usagold.com msg#: 57185)
Chilling @ET, Stocks, Lies & Ticker Tape, Randy, ALL
Sir,
I object to your discrete suggestions that this site is some form of police state! Your line of propositions is an outrage to every person that has worked years to build this forum into what it is today! Your returning post is outright insulting!
you say
------If so, why? Such questions are important. Here's why:
There is a word that the U.S. Court system likes to use in discussing freedom of speech and censorship. That word is "chill." --------
This line alone is directed at the very core of this body. You of all people have had the most latitude to speak here and now you return with accusatory oratory!
----Censorship can be quite subtle and even unconscious, and sometimes has effects even the censors don't intend. -----------The problem with censorship, or the perception of it, no matter the circumstances, and especially when things aren't well defined (and even when they are), is that people become afraid to talk about all sorts of things. That's what "chill" means.-----
Sir, the rules here are well defined and speech is wide open,,,,,, if civil! Censorship here is not unconscious and very intentional! The only people here that are afraid to talk are the ones that insult and attack others,,,,,, the ones that break the posting rules!
you say:
------One poster just e-mailed me recently saying he was only reading here once in a while now because things were getting boring and repetitive. Don't know if this represents any kind of consensus, but variety IS the spice of life.------
I suggest that these posters should go the the other sites that allow anyone to be cursed, insulted and shouted down! In these they may find your spice a little much!
------It can also be argued, in line with the title of Mises' major work, that any activity that involves
"Human Action" is grist for the economic mill. Which makes it, if the proper connections are drawn, relevant to gold and theoretically at least, on topic here. Sometimes posters do tend to leave out the appropriate connections, however;) ---------
Murder, robbery, sensational stories without an economic connection are grist for the tabloids,,,,,, not here!
------Intentional or not, I feel a definite drop in temperature in the room and would suggest someone might want to do something about it before things "chill" people so much there's an exodus of uncomfortable folks large enough to drop this forum below "critical mass."-----
******
This last note is an absolute outrage! Was your intention of returning here only to thrust a spear into our long work?
I also duly noted your recent reply to ORO,,,,,, asking him to cool it in the same manner as your own expression to me. First you attack my words with insulting remarks then after I offer that we could discuss over "burgers and beer",,,,, you change your approach. Sir, it is your "chill"
that frightens!
Good day
Trail Guide (06/29/01; 19:56:26MT - usagold.com msg#: 57204)
(No Subject)
Randy,
Thank you, sir. As far as we are concerned,,,,,,,,
****** pull the plug when ready******!!
Trail Guide (07/02/01; 12:24:51MT - usagold.com msg#: 57345)
Bush to throw 'protectionist' bombshell' at Europe!!
http://www.thetimes.co.uk/article/0,,5-2001223492,00.html
Since CB2 put it up,,,,,,,,,,
and USAGOLD drove it home,,,,,,
I'll put a coat of paint on it to make it last,,,,,,,,
I'm off for a while,
TrailGuide
===========================================
MONDAY JULY 02 2001
Bush to throw 'protectionist bombshell' at Europe
FROM CHRIS AYRES IN NEW YORK
FEARS are growing that President Bush could throw a "protectionist bombshell" at Europe in retaliation for it blocking the $42 billion (£30 billion) acquisition of Honeywell International by General Electric.
The EU's decision to block the merger of the US industrial groups — which it could announce as early as tomorrow — is the latest in a series of transatlantic trade disputes that have strained relations between Washington and Brussels. The disputes, which threaten to trigger a full-scale trade war between two of the world's biggest trading partners, come on top of transatlantic tensions over other issues such as the environment.
The most likely target of US protectionism is the European steel industry. President Bush last week angered the EU by using section 201 of the 1974 Trade Act to launch a six-month investigation into the impact of European imports on the struggling US steel industry.
If the investigation finds that imports are harming the US, President Bush can impose quotas on imports, punitive tariffs and other protectionist measures. This could have a devastating effect on European steelmakers, including Britain's Corus, which export about five million tonnes of finished steel products to the US a year.
The steel dispute comes amid an equally damaging row over tax subsidies given to US companies operating in Europe. The World Trade Organisation (WTO) last month ruled that the Bush Administration was breaking international trade regulations by offering the subsidies, and opened the door for the EU to impose $4 billion in sanctions against the US.
Robert Zoellick, the US trade representative, said that imposing the sanctions would be like dropping a "nuclear weapon" on trade relations between the two continents.
The US has already failed to hide its anger over the EU's rejection of the Honeywell deal. The EU also last year blocked AOL Time Warner's acquisition of EMI Group, the British record company. There are concerns in Washington that the EU has a hidden anti-US agenda.
President Bush recently said that he was concerned about the
EU's stance on Honeywell, while Donald Evans, the Commerce
Secretary, pleaded with the EU to clear the industrial merger.
Attempts by Washington to influence the EU's investigation last month provoked a furious response from Mario Monti, the EU's Competition Commissioner. He said: "I deplore attempts to misinform the public and to trigger political intervention. This is entirely out of place in an antitrust case and has had no impact on the Commission whatsoever. This is a matter of law and economics, not politics."
Imposing tough sanctions on European steel imports would be a popular move for President Bush in the US. The Speciality Steel Industry of North America, said last week: "We believe that substantial dumping continues in the US marketplace. We will closely monitor developments and, if and when appropriate, will ask the Administration to initiate additional section 201 cases on affected products."
Washington and Brussels are already involved in a related row over steel duties. The EU has threatened to take the US to a WTO dispute panel over its "anti-subsidy duties" on steel imports from about 16 European companies.
The EU won a similar WTO case last year against the US over
duties on imports of leaded bars produced by Corus.
---end-
Trail Guide (7/8/01; 08:36:41MT - usagold.com msg#: 57668)
I must go where "Ears do not bite"!
I don't believe it people, but I guess this was bound to happen!
I just spent several days writing a piece that explained our whole philosophy. This time in a clear positive manner that was easy to read. I had decided to stay on the GoldTrail page only and elevate our discussion into a real time dialog. Events are close enough to a conclusion to warrant
this. After a ton of asking and asking I finally convinced Another to write with me in his true academic / professional voice. Great! No more editing for me.
So,,,, he gets today's forum from me and what does he read?
====================================
------ Journeyman (7/8/01; 06:40:37MT - usagold.com msg#: 57667)Bet you never heard this story. Media control & Chomsky @ALL
------Chomsky's proof
By William Rivers Pitt
The United States is unusual among the industrial democracies in the rigidity of the system of ideological control ---'indoctrination,' we might say--- exercised through the mass media. --Noam Chomsky -------------
-----------June 25, 2001
--In the early morning hours of Thursday, June 22, 2001, a man named Jared T. Bozydaj took to the streets of New Paltz, New York, with an Intrac Arms 7.62 semi-automatic assault rifle. He fired pointedly at police officers, wounding one officer named Jeffery Quiepo in the arm. The shooting went on for several hours before Bozydaj was disarmed and arrested.-----------------
--------Clearly this kind of control requires an extensive network of influence coordinated from some central "authority." If they cover-up (by failure to cover) this sort of thing, what about economic news such as the current major turbulence in Chile, Argentina and Brazil? Etc. ----------
-----Reminds me of ---another-- illustrious information guru. ---------------
---"Don't tell them ... then it will not exist ..." -Chief Nazi indoctrination "Information Officer" -----
======================
OK,,,,,,and if that was not good enough, here is one more! Go on,, read the whole post? A few items below:
========================
working-kirk (7/8/01; 05:49:57MT - usagold.com msg#: 57664)
---Which bring me to the subject of Crack Whores.-------
-------If you are selling sex you can get a blow job between $10.00 to $15.00. A Fuck goes From $25.00 to $100.00. A blow job takes anyway from a minute to three, and sexual intercourse can take five minutes to 15.----------------
===============
OK,,,,,,, good job men! Perfect timing! On subject and driving home the quality of this venue! I complained in two of my last three post about such discussion and most everyone here seemed to support a "freedom of speech" that included all of the above! Journeyman gets to associate Another with" indoctrination" and "Nazi" thought.
All right,,, good stuff J-man!
Well,,,,,, Michael,,,,,, Randy,,,,,,, All,,,,, For all my insisting to "him" that this venue was the correct place to build an understanding of our future world of gold,,,, I guess I was wrong? I got back a quick retort and firm instructions. Instruction I will follow till hell freezes over because I will not lose my connection to Another. He said simply "tell them right now our position and walk away, it's over"! And I can tell you when he says it's over,,,,, it is over!
So,,,,,,,,, MK, please understand that it's not old FOA walking away mad this time. The big guy said we are done. I'm back to discussing this in private with select people that want to hear it and debate it in private. I'll stay in touch with you and discuss as you may want? After all this work, I guess it's my turn to feel low now. What a bunch of garbage!
Good luck all, I did my best to plant the seeds of thought. Own the wealth of gold and they will grow for you!
You will now "watch this new gold market" without FOA or Another.
Your friend and hard worker,(smile).
Last post, Signed off!
Gold Trail Update (07/12/01; 21:16:44MDT - Msg ID:57999)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (07/12/01; 21:16:43MT - usagold.com msg#81)
On the trail.
Has everyone seen West Side Story? Or for that matter any story that portrayed human group loyalties and commitment. How about the Three Musketeers? These stories and plays reflect our involvement in groups and often depict how we stand together as a team. In the first case a gang, in the second as "all for one and one for all". In the second, if one member is insulted it's a reflection on the whole group. If that hurt one walks away then the whole bunch is suppose to walk together?
Well, it's no different in political circles, too. My interaction here at USAGOLD is similar to a tiny part of our political world. A world some of my friends call home, no less. It's very clear to most of them that I'm not actually political here, just calling plays as I see them on the field. All done for the benefit of whomever has tuned into this station and wishes to hear.
It should also be clear that I have walked away this time, just enough to still honor the cause. Far enough to make a point,,, yet close enough that my private thoughts and discussions can still be heard. Thoughts and discussion with a message of gold's evolving place in the world.
So, on this Trail only, I now must remain.
Onward
As we begin today, I noticed a side path that lead away from the GoldTrail. At it's end I see a group of people listening to some person standing on a tiny stage. Let's ease over there and see what this funny looking guy is saying.
Onward now,,, quietly:
================
Gentlemen, thank you for coming here today. Once again I'll be offering up some of my views pertaining to gold's new place in the world. For those new here we are covering the subject, today, in a somewhat broader manner. Again, thank
you for your time and consideration.
I see we have several Americans here tonight. Good! You can help explain to anyone seated next to you, what "a roadrunner" is. That little ground running bird is native to a good portion of the southwestern United States: the object of a children's cartoon years ago. It seemed he was always running around some mountain curve at incredible speeds! I always liked the part when he would chase other characters so fast that he sometimes ran right off the cliff side road! Then ended up suspended in mid air; his little legs going full speed as if he never knew he left the road.
Ha! Ha! You know, I always think of that image when listening to modern Western Gold Bugs. Especially over the last ten years or so. Like our "roadrunner" cartoons, they carried their hard metal message so long and so fast that they ran right off the Trail, too. Not knowing that our Gold path would one day curve and follow it's natural way back to it's beginnings.
Over this time a lot of hard money thinkers stayed suspended in that same position. Right up there in the open for all to see. Over and over they would look over at us "new thinkers", standing on the mountain and yell:
---"you fells are on soft economic ground and it's all gona slide out from under ya"!-----
Hearing that we would lean over the edge and just yell back;
------"we know that, but mind your legs guys and keep um moving"! It's a long way down if you stop out there!" ----------
Ho! Ho! Ok, all of you can see where I am going with this.
=============================
For years we had this image in our heads that gold was a hedge. A hedge against what? You name it: war, disease, bankruptcy, inflation, bank failure, money failure! If something caused a problem in mankind's world, then gold was a good thing to perform as a hedge against it.
It didn't take much leg work to research why so many thought that way. We had a whole world of history to reference this and the last couple of centuries produced copious works by noted economic thinkers on the subject. Most all of their work could be boiled down into a few simple concepts for us lesser minds to understand.
Let's see...... gold is money...... gold was used as money....... and gold circulated as official government money not too many decades ago. And one more........ no currency could live without gold money backing it.
So, it seemed that if for any good reason we had a disturbance in "the economic force" then all roads must eventually lead back to gold use in it's well known money context. It's demand would surge while it's price rose and that price action would hedge our other loses. That is loses we incurred to our net worth because of any of these mentioned problems. Fair enough. I can understand that. In fact, I think most everyone did.
--------------------------------------------
But what happened? Over the last 30 years or so, something seemed to be changing in the way all of us perceived our need for gold. Indeed, was it perhaps that this new world was ignorant of the fact that a fiat currency could never last as money? Was mankind now blind to the known fact that a fiat currency, once removed from it's association with real gold money, was dead on arrival?
From 1971 thru 1980, we had every form of the above mentioned problems. In triplicate! Our dollar, stripped of gold backing, was surely on it's last legs and slowly sliding into failure. It was officially a fiat currency that we all were taught would burn from inflation in a short time. Yes, gold went to $800 but it should have kept on going if it was this historic money? There were enough
dollar assets in the world to buy up every ounce and then some! Thereby replacing all that fiat wealth with gold wealth! Still, the real demand for actual physical gold failed to drive the price higher or sop up any and all gold offered. Something just didn't add up.
We were not without teachings on this! Anyone, with any understanding of economic function or hard money theory, knew that super price inflation was coming and that action would drive the real demand for gold to the moon. Still, it didn't happen. Our dollar price inflation was mild by failing fiat standards and gold never left the launch site.
---------------------
Another fifteen years went by. A period of time that should have vaporized any circulating fiat currency, unattached to gold. Especially as the world's reserve currency was printed in numbers that only a computer could add up. It seemed the general public was not as lost as hard money thought predicted. They kept right on dealing and saving in dollars, leaving physical gold to drift.
Looking closer at the big picture:
It further seemed that through out our recent decades of changing economic function, the use and need for currency fiat was being impacted by a new demand use. Something not fully understood, but there never the less. This market action was not lost to some planners. Planners in big political systems that had opposite game plans from each other. Both trying to use fiat's and gold's changing function for their own advantage. On one side their designs would eventually rework everything, including removing our dollar system. On the other their reasoning was to just survive... gold or no.
Truly, over this time, we experienced every form of financial dislocation. Some inflation with some deflation,,, wars and political failure,,, 3rd world economic failures and even swings between small storms and perfect storms! Still, underneath it all, riding just beneath the surface, this "new demand" force was affecting the use of what most thought was a worthless currency. Helping to keeping fiat use in tact, even without it's needed gold money backing. Something different was happening. Something as unique and impossible to hard money thought as "computer bytes" were once unique and impossible to the function of a new economic world.
=========================
To be sure, this whole fiat system was engaged for political motivations. Governments waged war against gold and other fiats for various reasons. Some factions fought gold to protect the image of their currency. This was a throwback to 30 years ago and was still important to certain big players.
Until a few years ago, a currencies gold price still indicated said currencies value. Some also waged war to keep gold in a range so others could accumulate real physical cheaper. Almost like an economic bribe?
In these and other functions, credit gold was employed to shape a lower trading price for physical gold. As long as the currency using public or the gold using industry didn't demand too much gold to settle expiring credit gold contracts,,,,, the unlimited nature of fiat based gold trading allowed as much paper gold to be sold to as many that wanted to buy. While all of this was but simple political maneuvering, it could not have been pulled off without the help of that mentioned above; a "new currency demand".
Political forces noticed that the public was well attached to using fiat without gold backing. Most were more engaged to bet on gold's price, as a hedge, instead of owning gold outright, as a hedge. With such a setup in play, the paper gold market could be expanded without physical settlement
fear. All the more so if traders, betting mostly on gold's price, feared a currency loss as much as physical delivery. In this, they always dumped their dropping contracts to settle in cash before the dreaded delivery ever came.
For sure, over all this time people brought and kept gold in large amounts. But that demand and it's trading volume was a trifle in the overall physical and paper trading volume.
================
The total demand for holding physical gold as a hedge was falling away just as it was needed to force credibility upon a inflating world dollar gold system. Without full physical demand, gold stores, worldwide could circulate in an ever lower price spiral. Always leading it's old disgruntled owners to sell, fulfilling just enough settlement for the next real gold buyer. Only to be repeated again and again as the paper system produced another lower value for each new buyer/ owner. Eventually bringing gold to it's plateau price today. Where it is trapped between the falling demand to use physical ownership to hedge currency risk and digital currency's new use demand that keeps economic players in the fiat game.
I suspect that if a tremendous dislocation event occurred today,,, under the current dollar gold system,,,, our paper gold price would indeed collapse! It would do this as investors committed to hard money thought failed their own cause. Them and others would continued to cycle real gold out of their portfolios,,,, round and round the circuit,,,,,, as contract gold prices fell away. Contract
owners would drive those prices ever lower in their rush to escape even the illusion of delivery.
To the incredible shock of our modern "roadrunners" their gold would slowly fall in almost any financial panic. Falling in price as their neighbors traded each and every last ounce down to the bottom. Only if a complete currency / banking washout occurred would gold find demand as a real wealth trading vehicle again. The only kind of demand in our modern world that will once again return gold to it's ancient value ranges.
But this is not the end of the story. Nor is it how the final act of this play will unfold. I expect the above wealth demand to be politically reinstated. And timed to destroy the credibility of our current dollar paper gold system.
This ongoing discussion will embrace and follow this political reality as it unfolds in our time. Unfolding into what is about to become the greatest bull market in gold our world has ever seen. To fully understand how this will come about, we need to understand how some political forces are using both gold's and fiat's changing function in our modern economic structure. To grasp that, we all must understand what money is today, yesterday and tomorrow.
So keep those little feet going mr. roadrunner!
We will pull you back in long before gold hits $30,000.
Count on it! (smile)
===================================
===========
OK folks, this is more than one can stand for a day. Let's quietly ease back to the trail and think about all that for a while.
Michael, Randy,,,,,, I hope this system has a lot of space because I can tell that I (errrr,,I mean this fella) has a lot to say! He also needs to address where others think his view is all wrong. Who knows? I could be all wet! It's going to be an long discussion for everyone reading, too!
Especially if you two guys join in?
Uhhhh,,,,, I didn't mean that the way it sounded (smile)
thanks
TrailGuide
Gold Trail Update (07/16/01; 12:42:08MDT - Msg ID:58177)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (07/16/01; 12:42:07MT - usagold.com msg#82)
The evolving message of gold
Hello everyone,
Once again, after walking only a short distance, we come to a clearing where a speaker is beginning his talk. Let's just stand here on the hillside and quietly listen!
==================================
Ladies and gentlemen, good evening an welcome to our ongoing traveling talks on the changing world of gold. Thanks again for being here and we will get started now.
Much thanks to the USAGOLD people for recording and reproducing these discussions. Also a hardy appreciation to their Randy for organizing all our thoughts as they were presented in the TrailGuide context.
I begin tonight by reading an item from the very first TrailGuide walk. Then proceeding on to expand in more detail from our points in earlier talks. For the benefit of those who missed our last discussion, this thought picks up that theme very well:
"""""""""""""""" Our most broad view, expressing our strongest position is this:
From ten or perhaps twenty years ago a political will, a concept, was being formed that would today change the economic architecture and power structure of the world. Within this change, gold would undergo one of the most visible transformations since it was first used as money. We expect that, starting three or four years ago, the gold market itself has started responding to this sea change. As such, in our time, physical gold will enter the greatest bull phase in it's human use history. This my friends is the very trail we walk today. During our hikes and fireside chats, we will point out this political will, consider the logic and express our reasoning for this position. All the while observing the "river current", in the form of events, that will soon confirm our view."""""""""""""""""""""""""
=======================
First off, I want all of you to know that I was a hard money Gold Bug for decades. Actually, I still am in many ways. Yes, in spirit I am one of those little "roadrunners" mentioned in our last talk. Still storming down the gold money trail. Fortunately for me, and my portfolio position, I started looking at a realistic human / political side of money thought. A side most of us never grasped quickly enough to help us; because evolution was changing it before our understanding could catch up. My slow learning curve was speeded up with help from some very sharp people. Today I still see things using a hard money position; but, just as the world has turned and time passed by, my position has evolved quickly enough to flow with our human tide.
==============
The major object of our discussion tonight is this thought:
--- the present state of affair in our gold market isn't just the result of political motive alone. --
I'm carrying this over from our last talk; that mentioned a new demand for fiat.
Yes, it's true; a simple political motive explanation would, indeed, solve all our problems. For many Gold Bugs this explanation does end their need to think much further on the subject, but their continued financial loses in the gold arena says their problem was never solved as such. Indeed, there is plenty of political push and pull going on to overtly move the market and we will later cover most of that in other talks. But, to underscore our isolated point, tonight, we magnify a few thoughts.
==================
Had the dollar run it's inflationary course, in a manner and time period that history records all fiats as doing, there would have not been any contest for us to follow. From 1971, had dollar prices of everything soared, as hard money theory said it should have, every asset in the world would have seen hyper prices reflecting our run from this inflating currency. Perhaps not all of the wealth held in dollars would have went into real gold: some of it surely would have competed against the politically contrived paper gold markets. But, in spite of official thrusts, enough cash would have went into physical to drive it's physical dollar price to at least $1,000 or $3,000 over the last 30 years. It didn't.
The dollar did very much inflate from a printing press viewpoint and did so without massive price inflation. A 30 year repudiation of much hard money dictum. This tremendous rate of currency creation could not have been contained in a way that held off price rises with coordinated Central Bank support alone. The amounts of currency created and the build up of official assets held in CB vaults, to support the inflating currency, did not come close to matching each other. Even in a reverse fractional banking context. This one observation, simple to grasp as it is, points to another demand for fiat currency that did not exist when hard money thought was first built.
Over the last few decades a new demand use for digital money, or fiat unbacked paper money, has helped absorb most of this extra printing. The velocity of and gross increases of both private and world trade gave a use to worthless digital transactions and helped build a value that didn't exist in fiat currency before. This effect had to be real, because the world took in every last dollar that was printed and didn't dump them off to buy other real assets. A process that would have matched printed money rates to price inflation rates! I'm speaking of dollars alone, of course.
And there is more to observe that this alone.
======================
In recent society's demonstrated use of unbacked fiat currency, they were advancing a trend to use currency in trade only; while owning wealth assets outside the known money context. As society advanced and trading volumes mushroomed, the need for more digital units increased more so from their trading function than their value retaining function.
This process was rendering the whole school of hard money thought useless as a strategy to to defend one's savings from inflation: as these inflating digital units failed to create a meaningful price inflation. The expanding universe of fiat was best used to gather real wealth, at stable fiat values, each time the fiat cycled through your domain. The object became; to gain fixed value wealth in quantity instead of gaining finite wealth and waiting for it to gain in value.
This is all completely beside the point that all this action will one day destroy the dollar unit as a saving / debt denominating vehicle. We will get to that later. Right now we are gaining an understanding about this money evolution in it's basic trade use and how we should advance ourselves using it.
====================
Owning wealth aside from official money units is nothing new. Building up one's storehouse of a wealth of things is the way societies have advanced their kind from the beginning. What is new is that this is the first time we have used a non wealth fiat for so long without destroying it through price inflation. Again, a process of using an unbacked fiat to function as money and building up real assets on the side. Almost as if two forms of wealth were circulating next to each other; one in the concept of money and the other in the concept of real wealth.
This trend is intact today and I doubt mankind will ever pull back from fiat use again. Fiat used solely in the function of a money concept that I will explain of in a moment. If we inflate this currency to it's death, and I expect we will, then the world will just start a new one and the process goes on. Note the minor examples of this process in various third world currencies as they kill their own kind and advance to using the king fiat dollar. The local currency printers eventually fail their task, so the next nation state's fiat comes into use. Currently, in the major category, the dollar is giving way to the Euro. Ha! Ha! In logical progression of this we will, one day three hundred years from now, be using the new mighty Argentina whatever as the world's next great fiat. (smile)
=======================================
Understanding all of this money evolution, in it's correct context, is vital to grasping gold's eventual place in the world. A place where it once proudly stood long ago. In the time before us, fiat monetary policy, interest rates, appropriate debt levels and even speculative stock market binges will all be regulated to how a fiat does it's singular job of being just money; not functioning as a long term savings vehicle. How well that job is performed will depend on a free market trading value of gold wealth.
All of this transition is killing off our Gold Bug dream of official governments declaring gold to be money again and reinstitution some arbitrary gold price. Most of the death, on that hand, is in the form of leveraged bets on gold's price as the evolution of gold from official money to a wealth holding bleeds away any credible currency pricing of gold's value in the short run.
To understand gold we must understand money in it's purest form; apart from it's manmade convoluted function of being something you save. Money in it's purest form is a mental association of values in trade; a concept in memory not a real item. In proper vernacular; a 1930s style US gold coin was stamped in the act of applying the money concept to a real piece of tradable wealth. Not the best way to use gold, considering our human nature.
=======================
Modern society thought, has taken a step beyond our schooled understanding of money. Going beyond, by taking a step backwards and embracing a practice more real. By accepting and using dollars today, that have no inherent form of value, we are reverting to simple barter by value association. Assigning value to dollar units that can only have a worth in what we can complete a trade for. In effect, refining modern man's sophisticated money thoughts back into the plain money concept if first began as; a value stored in your head! Sound like something that's way over your
head of understanding? I'll let you teach yourself.
==================
So, you think we have come a long way from the ancient barter system; where uneducated peoples simply traded different items of value for what they thought they were worth. Crude, slow and demanding, these forms of commerce would never work today because we are just too busy.
Think again?
Lean back and think of all the items you can remember the dollar price for? Quite a few, yes? Now, run through your mind every item in your house; wall pictures, clothes, pots and pans, furniture, Tvs, etc.? Mechanics can think about all the things in the garage, tools, oil, mowers. If one thinks hard enough they can remember quite well what they paid for each of these. Even think of things you used at work? Now try harder; think of every item you can remember and try to guess the dollar value of it within, say, 30%. Wow, that is a bunch to remember, but we do do it!
I have seen studies where, on average, a person can associate the value of over 1,000 items between unlike kinds by simply equating the dollar price per unit. Some people could even do two or three thousand items. The very best were some construction cost estimators that could reach 10,000 or more price associations!
Still think we have come a long way from trading a gallon of milk for two loves of bread? In function, yes; in thought no! Aside from the saving / investing aspects of money, our process of buying and selling daily use items hasn't changed all that much. You use the currency as a unit to value associate the worth of everything. Not far from rating everything between a value of one to ten; only our currency numbers are infinite. Now, those numbers between one and ten have no value, do they? That's right, the value is in your association abilities. This is the money concept, my
friends.
Unlike the efficient market theory that was jammed down our throats in schools, we all still use value associations to grasp what things are worth to us. Yes, the market may dictate a different price, but we use our own associations to judge whether something is trading too high or too low for our terms. We then choose to buy or sell at market anyway, if we want to.
In this, we have moved little from basic barter. In this, we are understanding that an unbacked fiat works because we are returning to mostly bartering with one another. A fiat trading unit works today because we make it take on the associated value of what we trade it for; it becomes the very money concept that always resided in our brains from the beginnings of time.
In this, a controlled fiat unit works as a trading medium; even as it fails miserably as a retainer of wealth the bankers and lenders so want it to be.
================================
The American dollar has brought it's makers a lifestyle that is at odds with this new thrust in money use. A reserve currency today must allow it's value to be set solely upon it's money function, not it's function of retaining wealth. Use trends today are forcing money creation policy and money values to be determined by wealth outside the official money realm. All the while the dollar holders are fighting to stop this from happening. Free Gold markets would today destroy the current dollar exchange rates and render it's debt creation null and void as a proxy to buy us things for free. Much is at risk to the lifestyle our old gold dollar relationships brought us if gold trades free. Much is to be gained for wealth savers, today, who buy gold for it's wealth function and forget it's current dollar created price.
================
I'll go further into the other aspect of money titled; "Who said we were suppose to save this stuff"!
Next time in our talks on the evolving message of gold. Good night and thank you for being here.
=========================================
Ok, folks! I checked the schedule and there are several more of these talks coming. After those are done, we can take a real good hike and check out where the trail is going. The GoldTrail that is!
Thanks all
TrailGuide
Gold Trail Update (07/20/01; 09:57:52MDT - Msg ID:58383)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (07/20/01; 09:57:51MT - usagold.com msg#83)
Why do we need to save this stuff anyway?
Hello everyone.
Can't believe I brought folding chairs on the trail! (smile) I guess I'll also take notes with the others here. Hey, lower in the front, I can't see! OK, it's getting started. Let's hear what that guy is getting into this time.
=======================
Good evening. I hope all of you rested well into the morning and had time to consider our thoughts from last night. Today's talk is, once again, a more detailed continuation of our theme: the evolving message of gold. I'll begin now.
Again I'll read a small piece from the TrailGuide series and use some slight editing to make it more clear. From that we can move into our subject:
"""""""" Our modern gold market and the price illusion it creates is little more than a product of the fiat dollar system; a design that denominates the trading of most gold credits in a contract form. Is it a free market? Why yes, very free. But, really free, in the sense that contract supply is unlimited. Investors and the gold industry, in total, brought into this paper based gold; even though they fully well knew 90% of the trading volume was represented by only cash equity collateral on the other side. Some of it private and some of it official. Knowing that, they somehow expected that those contracts were limited in creation by the fixed amount of gold in the world. Their mistake, not the markets.
Clearly, anyone schooled in classic hard money Thought should have known that this was but another gold inflation; another version of a typical fiat gold inflation and a transitory era between money systems. This was a time to gather gold over years, not invest in the leveraged aspects of gold's new fiat versions. Nor, to buy into the gold industry that owed it's life and cash profits to the
maintenance of such a system; transitory as it was."""""""
====================
To paraphrase that TrailGuide thought let's repeat what I said last night:
""The expanding universe of fiat was best used to gather real wealth, at stable fiat values, each time the fiat cycled through your domain. The object became; to gain fixed value wealth in quantity instead of gaining finite wealth and waiting for it to gain in value.""
Anyone, that understood this new fiat era, knew that this is how you handled the evolving process. For myself and others, knowing that gold's inherent value could not change much and was historically undervalued in it's comparative value to all things, we brought gold in quantity. We tossed aside Western concerns about shifting currency prices of gold. We did not try to paper leverage a finite amount of it; as some were trying to do in betting for a higher currency price to come. A price value, by the way, that would never arrive in this era. That higher dollar currency price, so many were leveraging for, would not be allowed to surface in paper values while the present pricing system still functioned.
It was plain as day that the whole world could sell gold short; with most financing deals and future deliveries predominantly structured towards cash settlement. With little more than margin money and no gold at all; you, me and that "man behind the tree" could all help set the price of gold lower with little thought of dealing in actual physical metal. With such a system firmly ensconced in investor minds, as the one and only true gold market, only a partial percentage of the coming price rise could ever be reflected on paper; as gold's price discovery system was and is eventually inflated until it fails it's purpose.
Such is the way our gold arena has evolved in our present financial culture. This entire realm represents the conclusion of a convoluted, decades long, attempt by mankind to tie his fiat money concepts to physical gold. These centuries of gold / money tie-ins will end in a colossal breakup of the entire fiat money plus gold concept; leaving gold and fiat to trade independently of each other.
Unfortunately, it's the dollar's watch this will all end on as this gold failure is running in parallel to the dollar ending it's position as a world reserve currency.
====================================
The dollar faction's war on gold is now lost as their whole system of fiat gold creaks under a load of failing credibility. That failing credibility is being driven home as the Euro system pumps far more dollar based paper gold sales into the system than their actual physical gold sales. All the while structuring a stand alone system, aside our present dollar gold world, that will later identify gold's
pure value in traded physical only form. For all of Europe, London sales included, the BIS sanctioned Washington Agreement was little more than a settlement of some official accounts; taking their CBs somewhat out of harm's way prior to an unimaginable rise in gold values.
The US Treasury, coming a little late to this recognition, is trying to get in the game by renaming some of it's gold stocks. They are trying to show some involvement; but their political motive, to actually deed over their gold, will only become powerful enough after the real breakup begins. The great gold reserves, so many Americans think they own, will leave our shores at prices we will later think are sky high; only to watch those values double and triple again! The US will be forced to use a good portion of it's gold to just keep the dollar in the game; still, no amount of gold will make it a reserve currency again.
=========================================
The incredible simple design, of using gold in the Euro political thrust, is what has hidden it from our Western view. So far, have we advanced, that few of us can fathom gold ownership having any purpose outside using it for leverage gain and credit lending. Four fifths of the rest of the world will later grasp the Euro concept and embrace it completely.
While many in the gold industry note the harm this paper selling is doing, we can hardly fault the Euro side's reasoning behind the paper sales. It's no different than selling short a stock you think is going to become worthless. Any investors that brought these paper gold goodies, because they thought they represented real gold, can just put up the cash and ask for delivery! The trouble is that the ones that point to the Euro CB sales and yell the loudest, never had the cash to buy or intended to buy gold anyway. They played the game for more dollars, not gold! They cannot see the different political gold reasoning behind Euro faction thrust vs. dollar faction thrust and proclaim that these are one in the same. Confusing the issue for all gold investors.
And the beat goes on!
===========================
Looking back, for a moment, at our last talk about the money concept; we can see where most of our money failings originated from our thinking that gold was, itself, money. Actually one writer, on the USAGOLD forum, hit the nail on the head when he said that; "money is just a book keeping accounting of real wealth". Indeed, as we mentioned in our last talk, money is an associated value in your memory and, for help, usually recorded on paper.
We were first alerted to the "gold is money" flaw years ago. When considering the many references to gold being money, in ancient texts, several things stood out. We began to suspect that those translations were somewhat slanted. I saw many areas, in old text, where gold was actually more in a context of; his money was in account of gold or; the money account was gold or; traded his money in gold. The more one searches the more one finds that in ancient times gold was simply one item that could account for your money values. To expand the reality of the thought; everything we trade is in account of associated money values; nothing we trade is money!
The original actual term of money was often in a different concept. In those times barter, and their crude accounts of the same, were marked down or remembered as so many pots, furs, corn, tools traded. Gold became the best accepted tradable wealth of the lot and soon many accountings used gold more than other items to denominate those trades. Still, money was the account, the rating system for value, the worth association in your head. Gold, itself, became the main wealth object used in that bookkeeping.
This all worked well for hundreds and perhaps thousands of years as fiat was never so well used or considered. Over time, society became accustomed to speaking of gold in the context of money accounting. Translations became all the more relaxed as gold and money accounting terms were mingled as one in the same. It was a subtle difference, then, but has become a major conflict in the money affairs of modern mankind; as gold receipts became fiat gold and bankers combined fiat money accounting with gold backing.
=================================
Last night we alluded that humans have not changed all that much in their barter trade associations. We, today, use fiat record keeping to associate trades for every thing we want. It's in the same mental concept people used a thousand years ago. Our tendency is to freely trade and value things up and down the association scale; that flexibility in our association accounting means fiats cannot remained fixed to any real wealth. In modern money terms and concepts; that means the prices of all things must be free to flow up and down in any amount. Our modern perceptions of inflation and deflation upon debt values only serve to destroy the understanding of this basic drive.
This need to change valuations is a human trait and is the main force that keeps attempting to break gold free from modern money attachments. We inherently wish to use gold as wealth and trade it's changing value within the same universe of moving values all other tradable things exist in. However, for credit banking sake, we tried to fix gold's value into our fiat money accounting so we could lend the "money concept itself"; lend money in lieu of real things. As just said, gold could never be attached rigidly in our accounting money concept because that requires it's value to be fixed
============================
Our world has built fiat system after fiat system; and all upon the notion that the money concept can be lent in lieu of lending wealth. This debt, in money terms, requires said money values to remain stable or the banking system fails it's purpose. In this, governments, banks and political stylists always try to entwine gold into the money system and control it's value for the sake of money debt viability. Such is the conflict in our gold money culture today. Our dollar is just one more fiat coming to the end of it's timeline as it's basic flawed concept, again, destroys the savers wealth.
The question stands in modern times: Why do we need to save this stuff anyway? Indeed, fiat is only a trading medium that reflects our 1 to 10 value rating of any good in trade; and that rating is a just value for only a short time. Fiat purpose is maintained for those that save it for later use over short terms, not long term accumulation as wealth or for spending far in the future. Real wealth is what humans save for the future and this is where our basic instincts drive us.
The incredible explosion of fiat use, sense it became a non wealth holding in 1971, bears this out. Fiat values, the world over, reflect only our tradable values placed on all things. The dollar, nor the Euro, have any value of themselves except for the denomination of tradable goods. The mismatch that has occurred is in the massive debt our world dollar use has developed. A debt that cannot be traded back into the US economy to receive goods at anything close to today's prices.
For years American lifestyles encouraged it's political system to protect their banking /debt credibility at all costs; so we could buy others real goods without sending real wealth to pay for it. We did this in the only way we knew how; in body, mind and spirit, our political economic purpose promoted the dollar and it's debt to be as good as gold and a substitute for real wealth holdings. Even a substitute for real wealth to be held in reserve behind other currencies! Still, in parallel to this US thrust; for thirty years fiat use evolved on it's own to embrace the non wealth trading aspects of "the money concept". Leaving in it's wake a world of worthless dollar debt as people brought wealth outside the "money concept" anyway. We are, today, in a transition away from that dollar mess and much of our wealth illusion will passing from our grasp in the process.
In every way, society is trading it's way back to where it started. In the process, gold will find a new value from it's history in the past:
" a wealth of ages savings for your future of today."
Thank you for attending these workshops. We will continue these discussions for a time and later envelop current events into our thoughts. It's been my pleasure, good evening.
==================================
OK,,,,, I'm out of here,,,,,I think I'll just fold my chair,,,,, hike over to the Trail restaurant for some
Tuscany vintage and good Italian food,,,,, not to mention a plate full of political sauce. (smile)
Amazing how the GoldTrail connects to so many parts of life, society and economics!
Thanks
TrailGuide
Gold Trail Update (07/26/01; 18:08:49MDT - Msg ID:58659)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (07/26/01; 18:08:48MT - usagold.com msg#84)
"The wind will blow"
Hello all!
I thought it was a good idea to tack this notice on a large tree.
It says that:
"another talk is to be given here tomorrow (fri) on the evolving message of gold"...... The Wind Will Blow!
Ok,,,,, good enough for me,,,, I'll bring some coffee and snacks. Unless a storm blows in and shuts down the presentation,,, we'll see everyone then.
TrailGuide
Gold Trail Update (07/27/01; 15:20:44MDT - Msg ID:58692)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (07/27/01; 15:20:44MT - usagold.com msg#85)
"The Wind Will Blow"
Welcome to our next series of talks on the evolving message of gold. Today's discussion is titled;
"The Wind Will Blow".
==========
As our modern society has evolved, we currently use fiat and own wealth in a way that demonstrates exactly where both values stand within our lifestyles. The examples abound everywhere in personal finances. Fiat has, today, become both a trading medium and short term savings asset. This long trend, in American money use, suggest that an acceptable price inflation cost for both theses uses has been evident for some time. Even though world use of our reserve currency has made an illusion of most of our real costs structures.
The concept that wealth is the long term savings asset that most strive to attain has been evident also. Even with US taxes on it's profits, real wealth assets still overcome that disadvantage by providing far less risk in an increasingly hostile world. However, in the background, behind the enormous, overshadowing expansion of public and personal debt, this new meaning and usage's of wealth and fiats are difficult to perceive. Most of what the general public has come to believe as real wealth is simply forms of paper ownership of wealth producing industries and paper claims on real assets that can never be recovered at today's values. This is true in most all items, not just gold.
Aside from Western cultures taking this debt expansion far beyond their means, our trend of buying things and not saving fiat currency, long term, should have sent a signal to money officials; but it didn't. Dollar inflation was exploding to meet a new fiat use demand and not creating a price inflation to match: a process that should have encouraged our economic engines, the people, to save the currency itself. In hindsight, they were spending it; not to escape future run-a-way price rises, rather they were doing what comes natural; trying to save real wealth by buying it. Even if they were buying mostly a value illusion.
======================
After 1971, the entire dollar system was too far down the debt road to change step; that is to allow all forms of real things to fluctuate up and down in dollar value. This would have required gold to rise into several thousands, even then! They were still trying to maintain dollar value for the viability of expanding dollar debt and that meant changing was not an option; especially for a system built on debt that required the illusion of a stable gold price. Still, the nature of fiat use was changing the world over and would have grave consequences for our entire dollar support system years later.
========
Contrary to Western thought, our use of money has not changed since time began. It's true that "Gold is the only money the world has ever known"; as long as one accepts that barter is the only trade the world has ever known. In the context of barter, gold has been our only money. Once we stamped gold with official unit sizes, perhaps done a thousand years ago, money became an associated value used as an intermediary between uncompleted barter.
We barter goods and services, today and anytime money has been used, using a bookkeeping system of value comparisons; all done to better convey a sense of values between ourselves. All done in the confines of what we call our world economy. The use of fiat today involves half a barter trade; then keeping the currency as an associated value and hoping it doesn't lose too much of that value before we complete the other half of the transaction. This works in a high speed trading environment where fiat is not saved long term.
I'll read an item from our last talk:
"""" Fiat purpose is maintained for those that save it for later use over short terms, not long term accumulation as wealth or for spending far in the future. Real wealth is what humans save for the future and this is where our basic instincts drive us. The incredible explosion of fiat use, since it became a non wealth holding in 1971, bears this out. Fiat values, the world over, reflect only our tradable values placed on all things. """"""""""
==================
The money concept, we have recently spoke of, did not suddenly evolve! Nor did our dollars suddenly become unbacked credit items after 1971. Well before the dollar's separation from gold all money bookkeeping, and all it's forms of currency moneys, were actually credit items.
Circulating cash dollars, official metal coinage and other previous fiats, themselves thought of as a final hard payment, were never anymore than a known tradable value. A trade credit owed to you as long as one held the money unit. Even with gold backing the dollar unit, money's value was always in it's exchange for something else we wanted. Gold values behind these fiats was used to represent some fixed tradable value the money unit stood for; not to be the money unit itself.
Gold, in ancient trade, could not become the thought of money as we know it today. It was the end of a barter transaction; two pieces of gold for one cow demanded no other trade to complete the deal. The use of money back then did not entail nearly as much associated concept, it was the
use of outright barter. Today things are, indeed, different!
================
What purpose is there in understanding the descriptions and perceptions in these last few talks?
Because there is a conflict between society's basic desire to use our modern money; or "our modern concept of money as it has evolved".
First:
Our natural drive to use money, in lieu of barter, is to use a simple bookkeeping credit trading medium that keeps track of our barter. This requires our embrace of the fact that every item in our universe of wealth constantly changes in value. Even as gold changes in value; both up and down.
Second:
The unnatural convoluted drive, of many, is to use this same "money value concept" to borrow real wealth "use"; instead of borrowing the actual wealth itself to gain said "use".
This second item comes under the heading of trying to get something for nothing and is everywhere in Western Thought!
If we lend an item of real wealth, say a tractor or chair, it's future value is unimportant to the lender as long as the real item is returned. It is the "use" that is lent, not the money concept in the form of a trading value. In this process we recognize that, because the value of things change, the debt to be repaid is the item of wealth, regardless of it's higher or lower value. Only it's "use" changed hands during the lending and repayment of debt. All is well.
However, lending the value contained in our modern money concept exposes the lender to uncertain gain or loss of tradable value because it's the value that's being lent, not the actual "use". Without some way to lock down the value of money, over long periods of time, the industry of money lending (banking) fails it's purpose and risks it's profit if tradable money value falls.
This is the trend that is killing the dollar today.
It's not that price inflation may erupt; it hasn't done much in 30 years compared to the money printing volume. Our demand for more fiat has absorbed most of what we issue.
It's not that the massive dollar debts won't be paid; they will as long as it's in more cash. Payment in real wealth, such as real goods and services from our local economy, was never an option. We simply couldn't do it!
The risk is; that our money system requires dollar and debt stability for lenders and said banking system must regain that lent tradable wealth close to par. Further, the money system is backed by this debt being stable; so without said stability the currency system fails.
The contrast here is that modern fiat use trends are advancing towards flexible fiat money. Not so much flexible against other currencies; flexible against all other wealth, including gold. The more a currency can adjust to commodity and industrial use demands, the more in demand that currency reserve system will be. The immovable past structure the dollar is built upon demands it's values be defended with complete hyperinflation if necessary. Prior to EMU, there was no other reserve currency that the world could run to. Now, the dollar cannot deflate and take the rest of the world into deflation with it. The tables are turned; deflationary policy will not defend the dollar. Only inflationary policy will. Make no mistake, we are not calling for price inflation to end the dollar's reserve rein! We are calling for "inflationary policy" to dethrone it while said hyperinflation follows.
So begins and ends our long march that attempted to steady the value of modern money by firmly attaching it to the value of gold.
So ends man's march to fix the value of gold, even during short term use, while we still naturally wish it to change.
========================================
To comment on the present
The very changes needed in our money universe, today, would kill dollar demand by devaluing all dollar assets in super higher gold prices. The debts and the dollars would remain; only 90% of their current illusion of value would vanish. Hyperinflation in prices of all wealth objects will be the workout result of this process. As such, opposing dollar political motive will force the US to give the markets what is needed; both gold and gold prices beyond imagination.
As has been mentioned by others in several public meetings;
"The world is in the midst of what could well go down in history as the first recession of this modern era of globalization".
We must point out that this is lacking some breath of perspective: in reality this will be a dollar based recession and one that the world will repulse from by advancing the use of a more flexible currency unit; the Euro. A unit that will match modern needs for fiat by marking the value of all debts as they change; by allowing a free market in gold wealth to exist outside the "money concept".
=====================
The captains of oil have not seen all of this in a vacuum. Selling irreplaceable oil for a currency entering the end of it's trend was not an option. Gold prices were lowered in exchange for a short term wait; to see if Europe could do what was intended. They did.
The next step will be an orderly exit from dollar use; a somewhat destruction of all dollar gold pricing; and a super price inflation for US dollar assets. We are not at the end my friends, we have just come to the beginning. For physical gold advocates that understand the difference between real wealth and leveraged real wealth, the time arrives when values are reflected with the speed of the wind. Truly, in our time,
"The Wind Will Blow".
At our next talk, we will move completely away from concept and into current events.
Titled "Political Gold - how much of it is ours"
Ladies and Gentlemen, thank you so much for listening tonight. I look forward to our next meeting.
Good day!
================================
Thanks all,
still hiking the path
TrailGuide
Gold Trail Update (07/31/01; 21:14:44MDT - Msg ID:58864)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (07/31/01; 21:14:43MT - usagold.com msg#86)
Political Gold
Hello All!
Looks like I'm here tonight to escort everyone to their seats,,,,,,,,the guest speaker will be here in a min.,,,,,, Uhhh??,,,,, could I see your tickets please?
All right, it's starting,,,,,,,,,,,,,,
============================================================
Good day to all our guests and thank you for arriving early. Our talks are an ongoing progression on the subject; the evolving message of gold. We will begin now.
=============
Starting off, I'll read an item or two from the TailGuide series: A Tree In the Making. Please read again this portion of his series for clarity.
"""" But, greatness is within those that know life is dynamic,,,,, what we do is never certain and subject to the leadership of nature. That person will spin the Bonsai on a table for hours, days, and even years as he styles what will work for that period of growth,,,, perhaps planning the timeline in a currencies development. A cut here,,,,, a change there as time grows the next limb. In the processcreating something we all recognize, can use, understand and enjoy,,,,, yet,,,, different in many ways from what we knew or saw before. """""" -----
""""""Understanding the events that got us here and how they will unfold before us is what this Gold Trail is all about. Everyday our political world is pruned like two Bonsai, in an effort to shape a more healthy future. The dollar tree is failing because it needs so much dead wood cut off,,,,,, but if it is pruned it will not resemble the mighty Bonsai it once was! The Euro tree is growing as it is being styled,,,,,, what it will look like we have an idea,,,, but not a complete picture. It's hard to imagine that anyone can look at an early Bonsai and shape it's future some 20 years out? But, that is exactly what someone did with a tree on the roof of the Monkey Bar in Hawaii; indeed, this is what has been in process for so long with our changing money system.""""""""""
======================
My friends:
We are, today, at the very conclusion of a fiat architecture that is straining to cope with our changing world. Neither the American currency dollar, it's world reserve monetary system or the native US structural economy it all currently represents will, in the near future, look anything as it presently does. Trained from birth, as all Western thinkers are, to read everything economic in dollar system terms; we, too, are all straining to understand the seemingly unexplainable dynamics that surround us today.
Western governments, the public and several schools of economic thought are attempting to define and explain what extent these changes will have within our financial and economic world. Most are all striving to see this as the next plateau of dollar integration, carrying us onto the next level; looking always higher for what this next level will bring in social, financial and lifestyle enhancements.
Governments look for a correct policy mix; one that will serve their political motive when the next cycle moves higher. The public looks for the next great investment or industry to be employed in; to enhance their well-being all the further. Economic schools, as represented by both the financial industry and the academic areas, all want "their take" on the next cycle to be seen as the correct one.
After all, this is just one more in a long line of up and down economic cycles that are so common in American economic leadership.
However, all of this positioning has left out, this time, one important, almost unthinkable question; what if current trends are moving away from using our dollar reserve system? Even further, let's ask; what if the last decade's efforts to prolong dollar use, both internally and worldwide, have inflated it's worth to such an extent that it's now vastly overvalued? Asking more; what if the architects of a competing currency system and the major players that helped guide it's internal construction, all took a hand in promoting the dollar's extended life, it's overvaluation and it's use; so as to buy time for this great transition in our money world?
================================
Most average Western Citizens and dollar use nations have pined everything on this ongoing dollar system. Their jobs, debts, investments, retirement and lifestyle expectations all depend on the dollar always being what it is; a world reserve money that buys them more than one can create during a lifetime. As true as that thought is, few understand the implication or even want to consider their life without a supreme dollar. But, just as a large portion of world inhabitants are accustomed to using more than one currency; those of Western Thought would have trouble grasping the perception behind this simple offering:
------ I once walked across the globe and brought two persons together. I gave each $1,000 US dollars in cash. The first replied; "You can't be serious? Is this as good as it gets?" The second replied; "Oh my, thank you! In all my years of life I never knew it could be this good!"------
One reply is the product of a life with unquestioned debt availability. Where the majority of debt users cover their burden with an ever growing supply of new credit money. In this economy, not to mention this person's perception, almost free debt can purchase anything and everything.
The other is the result of local money debt being built upon foreign dollar debt reserves and covered with payments of real wealth from the sweat of one's brow.
===============================
Within this theater of thought, we can begin to picture how Western perceptions cannot grasp our on going curve on the money road; much less a twist in the Gold Trail! Follow with me, if you will, as we expand some thoughts from TrailGuide's last talk, a few days ago.
"""""" As our modern society has evolved, we currently use fiat and own wealth in a way that demonstrates exactly where both values stand within our lifestyles. ---------- In hindsight, they were spending it; not to escape future run-a-way price rises, rather they were doing what comes natural; trying to save real wealth by buying it. Even if they were buying mostly a value illusion.""""
The purpose of this portion was, I believe, to deliver food for thought. The conflict, for investors and thinkers to discern, was in the evolution of fiat dollar use. While practically every historical evidence pointed to a devaluation of the dollar, within US border use, dollar use demand expanded along side of very little price inflationary pressures. Still, even with years of low inflation numbers, a cause that traditionally drove money into long term savers pockets, investors rushed to seek their perception of real wealth. Fulfilling an ages old drive to own "something" for the long term. As the final conclusion, partially phrased above, pointed out; most everyone tends "to read everything economic in dollar terms"; even buying into paper dollar versions of a value illusion. To this end, Americans have continued to save for serious consequences by buying every kind of dollar dependent real asset they can; stocks, business, debt, farms, industrial metals production, etc. and expecting it all to act as real wealth. Some of it will, most of it will not!
Further on from "The Wind Will Blow":
""""" After 1971, the entire dollar system was too far down the debt road -------- the nature of fiat use was changing the world over and would have grave consequences for our entire dollar support system years later."""""""""""""""
Having evolved a dollar reserve money system into a straight debt fiat currency, without gold involvement, the entire dollar function became locked into one basic premise: for the system to survive, it's core reserves of debt values had to remain somewhat price stable as the currency inflated relative to GDP. Over the next 30+ years their dollar controllers, the fed and treasury, thought they had a fairly good handle on the system as they managed banking reserve requirements. To their amazement, it turns out today, that digital use demand was the best function that supported their efforts all the while; by increasing the world's use and need for currency. Had they understood this modern economic function early on, they could have somewhat printed the currency outright with almost the same result while arriving at today's destination. They could have let gold float, not to mention they could have skipped a large portion of the debt build up that will now end the
dollars timeline.
Most, if not all, of this perspective is only now coming to light as the Euro builds pressure on the dollar. The better architecture of the Euro system is leaving little room to adjust as the US fed must singularly act to inflate their local currency in a historically new and unprecedented fashion. The actual debt machine that built much of America's lifestyle is now going into reverse as it destroys it's own currency; one built upon a stable debt system with locked down gold prices.
Going further and paraphrasing what TrailGuide writes:
"""""""It's not that price inflation may erupt --------- ------------It's not that the massive dollar debts won't
be paid---------The risk is; that our money system requires dollar (goods prices) and debt stability -------- so without said stability the currency system fails""""""""""""
Without an international floating gold reserve pricing, to balance against their devaluing debt reserve, the entire dollar banking system can only rely upon extreme dollar inflation to float it's accounts. Price inflation will have to be ignored. To this end the group of dollar supporting countries, we refer to as the dollar faction, has locked itself into a box. It must find a way to float gold prices with a gold reserve that only drains away if world gold price rise.
===================
Current events
===================
There once was a time when citizens owned their trading vehicles; all wealth, including gold, was free to barber. Then ruling authorities stamped most of those gold trading vehicles as "legal tender" and made them money objects; dependent upon value associations instead of barter. No doubt to collect taxes as running nations was a costly affair.
Extending the point:
Around 1975 Americans were given the legal right to own gold again. Many did not then, nor do they today, see any reason to own gold as their treasury has gold with which to back their currency. The logic of this perception is clear and simple to the casual observer. However, take out one US legal tender dollar and read it's cover carefully? Does it say it is your currency? Is your name on it?
The US dollar is a note, a security that specifies a value the holder is owed. You may keep it or spend it or even trade it, but it does not belong to you. It belongs to the US Treasury and is created by the Federal Reserve; both political entities. What a person owns, when holding a dollar, is the value that note is tradable for; the value that is owed to you and said dollar note represents. In
every way it is real money; in that it's value is in it's tradable value association; not of itself. If the dollar itself had real value, it's use would constitute barter; not the use of TrailGuide's money concept.
If you think you own the currency of this country, understand this one item: the political entity that the dollar is owned by, can cancel it's legal tender status at any time. There by removing your use of it's holdings!
Extending further:
The only gold Americans ever owned, prior to 1933, was the very gold coins they carried. They owned it because it was a true barter vehicle. Even if the Treasury removed it's legal tender, "money aspect", from said gold coins, you could still barter the value contained in the gold. By 1971, Americans owned no gold and all gold held in the name of the US Treasury was "Political Gold" owned by the government.
The perception, by some, that because the government owned the gold, the citizens own it too. This flows from a similar convoluted logic; that stock holders of publicly traded gold mines own the underground gold. In reality, if the mine was dissolved, both processed and reserve gold would be sold and "Legal Tender" money would be distributed to it's owners. Not gold.
The same is true for Political Gold. All gold held by the state, unless distributed first to it's citizens, is subject to world wide "Legal Tender" political claims first. The precedent for this is clearly revealed as the Swiss must ship their "Political Gold" to others first; while sending currency to satisfy gold claims against it.
As the IMF has recently extended this protocol, swapping gold at different values, to settle political debts; this action further justifies the US being able to use it's gold to defend it's currency's settlement function. Aside from the US minting eagles for public sale and it being against the law for gold reserves to be sold outright to open bidders.
==================
To draw a conclusion from this "current event":
Deep Storage gold
Americans have the right to buy and own the "Wealth Of Ages". As events draw to a close upon dollar use, we can expect outright use of America's "Political Gold" in restraining the speed of it's currency's burn. To compete in the new architecture of a Euro System currency, unrestrained trading of gold will advance it's dollar and Euro price significantly. With political pressures to tax private physical gold trading as low as possible, expect enormous taxing and windfall profits rules to impact all other forms of gold ownership. Indeed, long before such changes are in place investors will rush to be in the correct ownership place, well ahead of the fact.
Of Fiats and Gold:
It is ironic that both roads have curved as time moved on. One returns to it's roots, as a wealth value today, few have ever know. The other becomes the money a modern future requires. Both on a different path and building for our better future.
Next time I will discuss; what one should realy expect to see when all paper burns; and how close political events are saying we are to that fire!
Thank you for taking the time to come here and listen to these talks. I wish you well and good night.
=======================================
Ok, everyone please leave the Trail as you found it,,,,,, no trash or drinks. (smile) We will meet here for his next talk when it comes. I'll comment in between.
Thanks
TrailGuide
Gold Trail Update (8/2/01; 12:52:56MDT - Msg ID:58957)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (8/2/01; 12:52:55MT - usagold.com msg#87)
Walking On Solid Ground
Walking On Solid Ground: Hiking the Gold Trail
Ok! We have quite a crowd here,,,,,,, this morning. This must be an overflow from our recent Talks Series. There are more of those scheduled next time; but today we will go for a hike. As many of you already know, and some newer visitors are finding out, there is a price to be paid to hear mine and others Thoughts. Yes, you have to use your legs and mind, because most of the gain here comes over time and distance. If one want's the whole story you will have to walk with us and watch it unfold. Out here, there is no waiting at the Trail Head for someone to return with a complete report. The understanding is found within yourself, while completing the trip, not just at the end.(smile) I'll speak loudly so those in the back can hear. Packs on,,,, keep up, now! Let's hit the trail!
====================================
It's a clear day, today, and easy to see how the world is changing. Once we thought that everything in the name of "dollar money" was an anchor of financial stability while our organic planet changed; we now know that even our money systems have seasons, too. Watching evolving events with a Physical Gold Advocate based perspective, over this last decade, demonstrates this perfectly. Indeed, from here on out our world now has two major fiats and their competition is going to prove that anchors do not hold because they are attached to the weight of gold; rather money is made
stable by moving it's value with gold.
Look to the left
The gold perspective, most people have employed, is little more than a shadow of what the political gold world, in it's immensity, is all about. Shallow Western perspectives and their view of gold, being just it's dollar price, proved over and over how dangerous such a narrow thought can be to one's wealth. Making the object of one's gains to be "the inflating denominator of wealth", fiat money, instead of "the real wealth itself", gold; leaves us at the mercy of any political money evolution! When seasons change, as gold trail hikers know they always do, the risk becomes the "question" so many gold bugs have grappled with this last decade; can my investment in the price of gold keep up with and purchase an equal value of physical gold itself? For most, it has not, as paper leverage hacked away at their wealth held in paper gold assets! The future may be even less kind!
An investment in the gold industry, not just mining, can be nothing more than an investment in a business that balances fiat production cost against fiat market prices for it's product; gold. The return, if any, is always in fiat and places this portion of one's wealth smack on the tracks of more political manipulation. Today, we can see this play out all over the world as fiat returns in the gold business head towards and even sink below zero. The investor watches this fiat illusion of his net worth drain away while the opportunity to build a real wealth of "bullion ownership" escapes yet again.
Playing the various paper gold investment games is no different. When the time comes, when the dollar season really changes, dollar denominated paper gold bets will do well if they can just break even. The real wealth owner will stand aside this burning of paper and watch his coins and bullion explode hundreds of percent ahead of any fiat paper gains. This is what the real world of a gold advocate is all about.
=====================
Onward the trail,,,,,, look off towards the end
I, myself, own gold for one purpose; to save a real wealth that's in addition to all the other things I own. I save it this way because it outmaneuvers, sidetracks and escapes all political money evolution. It does this in such a way that I will later have the same relative amount of real wealth for my future needs. Or, in the very worst case, have close to the same as I have today. Still, the upshot of this is an additional aspect that is good for me and bad for so many players trying to leverage gold. Pause and see this:
-----The very political motive that is moving our world away from dollars has, for some time, changed the dynamics of straight bullion values. In the long 20 or 30 year process of evolving our currency world, the time span required to do the job has rendered gold far below it's worth; "relative" to all other things. When the seasons change, as mentioned before, bullion will first have to find it's true "free from money involvement" price in the world. From that point it will return to do it's best job of marking the historic process of falling currency values; unproductive political currency inflation. It will do this so well because physical gold will return to it's roots. It will again be recognized as the best,,,,, "lowest taxed",,,,,,"barter wealth",,,,, the world has even known! Low gains taxes will not allow it to replace digital money; as will it's inability to duplicate fiat's efficiency.
Rather gold will accentuate fiat use by becoming a real wealth reserve that compares fiats against each other thru a single arms length medium. Unable to control this gold medium, because it is no longer money and subject to credit entanglements, national fiats will resort to competing against each other. The free markets as we have always wanted them! First worlds, third worlds, all worlds; trading for what they can do, not what they can control.------
Back walking again
During this short and slight moment in time, a decade of years in the making by our human measurement, physical gold has become an investment of a lifetime to persons like myself. A wealth of ages that will not only transport my savings forward, during fiat evolution, but will increase my total wealth many times over. From there it will defend that value against all comers; all fiat price inflations!
This is the opportunity paper traders forsake as they bet on a train that's running away from them.
====================
Further we walk
I have tried to point out that the gold concept today is not one of just matching dollar price inflation in the future. If that was all we owned gold for, one could have covered that with several stock market games years ago. If $500, $700 or $800 was the goal, it becomes just another commodity bet and there have been plenty of other leveraged "plays" that already beat that. No, buying gold today is a political move; one that will add political sized returns to this gold advocate's wealth.
For this reason we outline the political "fiat against fiat money nature" of the battle more so that the gold to money battle. In the future, for any currency to compete against the Euro, native gold markets will have to trade at least in equilibrium with a Euro based free gold price. This will further pressure "political money posturing" to relinquish all fixed gold relationships with their moneys; fixed legal tender gold coinage included. This could become a very convoluted affair for gold coin investors. Especially if Euroland eventually mints a free floating gold coin; not dissimilar to the K- Rand! Not to be confused with Robert Ms 100 Euro or Germany's new offering; perhaps it will be
called the "Euroland" gold coin? In fact, I bet it will (smile).
Coming to a nice clearing
While I am not unloading any of my various Eagles, maples, etc.,,,,,,,,, I want my involvement with gold to be as free of fiat involvement as possible. As an extension to this, all out of circulation, old gold coins make an excellent contribution to this thought. A powerful thinker once said that old gold coins will one day be treasured as forms of antiques in addition to their gold values. Few enough in circulation to carry extra value, but not rare enough to dissuade one from selling or trading them in the future.
To this end that same gentleman made a statement that embellishes the entire trail of Thought we walk today. It inspires countless large and small private gold advocates with a warning for a future we must prepare for and a call to stand guard!
I'll say the words again to end our hike.
--------
"when a thousand hungry lions fight over one scrap of food, small dogs should hide with what's in their belly"
"we watch this new gold market together, yes?"
-------
The sun is going down and it's time to camp here for the next speaker. Something about burning paper; I won't want to skip that one. Thank you each and every one for walking with me on this very fine day (smile).
TrailGuide
Gold Trail Update (08/02/01; 17:31:53MDT - Msg ID:58966)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
MK (08/02/01; 17:31:52MT - usagold.com msg#88)
Huff. . . .puff. . . .huff. ... .puff
Hello, FOA. I've been climbing all day, and just when I think, I'm not going to quite catch up, I round the bend back there and see you sitting on that rock just beaming at me. It is good to see you, my friend. Good to meet you here on the Trail.
I want to mention before all else that this hike we are on now -- The Message of an Evolving Market -- is nothing short of phenomenal, and would like to take this opportunity to ask your permission to use a portion of it in the upcoming News & Views. We've decided to go to a larger quarterly publication to augment all that's going on here at USAGOLD. You might be interested to know that Randy just informed me by e-mail that just today he has registered several new posters including "gold-hearts" from Germany, Paraguay and Sweden. Now if we can just get them to post! It used to be that investors would call and say that they were inspired to act on the basis of something they read in the newsletter. More and more, their interest is piqued by something said or published at USAGOLD. So, we change with the times my friend, and this too is a message from an "Evolving Market."
Like some at the main forum, I took an interest in the Legal Tender discussion from the Political Gold post and, it is something you said in that essay, that brought me over here for my first post.
This I find very interesting:
". . .All gold held by the state, unless distributed first to it's citizens, is subject to world wide "Legal Tender" political claims first. The precedent for this is clearly revealed as the Swiss must ship their "Political Gold" to others first; while sending currency to satisfy gold claims against it.
As the IMF has recently extended this protocol, swapping gold at different values, to settle political debts; this action further justifies the US being able to use it's gold to defend it's currency's settlement function. Aside from the US minting eagles for public sale and it being against the law for gold reserves to be sold outright to open bidders."
This idea of a gold drain from the U.S. to those countries holding copious amounts of U.S. Treasury paper, as a form of settlement, is something I, like you, see as a consequence of a potential post-1971 U.S. dollar order breakdown. You are quite right to imply that gold mobilizations are often related to settlement issues including currency breakdowns and possibly even gold carry trade settlements (wherein the central bank acts as a gold lender of last resort). For the press and some economists to underplay the role of gold in international settlements is to throw a cover over the truth and maintain the fiction that gold's role is secondary, when it is not. It is in fact primary and the cases just in the last decade are legion. The Argentine treasury for example is devoid of gold. So is Brazil's. So are a dozen other countries which have experienced currency problems. (Leaving aside for a moment, all the hapless third world countries who have entrusted their gold to the gold carry trade.) In Q1, 1998 S. Korea -- a country that uses 25 tonnes of gold a quarter -- exported 250 tonnes of gold in defense of its currency! The sure route to rebuilding a currency is to somehow associate it with gold. So we have Russia and the Chevronet, the Islamic Dinar movement, and gold reserves in the ECB.
Along these lines, I think I probably speak for many when I say I am intrigued by your statements about a future U.S. gold mobilization in defense of the dollar. Somehow I think there's a great deal more to your thinking than what is contained in that paragraph.
I guess my major question has to do with the settlement price in such a situation. At the current price, I think the 8000 tonne U.S. Treasury hoard would be sitting in Brussels, Tokyo and Beijing within 30 days of the mobilization's announcement. With something like $6 trillion floating around the globe, few would dismess that concern. Could you give us some details on your thinking?
Well, I need to get back down the mountain, FOA. It's getting close to dinner time and that cloud rolling over that mountain to the West looks like it might spell trouble.
Good to be here, good sir. I always enjoy these discussions. MK
Gold Trail Update (08/02/01; 21:35:34MDT - Msg ID:58971)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/02/01; 21:35:33MT - usagold.com msg#89)
Few words can describe.....
Well,,,,,, my goodness,,,,,, just when I thought everyone had gone home,,,,,, here comes MK!!
Ha! HA! I hope no one sees us right now because what a pair we make up here. You are gasping for air and I'm lost for words??
Not to worry for long. After a rest your golf conditioning will show up and good speech will overcome my surprise! (smile).
TrailGuide
Gold Trail Update (08/04/01; 08:54:49MDT - Msg ID:59030)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/04/01; 08:54:48MT - usagold.com msg#90)
Marker on the trail: Does the game begin?
http://www.thetimes.co.uk/article/0,,5-2001243118,00.html
Hello all
While work is in progress to reply to MKs question; I thought a few markers on the trail, from time to time would be helpful.
======================
From The Times WEDNESDAY JULY 18 2001 (see link above)
Misery deepens for US high-tech industry
BY LEA PATERSON, ECONOMICS EDITOR
-----A SHARP contraction in US manufacturing has pushed American industry into its longest uninterrupted period of decline for almost 20 years, figures revealed yesterday. -----------
------industrial output dropped a larger than expected 0.7 per cent in June. This was the ninth month of contraction, the longest unbroken period of decline since 1982.------------
--------- Capacity utilization fell to a 18-year low of 77 per cent. -----------
-------- "Another sharp decline in output confirms the damaging impact of a strong dollar, excessive inventories and weakening sales," Matthew Wickens, at ABN Amro, said. -----------
==========================
Unlike past periods, when America rolled over the top of another economic cycle, this fall away should begin to develop into a permanent downhill slide! Never before in our post 1971 financial cycles have we defended the dollar against a reserve rival while trying to adjust world financial policy during a building recession.
This time the world may slow somewhat as we fall away; however, they will not have to follow us into an inflationary money policy that floats all ships in the same reserve currency ocean. America is, for the first time, about to experience the impact of such an arrangement.
As the "strong dollar" gives way, the effects mentioned above by Mr. Wickens, will fold over time and again in a historically new inflationary trend the likes of we have never seen. Each time our output declines the resulting "excessive inventories and weakening sales" will not overcome the effects of ever rising prices.
Just as our dollar's exchange rate falls, placing us in a better competitive position, localized price inflation will mute that effect. One again producing the calls for lowering "the too strong dollar" from that level. Over and over the game will cycle; producing a kind of inflation we have never known! A kind of price inflation that cannot be overcome with "typical accepted" inflation investments of the
past.
This time, investing in "the industry" or "business" that produces inflation hedging investments will not work enough to do the hedging job. From oil companies to coal companies,,,,,,,, home builders to lumber producers,,,,,,, carpet makers to gold miners: costs will outrun their ability to create an after tax profit.
Even leveraged games of paper will fall victim to political moves; aimed to protect local currency use.
The world is changing and we are on the right "Trail" to understand it all. The "burning of paper" wealth is coming and one of our future talks here will describe it all so well!
Thanks TrailGuide
Gold Trail Update (08/06/01; 09:37:26MDT - Msg ID:59092)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/06/01; 09:37:25MT - usagold.com msg#91)
Gold Mobilization
Hello again MK!
Glad you could meet me here in Denver and share this next presentation. We can talk a bit before things get started. Yes, it was very good to have seen you up there, on the trail, and thanks for complimenting the first parts of this "message". MK, you also presented a question to me that I'm sure was rhetorical: permission to use some of these works in News & Views?
Oh my! You build a forum rock for Gold Advocates to stand on and present their case from; then you ask such a question???
Sir, you are the epitome of what gracious courtesy strives to become! Yes, please do use even the smallest portion of offerings as you desire and do feel free to disagree with any point in them. (smile)
Michael, the reason for our city meeting, today, was so we can step behind this closed door and listen in on a discussion there. It's in progress and we are suppose to be here, so let's go in now.
===================================================
Hello to everyone that just arrived.
In this talk we are shifting the schedule a bit to delve into a political money issue: as the question was presented by Mr. Kosares earlier. He is the gentleman that's just entered and is standing to our left. Not only is he also an educator of gold issues, to the public at large, he is also a keen observer of human dynamics in the political sense. So, this particular area of thought was the attraction for his being here. It's a privilege and honor to have him sit in on our discussion.
===================
To start off:
Someone once asked me if all of our thoughts were on the level? Well, at a young age I often thought there was difference between fact and opinion; then I learned that everything spoken was opinion and anything written was fact! A few years later, someone told me that anything spoken is not true and all things written is opinion! Last year I was told that everything is an opinion and nothing is true! Ha! Ha! So, today, I state for the record that all of our Thoughts are Absolute fact!(smile)
====================================
We are asked to expand our thoughts pertaining to "a future U.S. gold mobilization in defense of the dollar" and elaborate on what "the settlement price in such a situation" could be? These truly are exceptional, thought provoking questions, and will require an equally dynamic explanation. I'm assuming most or all of you were at all of these "message" talks and have our past, long running, basis of context in mind. To understand our position, one has to grasp how position we came to know it.
We begin.
=======================================
I am sure most Americans are uncomfortable at the prospect of our stores of Political Gold being shipped off to defend the dollar. Uncomfortable as this may be, unprecedented it is not. During most of the years of an active Gold Exchange Standard gold was routinely "shipped off" from nation to nation to satisfy foreign demands. Not just entirely to defend our dollar's value; the aim of these operations was, then and now, more so to keep the dollar in settlement use.
Yes, the dollar's continued use for trade settlement and the defense of that valued use was always the aim of these gold trades; but even below this is a deeper meaning to this function.
========================================
From a dollar point of view, shipping gold then, and now, was in the same context of defending one's currency on the exchange market. In the context of this use; gold was not sold as a commodity, rather it is clearly traded as an officially earmarked "good" that can further support the "tender status" of internationally held dollars.
The psychology of "gold exchange" is more manifest in our "legal tender" function than most strive to understand. Standing aside, for a moment, from our previous discussions concerning modern fiat demand's impact on the dollars recent value; we look more closely at the logic of this "tender"
function.
============================
Local dollar currency, circulating within US borders, is given political value because of it's legal tender designation. Dollars outside our domain, while often sharing the same trading value, are not covered by that law. Even though, through protocol they are commonly accepted, they are not legal tradable money; unless they re-enter the US again.
The process of defending the dollar by shipping gold is, today as much as yesterday, an expression of maintaining political "Legal Tender" status for international clientele. Indeed, as an ongoing trade deficit in the US has become irreversibly structural to the integrity of the local economy and remained in this function for many years; the legal tender function of foreign dollar reserves comes very much into question. It begs this suggestion: does the international dollar have any internal political force backing it's value overseas? This question can only be addressed by shipping gold in a legal "currency defending" process.
============================
During most of the "gold exchange standard" period our dollars were nothing less than contracts for gold in storage. As we all know, to defend such a non expiring gold contract nature, as the dollar was held then, one must sometimes perform as the note is written; and gold on demand was said performance. Indeed, the circulation, use and retention of international "dollars in reserve" was built upon both; it's old gold deed form, that could be traded for gold, and it's use as a viable "legal tender" vehicle, to buy local US goods.
Over the last decade or so, with both it's gold deed function and "legal tender" function blocked by political motive and structural economic forces; the currency can and must be defended through other means. Further, our international dollar has degenerated away from being even basic "money"; to being little more than an international derivative of derivatives; that represents currency swaps, gold loans, uncollectable foreign debts and still more gold swaps. In this end stage of failure, our external dollar arena must eventually be defended with performance, if demanded; if it's use and credibility as an international settlement medium is to continue. With the US now clearly proceeding into a recession, and doing so with the competition of another reserve currency for the first time, local price inflation will prove irresistible in undermining international dollar exchange values.
If foreign political motive decides to no longer support international dollar denominated gold derivatives with physical delivery or refrain from using gold as a trade settlement; the US will have to choose between shipping it's gold or seeing all international dollar structure and use fail! In it's place, Euro system currency would easily become the main reserve as soaring gold values would
replace "tender" value lost from dollar failure.
We think that: given ongoing lifestyle enhancements afforded to US citizens from the current dollar's value as a reserve currency; the loss of this standard is of greater importance than the loss of gold! Local political motive will answer this foreign dollar value challenge by using gold as somewhat of a bribe for letting the air out of the dollar slowly. The result will be a massive dollar price rise in gold that performs over several years; as the reserve function transition politically begins.
The nature of the current dollar based gold market, outside US borders, is perhaps leveraged 1,000+ to one and will require ever greater physical gold shipments, at ever higher values, to maintain dollar credibility. This failure process will draw US gold stores out in the form of "currency defense"; not as gold sales aimed at keeping the price down. A purely legal defense use of politically owned gold.
Still, gold shipments will always be far behind the price curve and only be done as last resort crisis operations. Further, the rise will be so intense as to provoke a complete cessation of all derivative gold trading within US borders. Long before this occurs traders, both foreign and local, will bail out of our gold derivative markets even as physical prices rise. A spot physical gold market will be all that remains. Something local citizens will cherish and paper brokers will deplore!
===================================
To date, these gold shipments have been ongoing but have not, yet, involved original US political owned gold. The bullion involved has been metal subjugated from foreign third world countries through dollar for gold swaps; executed thru US currency protocols. Mr. Kosares is correct in observing how foreign gold is drained from these nation in trade for debt relief and crisis support. In classic form, we will be the next in line to be "swapped out" also!
I expect that "our" crisis will begin by year end as the Euro foundation becomes complete in the issuance of real currency. The new designation of our gold reserves is a classic signal that a major crisis is coming. A suspicion will eventually arise that native US money growth, now approaching 20%, will accelerate in hyper form to save it's banking function and political gold stores will not be
available to redenominate the currency. The very thought of a loss of reserve status for the dollar is on everyone's minds and will soon break out into open currency warfare. By then; the Washington Agreement's restrictions of bullion supplies will begin to bite as players demand gold and rush from the failure of contract credibility. By then: it will become known that the only way to stay whole, without bullion relief, will be in aligning one's self within the Euro Zone of financing. Those that started early in resolving some of their political gold debts will be the first to receive backing. England? Swiss? The rush will be on!
How far will gold rise? At first blush, foreign dollar assets will not, in any way, return home! They will circulate offshore; either from lack of understanding of the issues, a thought that things will be worked out or from foreign exchange controls aimed at protecting the failing US economy!
These reserves will circulate until their gross exchange value simulates a figure that can be reasonably expected to "buy something" within the US; ten cents on the dollar could be a guess? However, keep in mind that the fed will be printing like mad, local prices will be soaring and no one will be chasing dollars like they do today. I expect that physical gold trading, within the US, will follow far behind foreign trading for a time. Perhaps a $5,000 to $15,000 ratio will be a thought as dollars within the US will be worth more than outside. Still, the relative value of physical gold will eventually converge as a trading standard is reached.
Keep in mind that there could be a gap between physical prices, reflecting reality, and futures prices crashing. The Western gold world looks to the current paper gold price as the value for bullion; even though it is but an illusion. A market trading 90% derivatives and 10% physical cannot, in any stretch of the imagination, produce a gold price relative to real things.
===========================================================
Our understanding
For years academia has gone round and round about how the US illegally went off the "gold-is-money" standard. Well, I know that and so too has most every hard money person has delved into this area. All of those days are never going to be reworked to change history; so why waste our time on a wrong that's not going to be brought to justice today? Well, we can look at some of those particular points so as to find clues for a better context concerning our subject.
As you know we have discussed, at length, how gold is not money; rather it is the very best form of physical wealth barter the world has ever known. We also separated money from gold by defining money as a "retained value thought"; a thought that exists between both sides of a barter transaction as an "associated tradable value". In this, the fiat dollars we know and use today; represent today modern money in the very best of this money context.
The result of such thinking draws a conclusion that fits perfectly into our fast paced world. Fiat currency, unbacked except by it's legal tender statutes, is a fine immediate trading medium for short term buying and selling. It's best saved for short term use, only, and spent to buy any and all forms of real wealth. Of course, if it's printing production extremely outpaces even basic GDP, it's use value eventually falls.
The problem for our dollar is that it has entered into this modern "single use" fiat world, as a currency promoted as "real wealth saved"; and the use of gold, as a parallel long term savings vehicle, is dismissed and cloaked in an illusion of price. No fiat can serve it's modern function while becoming entangled between these opposite forces of use; a wealth for saving and a money for trade.
Many times officials have tried to mitigate this cross function failure by storing gold in government control and printing fiat in a straight ratio to gold owned. Hopping to keep gold values static so as to retain fiat values and keeping a fractional reserve banking system viable and expanding; while having said stable fiat values stabilize it's debt that's held as a reserve. In the real world this cannot function as all prices and values are dynamic. Including gold and all forms of money!
Further, we hire auditors to count the gold and the money to make sure they match. Counting the gold is easy, but counting fiat, in it's endless credit functions and derivatives, time and again proves an impossible affair. Eventually the stores of official gold must have their value "controlled" thru fiat credit entanglements; all for some ridiculous balancing act.
It is, and will be, far better to just hire auditors to do the best they can to count fiat issuance as an independent function. Then, allowing gold wealth ownership to return to the public and freely trade outside it's old official money and credit entangled realm. There, gold can be used to "tender" in the form of real purchasing power; as the real wealth trading item it always was.
======================
Concerning this subject; we find collaborating evidence to this chain of thought from the fathers of our constitution. Note that they do not mention gold and silver in the context of money! Few hard money people or historians have thought seriously about the context of this wording, or how the minds of that era were thinking. Consider the word tender as one version of the dictionary presents it:
Middle French; tendre to stretch, stretch out, offer ------ also --------- to present for acceptance.
----Article I, Section 10 of our Constitution says, "No state shall make any thing but gold and silver coin a tender in payment of debts."-----------
Clearly, even then, gold was connected in thought with being something one "stretched out" and presented for acceptance. These are common perceptions from a time when much of what one brought and sold came to them through barter. Even though these early colonies were closer in time to our modern use of money associations; their lives were still very much in an era where, perhaps, 50% of trade was still outright barter!
Truly, in their perceptions gold and silver was a "good (tender) in the settlement (payment) of trade (debts)" and no state should make anything else to function in that context. But what about something outside this context? A medium of trade different from bartering gold wealth for goods?
-----Would American fiat money one day be issued as a "medium" in trade, more so than using gold as a "tender" in barter? ---------------
=====================
The common use of fiat currency is and was a natural evolution into using "money", in it's pure associated value form, as a medium for the trade of goods; far removed from using gold in a "real good barter" context as a "tender in the (final) payment (settlement) of trade (debt).
American money law may have been desecrated over and over again; however, nothing in our original thinking precludes us from designating "the money concept" as a "legal tender" in trade along side gold or silver as a "tender" in trade.
In reworking the definition of "note" as it appears on our currency, perhaps it is the money our system never had time to allow it to become. In another time and another place, fiat will be know as:
-a written promise to trade at a determinable value a variable sum of other goods to the bearer--
The difference between use function and value function, of our money, was most surely convoluted for political gain and banking credit interest. Truly, American history has shown we did a terrible job of rendering this ages old gold barter function useless in a modern world. Mostly because of our complete lack of money vs. barter understanding. Today, we enter the "end time" thrashing of such a currency experiment.
Thank you for attending and I thank Mr. Kosares for his presence here. Sir, please drop in at any time.
=============================================
Back on the trail again to watch it all unfold! (smile)
Thanks (MK)
TrailGuide
Gold Trail Update (08/07/01; 09:44:00MDT - Msg ID:59141)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/07/01; 09:43:59MT - usagold.com msg#92)
(No Subject)
Hello all!
Thought I would ramble a bit while we walk this 1/4 mile circle in my back yard,,,,,, here on the trail. Only a few here today,,,,,, so we can talk quietly .
Couldn't help but notice that MK posted some of his fine points from ABCs of gold! I saw it while attending that discussion, yesterday, in Denver (smile). You know, for people that lead a hectic life, that book is all one needs to understand the meanings of gold. Just do as the thrust of the text implores; put yourself on your own gold standard and save some of your wealth in gold. After reading all of it, it's a real simple concept grasp. Don't put off the necessary things required in your daily life so as to buy more gold; that just puts you in the same category as most sweating goldbugs! Saving gold, over the long run, will allow one to enjoy the wealth when it truly does appear. This, perhaps, was the centerpiece of Another's thrust, so long ago: just buy gold as you are able and as the understanding comes! Perhaps that just proves that the ancients were smarter than we are today; they owned gold and didn't need to hear all the politics.
Yes, I have had a copy of the ABCs for some time (smile). Only, I had to go through all kinds of antics to acquire it. You know,,,, CPMs private club of clientele gets all this stuff real easy, while guys like me have to pay a small fortune for it on the black market! But well worth the cost. (huge grin) Wait a min.,,,,,,,, I'll pull a copy out from my backpack. I'm only doing this because we are few here today,,,,,, I'd get thrown off the trail if anybody finds out.
I like the part on page 69:
---------- The American political process today is characterized by the politics of debt -------
Well, here,,,,, pass it around so you can read it.
Good stuff!
You know,,,,,,,
I think far too many people try to think of gold as an investment instead of an asset. Aside from modern financial doublespeak, with brokers of every kind and nature trying to sell us leverage,,,,,, the old world ideals of real property and ownership imparted a much more stable meaning to the term, "asset", than we place on it today. In Old French; assez ------ enough------ implied a holding that was appropriate. Or Latin (1531); ad to ,,,,,,,,,,, implying a build up of things.
Truly, the return on an asset, placed into use, was a return of the value of that use. Not an increase in the value of the asset. We watch gold today and see it only as an investment that returns little. It should be seen as an asset we can acquire at a very low real value. In such times we should consider this action as an opportunity to ------"ad to" or the building up of things.
You know,,,,,,,,,,
We are all trapped in the society we came into this world with. The history of mankind is an endless record of "us" coming to terms with the the people we love,,,,,, but their politics we cannot stand! The ideals are always there to reach for but for the life of "us" our little group, in our little time frame, cannot come together to reach for the right thing. Strangely enough, within this America, there go I.
A friend once tried to insult me in a toast; referring to me as the best and smartest mutt he ever knew. Ha! Ha! I lifted my glass, in front of all, and drank with a loud gulp. Then returned the compliment; "to my family and friends, from the best dog in the pack"!
All that: from a fifth generation, typical Anglo-Saxon that was born in the "USA". I walk this land, upon which my home is owned, and tear for a future we may face. Oh the irony of it all; that one day my time will end with a pocket full of gold and left fist full of Euros,,,,,,, whist a sword drawn to defend this soil of my fathers. Against all comers,,,,,, here stand I,,,, America or nothing,,,,,, my country, my sole! To the attackers I say " these are my people,,,,, so right and so very very wrong".
You know,,,,,,,,,
The seasons change, so do I
and the better part of life is in knowing why
I'm off the check the path!
TrailGuide
Gold Trail Update (08/09/01; 10:27:20MDT - Msg ID:59268)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/09/01; 10:27:19MT - usagold.com msg#93)
"everything to do with a gold bull market"
Hello again!
I'm just placing another "rather large marker" here on the trail for us to follow all the conflicting stories that come out; especially as all this moves into a higher gear. Note the first news item and how it reflects the paper pusher view of dollar advocates; all taken from USAGOLD NEWS FEED:
=====================
US euro futures data could spell currency trouble
-------Europe's single currency could be headed for trouble if data on U.S. futures traders' positions is any indication. Recent figures from the Commodity Futures Trading Commission show that speculators have been fortifying long positions in euro futures for almost two months, a situation some see as a contrarian sign of an imminent decline.----------
-----The Commitments of Traders report showed that speculative interest was nearly flat the week of June 12 and has steadily built up to the current long bias, analysts said. "It is a fairly bearish signal,----------------
------ But the fate of euros really hangs on the performance of the U.S. economy, since the gains in euros have been largely a factor of weak dollar fundamentals.------------
http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news&news_id=reu-n09239372&feed=reu&date=20010809&cat=USMARKET
end
=====================
Note:
The last item above could just as easily be printed in Another format that better indicated the new financial market ahead:
------ But the fate of DOLLARs really hangs on the performance of the EURO ZONE economy, since the RECENT LOSES in DOLLARs have been largely a factor of STRONGER EURO
fundamentals.------------
Puts a different view on it doesn't? Now read a bit of reality news from today's item:
================
Dollar Falls to Three-Month Low as Extended U.S. Slowdown Seen
-------- New York, Aug. 9 (Bloomberg) -- The dollar fell to a three- month low against the euro as a report of rising U.S. jobless claims reinforced concern the world's biggest economy won't revive anytime soon. ------- Since a Federal Reserve survey yesterday showed stagnant growth the past two months, the U.S. currency has shed about three- quarters of a cent versus the euro. Today's report that more workers than expected filed claims for unemployment benefits last
week drove the U.S. currency to the day's weakest level. --------------
------- ``People are questioning the relative strength of the U.S. economy'' after the Fed survey ----------
----- U.S. corporations would likely welcome some further weakening in the dollar, as gains in the currency make their products less competitive overseas. General Motors Corp. Chief Financial Officer John Devine criticized the government's strong-dollar policy yesterday, telling reporters that the currency's strength -----`is destroying the manufacturing competitiveness of this country.'' -------------
-------- The euro started trading in January 1999 at about $1.17, and since falling below $1 in February last year, it has twice failed to sustain rallies above 95 cents. ---------------
-------- Today's euro gains also came as the European Central Bank said in its August monthly report it will ``closely monitor'' whether interest rates are appropriate, a signal it may be preparing to lower borrowing costs as soon as this month. A rate cut may bolster expectations for
a rebound in European growth. -------------------------
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Currency%20World&tp=ad_uknews&T=news_storypage99.ht&ad=world_currency&s=AO3KXQxWhRG9sbGFy
end
====================
Note:
Notice our General Motor's CFO's comment --------- "the (dollar's) strength is destroying the manufacturing competitiveness of this country.'' -------!!!
This should read --------"the Euro's weakness is destroying the manufacturing competitiveness of this (USA) country.''
This item of relative logic is further confounded in that the Euro is hardly week! American media, being dollar biased as it is, has used every moment to educate us to see how far the Euro has fallen. When it fact the Euro has only fluctuated in a tight band; just below a currency level that shifts "American real productivity" competitiveness toward the next largest economic block. Giving the world financial structure every reason to move into Euros to denominate and settle trade.
Consider this item: ------ The euro started trading in January 1999 at about $1.17, -----------
Using this 1.17 figure blurs our reasoning just enough to allow one and a half years to pass without anyone complaining it's fall. We are positioned to look at this process as --" oh see the poor old Euro, it can't hardly get back onto its feet". Consider that that 1.17 figure was nothing but a "nano-second" spurt, more similar to an IPO (initial public offering); relative to almost no actual
goods trading. In it's beginning setup we can see that the real range, from hindsight over a period of time, was between around 98 and 83. This is the area where the ECB/BIS wanted the new currency to occupy in its war to unseat the dollar. Yes, the Euro is only down some 10% as of today! This is not the sign of a failing reserve system of 300+ million people!
Further:
Also note the above -------- Today's euro gains also came as the European Central Bank said in its August monthly report it will ``closely monitor'' whether interest rates are appropriate ------
Suddenly the tide has turned and the ECB is seen as ahead of the curve while still in a non inflationary management position; relative to the dollar. Going forward everything the fed does will be seen as stroking US price inflation. Perhaps this is the reason Another said that Mr. D, of the
ECB, can and is about to leave. His hard job is done! Only to see Mr G, of the Fed, beating a hasty retreat! Truly, no one wants to reside over the transfer of our US horde of political gold as prices soar,,,, both of gold and all local goods!
Even further:
This not only has "everything to do with a gold bull market", it has everything to do with a changing world financial architecture. And I have to admit: if you hated our last one, you will no doubt hate this new one, too. However, everyone that is positioned in physical gold will carry this storm in fantastic shape. This is because the ECB has no intentions of backing their currency with gold and
every intention of using gold as a "free trading" financial reserve. None of the other metals will play a part in this.
Clearly, the coming drastic constriction in dollar financial trade will trigger a super "print press" response from the Fed. They will not be pushing on a string; rather picking up the ball of twine and throwing it! All the while using the old 1980s "monetary control act" that opens their use of
magnetizing almost anything and everything. They won't be adding reserves to the banking system in the future; rather buying any and all debts from anyone that needs fresh cash. Believe it!
For the first time,,,,,,,, our industrial production, along with the demand for industrial metals like silver, will fall away even as hyper inflation in prices takes hold.
For the first time,,,,,,,, demonstrating that no other asset is equal to gold, even though promoted to be!
When the coming paper illusion price of gold is destroyed, sending its trading price way up and way down, several times, before shutdown,,,,,,,,,,,,,, the thinner paper markets of lesser metals will be absolutely devastated. Yes we will see $50.00 silver in our time,,,,,, $50.00 for a hundred ounce bar,,,,, that is! No less a relative price decline for the other metals is in store. Even if these
actual dollar numbers prove incorrect,,,,,, relative inflation adjusted prices will show the exact same ratios to gold. The gain will truly be in gold!
Gold,,,,,, a wealth for changing times,,,,, a wealth as new as it is old!
thanks
TrailGuide
Note to MK:
Nice change, going to a quarterly paper! According to
Will Rogers "everything I know I read in "News & Views"!
errrrr,,, I think that's what he said? (smile)
Gold Trail Update (08/09/01; 10:39:27MDT - Msg ID:59272)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/09/01; 10:39:26MT - usagold.com msg#94)
(No Subject)
Oh boy!
This item below:
----- magnetizing almost anything and everything ----
should read:
---- monetizing almost anything and everything---
But then,,,,,, you already knew that? (smile)
Gold Trail Update (08/12/01; 11:16:51MDT - Msg ID:59405)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
MK (08/12/01; 11:16:50MT - usagold.com msg#95)
A couple comments. . . .
Greetings, my good friend.
I would like to first of all thank you for your very kind words. It is you -- not I --that deserves the accolades. At every turn in this trail you bring us new mental challenges and new understandings of the economic and financial times in which we live. I have always said the message of FOA and Another, whether one agrees with it or not, inspires a deeper meditation of world affairs -- beyond the pablumatic representations of CNBC, et al. How many who read these pages could say that they have not walked away with something valuable each time they walk this Trail? That's why I am proud -- make that honored -- to sponsor and be a part of this page. A humble bow in your direction, FOA.
So now you mention that Another believes that the ECBs Mr. Duisenberg is on his way out and it appears that you also take seriously the report from News Max that Alan Greenspan may be close to retirement as well. These would indeed be major changes on the world financial scene that I do not think the markets, including gold and stocks, have even mildly factored into current pricing.
So now do we see what the French might do with the ECB?
I have always thought the French central bank to have a Gaullist heart no matter what was happening in the French politicial sector. It has been unwavering in its position on gold leases (strongly against) as well as its position on gold reserves ( strongly for). Of course, the dream of a united Europe was seeded and nurtured by Charles DeGaulle, the same man who said:
"Indeed there can be no criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence."
DeGaulle was a strategist and masterful politician. He understood that gold was the key to breaking away from the dollar for Europe, and that idea has stuck in European politics, particularly French politics, from immediately after the War. He led the move to repatriate European gold from the United States in the 1960s (at $35/oz). He led the move in forming the intellectual beginnings of a United Europe. And now France and Germany together can dictate the direction of the EU confederation. It seems that gold has staked out inviolable territory in the EU thanks in large part to the French Gaullist influence within that country, and it will be interesting to see what a French head of ECB might do next.
Those among us who treat the suggestion of a gold drain from the United States to defend the dollar as unpatriotic should recall that the United States and Great Britain have not been the victims of a hostile takeover with respect to our lost gold reserves. As a matter of fact, the United States and Great Britain invited it, indeed acquiesced to it -- just as Great Britain invited and acquiesced to the drain of gold reserves over the last few years. All justified -- then and now -- by one lame-brained analysis after another. I have always said that nations do not ship gold reserves because they want to; they ship gold reserves because they have to. Usually, as you point out, for political reasons -- and the gold becomes "political gold" meant to buy time or prevent one politican or another from being blamed for the collapse of the dollar. So we sink ever deeper every day (with more and more dollars piling-up overseas by the day, the result of a massive U.S. balance of payments problem) with no apparent solution on the horizon. Let's make that no apparent solution save one: The threat of destroying the U.S. export market if its trading partners fail to hold U.S. government debt. Why wouldn't the U.S. gold reserve come into play under such circumstances. To be sure, there are those who believe it already has! (Though I, for one, do not relish that possibility.)
Back in 1997 when I was still writing in mainstream publications, MoneyWorld magazine published an article I had written titled: "The Real Story Behind Central Bank Gold Sales." I wrote the article having suffered through dozens of articles published in the mainstream press that the "central banks" were selling gold and would continue to sell gold. This, they maintained,was the weight hanging on the gold market that would not let the price go up. We should keep in mind that this article was written long before bullion bank involvement (leasing and carry trade programs) in the gold market became common knowledge and widely blamed for gold's woes. My goal was to destroy the mythology that "central banks" as a group (in its entirety) were pro-gold sales because they were not.
I started with a simple division of central banks. I put the United States, Great Britain, Canada, Australia and New Zealand in one camp and called it "the Anglo-American countries." I put Germany, France, Switzerland, Italy, Netherlands, Portugal, Spain, Belgium and Austria in the other camp and called it "the Countinental European countries." I then tracked their gold reserve holdings as groups from 1965 on. The results were incredibly interesting. They also spelled out in very clear terms that it was not the "central banks" who had been gold sellers through the period but the Anglo-American group. In order to understand what is really going in the gold market, I see this division an an important demarcation point.
Total Anglo-American reserves went from 15,754 tonnes in 1965 to 9197 in 1996 -- a loss of 42%. The U.S. went from 12,499 in 1965 to 8138 by 1996. Of course much of that came well before Nixon closed the gold window in 1971, but some was also sold in a series of futile gold auctions in the mid-1970s. Britain went from 2012 tonnes in 1965 to 717 in 1996 (and now 350 tonnes due to the latest round of gold auctions to kick off the 21st century.) So Britain's gold reserve is almost nil. It now holds 17% of the gold it did in 1965 and explains the virulent anti-gold posturing by the British press, politicians, international bankers and bureaucrats. But if Britain's gold situation seems remarkable, Canada's has been even more prodigal. It now holds 9% of the gold it had on reserve in 1965. And the policies of currency destruction continue in that country virtually unabated.
Continental Europe in the same period went from 17,740 tonnes to 16,007 -- a drain to be sure but nowhere near what the Anglo-American countries had sold. Since 1996, the only anomaly in this pattern has been the Swiss sales -- one I am still scratching my head over. You will note that what was lost in the Anglo American camp did not show up on European central bank balance sheets. Some of it showed up in the Asian official sector, but the majority of it, it would seem, has gone into private hands -- a trend I suspect will continue given the history of monetary management over the past 100 years on both sides of the Atlantic.
And then there is always the potential for secret acquisitions on the national level -- operations too sensitive to reach the International Monetary Fund's annual blue book tallies -- something I would not totally discount. I recall Toyoo Gyohten's comment of several years back. He is "the" heavyweight in Japanese banking circles and former chairman of the Bank of Tokyo. "The size of our gold reserve," he said, "really did affect our status in international monetary discussions." Japan for the record holds 750 tonnes -- up from 292 tonnes in 1965. That statement was made prior to the famous Iyaru Hashimoto (former prime minister) comment that Japan would sell U.S. Treasuries and buy gold indicating that the at the very least, the Japanese at the highest levels have discussed gold ownership.
So you see, my dear FOA, you are absolutely correct about the potential for dollar settlement for gold. One thing I have learned over the many years I have studied the gold market is that events seem at time to move glacially only to rev up just when you least expect it. The British sales are part of a long term program tied to the policies of John Maynard Keynes and the defense of the dollar. That era is coming to an end with the recent rumblings by the Bush administration to reduce the influence of the IMF (a creation of John Maynard Keynes along with the World Bank and the rest of the Bretton Woods system).
I too foresee a new international financial architecture wherein gold plays a key role.
I would like to hear your thoughts on the potentiality of Alan Greenspan's retirement before going further. Do you see this as part of a larger picture related to euro introduction? Or just good timing for our Fed chairman. Knowing Mr. Greenspan's affinity for gold as pointed out in the Gilded Opinion piece "Gold and Economic Freedom" -- an essay which he recently said he would not change a word of.
I would point out to our readers that if I am understanding you correctly, and I think I am, you think that these gold movements of gold out of the United States would occur at very high dollar prices -- a currency windfall for gold holders. Are you also saying that at the same time buying gold in the United States would be problematic?
Do you believe there is anything the United States might do to prevent an extraordinary gold price?
I know, and would point out to our readers, that this is all conjecture, but it is interesting conjecture.
Gold Trail Update (08/13/01; 07:24:31MDT - Msg ID:59481)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/13/01; 07:24:30MT - usagold.com msg#96)
Political Gold 2
Hello MK and everyone!
I thought I would add a few thoughts now; before working on several new "talks" and a long absorbing reply to MKs post here.
OH boy,,,,, did everyone read J. Turk's latest? I did and am carrying a shovel with his name on it. (smile),,,,, if I ever run into him I'll use it to cover the guy up with praise and admiration! Fine work and great conclusions! This should just about cap the story as it breaks open.
Of course, the US still owns it's gold and has yet to ship any of it's official stocks of the same. A quick check of the ounces held in storage will confirm that. Any physical gold that has "walked from our accounts", to date, came from some other supplier. We contend that this bullion was the
same stores that were "lifted" from other 3rd world countries in return for US support during their various banking and currency crisis of the 90s. See back as few talks.
Now, the big question is; will the US stand behind it's international "legal tender" obligations and ship it's official gold when serious crisis and currency support protocols demand it? Our record isn't good in this area. In 1971 our dollar held an even closer connection to gold that any of the modern IMF "paper gold" substitutes today and we still closed the window! Still, we think that at this time in history, given the Euro competition, US "political gold" will be shipped to keep the dollar in play. Nothing illegal, mind you, just basic currency defense as needed.
Several years ago, many gold bugs and gold advocates missed the path as the trail turned. Something I pointed out at the beginning of these "message" talks. As most of you will no doubt agree, almost all gold discussion still centers around "the dollar's war with gold". Truly, the evolution of this story will be how that war ended then and now the dollar's war with the Euro began! A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market. Inflating
the gold market place with so much "paper gold" that we would eventually have to bankrupt ourselves just to keep the dollar in the war game against the Euro.
Because Saudi Arabia is a member of the BIS and marks it's currency to the SDR, we are going to be hard pressed, for oil reasons, not to ship against demands. Perhaps, oil's continued settlement in dollars is directly tied to gold,,,, Do ya think?
Further, much of the current credit in our modern gold market place is backed with this "legal tender" of the IMF. As we have contended for years, 90% of the entire modern
dollar gold market is a paper game first, and that will burn as the dollar loses it's position as the reserve currency. All these Giants that are holding physical gold and credible paper" are going to win big as escalating gold values displace their dollar asset base. There are a few of you smart cookies out there that "NOW" understand what we have been getting at for such a long time.
We have said all along that how much credibility your "paper gold" holdings enjoy will depend on just how important you are in the scheme of worldly economic and political affairs. Last on this list, I can assure you, are all the paper traders on various public and "industry use" gold exchanges. Did I once hear some paper brokers scoff, on various internet forums, that real gold supply was what was moving the market,,,, and that all this talk about paper gold was a joke?? Hmmmmm,,,, the trail is soon to become very, very quiet on this account. I say into this silence, plan your "asset" moves wisely as the future is now directly before you!
Yes, the war now is between the Euro and the dollar! The Washington Agreement placed gold "on the road to high prices" as it signaled a phasing out of Euro support for our American gold values. How fast gold can, now, rise will gauge how much staying power the dollar has in all this. If there is any gold war now, it's to be in just how fast the dollar gold market can disintegrate into worthless
IOUs! So, don't count on this destruction of our paper gold market to mark the real value and availability of physical gold; that ratio will split somewhere down the goldtrail. This action will scare most harden gold investors to death; especially the ones in leveraged gold stocks and lesser white metals!
Ha! Ha! What a revelation and change of events for paper gold players. What an exciting day and future for physical gold advocates! To paraphrase and old 1970s texas oil commercial:
------ "If you don't have a gold broker, get one! You'll love doing business with Centennial! ----
(smile)
TrailGuide
Note: MK, an idea for your company T-shirts:
a picture of a loan convertible car going west down the highway with the top down,,,,,, the rocky mountains, downtown Denver and a sunset silhouetted far in the distance,,,,,,, the wind blowing thru the passengers hair,,,,,, a small HY sign to the left with " ROUTE USAGOLD.com" on it,,,,, under it all the caption,,,,,,
------ The fastest gold freeway in America! ---------
Ha! Ha! Ho! Ho! I'll take a dozen large! (smile)
Gold Trail Update (08/18/01; 12:57:32MDT - Msg ID:59879)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/18/01; 12:57:31MT - usagold.com msg#97)
(No Subject)
Hello again, everyone.
Yes, I am still working on several posts. Some of then involving the current SDR discussion and how its evolution has changed the face of modern bullion banking. Randy Strauss offered a very good map of how these international paper gold assets came into the world. I'll draw a few more lines on the paper to show where that map leads us today.
No, our bullion reserves are no more ours than navy war ships are ours. Still, both items are fair and legal assets to use in defense! One in war and the other in currency skirmishes. Truly, it is coming to that.
I am between entertaining and talking to some thinkers about what comes next, politically. Hope to get some of this into words next week. Have a good weekend (smile).
TrailGuide
Gold Trail Update (8/22/01; 05:18:55MDT - Msg ID:60066)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (8/22/01; 05:18:54MT - usagold.com msg#98)
From the USAGOLD news site
http://www.bday.co.za/bday/content/direct/1,3523,913236-6078-0,00.html
I'll be back a little later with some "coffee cup" discussion and views of MKs last post here (and much more) (smile).
Here is one that most dollar bulls never saw coming:
=================
German economy improving: Ifo
------ MUNICH - The German economy showed signs of improving on Wednesday after the widely-followed Ifo index of the western German business climate rose unexpectedly to 89.8 points in July from 89.5 points in June. ----------- Analysts had been expecting a sharp fall in the index, which is conducted by the Ifo economic institute and is closely watched by financial markets. ------------ The euro broke the psychologically-important level of $0.92 shortly after the figures were released, rising to its highest level in five months. ------------------ end
======================
The war between gold and the dollar has been over for a while now. The action, today, is between the dollar and the euro arena and this is what will break the price lock on gold. Leaving gold bugs with a lot of questions that ask why this: both systems will strive for a higher currency price for gold; one doing it because they have to; the other doing it because they want to! The casualty on this battlefield will be the world gold market as we know it. A market caught between how Western perception thinks gold's price should be "discovered" and at what price level trading in physical gold craters the entire paper structure. A structure of American based "paper gold".
We have been saying for some time that this will be "the" show to watch unfold; but only if your holdings allow you to stay still in your seat as it happens (smile).
back later
TrailGuide
Gold Trail Update (08/22/01; 09:25:52MDT - Msg ID:60077)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/22/01; 09:25:51MT - usagold.com msg#99)
Part 1
Hello MK!
In your message # 95, posted here on the trail, I saw a nice invitation to engage in some "conjecture" and a warm cup of coffee. Sounded too good to pass up. Actually, the seasons are changing, high up here on the trail, and it won't be long before cold weather demands much hot coffee to follow the path. Later, I'll be at my little house in Florida as winter arrives in the northern half of the globe. As you know I live in several places, but our USA is the only real home. (smile)
=========================
Mike,
You mentioned DeGaulle's famous quote that ended with: "as the unalterable fiduciary value par excellence". He made that statement in 1965, but Pindar also said in 522-442 BC: "Gold is the child of Zeus. Neither moth nor rust devoureth it."!
Do you see the common thread linking these thoughts; neither time or lineage brought these gentlemen to think of gold as money. Ha! Ha!, I just had to throw that in there (big grin).
Actually, referring to your chain of thought,,,,,, I don't think we can be so sure that the Gaullist of our reference period can be the same as the ones in power today. Our Charles, the one that passed on in 1970, was a military man and even taken prisoner once. His thoughts on gold and money were molded from a harsh war experience and an extreme political interventionism common in that era. To this end, his positioning had to promote French nationalism, even in money affairs, if his Fifth French Republic was to hold up. To his credit, and far more important than his gold stance, he planted many of the seeds we see as trees today. Back then, he was leading France to be part of a greater regional economic power; early on he stroked Russia, China, even Iran and Iraq. Even though none of these nation states remotely resemble, then, what they are today; the thrust was an
ideology to unite the economies more so than the powers.
Mike, in this, you are so very correct to note his "forming the intellectual beginnings of a United Europe". Still, the hard money people and leaders, we grew up with, have all moved on. The ones now in "positions of influence" and "outright power" are our very piers. Many are not far from our age group and in this; the range of life experiences, so similar to ours, so shape modern money thought. Yes, they studied the same history books we did, but have evolved to embrace different forces shaping this, oh so, different world. If you want to see the Euro Gaullist of today, just look into a mirror and try to reach for their same understandings. Its not hard to do.
How long will this era last; how much will it all change the dollar's timeline; can EuroLand ever be the same animal it once was??? Questions that only time will answer. For us, today, we follow their progress for our direction and understanding.
In a recent Financial Times article out of Paris, Jacques Chirac (French Precident) and Lionel Jospin (prime minister) were both noted for talking about the coming ECB succession. One of the few points they agree on (few indeed) centers around the fact that a Frenchman will head it next. Still, more so than knowing who will lead; understanding the political strategy that's unfolding is what counts. Seeing all this with my eyes, we can envision the posturing very clearly.
As this reserve currency transition, or perhaps war is a better term, moves on; the ECB must shift it's thrust with a leadership statement. Wim Duisenberg provided an excellent political cover for selling into the American paper gold market; as it exists around the world today. His national pedigree demonstrated a distinct flavor against gold as a monetary reserve. Truly, the ECB could not be seen prompting all their big bullion banks to short American paper gold, if they ECB / BIS were serious gold advocates. In our time of Western thinking, who could understand such a contradiction? But, politically, the game was to serve two goals; temporally support the dollar for trade settlement until the Euro was on its feet (sending gold prices down); and inflating the American lead gold market until it burst from over issuance. A good chuck of this ties into the SDR
issue that I'll get to later.
Now,,,, with the US vs Europe economic war in full bloom today; and Euro money policy in a position of leadership; and Euro circulating currency about to begin; it's time for a shift of thrust. Jean-Claude Trichet, or at least someone of his same pedigree, will usher in a new position;
"physical gold is a great asset for private and official sectors to save"! Bamm!!! Suddenly, our decades old paper gold game will run smack into a new idea; "Euro promotion for private gold ownership" and "high gold prices are good"! And more importantly; this concept will be presented from the controllers of the next reserve currency!
Contrast this against a whole world invested in gold as a hedge,,,,, by owning all of an American sanctioned paper gold market that's inflated 1,000 times beyond physical reality. (smile) Makes a physical gold advocate feel real good inside; like this warm cup of coffee! (double wide smile)
This is the new Gaullist; a variant time traveler who arrived from failed official gold wars that pitted currencies against bullion. Never again!
[more]
Gold Trail Update (08/23/01; 07:32:50MDT - Msg ID:60129)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/23/01; 07:32:49MT - usagold.com msg#100)
(No Subject)
Apologize to all,
I was about to do a series of
posts yesterday and
ran into some communication / sending problems.
Have everything written up but can't pull it up from my location.
Will
post as able.
TrailGuide
Gold Trail Update (08/24/01; 10:54:31MDT - Msg ID:60192)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/24/01; 10:54:30MT - usagold.com msg#101)
Part 2
Hello all!
Well,,,,, with my replies drifting somewhere in cyberspace, I asked our speaker to return and address a whole cross section of recent developments. Besides, this guy always could hit the mark better than me. (if I don't find those documents, some heads are going to roll for sure) (smiling with a medieval ax in my hand). OK,,,,, let's chair up to a nice round table talk:
==========================================================
Good evening Mr. Kosares, nice of you to spare some time to join us.
Historically it's appropriate for French thought to be, once again, influencing Euro Zone gold policy. In an Alpha / Omega analogy, their pro gold stance should prove to be a fitting conclusion of our 30 years of gold suffocation. It will also be most satisfying, I presume, for them to see gold valued and used independent of money function and American's "dollar foreign policy".
I agree with you, in that gold has its own territory staked out within a broad range of EU economic and currency initiatives. In time, this policy will be much more clear and further entertain a close scrutiny from all other domestic powers. I submit that this day has always been on record "as coming"; even though noone could mark it prominently on their calendar until now.
===
We enjoyed your dissertation about "the threat of an official US gold drain". It records, not only the numbers, well, but also points to long running common political attitudes concerning gold and its prominent position in international currency valuations. This recognition of gold being an important official currency measure, is something Western Gold Bugs have consistently longed for. Now with it openly acknowledged thru outright manipulation, these same thinkers object to it's being used in a similar manner as currency? It seems they want gold branded "important"; only as long as such branding makes the price go higher; not lower. In their minds this somehow places bullion in a different category from currencies that are routinely forced up and down for political objectives.
Ah yes, to this end I must present a exert from my good friend who cannot keep track of his files (smile):
---- You know,,,, I look at the last several decades of modern paper gold trading and cannot help but think of Arizona (state in the USA). Throughout the region they have roads going over old stream beds labeled "dry wash / subject to flooding". With this context I can construct a good analogy with American gold investors.
A guy begins building his house of wealth in the middle of one of these dry washes. A known gold expert comes along and tells him; "hey buddy, that old stream bed floods from time to time". The Bug says,,,, yea I know, but I only plan to be here for a quick trade or two,,,,, I know it's unstable and washes out every so often,,,,,, taking all paper values with it. I'll just catch some good sun between the rain,,, I'll be ok.
Well,,,, years go by and the rain comes and he gets washed out a few times more that usual,,,,,, but the guy still stays,,,,,, even thought the paper gold price keeps getting washed ever lower. Then,,,,,,, a huge unending wash comes even when no rain is falling. After seeing his house of wealth float away with a falling paper price he decides to walk upstream and find out why all this water keeps
driving the gold price down??
By god,,,,,,,, miles later he finds a government dam that suddenly started releasing tonnes of water all the time. He raised hell and said it wasn't right,,,,,, but the man at the valve said they aren't doing anything any different than what this type of "paper market"-- I mean stream bed,,,,, was built for. This is a derivatives market, son,,,, meant for betting on the flow,,,, not building a house from it!
If all the public is just speculating on when the rain will fall,,,, why is it so wrong for the government to do it,,,,,, and help maintain your lifestyle to boot. Besides, if all your gold talk is so right,,,,, then we are catering to gold advocates and making physical prices more reasonable???
But the Bug says,,,,,, hey, this isn't a natural market,,,, I mean stream flow!! This bed was only suppose to flow between natural dry and wet spells,,, like a real free bullion market! In reply the valve man asked,,,,, who the hell told you that??? The Bug answered:
I learned it from My Broker!
===================
Sir Kosares,
American dollar policy has built a substantial wall of separation between its currency and gold. More philosophical than material, the last decades of official declarations have served to block any useful "voluntary" return to high dollar gold prices. At every turn of the road, treasury and fed spoke persons have said that a low gold price indicates good dollar management. The price and time needed to reverse such a "learned experience" would, today, be enormous. Thus, we see a trapped currency policy that can only travel toward intense dollar inflation, riding ever lower paper gold values until both processes default; both printing press and price wise.
The reality of all this is that dollar gold prices could have soared as far back as 1971 and the world could have gone its way. I believe that noone would have left the dollar then, even with $5,000 gold, because no other currency system was ready to assume the dollar roll. Yes, US inflation rates would have soared and world economic trade would have fallen victim to mangled exchange rates: but that happened anyway and the dollar would still have retained it's reserve status.
This drive to prove the dollar, in low gold prices, now comes to its destine end. An end extended by inducing paper gold inflation backed by ever more official involvement in the world gold markets. The dollar faction is pumping paper gold to support the dollar while the Euro / BIS faction has shifted to doing the same to destroy the paper gold market faster. In recognition to my good friend's story --- the water flow is now washing away dreams and exposing houses built in the wrong place---. Indeed, why on earth would Western thinking Gold Bugs believe in a paper gold system that could only show value if it was not inflated? Did they expect a deflation in paper gold to drive prices up?
Their government considers their current derivatives based gold market to be just as important a tool in economic and international affairs as the dollar gold exchange standard was prior to 71. America opened the dam to let gold contracts flow thru the dry wash then, as dollars were printed to inflate the largest paper proxy the gold market traded with: dollar gold!
If this was important to maintain US lifestyles at that time: so why would it not be important now? They destroyed worldwide wealth held in gold, in the form paper dollar proxies. They changed the very currency of the world to gain an American end. Now Bugs cannot believe this same system would inflate their same little market to extend the same courtesy again? In the process, this time, also destroying the whole of the gold industry.
A strong dollar policy is built upon a low gold price; once again by inflating the widest scope of the usable gold markets: credit gold. In an incredible contradiction, it seems that the real fools are the gold bugs who buy into this paper market expecting some kind of deflation to drive the contracts higher? In order for this to happen, the US would have to counter modern gold thought with policy that said; high priced gold is unimportant to dollar policy. More than ever, with Euro competition creating a currency war, dollar gold must fall or the whole system must freeze up! Dollar prices cannot rise until the entity of our credit gold market is removed from function. This will happen.
=============================
I have presented this topic many times and again state that "all gold paper will burn". Most mine values included. Then and only then will gold values soar as physical units traded. Not before. As an adjunct, the illusion of most American paper wealth will also burn with this process that
transitions the dollar away from reserve status.
At the right time the Euro Zone will withdraw from the IMF, leaving the US and its factions as the only support for dollar credit assets held overseas. Then the evolution of SDR use our guide knows so well will be complete. This will leave the SDR interpretation open to only one avenue to finding support: it's basket currency function dissolved, gold will have to flow from American based stocks. With most of the present official credit gold leverage built upon IMF protocols, the US will find itself shipping ever higher priced gold to defend an ever lower valuation of dollar exchange rates.
With the world credit gold markets paralyzed in default and dollar credibility placed in question along with American economic stamina; physical gold will return to official hands in Europe in exchange for Euros. A paradox observed as high gold places more demands upon Euros and sends the dollar ever lower.
=====================
In all of this Alan Greenspan will say good by. A gentleman of his ability and stature will find no use for a position he cannot change from; a good general does not only retreat. Any lesser player can buy public and treasury debt for the purpose of constant hyper inflation; there is no policy strategy or gamesmanship in this.
As for gold being a problem to buy in the USA? Once again, I point out that American policy has only the wish to manipulate its currency valuations with official currency trading. It will be in the US advantage for gold prices to rise and rise strongly. An acknowledgment to Euro planning and a defeat for 30 years of American gold misuse. If treasury gold is traded at all, it will be within official channels to help control dollar values.
However, as paper gold values freeze up and their use fails the public, physical bullion brokers will become a popular as "crude oil" is to producers. I wish you "a deep well" in your affairs, my friend, and will respond more for a time.
======================================
Thanks Mr. speaker,,,,
Thanks all
TrailGuide
Gold Trail Update (08/27/01; 19:00:07MDT - Msg ID:60350)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/27/01; 19:00:06MT - usagold.com msg#102)
From USAGOLD news feed
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Economy%20World&tp=ad_uknews&T=news_storypage99.ht&ad=world_economy&s=AO4rDHBa.RXVyb3Bl
European Money Supply Growth Accelerated in July, Analysts Say By Sonja Dieckhoefer
--------- Benchmark interest rates in Europe are currently 100 basis points above rates in the U.S., ``causing investors to turn to Europe,'' said CDC's Nehls-Obegi. That may also have lifted M3 in July, she said. The ECB said ``non-resident holdings of money market paper and debt securities issued with a maturity up to two years'' have been distorting M3 growth figures higher. ---------
==========================
The beginning of a reversed carry trade? I think Michael Kosares called this one long before anyone else could see that far down the path.
I'm working on a rewrite for the trail. Watching, hiking, talking and writing all at the same time.(smile)
TrailGuide
Gold Trail Update (08/27/01; 19:22:44MDT - Msg ID:60351)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
MK (08/27/01; 19:22:43MT - usagold.com msg#103)
Is that Milton Friedman I see peeking from behind that boulder??
Hello again, my friend. From your last post I was struck by this statement, one I am still pondering:
"As for gold being a problem to buy in the USA? Once again, I point out that American policy has only the wish to manipulate its currency valuations with official currency trading. It will be in the US advantage for gold prices to rise and rise strongly. An acknowledgment to Euro planning and a defeat for 30 years of American gold misuse. If treasury gold is traded at all, it will be within official channels to help control dollar values. However, as paper gold values freeze up and their use fails the public, physical bullion brokers will become as popular as "crude oil" is to producers."
I am particularly interested in your view that " it will be in the US advantage for gold prices to rise and rise strongly." Of course that is 180º from the current policy where the messenger throttled, imprisoned and killed in the hopes that the vacant dollar policy is not exposed to the world. Of course, as you have pointed out the euro could very well change all that. I also detect a hint that the oil producers might want "oil for gold" when you say "it [gold settlement] will be within official channels to help control dollar values."
I don't know if you saw the story today, but our friend Milton Friedman (who once proclaimed that the U.S. gold reserve should be put on the block and sold en masse to the highest bidder) proclaimed today that the euro was a "a big mistake."
What I think you might find fascinating are the reasons why he believes this. According to Forbes magazine, Friedman slammed the the euro "saying that it would create monetary turbulence and discrepancies instead of promoting political unity."
God forbid that we should suffer "discrepancies!"
Whoa, , ,Ho! Ho!
It is not difficult to see what he is really saying. The euro is going to get in the way. It's going to cause "turbulence!" (not that the dollar hasn't served this purpose all too well on its own.) And then there's "political unity." How could the Europeans be so . . . .well. . . .so totally uncooperative."
Here's the capper:
The esteemed Stanford professor goes on to say that "the U.S. should pull out of recession in 2002 but that recent Fed interest rate cuts could lead to inflationary problems."
"I believe the United States is already in recession," said Friedman, "The fall in production and employment show that clearly. Whether or not we use the word 'recession' is just a question of semantics," He also pointed to the Fed's seven interest rates cuts this year as reason to look out for inflation next year. "With the very unusual Federal Reserve policy of successive interest rates cuts...the key problem once the recession ends in 2002 will be how to control inflation," he said.
So its very clear:
With inflation just around the corner, it is difficult enough to deal with one inflation indicator let alone two. . . . .two safe havens not just one. What's the dollar to do?
Guess it all get's down to a matter of perspective. I've always contended that if the U.S. gold reserve is to be sold that it ought to be offered to the American public on a first refusal basis. (Grin.)
Thought this would be enough to raise a comment or two. . . . .
My best to Another, and hoping this finds you both well. MK
Gold Trail Update (08/28/01; 10:34:03MDT - Msg ID:60381)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/28/01; 10:34:03MT - usagold.com msg#104)
Just a walk down the path!
Good day everyone.
---- Two roads diverged in a yellow wood, And sorry I could not travel both -------- I shall be telling this with a sigh---Somewhere ages and ages hence: ----I took the one less traveled by, And that has made all the difference ----
This partial caption, as it appears at the top of our trails page, tells of the Gold Advocate story through out this modern gold era. An era that has so very decimated the savings of traditional hard money paper gold bulls. Clinging to all their failing theories, they assumed were financial hard money law, only to watch those market dynamics evolve away in our political world; taking much of their wealth with it.
So, down the single path we go and boy has that decision made a difference! As Physical Gold Advocates, buying and holding real gold for the future, we have avoided taking an enormous hit to the "safe side" of our long term savings. When one adds up the net accumulated loses from a decade of "gold market timing", in and out "leveraged plays" and good money poured down the "liar's hole" of gold mining prospects; is it any wonder so many are clamoring for the government to come clean and return policy back towards support for the "illusion of our paper gold market"? Back towards the leveraged player's favor so he can get even: perhaps even with coin buyers?
In a large part, this explains a lot about the cross currents and confusion gold buyers hear in today's media. Two entirely separate factions are in the gold game; one vocal and unhappy, the other quiet and very pleased to buy gold at lower prices. If you invested in the commodity side of our gold industry, that's the new gold supply side produced by the mining sector, you need a higher price or
your investment will eventually become zero wealth! If you invested into the real asset side of the market, physical gold owned and held as part of your long term wealth, higher values will one day come and easily match all the considerable currency inflation that has already arrived. For these buyers, life is good as lower prices and time are both on their side.
But, what of the guy that brought into our leveraged gold markets; thinking it was a free market that represented the real value and price for gold bullion? Was he a victim of a government currency supporting scam that rendered his leverage a loss? Or was he the victim of an market industry that told him not to buy physical gold, instead take advantage of the leverage we can sell you?
Ask yourself: who said years ago that we know how it all works and how to out maneuver this dollar inflation stuff, ,,, who said the paper leveraged gold markets were the real free markets,,,, and we know how the government does all this because we are professionals,,,, and we have a good leveraged play that will beat that inflation when it comes and beat it X times over!
The answer we hear: "Now that these leveraged plays have and are turning into toilet paper,,,,, we want to know why the government made us buy all this stuff" ,,,, instead of real gold????
In our society, dominated by Western Thoughts about savings wealth and the use of leverage to gain it, Paper Gold Advocates have advanced the logic of their position by using overlapping reasoning. Promoting an idea that share ownership in an industry, that sells gold to make a cash profit, is the same as ownership of the gold product they produce. This is the same thinking progression where history records a shoemaker's children without shoes. Following this you, as a paper gold investor, also risk a situation where your family goes barefoot, without real wealth, while political maneuverings wipes out your stock and trade business investment; not to mention your wealth. In the same social dynamic where friends point out the shoemaker's bare feet, physical gold advocates will one day be asking; "but I thought he owned a gold mine?"
=================
I read all the fine articles and elaboration about the woes of our gold mining industry, it's investors and losers that played leveraged paper bets against this evolving market. Still, we are struck by a glaring flaw in their presentations: instead of taking the high ground with Physical Gold Advocates and advise dumping paper investments in this politically manipulated market and buying gold with the proceeds, they sink to the background and wait for a legal retort that would eventually lock up their lost illusion wealth for good. In the process they are trying to legitimize their use of the same failed logic the mines and paper brokers pushed; "buy our industry not the gold product its all based on"!
For decades, this entire paper hard money reasoning reeked from terrible political understanding. They tried to sell hard wealth logic packaged into something new players couldn't resist: ----- " I know you are a smart gold thinker that knows the real money inflation score! And because you are immersed in Western Thought, you can understand our logic better than most average people; let the other simple people buy real gold while you buy something that is just as good and pays off x times better; all our near gold substitutes"! ---------
Truly, the reactions we are hearing today, on many gold forums and all over the hard money media, is the "hangover" of investors being sold that logic as a "static" law of the money universe! Without their being exposed to the fact that money, gold and politics are all an intertwined dynamic human action; coursing through nations and society, as organic players fight to hang onto our real wealth and savings over time.
The notion that "real wealth" and "money function" could be combined and retained, for trade use and as a long term savings for average man, was a dream for hard money socialist. These two separate forces were stamped together and coined by a narrow logic that never would concede how incompatible it was with changing human desires.
Again, this "hangover" of loses is the result of layer after layer of misconception being placed over real gold ownership. The sad fact is that those who stand outside the ranks of Physical Gold Advocates will mostly not ever catch up, financially, with simple gold owners! The world, it seems, turns once again as it always has.
===================
Yes MK, I saw Milton over there behind that rock. His comments and understandings are like the wines his old (part owned) vineyard produced; sometimes ok, sometimes bad. Years ago, when I lived in San Diego, we often went to his winery: San Pasqual in the Temecula valley area,,, if I remember right? Don't think he owns it any more. I never liked their wines, but one of his wine vinegars was absolutely fantastic. We stopped at Chinos vegetable farm, around the corner from us, on the way for a sunday drive. While later cooking, I would recall how I could only like some of
his offerings.
Today, my tastes for "a changing currency universe" is proving just as correct in opposing much of his thinking. Along the same lines our friend PH in LA said; we have to stop watching our favorite trees and start watching the whole forest!
=================
You write: ----- I am particularly interested in your view that " it will be in the US advantage for gold prices to rise and rise strongly.---------
I think this whole concept is the most difficult part for people to grasp. We wrote many portions of this logic and tried to tie it into unfolding events so it would be clear. Problem is that this was so spread out, as it occurred over years, it's hard to see it all.
A most interesting part, one I think will be studied later, is in the evolution of our modern paper money dynamic itself. The US was way behind the curve in grasping how our changing "world economic function" was reworking the use, demand and nature of how fiat money settled commerce. Even with all it's awful inflationary attributes, we were evolving with the markets to use our fiat moneys in ways that were in spite of their losing value. Had American money policy seen this in process, they could have dropped the war on gold long ago; the way the Europeans have already.
Still, as part of this political war of economies and currencies, the ECB / BIS played into our gold war theme. Aside from a separate strategy that kept cheap gold commitments flowing for cheap oil,,,,, Euroland played our gold war, too, as we murdered the paper marketplace along with the whole dollar gold system it was built on. I think that the US, just recently, caught on to the "total meaning" of the Washington agreement and is now rethinking what to do with their position.
They shifted their war on gold to become a war on the Euro,,,, only too late. Now, knowing that the Euro is a fact, we must have a super gold price if the dollar is to stay in the game! The question becomes one of supporting a cheap paper price for the sole function of keeping the market and all its bullion players alive. With the war on gold over, they need to turn their tanks around to face the
real enemy but cannot.
If we try to save the dollar gold markets, they will morph into a pure paper system with no gold supply to back them; paper would eventually be priced way below world physical markets. They will become a pure cash settlement item, in a way like the OEX. This will easily drive oil pricing into Euros. If we adopt a week dollar policy, trash the IMF and it's SDRs (prior to ECB withdrawal) we will have to supply gold bullion outright and allow a true market price based on some currency supporting function; still at thousands per ounce. Our entire anglo - London gold markets will spin off hugh,,,,, nation busting financial loses. By the way,,,, this is why our boy is driving for EMU as soon as possible. (smile)
In all of this; the main story / component is oil supply! We must keep our dollar function, if only in a diminished fashion, in order to buy oil imports. Once the dollar fully fails, everyone (our partners like Mexico and Canada) will bolt for using Euros as reserves and international settlements. OIL value in the US would spike sky high even as local inflation drives alternative energy supplies to
become uneconomic to produce. Even at $200 a barrel equivalent.
========================
You write ------ Guess it all gets down to a matter of perspective. I've always contended that if the U.S. gold reserve is to be sold that it ought to be offered to the American public on a first refusal basis. (Grin.)---------
Mike, I know you guys have written some fine thoughts about how the government may one day take our private gold back. I have to allow that we never know what they will do: a lot of nuts become favorite leaders??? Still, we say that the government already has it's gold back. They took back what was "legal tender" , then ,,,, and won't try to get at what is now private gold wealth.
Just like the dollar tender in your pocket, US bullion is not yours to begin with. They have the right to call it in. This area is also a hard concept for gold thinkers to come to grips with. After decades of being told that the gold in Fort Knox belongs to the public, the truth that it doesn't and never was Its impending use as a currency supporting supplement is shaking people up that believed that position. Soooo many investors thought that this gold reserve was there to back their currency at home, at some future high price, that they reasoned they could just buy gold mine stocks with their investment moneys for an added play. Letting a future currency deflation and a rising gold price meet at some high price in the middle and back up their other surviving shoe box savings! Again, this ain't gona happen! Our currency is going to inflate to hell, even as we clean out our official gold reserves to ship overseas. If ever there was a story to buy gold for your own,,,, this is the tail that will create a killer offtake the world over!
However, the political choice, as you alluded to above, should will be allowed to buy our governments gold,,,,, if offered,,,,,, OR have that gold keep oil prices down to $90 a barrel so we can still drive SUVs. I wonder what will happen???
===============
As a side item: I see where George Mitchell sold out his Mitchell energy and development. Funny, I know a guy that used to play with him as barefoot boys on Galveston streets. He said that young George once wondered (as boys do) if a small growth in his nose would finish him off. I think he had internal radium treatment for it or something?? Oh my,,,, who would have known that this barefoot brilliant friend would one day sell out as a billionaire?? What a wonderful, free country!
I'll post more about SDRs and Randy's notes if things don't go haywire again!
Thanks all (and MK)
TrailGuide
Gold Trail Update (8/29/01; 06:09:55MDT - Msg ID:60442)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (8/29/01; 06:09:54MT - usagold.com msg#105)
Perceptions: The evolving message of gold and what it means
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Currency%20Europe&tp=ad_uknews&T=news_storypage99.ht&ad=euro_currency&s=AO4zDXxLwRUNCJ3Mg
Here are a few quick observations:
It would be nice if our Fed could manage it's dollar policy with an eye on value only. This was suppose to be their job but it became morphed into an economic policy instead.
In his comments today, the ECB's Welteke makes a clear distinction between these two institution's thoughts on the matter:
------ Firstly, it isn't the ECB council's mandate to steer economic growth, but to stabilize the value of money. Price stability is the top goal of the European System of Central Banks. The U.S. Federal Reserve has a mandate that includes growth and employment targets ---------------
Notice that phrase "to stabilize the value of money"? After several decades of evolution, US traders have come to equate the value of a currency as to whether money policy is delivering them investment profits or no. If local prices of stocks and real estate are rising, then a money's exchange rate should also. It's only natural because everyone the world over will want in on the "next great investment"; where ever that process is being played out!
Of course, that's not the way money values are determined; but because international trade has delivered money flow control into the hands of an "out of control" dollar derivatives market, this is the thinking dynamic in charge. No greater case can be made that; world wide currency values are but an illusion while being measured with a dollar reserve system. We see this ever so clearly today as the ECB strives to place a real value upon their currency by employing strengthening rates of return behind it; saying that a nation's currency is worth something aside from structural economic function alone. All the while the Fed is inflating the dollar as an open sign that the dollar is worthless if our economy goes "only sideways" for a while.
What an incredible reversal of perceptions for American traders to latch on to; we are buying into the dollar inflation as a permanent structural component of our economic and financial markets. This trend is something we, as gold / Euro / oil people, have been promoting will happen for some time. As the Euro matures, this ongoing dynamic will lead to; a dismantling of our dollar reserve system; a flow of us gold out of the country as an only means left to maintain dollar settlement; a rising gold price that first disables, then destroys the current world dollar gold market; hyper inflation within the US and a critical loss of oil imports at cheap dollar valuations.
Our way of life and quality of life will be changing as this plays out. Truly, for those that understand, we will not actually lose anything real; rather we will lose the illusion of wealth Americans have come to value as their given right. An illusion we trade to the world and with each other in the form of an overvalued currency and the assets it denominates.
Again, I'll have more on this if this complex computer system stays together (smile).
TrailGuide
Gold Trail Update (08/31/01; 16:03:52MDT - Msg ID:60624)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (08/31/01; 16:03:51MT - usagold.com msg#106)
Off the trail and on the road! (smile)
Well,,,,,, I tried to get this incredible cluster of wires and chips to work correctly, but to no avail. My computer is fine, something wrong in the private network that supplies me. Anyway, I'll take this interlude to work in some travel time. Have a great Labor Day and I'll be back in a few weeks.
While away, some points to consider:
The Dollar
On the plus side; all thru the 90s it was the best currency to store your extra cash in. No matter if one loved it, hated it or thought it was near destruction, the dollar worked well for its owners. It worked more so because of the way the world changed in using currencies. Not because we managed it so well.
On the negative side; it is a self serving money that caters to one and only one nation state. The needs of all other users of this reserve currency are cast down into second class status.
Because it has been in this reserve position so long, the gross amounts that circulate outside the borders are completely out of any proportion that our local economic structure could service.
Even with a huge, record breaking trade deficit, our fed shows no concern to slow further dollar printing.
The level of sophistication of world trading systems has bypassed the need for a one world, all serving currency unit; like the present IMF dollar system.
The Euro
Its structure, using several central banks, is very close to our dollar system. From that point the closeness ends.
Its political structure is much more appealing to world wide users. Because it's based on a number of different nation states, its management policy will tend to carry more of a worldly mix of initiatives. Not something for everyone, but far better than the dollar.
Its built to have more of an internal function that services EuroZone trading. If it becomes the best (or last) man standing, such an internal flow will cause world trade to flow thru Europe instead of using Euros bypass trade around Europe. This alone will keep it from being a world reserve. Gold wealth may come back to serve this end.
Will it fail?
I don't know! I do know that it will endure. The reason I have moved the cash side of my wealth into Euros is not because it will outrun gold or, for that matter, outrun the dollar in the near term (Euros are a small part of my asset mix with gold being the largest). I changed because I expect the dollar to fail in a super inflation as the world moves on. I expect the Euro to not fail at all or fail less?
Further, the main reason I own gold is because the current dollar gold market does not show us the real gold value at this time. There are a whole host of political reasons why this is so. Still, as the dollar fails, American gold reserves that still exists as the final backing will have to be used in a pure physical market to somewhat deflect the dollar's fall. You can count on the fact that the majority of that US gold will not be, in any way, used to shore up a then failing paper market. As this plays out the current Bullion Bank / london market will lock up and once again rob the paper owners of bullion. No different than the way pre 1971 foreign dollar owners were robbed before the payoff.
The paper gold bulls of that time were waiting for big boys to default on their gold debts,,, like GATA is waiting for today,,,,,,, so the bulls could collect. Didn't happen then and won't happen now.
I expect the dollar to fall away from its present stature in world trade. Bring with it a changing lifestyle for all Americans who have hitched their wealth to dollar related assets. Unfortunately, most gold mine operations are in that league.
I expect gold to do a sky shot, not because of coming us inflation, but first because of a paper gold market abandonment. Then, super dollar price inflation will only drive it higher.
The dollar system, as Mr. G. well knows, is locked into a structural inflationary trend that cannot be stood aside of because of the Euros existence. Any attempt by the fed to raise rates to slow dollar printing will stall our economy further. The Euro system will not, as in the 70s and 80s, have to follow our stance; they no longer have a mandate to bank unneeded trade dollar excesses. They have been sending this strong signal for some time by selling off dollar interest. This trend is going to accelerate as the Euro builds. They have no purpose or reason at this time to get into a real war with the dollar. They are at war just by laying comfortably with a Euro return a little above us for
their work to be done.
Good luck all
TrailGuide
Gold Trail Update (09/02/01; 10:05:39MDT - Msg ID:60680)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
MK (09/02/01; 10:05:38MT - usagold.com msg#107)
The Now Very Clear European Position and Remembrances of Harry Browne's "You Can Profit. .." Books from the Early 1970s. . . .
I see your #106 as one of the most important messages you have ever posted at the Trail or at USAGOLD. In some ways, it is a recapitulation. In other ways, it is groundbreaking.
I believe you are correct. The Europeans will be content to let the dollar take its own course in full knowledge that the seed of currency freedom it has planted is fundamentally sufficient to meet the needs of the new Europe. I do not think however that this was clear until the last euro rate cut. Your post focuses those considerations. Europe will be no more aggressive than it needs to be. As a casual political observor, I believe that this policy is a mistake that forces Europe to play the inflation game along with the United States, and that is not the way I would have played the game given the opportunity. However, I'm not the one calling the shots in Europe. I am an American businessman and investor and in that capacity I am not so much interested in the world as I'd "like it to be" but as "it is." I'm sure my European counterparts feel the same way.
What do you believe this now very clear European position means to the European currency holder and the U.S. currency holder (in the form of savings and equities)in the medium to long run? Do you believe gold ownership is important to the European investor? It is clear that you believe it essential for the U.S.-based investor as you foresee a complete dollar breakdown.
In reading your last message, I was struck with how close it came to Harry Browne's analysis in the early 1970s. In two books, "You Can Profit from the Coming Devaluation" and "You Can Profit from the Coming Moneatary Crisis", he laid out a thesis very similar to the groundwork you have laid in your #106. The Wall Street establishment and press considered him the lunatic fringe back then simply because most people never heard of such a thing. He was simply ahead of his time. And he turned out to be absolutely correct.
Here is what you said that made me think of the "You Can Profit Books":
"Further, the main reason I own gold is because the current dollar gold market does not show us the real gold value at this time. There are a whole host of political reasons why this is so. Still, as the dollar fails, American gold reserves that still exists as the final backing will have to be used in a pure physical market to somewhat deflect the dollar's fall."
Of course, this is precisely what happened in the 1970s. Harry Browne made the same argument back then -- that the $35 gold price was both an institutional fixture and institutional fiction. Europe took advantage of that situation by reclaiming a substantial gold reserve. When the London gold pool (both de jure and overt) broke down at the $35 price, the devaluation (both de jure and and overt) quickly followed. Additional formal gold sales proceeded from there from both the International Monetary Fund and the U.S. Treasury.
Since today the gold price is both an institutional fixture and institutional fiction much the same process is in motion at present -- only de facto and covert. Are you suggesting a similar result? And with the euro present and accounted for, will it lead to a new world order?
FOA, I want to thank you again for sharing these thoughts with us. I think we may have come to a new Trailhead -- perhas one that looks vaguely familiar, but then again perhaps something totally different. I am convinced you are correct that the Europeans believe that there is a certain historical inevitability to the dollar's demise and there is no need to hasten the process.
The real controversy in the weeks and months to come will revolve around what this might mean to both European and American savers, equity investors and gold owners.
Gold Trail Update (9/29/01; 16:52:02MDT - Msg ID:62670)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (9/29/01; 16:52:01MT - usagold.com msg#108)
Back on the trail.
Hello everyone!
Well,,,,, I have been home for a few days and my travels were more an adventure than a vacation. During this period of terrible tragedy for our nation, and pain felt for those lost in the destruction, my little world was only shaken in comparison. Still,,,,, almost all my communications was lost for weeks.
I'm back now and am facing a mountain of communiqué from friends and associates. With all that is currently going on I have no intentions of "catching up" with the news thread right now. I just try to jump in as I am able. Truly, this is an unspeakable turn of events and only moves our events timetable that much further ahead.
Michael, Randy,,,, all,,, I'll be back later.
TrailGuide
Gold Trail Update (10/1/01; 04:54:26MDT - Msg ID:62735)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/1/01; 04:54:25MT - usagold.com msg#109)
Still Clearing The Trail!
Good Day to Everyone!
Am still working thru a backlog. Yet, I wanted to say that my next address will contain a pre-hike list of answers, points and notes about our views. I'll also be shifting my writing and discussion format so as to clearly separate my thoughts from thoughts from friends and associates. This is something I always planned to do as events came into sharper focus. This change of style should help every person that hikes this path.
In conjunction with this first set of remarks I'll post the next installment of "Walking on Solid Ground". If you thought the first was worth a read, this one will also have value. Thanks Michael, for including that piece in your wonderful quarterly paper! (smile)
TrailGuide
Gold Trail Update (10/3/01; 10:21:27MDT - Msg ID:62863)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/3/01; 10:21:26MT - usagold.com msg#110)
The makings of a dust storm
Hello Everyone,,,,, packs on,,,, there is ground to cover!
-------------------
That's not dust from our feet -------
As we walk along this Gold Trail we no longer have to look far ahead to see results; real events are directly under our feet now. True, many will point to this tragic attack on New York and Washington as the catalyst for current woes. But I say that our entire economic structure was already weak and failing from decades of dollar expansion. If these recent events had not come along, something else would have eventually triggered our economic cascade.
The effects are falling into place just as I said they would. -------
As a note to hikers: I will begin using "I" while talking and, from here on out, clearly indicate when I'm speaking the thoughts of a friend or associate. Over the years I have very often spoke the words from others, as they wanted it produced. Often doing entire posts while stating other's positions or inserting their views in my posts, mid stream, without saying I was doing such. We have all come far enough, now, that our understanding can grasp the changing tide without this. My planting seeds of thought in such a way may no longer be needed, but your leg work is far from over. This change is a result of the evolution of our political and financial world just as much as your growing in insight.
Onward
For decades hard money thinkers have been looking for "price inflation" to show up at a level that accurately reflects the dollar's "printing inflation". But it never happened! Yes, we got our little 3, 4, 8 or 9% price inflation rates in nice little predictable cycles. We gasped in horror at these numbers, but these rates never came close to reflecting the total dollar expansion if at that moment it could actually be represented in total worldwide dollar debt. That creation of trillions and trillions of dollar equivalents should have, long ago, been reflected in a dollar goods "price inflation" that reached hyper status. But it didn't.
That "price inflation" never showed up because the world had to support it's only money system until something could replace it. We as Americans came to think that our dollar, and it's illusion of value, represented our special abilities; perhaps more pointedly our military and economic power. We conceived that this wonderful buying power, free of substantial goods price inflation, was our god given right; and the rest of the world could have this life, too, if they could only be as good as us! Oh boy,,,,,, do we have some hard financial learning to do.
----------
Over the years, all this dollar creation has stored up a massive "price inflation effect" that would be set free one day. Hard money thinkers proceeded to expect this flood to arrive every few years or so; the decades passed as those expectations always failed. Gold naturally fell into this same cycle of failed expectations, as the dollar never came into it's "price inflationary" demise.
A number of years ago, "I" began to learn of some smart people about the real political game at hand and how that would, one day, produce the final play in our dollar's timeline. Indeed, you are hiking that trail with us today; us meaning Euro / gold / and oil people. All of us Physical Gold Advocates that have an understanding about gold few Americans have ever been exposed to.
-----------------
Our recent American economic expansion has, all along, actually been the result of a worldly political "will" that supported dollar use and dollar credit expansion so as to buy time for Another currency block to be formed. Without that international support, this decades long dollar derivative expansion could not have taken place. Further, nor would our long term dollar currency expansion produce the incredible illusion of paper wealth that built up within our recent internal American landscape.
-----
The relatively small goods "price inflation" so many gold bugs looked for will be far surpassed and the "hyper price inflation" "I" have been saying is coming is now being "structurally" set free to run.
------
Why "structurally", why now?
For years now, "politically", the dollar system has had no support! Once again, for effect,
"Politically NO", "Structurally Yes"!
For another currency block to be built, over years, the current world economy had to be kept functioning. To this end the dollar reserve system had to be structurally maintained; with its IMF agenda intact, gold polices followed and foreign central bank support all being part of that structure. Truly, the recent years of dollar value was just an illusion. An illusion of currency function and value, maintaining the purpose of holding the world financial and economic system together for a definite timeline. Politically, the world does not hate America; rather they hate the free lifestyle our dollar's illusion value brought us yesterday and today.
Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built American's illusion wealth will now fall away. In it's place we will see the beginnings of a currency war like no other in our time.
-----------------
This very change in structural dollar support is the same change that has been impacting our fed's actions for over a year now. This change is the difference between "my" call for super price inflation and the endless calls past hard money thinkers have made. Their on again / off again goods "price inflation" outlook is based on the same failed analysis that expects price rises because the fed was into another "printing money faster" cycle. I point out that that cycle has come and gone many times without a price inflation anything close to our total, long term, dollar creation.
Further
To this end, I have been calling for a hyer inflation that is being set free to run as a completed Euro system alters Political perceptions and support. That price inflation will be unending and all encompassing. While others call, once again, for a little bit of 5, 10, 15% price inflation, that lasts until the fed can once again get it under control,,,,,,,,, I call for a complete, currency killing, inflation process that runs until the dollar resembles some South American Peso!
Understanding the Western View
Most current brand of American gold bugs all invest along the "hard money socialist" line. They harp on the gold story while placing their money in leveraged bets on gold. Perhaps 10% of their hard money portfolio is in physical and even most of that is in the falsely perceived leverage of lesser hard metals. All the while 90% of their investment is in various leveraged near gold games.
Their story sounds good, but their bets can only pay off if the government statist are able to control the gold market they way it has over the last 30 years. Indeed, if the dollar banking factions were to win this round, we will get another little price inflation cycle and paper gold will, once again, rise a few hundred dollars. The payoff would serve the mines and leveraged paper players at the expense
of long term wealth creation for physical gold advocates. In past cycle form, the statist would send the paper gold price back to the pits.
Fortunately for the majority of world physical gold owners, the hard money socialist game has ended. In fact, it has been on track to fail for a decade or more. To this end, I invest for a full American economic and associated dollar currency breakdown that is reflected in a total revaluation and function of all dollar using business entities. Because governments do and must combat these types of breakups, gold mines and the hard money socialist that guide most of them will fail little better than other investors or companies. They will cry for the government to again create a stable, leveraged paper gold arena so their bets could return to even. The creation of a Euro based World Free Gold physical only market will bar all trading nations from again playing the socialist Western gold game. Physical gold will be the very best holding as all of this comes into play. Virtually all government gold policy will gravitate towards sponsoring citizen gold ownership. Essentially because Europe will have removed the entanglement of modern fiat competition from
said gold markets.
Yes, late comers to this understanding will encounter a true free market, but their buy in price will be at a much higher natural trading level. Present hard money socialist decry this and invoke a call for "official money gold" as the only way governments can go. That will not ever be allowed again
and it guile's them because they need their leveraged gold investments to get them back to even first. Remember, these are the same people that hold free markets on a high plateau as the goal for everyone. Yet, they talk a story of gold control for just a little while longer so adjustments can be
made.
Won't happen! Plan on Americans using inflating dollars as their local transactional currency and Euros as their second currency. All the while calling CPM for their monthly purchase of a world class savings asset; 1oz bid $8,324 - ask $8,388! (right MK,,,,,,smile)
--------------------------
Greenspan will not embark on a dollar building policy again! Even if he changes his mind about leaving. Unlike our past inflation cycles, he has only one act to follow because he must support the internal economic dynamics of this country as its dollar falls from reserve status. There will be no
inflation "cycle" on this go around. The creation of a competing Euro currency block has changed his policy dynamic.
The fed has cut rates below perceived price inflation levels already and will cut again and again; even in the face of real, published, soaring, official statistical CPI. The die has been cast and the game in in process.
--------------
Timing?
We, and I, as physical gold advocates, don't need timing for this position! Timing is for poor, paper traders. We are neither and our solid, long term, one call over several years to hold physical gold will confirm our reasoning. There is no stress for me to own this ancient asset as it is in a good proportion to all my other wealth.
There is no trading an economic system who's currency is ending its timeline. Smart, quick talking players will joke at our expense until fast markets and locked down paper gold positions block their "trading even" move into physical at any relative cheap price. Mine owners will see any near term profits evaporate into a government induced pricing contango that constrains stock equity with forced selling at paper gold prices.
My personal view
They will, one day in the future, helplessly watch their investments fall far behind a world free market price for physical gold. Further into the future, one day, mines will make money on the last thousand per ounce price for gold; only the first $XX,000.00 of price will not be available to them.
-------------
Now that I have more defined mine and our position and views; it's time for us to begin another
"Walk On Solid Ground".
I'll be back as able.
Thanks Michael, Randy,,,,,, all
TrailGuide
Gold Trail Update (10/4/01; 11:34:16MDT - Msg ID:62919)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/4/01; 11:34:15MT - usagold.com msg#111)
Walking On Solid Ground
Hiking the Gold Trail: understanding the evolving message of gold.
-----------
Good morning to everyone!
Glad to see so many here. This is a more formal presentation and one of our usual departures from my casual ramblings I brought a few other friends with me to support my thoughts and help guide the hike today. We'll bunch up close when we pause to talk, then stretch out in a line to stay only on the trail. Don't worry, you will all be able to hear me as we walk.
Let's go
My friends and I are Physical Gold Advocates. We own physical outright and do so employing the same reasoning mankind used in owning gold throughout most of history. However, there is a major difference between our perceptions of this historic reasoning and the current Western perceptions so many of you are attuned to. Ours is not a mission to unseat the current academic culture, concerning money teachings; rather it's to present the historic and present day views of the majority of gold owners around the world. Those of simple thought and not of Western education. Plain people that, in bits and pieces, own and use the majority of above ground gold. Whether or not our perception is correct will depend on your ability to apply logic and reasoning.
As we stand here, examine this ancient formation to the left
Most contemporary Western thought is centered around gold being money. That is; gold inherently has a money use or money function; built into it as part of the original creation. This thought presents a picture of ancient man grasping a nugget of gold, found on the ground, and understanding immediately that this is a defined "medium of exchange"; money to buy something with. This simple picture and analysis mostly grew in concept during the banking renaissance of the middle ages and is used to bastardize the gold story to this day. Even the term "money", as it is
used in modern bible interruptions, is convoluted to fit our current understandings.
Much in the same way we watch social understandings of music, literature, culture and dress evolve to fit current lifestyles, so too did gold have a money concept applied to it as it underwent its own evolution in the minds of political men. This is indeed the long running, background story of our Gold Trail; an evolution, not of gold itself, but of our own perceptions of this wealth of ages. A evolving message of gold that is destine to change world commerce as it has never changed before.
Onward my friends
In ancient times there was no concept of money as we know it today. Let me emphasize; "as we perceive money today". Back then, anywhere and everywhere, all things known to people were in physical form. All trade and commerce was physical and direct; barter was how all trade was done.
If one brought a cart to market, loaded with 20 bowls and 20 gold nuggets, he used those physical items to trade for other valued goods. The bowls and gold had different tradable value; as did every other thing at the market. Indeed, gold brought more in trade than bowls. Also true; if a barrel of olive oil was in short supply, it might bring even more in trade than all the gold in the market square.
The understanding, we reach for here, is that nothing at the market place was seen as a defined money value. All goods were seen simply as tradable, barterable items. Gold included. Truly, in time, some items found favor for their unique divisible value, greater worth and ease of transport.
Gems, gold, silver and copper among others, all fit this description. These items, especially and more so gold, became the most tradable, barterable goods and began to exclusively fill that function.
But the main question is: was there money in that market place? Sure, but it was not in physical form. Money, back then and today, was a remembered value in the minds of men. Cumbersome it may have been, but even back then primitive man had an awesome brain and could retain the memory values of thousands of trades. In every case, able to recall the approximate per item value of each thing traded. That value, on the brain, was the money concept we use today.
Eventually gold climbed to the top of in the most tradable good category. Was gold a medium of exchange? Yes, but to their own degree, so were the bowls. Was gold a store of value? Yes, but to a degree, so were dinner plates. Was gold divisible into equal lesser parts to define lesser barter
units? Yes, but to a degree one could make and trade smaller drinking cups and lesser vessels of oil. Perhaps gold became the most favored tradable good because the shear number of goods for good traded made a better imprint on ones memory; the worth of a chunk of gold in trade became the value money unit stored in the brain.
Seeing all of this in our modern basic applications of "money concept", almost every physical item that naturally existed or was produced then also held, to a lesser degree, gold's value in market barter. But most of us would have a hard time remembering a bowls value and thinking of a bowl
as money. The reason this is such a stretch for the modern imagination is because bowls, like physical gold, never contained or were used in our "concept of money". Back then, as also today, all physical items are simple barterable, tradable goods; not of the money concept itself. Their
remembered tradable value was the money.
Gather around
Money, or better said "the money concept", and all physical goods occupy two distinct positions in our universe of commerce and trade. They have an arms length relationship with each other, but reside on different sides of the fence and in different portions of the brain.
For example: say I take a bowl to the mint and place an official government money stamp on the underside. The bowl now is stamped at $1.00. Then I take one tiny piece of gold to the mint; one 290th of an ounce or at today's market a dollar's worth. They stamp that gold as $1.00. Which
physical item would be money? Answer; neither.
Using ancient historic reasoning and the logic of a simple life; the bowl could be taken to the market square and bartered for another good. Perhaps a dinner plate. In that barter trade, we would most likely reach an understanding; that the "bowl for plate trade" imprinted our memory with what a digital, numeric dollar concept is worth. Again, the 1.00 unit was only stamped on the bottom for reference. While the dollar concept is only a rate able unit number to compare value to; like saying a painting is rated from one to ten when judging appearance.
We could do the exact same thing with out 1/ 290th ounce piece of gold as with the bowl above. In the process we again would walk away with the knowledge of what a $1.00 unit of money value was worth in trade. The physical gold itself was not the money in trade; the value of the barter itself created the actual money value relationship. Again. the most important aspect for us to grasp here is this:
----- The use of physical gold in trade is not the use of money in trade. We do not spend or trade a money unit, like the dollar, to define the value of gold and goods: we barter both goods and gold to define the worth of that trade as a remembered association to the dollar money unit. That
remembered worth, that value, is not an actual physical thing. A dollar bill nor an ounce of legal tender gold represent money in physical form. Money is a remembered value relationship we assign to any usable money unit. The worth of a money unit is an endless mental computation of countless barter trades done around the world. Money is a remembered value, a concept, that we use to judge physical trading value. ----------------
Onward
Naturally, for gold to advance as the leading tradable good it had to have a numerical unit for us to associate tradable value with. We needed a unit function to store our mental money value in. In much the same way we use a simple paper dollar today to represents a remembered value only. Dollars have no value at all except for our associating remembered trading value with them. A barrel of oil is worth $22.00, not because the twenty two bills have value equal to that barrel of oil: rather we remember that a barrel of oil will trade for the same amount of natural gas that also relates to those same 22 units. Money is an associated value in our heads. It's not a physical item.
The first numerical money was not paper. Nor was it gold or silver; it was a relation of tradable value to weight. A one ounce unit that we could associate the trading value to. It was in the middle ages that bankers first started thinking that gold itself was a "fixed" money unit. Just because it's
weight was fixed.
In reality, a one ounce weight of gold was remembered as tradable for thousands of different value items at the market place. The barter value of gold nor the gold itself was our money, it was the tradable value of a weight unit of gold that we could associate with that barter value. We do the very same thing today with our paper money; how many dollar prices can you remember when you think a minute?
This political process of fixing money value with the singular weight of gold locked gold into a never ending money vs gold value battle that has ruined more economies, governments and societies than anything. This is where the very first "Hard Money Socialist" began. Truly, to this day they think their ideas are the saving grace of the money world. It isn't now and never was then.
Further along
When investors today speak of using gold coin as their money during a full blown banking breakdown, what are they really speaking of?
In essence, they would be bartering and trading real goods for real goods. The mention of spend their gold money is a complete misconception in Western minds. Many would bring their memories of past buying with then and that is where the trading values would begin. Still, it would take millions of trades before the "market place" could associate a real trading value to the various weight units of gold. It took mankind hundreds? of years to balance the circulation of gold against its barterable value. Only then could a unit weight value become a known money concept. In that process, in ancient times, gold had a far higher "lifestyle" value than it has seen in a thousand years. This value, in the hands of private owners, is where gold is going next.
If you are following closely, now, we can begin to see how easy it is for the concepts of modern money to convolute our value and understanding of gold. It is here that the thought of a free market in physical was formed. Using the relationship of a free physical market in gold, we will be able to relate gold values to millions to goods and services that are currency traded the world over. Instead of having governments control gold's value to gauge currency creation; world opinion will be free to associate the values of barter gold against barter currency. In this will be born a free money concept in the minds of men and governments. A better knowledge and understanding of the value of all things.
Next trip, we will hike the currency trail.
From an associate:
" Some men will stand on a stage, their backs to an economic forest; growing tall and green from fiat dollar use. These men will tell the audience before then that this forest does not exist and they are really in a desert. They say only gold as money will bring rain to this sand. To believe this, one has to accept that 30 years of American fiat dollar use had no part in making this landscape. I say that if the dollar created only a part of this desert, then the Euro and free gold will keep lumber mills employed at least 20 years, no?"
Thanks all
TrailGuide
MK, I'll reply about your Harry Browne thought soon (smile).
Gold Trail Update (10/5/01; 10:55:20MDT - Msg ID:62993)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/5/01; 10:55:19MT - usagold.com msg#112)
Discussing the World with Michael Kosares
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Currency%20Europe&tp=ad_uknews&T=news_storypage99.ht&ad=euro_currency&s=AO72iPxRDRG9sbGFy
Hello MK
I wanted to come back to your last stop here on the GoldTrail to address your points and expose myself to the world. (smile)
I bet you and many hikers think I am tagging all Americans and gold thinkers with this "Hard Money Socialist" label. Ha Ha,,,,, let me slowly turn around so everyone can take a good look what a HMS looks like. Yes, that's right,,,,, I fit the definition completely.
Most of my life I thought gold should be locked into any official currency system so to act as a gauge and controlling factor against socialist tendencies in governments. I studied and in some cases talked to all the prominent thinkers on the subject.
In the late 60s, when Harry B. was living in LA, his pre book views took on quite a following. Me included! Oh, it all seemed so natural then; the eventual breakdown of our misguided economic policies had to, one day, kill the whole dollar printing game! We all thought that "the coming big failure" would drive every governments back to using gold as money; or at least in some version of another gold exchange standard.
However, even then, I had some serious people pointing me in a different direction. You mentioned how people saw Harry's thoughts " " ----- considered him the lunatic fringe back then simply because most people never heard of such a thing---- " "! Ho Ho, you should have seen my reaction
to these other perceived, radical, foreign views I heard?
Truly, Harry's stuff seemed so much more real, so much more the "American Way", that it just had to work. Well, it did and we have whole libraries full of historical scrip and economic writer's papers to chronicle his correctness. But, you know, I also looked back at these other guys explanation of things and they were every bit correct too,,,,, the effects were the same. Then as the 70s ended and the 80s ran on, their much more longer term understanding really took hold and left all other gold / currency explanations in the dirt. True, all the rest of the hard money crowd gained a little with each gold cycle high, but were also shot down with each cycle drop. The trouble is that historic process is a time consuming afair (smile) and most of the younger boys and girls that come here don't have a full hands on perspective to how we got here. Current dogma has a way of leaving out important turning points that are really needed to be factored in. Hell, a few decades of cycles became so regular in our mind set that a whole industry was born, explaining why cycle investing works (smile). In time I came to understand that there really was a long term, singular move, evolving along as a political play at work here. The last decade only served to underscore it all.
The early 90s Gulf war spike in gold should have been the final revenge for us bugs. Can you imagine,,,,,, war in the middle eastern oil fields,,,,,,, hundreds of well burning and gold gets shot down?? I was already 80% in my associates camp of thinking by then and that spike down pulled my other 20% right in. I knew then that the whole story was changing on political grounds and was not going to follow the Mise path.
My typical hard money shared long held belief, back then, was always:
----"Gold is the only official money of the world and will return to these roots one day"-------- and -----" some world wide financial dislocation will drive all governments back to this position"-----!!!!
It wasn't going to happen, no matter what, short of nuclear war. All we had to do was look around and see how people the world over were attached to using fiat currencies. The economic system itself was morphing into new ground as world trade learned to function very efficiently with fiat
digital settlement. And that's something the 70s crowd said could never happen. That was how many years ago?
A lot of the Mise crowd tried to point out that ---- " hey, this is all very good but if you were on a gold system this economic game would be all the more better" ----! Ha Ha, no one cared,,,,,, why risk what was already in process. Even the third world didn't want to hear it. They figured that any return to a hard money system would harked back to a time they remembered well. These guys suffered during the early century and no one was going to tell them that the gold standard wasn't the fault. The US, is today and was then, robbing them blind but the situation seemed, to them, that this new dollar standard was building them up. Looking at it all,,,,, we robbed the Japan life style standards the most. All to buy us an almost free standard and they loved it.
When it came to using fiat money in our modern era, it made little difference what various inflation rates were in countries around the world; 50%, 100% 1,000%,,,,,, they went right on playing with the same pesos. There have been countless third world examples of this dynamic, if only we look around. Mike, look at what happened in Russia after they fell,,,, the Ruble stayed in use and function with 6,000% inflation. My god they still use it now.
No,,,,,,, my guys are dead on the money with respect to the political dynamic that's playing out. The world is heading towards a huge financial / currency crack up, but it won't work out with gold coming back into the money game. This very long term transition is playing on a move away from
dollar domination with Europe preparing to suffer less than us by pulling in as many other political trading blocks as they can.
When you look at who they are reaching for; every one of these blocks wants gold moving higher to shelter their dollar trading losses. None of them expect to unload dollar reserves because our end time trade deficit won't permit it. They can't just send the dollars to each other, buying their
own goods that would never exhaust the external dollar float. Hell they now have their own money to do trade with, the Euro.
The game is to let the US economy suffer from its own bloated expansion by moving slowly away from supporting foreign dollar settlement with CB storage. This is more than enough to end the dollars timeline as we are already stretched to the leverage limit. They know that Greenspan has but one policy to use and that will be super printing. He is doing it now, right on que!
The ensuing domestic price inflation will waste away all buying power of dollars overseas. This is where they must install a free market in gold that ends international confidence in the current gold fractional reserve game. This is the "what for" of Britain moving itself and it's gold operation into the Euro arena. Once safely there, or there in initiative, the ECB and BIS could cash out England's gold
liabilities without crashing London's banks.
Mind you, this is all happening while Western style "Hard Money Socialists" are defending their stance by saying the Euro is just another fiat. Ha! These are the same guys that, throught the 90s, put every dine in expensive gold stocks and watched dollar currency inflation drive the dow up a
trillion points while political actions killed their leveraged gold plays. Now they will refuse to buy physical when political will is about to impact this sector and they will most likely stand by while a Euro based dynamic starts another economic surge later.
Truly, reasoning and logic is all about your point below: "it is", Mike.
Mk, you mentioned:
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Europe will be no more aggressive than it needs to be. As a casual political observer, I believe that this policy is a mistake that forces Europe to play the inflation game along with the United States, and that is not the way I would have played the game given the opportunity. However, I'm not the
one calling the shots in Europe. I am an American businessman and investor and in that capacity I am not so much interested in the world as I'd "like it to be" but as "it is." I'm sure my European counterparts feel the same way.-----------
Right Mike, your last part is like Another said about the forest growing anyway. The fact that it worked with fiat is the way it happened,,,,, "it is"!
To address your point: well, they are awfully dog gone aggressive now. Note that they didn't make any attempt to match our post crash rates with a larger drop in their own. That has placed then in a very pro-active dollar warring position now. I'm sure Greenspan is smoke-en over this break away. Its built a major carry proposition against the dollar with it and the Euro has to gain on this. Here is an item from your News feed:
--------------------
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Currency%20Europe&tp=ad_uknews&T=news_storypage99.ht&ad=euro_currency&s=AO72iPxRDRG9sbGFy
Currency Europe
10/05 13:06 Dollar May Fall vs Euro, Yen; U.S. Unemployment Seen Rising
By Chris Gothard
London, Oct. 5 (Bloomberg) -- The dollar, little changed, may decline against the euro and the yen on expectations a report will show U.S. unemployment climbed to the highest level in more than four years, more evidence the nation is headed for a recession. -------------------
``We expect unemployment to rise,'' said Rod Davidson, who helps oversee about $1 billion as head of fixed-income securities at Murray Johnstone Asset Management in Glasgow. ``Everyone is watching for the slowdown in consumer spending.'' He expects the dollar to decline to 96 cents per
euro by year-end, and recently sold U.S. Treasury bonds in favor of European government debt. ----
Since Sept. 11, U.S. Treasuries maturing in one year and more returned 2.05 percent in local currency terms, according to Bloomberg indexes that take into account reinvested interest. For a European investor, those returns are reduced to 1.79 percent because of the dollar's drop against the euro in that period. ----------------
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Add a,,,,,,, solid rate difference on top of these figures,,,,,,,,, factor in a "beggar thy neighbor" who is going to survive this economic war between Japan and US ,,,,,,,,; and europe's thrust is major! I fully well expect Europe to sell into any dollar gold market spikes,,,, now,,,,, so as to hold the level stedy,,,,,,,in an effort to inflate paper and discredit our gold market. Eventually they will move to create a rift between physical dollar gold prices and dollar derivatives prices. The call will go out
that American gold does not reflect what's happening to our Greenspan dollar policy,,,,, real US price inflation,,,,,,, and is a fraud.
You know, the US wants and needs a higher gold asset price now and I bet they are confounded to find a way to achieve it. We are stuck in a situation where we will ship a good portion a cheap prices first. We spent a decade or so playing this gold game for better oil pricing and economic
dominance; now a higher dollar price would hand our banks a trillion dollar derivatives loss if it rises. It just kills them because the Euro banking establishment would simply cash our all the dollar based gold derivatives into euro settlement and gain as gold spikes and builds an ever larger asset base for all the ECBMBs.
I have to laugh at all these jokers that keep trying to understand the ECB gold policy as some sort of currency backing similar to years past. It just flies right past them that the ECB wants gold as an dollar replacing asset, not local money backing. For your European clients, they would be in the best of all worlds it they buy gold now. Their system is almost making rising gold a law so as to buffer domestic dollar exchange rate loses.
Mk, you also wrote:
-------- Of course, this is precisely what happened in the 1970s. Harry Browne made the same argument back then -- that the $35 gold price was both an institutional fixture and institutional fiction. Europe took advantage of that situation by reclaiming a substantial gold reserve. When the
London gold pool (both de jure and overt) broke down at the $35 price, the devaluation (both de jure and and overt) quickly followed. Additional formal gold sales proceeded from there from both the International Monetary Fund and the U.S. Treasury.
Since today the gold price is both an institutional fixture and institutional fiction much the same process is in motion at present -- only de facto and covert. Are you suggesting a similar result? And with the euro present and accounted for, will it lead to a new world order? -----------
The difference today is that the whole worldly financial, economic and currency structure evolved to service a much more fast paced dynamic. Simply put, we cannot go back to not using digital settlement again. If we are to use our trading efficiencies we must embrace fiat currency use,,,,,,,,, and all its evils. This is what was recognized as we were placed on the road to high priced gold. Kind of like high priced oil has been factored into our equation,,,,,, so too will a rising gold price be seen as the price we pay for modern operation. Of course, just as those that don't have oil must pay to play, and gladly do so,,,,,, those that don't have real gold when the tables turn will have to pay to keep up.
Back when Harry wrote his early views, gold was largely a physical market. Let's see, were there futures in the late 60s. Nope, didn't think so (smile). Gold was largely a government transfer thing with private players outside the US moving a relatively tiny amount of gold. The real story in the 70s was in how much gold the truly big operators couldn't get, even at those oh so high prices. The little American brought his K rands , gold stocks and post 1975 futures and thought he was doing something big. In retrospect, gold was dead in the water compared to where it should have gone. The dollar faction never really stopped controlling it.
Today, it's not the government pricing policy that in jeopardy, it's the very market itself and this change will break not only the price fiction but the institution also.
Ok, guess I went on enough here. I sure hope everyone can overlook my english mistakes in those last two posts? More so in all my posts? (smile) Talk later my friend
TrailGuide
Gold Trail Update (10/8/01; 08:04:09MDT - Msg ID:63166)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/8/01; 08:04:08MT - usagold.com msg#113)
Gold on the trail.
Hello Again.
While we watch world events agrivate the markets, the GoldTrail becomes an ever safer place to be.
With US bombs working overtime, we may as well get used to living, talking and investing in a world of disorder. It seems this particular period isn't going away any time soon. However, there is another dislocation on the horizon; once we get past this war phase, by then a real economic / currency transition may be well under way.
I wanted to further discuss a closing portion of MKs post, here on the trail.
----- Since today the gold price is both an institutional fixture and institutional fiction much the same process is in motion at present -- only de facto and covert. Are you suggesting a similar result? And with the euro present and accounted for, will it lead to a new world order? ------- I think we may have come to a new Trailhead -- perhaps one that looks vaguely familiar, but then again perhaps something totally different. I am convinced you are correct that the Europeans believe that there is a certain historical inevitability to the dollar's demise and there is no need to hasten the process. ---- The real controversy in the weeks and months to come will revolve around what this
might mean to both European and American savers, equity investors and gold owners. -----------
-------------------------------------------------
In MKs quote above, he was concluding a comparison to our early seventies gold market and its predicted change as seen by Harry Browne. He also considered the European perspective and what it will mean for us. That "us" is you, me and our friends in Europe.
My thoughts:
I made a point in my last talk that: ---- In time I came to understand that there really was a long term, singular move, evolving along as a political play at work. The last decade only served to underscore it all. --------
Within this evolving political play, gold is but one portion of the pie. For us gold advocates, "how this portion fits in", is the most important segment of this economic transition in progress. In time that question will become the most all consuming topic on gold forums.
If you have spent any time at all with mine or my associates thoughts, you may have come away with a perception that these past decades did not contain gold cycles. Indeed, all of these fluctuations could be understood as one long, determined, singular process; a competitive political process of taking the world off the old dollar standard. As in MKs thought above; most European planers realized long ago that there had to be some inevitable "play out" or "wear out" of the dollar's mechanics. Especially when its whole linkage to gold was broken; making the dollar an
international medium that only expressed the political management for one nation: the US!
Modern Euro Zone thinkers, today, are even more so aware of what their new currency initiative will mean in the time ahead. As much as we Americans turn a deaf ear to such logical discussion, there is no avoiding the fact that every currency that lived had an end. This fate is being hastened for our dollar even before full Euro use is established. We have but to look and see that "safe haven" currency buying has dramatically shifted to favor the Euro in this present time of warfare; something that was not recently the case for any other major national currency.
The historical fact, that fiat currencies end, is all the more true as modern economies probe the useful limits of fiat currency systems. We have pointed out many times that the dollar has a definite timeline and the equation that controls that line is linked to "political use". Where once hard metal backing or at least "hard style money" management determined a fiat's value, modern economics seem destine to morph even the next "world money" into the same process. This is part of the "why for" Europe's ECB built its gold policy as it did. In addition to replacing the huge hole a fallen dollar will create, their "non money" gold assets will establish a world class commodity link that oil
producers and other natural resource rich nations can use to deflect "new world order" building by the next zone of nations. A return of gold back to it's ancient real purpose and use in a value ratio that reflects the worth of the world's created and owned wealth in something other than national paper currency. This will send gold on a long term run over decades. Creating an international asset that forces the comparison of all economic orders, and the national currencies they use, against each other; negating the need to reinstate a Western policy of artificially controlling gold values for the currencies benefit.
-------------------
The US placed its money into this current equation in 1971. Then it failed to accept the internal price inflation that over printing its money demanded and a remarking of it's gold reserves would expose to the world. Once off the last possible connection to a gold exchange standard, the dollar became a modern political tool. Little more than a derivative of value that depended upon what it could buy within our American borders. While this will be the fate of every new currency in our modern world, the US was politically and structurally unprepared for this shift in dynamics. We left our currency in this international pot, subject to every bit of unknown economic evolution that would come along. Because we could not walk away from the free lunch it brought us, that evolution dynamic is now upon us. The price we will now pay is the complete loss of dollar utility.
We managed this threat with help from our Euro friends; somehow thinking they enjoyed and wanted our fleecing their lifestyle to the same degree we did it to the rest of the world. Their cooperation, we will find out, was but a structural policy that brought time; time for a dollar
replacement to be made.
Our ability to print and ship ever larger numbers of dollars overseas, against our local purchasing power alone, demanded a gold relationship to prove the dollar derivative's value. While implementing this policy, we morphed our internal goods production base so as to further decrease its ability to match the flood of dollars we were creating. From local manufacturing to services we moves, all the while our leaders and economists told us; "don't worry, noone is watching,,,, and if they are they are too stupid to understand it all". Herein is where gold fit into the pie. Herein our newly fiat currency became a tool with a timeline. A currency with an end.
While hard money historians, to the man, clamor for a return to honest government and a dollar backed with gold; they leave out an important step in the process that history says will never be skipped. Once a nation embarks down a road of inflating its currency for local political use, the cast is set for a constant redenominating of the money unit; that is "real bad" price inflation. However, modern economic evolution has presented an even more profound reply. Once a nation embarks down a road of inflating its currency for international political use, the cast is set for the world to find said fiats useful limits, then drop it from use; that is super price inflation as a result of fiat replacement. To this end we come.
--------------------
The gold market, today, is composed of a relatively tiny physical sector with an all consuming paper component surrounding and dwarfing the standing stocks. This relationship is fine and well as it served the international community with a way to hedge dollar positions with price rises in gold. It worked as long as this "paper gold" float had credibility; not to be confused with delivery credibility. In our modern dollar gold markets, derivative gold investors need only have faith that their position "could and would" deliver a gold "price matching" quality. As long as the dollar remained the world settlement reserve currency one need not have access to real gold to generate hedged buying power, paper gold would do this for you. Whether the gold price moved or no, a position and faith was all we needed to continue dollar use.
This kind of position has grown in the final decade of dollar use. In order to float ever larger numbers of international dollars, the paper gold float had to expand with it. Our dollar was very much hyper inflated as it was used in a final act of world economic leverage; "political use" that drained the last bit of "leverage value" from a failing currency system. To this end, the "paper gold"
markets were matched, point to point, with international dollar inflation.
-----------------------------
As we proceed with this act, the dollar will come to be seen more and more as "just another currency" rather than the world's reserve settlement money. We see today the makings of this move as national blocks move in this direction. England, Russia, China and South Africa are thinking more and more in terms of using Another currency; in a percentage that more reflects a realistic ratio of their trade flows. Soon oil, debt and all world settlement will be done more so in this same ratio. Soon, investors will match their fiat needs and savings plans so as to be denominated in Euro positions; again equal to a more worldly economic exposure.
While, at first, not completely replacing the dollar on a world trading scale, this initial shift will have a dramatic impact on the use, need and overall function of our current paper gold markets as expressed in dollar terms. In order to replace the loss of our international dollar demand and its impact on domestic economic and financial structure, the US fed has and will begin a structural currency inflation that builds upon an already overextended base of world dollar liquidity. This incredible currency expansion will break out into the open with real price inflation as never before witnessed in the US. In turn, foreign holders of dollar based assets will, not only, demand price performance of their "paper gold" hedges, even as they are compelled to shift a larger portion of their asset bases into Euro positions.
The ECB will not only be forcing a higher return to Euro holders, they will also be promoting a shift away from the US method of hedging currency risk. Moving their quarterly marking to the market of gold assets to using a local Euro Zone spot physical price; a price that will prove to out run the dollar "paper gold" market's ability to keep up. Such a play will emphasize "physical gold" positions for hedging as opposed to "paper gold" positions. The latter will become an obvious useless play as investors ratio their exposure into physical and glut the "paper gold" market with no longer needed, unwanted dollar positions. An action that forces a discount upon a market physically unprepared to match real gold against a decade of super inflated paper supply.
In the end analysis; the dollar will suffer an ever more negative reallocation of assets in a snowball effect that trends investors away from dollar use and settlement. As dollar price inflation roars, and physical gold demand soars; the dollar gold markets will completely fail their past hedging purpose as they become locked into a political cash settlement mode. A mode that forces an ever expanding discount against spot physical trading in Europe and the world.
---------------
The new world order MK mentioned above will, in time, be seen as simply a redefinition of currency use and values. As seen in a historic scope of human affairs; the world has always been on the brink of a new world order. Perhaps better said: the old world order has never stopped
changing. (smile)
thanks all
TrailGuide
Gold Trail Update (10/08/01; 18:21:27MDT - Msg ID:63196)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
[No msg#114]
Gold Trail Update (10/08/01; 18:28:06MDT - Msg ID:63197)
The Gold Trail Discussion has been Updated
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MK (10/08/01; 18:28:05MT - usagold.com msg#115)
Question from Beneath a Tonne of Yellow Metal:
FOA, with respect to your comment below (which fell on me like a tonne of yellow metal), let me ask a question or two:
FOA: "The ECB will not only be forcing a higher return to Euro holders, they will also be promoting a shift away from the US method of hedging currency risk. Moving their quarterly marking to the market of gold assets to using a local Euro Zone spot physical price; a price that will prove to out run the dollar "paper gold" market's ability to keep up. Such a play will emphasize "physical gold" positions for hedging as opposed to "paper gold" positions. The latter will become an obvious useless play as investors ratio their exposure into physical and glut the "paper gold" market with no longer needed, unwanted dollar positions. An action that forces a discount upon a market physically unprepared to match real gold against a decade of super inflated paper supply."
MK: I think I might understand where you are going with this. But let me ask you just to be sure: Do you foresee "using a local Euro Zone spot physical price" as you put it, (and I interpret that to mean Europe pricing gold in euros independent of the dollar price) as a means to breaking the bullion banks' grip on the price of gold? Let's just deal with that piece of the puzzle before moving on. In such a scenario, what would happen for example if natural supply and demand took the price to EU500), while the bullion banks through derivative selling held the price at US$290? Let me throw in one more ingredient: The exchange rate between the dollar and euro remained within 90% of what it is now. Is this even theoretically possible?
Gold Trail Update (10/08/01; 18:32:19MDT - Msg ID:63199)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
[No msg#116]
Gold Trail Update (10/9/01; 10:05:49MDT - Msg ID:63235)
The Gold Trail Discussion has been Updated
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FOA (10/9/01; 10:05:48MT - usagold.com msg#117)
PIZZA,,,, Bronco's,,,,,, Tonne of Yellow Metal,,,, and USAGOLD: Ha Ha,,, a gold advocates dream come true (ssssmile)
Background for everyone
All through out this period bullish gold traders have lost their shirts trying to bet on the price of gold. It wasn't until around 1995? or 1996? that these same traders even began suspecting that the price of gold was manipulated. As years turned into decades, hard money traders plunged theirsavings into our gold markets as up and down cycles drained their leveraged gold wealth. All the while thinking that the highs and lows, that were killing them, were just the ebb and flow of paper prices representing the fundamental demand and supply of physical gold. With Mises like faith they knew, someday, the currency inflation that has driven our financial markets and economies upward, would meet its end; finally taking their leveraged gold position to the top. It didn't happen then and it won't happen now; not as they are playing it! Period.
Remember, this writing is coming from one of the longest running (now ex.) "Hard Money Socialist" anyone has ever seen!
Without mentioning any names, I can remember when some of today's most avid supporters of the manipulation cause were shouting down, not only Another's voice of reason to buy physical, but anyone else that suggested manipulation or a "political thrust" was controlling the paper price.
Today, countless gold people around the world point out that gold is a manipulated item. While being on the right track, they are still using the wrong perception to grasp the dynamics of these markets. This lack of perception is what keeps them from positioning themselves and other gold
people correctly: positioned to gain wealth when a stake is finally driven in the heart of this paper monster.
The efforts by most are focused in one direction; to once again make our paper gold markets reflect the real rarity and actual fundamental value of physical gold bullion. While my heart, support and courage goes out to all gold bulls that strive for this end, it's chances of happening are the same as having government moneys return to being backed with gold: zero chance!
This grip on physical prices, that paper trading has, is only going to be changed because dollar gold derivatives no longer work. Not because some form of private lawsuit, world disaster or private coin buying is going to redirect investment flows. Only an official government change away from supporting their currency with paper pricing will do it,,,,, and don't expect the USA to be at the forefront of this move.
---------------
Lost in all the confusion is the distinction between investing in the price of gold and investing in gold itself. Perhaps 90% of all the investing in today's worldwide, dollar settled, gold market is done in this first way mentioned. Yes, the market is structured, contractually, to settle in gold. However, in practice, in norm, and in past legal precedent, it is accepted that paper gold trading is meant to only capture the price movements in gold while ceding, what could be, controlling physical trades and
their price setting function to other market areas.
Obviously, this is the way it all started, years ago, with the physical trading and its fundamentals dominating the lesser paper trading. But the market evolved with the paper contractual trading becoming 100 or more times the size of the physical side. But everyone already knows all this,
right?
What doesn't seem to be obvious is the "why for" the paper market grew so large. It grew to dominate because world wide dollar expansion reached its "non hedged" peak. In other words, the dollar's timeline was ending as its ability to produce non price inflationary economic gains came into
sight
In order to push dollar holdings further, international players needed and purchased "paper financial hedges" to balance their risk. Within their total mix of derivative hedges were found "paper gold price hedges"; modern gold derivatives. The important thing to remember is that these positions are not and never will be used to demand physical gold. They are held to buffer financial and currency risk associated with holding any form of dollar based asset. To work these items don't need to really perform "dollar price movements" in the holders favor as much as they are present in the portfolio to act as insurance stickers.
In that truth, these paper gold positions act like FDIC insurance at our banks. It can and will manage only a small determined portion of bank runs,,,,, not a full scale failure of the banking system. In a real full banking failure we would all get, perhaps, 80% of our covered $100,000 and 10% of the rest.
The same is true for these gold position's performance; real gold delivery along with true price performance, matching real bullion trading, would be only for the very few. For that matter, an actual functioning paper gold marketplace would be for the very few, too! But, in the same way a bank account owner understands the credibility of FDIC insurance when times are good; the international dollar asset owner will not grasp that modern paper gold hedges cannot be allowed to work until after a real serious price inflationary run begins.
For the first time in this portion of the dollar's timeline and our lifetimes, such an inflation is about to show its face!
==================
While so many of our gold bulls salivate at the prospects of some player calling for delivery and driving the gold derivatives market to the moon; it ain't gona happen! Our world of dollar based gold derivatives has grown so large and become so integrated into supporting (hedging)
international dollar assets, the central banks will band together to crush any delivery drive.
This is in the ECBs intrest as I will explain in a moment.
If some big player said he was going to take 100 million ozs out of the paper gold market, the Central Bank systems would just order him to trade out for liquidation only and go to the cash market to buy his gold. Don't think I'm confusing Comex positions and their rules as being different from the rest of the world gold market. What works on comex works everywhere when the system is at risk. The controlling governments, who's domain Bullion Banks reside in, would, could and will force those holders of bank busting positions to simply cash out for the good of their
system.
By the way; not only does a liquidation market send baby gold bulls running to sell, also, the BBs would be selling enough additional paper to temporally send gold down $100 bucks so our boy would trade out with a little less cash (smile). Then he would find an opposite "premium" spike in
the cash markets, waiting for his order.
I hope my little dose of reality drives some sense into our gold community. This is the reason Another says only fools try to buy their gold all at once on the paper markets. "NOONE" is going to exercise their "corner" until the dollar based gold system is changed.
-------------
OK, thanks for waiting, MK, I'm getting to your point. (smile)
Mike, while I'm writing this, I see gold selling off (silver more so). Once again, we see where the paper based trading has plenty of selling power and completely dominates the physical fundamental markets. How may postulated, even just a few years ago, that with the fed expanding the money
supply by a year to date "one trillion"; that paper gold could not reflect this inflation? This only further confirms that this form of market "hedge" is failing to function for its owners. Changing are coming, my friend, changes are coming! Back to the story:
==================
Paper gold derivatives became a major force in allowing this last, end time, demand for dollars and subsequent surge in it's value. This is why Another said it would run way up, even while being inflated, before the end would come.
Only now are we coming to a point where theory meets practice as Alan Greenspan now is and must hit the presses. This forced printing inflation, currently happening, is the very precursor to a lower dollar exchange rate, rising real price inflation and the very first destructive test of paper gold derivative hedges. As price inflation rises the US will protect its own banks and the short paper gold portion of these positions they created. They will sell all the paper gold they can in order to stop these hedging positions from functioning and breaking their writers.
On the physical side, the US wants and needs a higher price as they ship real gold commitments to help balance our sinking ship. So, the dollar supporting paper gold position we have sold for years will now block our ability to gain some ground with high US gold reserve prices.
In turn, Euro factions will also sell into the paper gold dollar system to help further discredit its hedging function in the face of dollar price inflation. Now to the good part:
----------------
If you are a major international dollar asset holder, watching this evolving transition, how would you act? Remember, not only is paper gold not rising to reflect real dollar price inflation, even physical gold cannot react because the dollar based market, as it currently functions, keeps physical subject to paper discovered prices.
With the world dollar gold markets completely locked from rising and performing their portion of a hedge function for your portfolio,,,,,,, because, if they rose trillions would be lost by the writers,,,,,,, what asset based currency would you escape into.
How about a currency that wants you to redirect your fiat hedging to using outright physical gold instead of paper gold leverage? A currency, with a stated free gold pricing policy, that will allow your physical hedge to function in place of that locked dollar gold market; and function in a
currency supporting way.
They say:We understand that there will be an inflationary transition form this dollar world because we, ourselves, must absorb a certain portion of all the past created dollar inflation. A portion of pain we and the world must all bear in order to economically get pass this period. But, at least, we offer a position in the wealth of ages to reflect this financial loss as it is manifest in price inflation.
We will allow and support any physical gold Euro price rise to balance this action.
--------------------------
Mike,
the leverage today will be in a physical gold position, not any other form of gold ownership. By accumulating physical gold today, we are truly walking in the footsteps of giants; advancing with them as they work thru this singular, long term political move. Truly, the oil producers also fully understand and appreciate this position.
Yes, I think it is theoretically possible to see physical Euro gold priced very high while traditional American paper gold markets become cheap, non functioning, cash settlement shadows of world spot gold values. In the near future, there will be no form of arbitrage between physical gold and this failed , crushed dollar gold market because it will only allow cash settlement. While a
US physical gold free market will be locally encouraged, it will most likely simply be a shadow function of Euro Gold prices. Besides, politically, unless we once again stop all gold ownership and or implement exchange controls,,,,,, all gold buying money would head to europe. Besides again, politically, a Euro based free market will end all fictions of gold's true value anyway. (This is my private understanding or scoop, if you will) I also expect a European gold coin to become real usable legal tender (not a collector item) and be named the "EuroLand"". Again, a barter asset that is taxed when used. Just as we have sales taxes and excise taxes; gold coins used outside an investment realm would be taxed. (again, this is but the shadow of an evolving down the road position as I can best grasp it)
I also fully well expect that most world gold mine production will be forced to ship gold into the leftovers of the dollar cash settlement paper market until the Bullion Banking system is made whole on their physical side. In adjunct to this, the ECB and BIS will play a major roll in cashing out failed paper gold positions for certain clients. Cashing out in Euros, that is.
A US workout to cover its failed paper gold position will most likely be using gold industry profits. It could be done via "windfall tax legislation", plain tax or part of any variety of emergency financial arrangement. All built in order to allow our current gold reserves to be repriced at higher world levels and help our dollar stay somewhere in the next currency system. Considering the size of the failure, real gold will outperform any and all investments once this all gets started. However, we should not be naive and not expect some serious taxes of our own on bullion sales. Still, only just enough so as to keep currency tender protected from being supplanted with illegal gold use. Illegal in that too high a rate and everyone would use gold in barter and stopped paying their capital gains taxes all together.
Dollar hyperinflation and super high gold prices are closer than many think.
MK, while I think you have always understood our thrust, if this post is sinking into the readers understanding,,,,, the words should be jumping off the page at them. Let's hope so.
Now, I think I will do some gardening and also have a pizza later. Sounded too good to pass up! (smile).
thanks
TrailGuide
I hope to later comment on the good words of Mr. Strauss.
Gold Trail Update (10/9/01; 14:55:33MDT - Msg ID:63248)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/9/01; 14:55:32MT - usagold.com msg#118)
Patching the trail!
Well. I read thru my last post and thought it was ok. Then I returned, pulled a copy off the printer and gulped. Don't we wish we could change these things? Here are some corrections and expansions.
[Sitemaster note: msg#117 has been properly amended to incorporate the corrections FOA indicated in this post, #118.].
sorry about this,,,,, I think I'll go hide for a while.
Just a TrailGuide
Gold Trail Update (10/10/01; 07:07:07MDT - Msg ID:63290)
The Gold Trail Discussion has been Updated
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FOA (10/10/01; 07:07:06MT - usagold.com msg#119)
At the Trail Head parking lot
I'm here to post a notice that another guest speaker will soon be talking somewhere on the trail. I think this one will be covering fiats or moneys, not completely sure?
(leaning against my car, while talking to a few day hikers)
After yesterday's awful writing I went into my back property to hide and do some gardening. Some of the guys that help me out came over and dug in. It wasn't long before they, once again, started telling me what to do and, in a weekly ritual, I fired the whole bunch! By now they know this is my usual banter and just kept right on working,,,, and still telling me where and how things should be planted! The truth is, after all these years I'm still learning from them. Looking at the whole situation; I know I can talk better than they can garden, but I also know they can garden better than I can write! So, there is a certain symmetry ,,,,,, somewhere in this scheme of human affairs. It requires us all to put up with the other's weakness; especially if we want the other's understandings.
(pulling a cloth from my pocket and cleaning my glasses while talking)
On most parts of this Trail, I could walk with my eyes closed; while in other areas I would need six maps and two GPSs units just to know north! Right now, I can tell ya what's most likely out there, but in those strange areas; not really sure?
Take this Euroland gold coin thing? My guess is we won't see this anytime soon. I suspect it will be something like a K-Rand, with no marked currency denomination, but different in that it will be a hybrid legal tender. If you look here in the US, gold coins are somewhat a currency as they stand.
Just like IBM stock, real estate and most any other asset, we just have to sell it for currency first; pay our taxes and then use the money to buy something. The process only becomes illegal if you use the stock, land or gold to trade directly for something and don't pay your taxes.
Mr. Strauss pointed out that the current trend in motion is that all VAT taxes are being lifted or phased out on gold trading. Eventually, most of the world will have only some form of capital gains taxes on gold. This is fine and is bringing gold into focus as the one and only metal asset the official sector is trying to work with. But I think there is more to it than this.
As I said many times; Europe it looking to bring gold back into use as a very tradable asset. Perhaps "the most very tradable asset" but still outside the fiat money context. They want to keep the government's and socialist's hands off gold and its market function so it will serve everyone as a
savings medium. But, they also want it to gain as a trading medium so the combination of the two will create immense demand.
To gain in the "use department" I suspect we will see some push to drop all gains taxes on gold used in official coin (Euroland) form. In place of that, there will be some form of excise tax charged on payments / trades done using these gold coins. Most likely, you will have a choice of paying
completely in gold or Euros but not a combination of both. Probably, gold will be used for large purchases because gold will carry a very high price by then. And too, 1 gram coins will be the norm; being the size of our one ounce now, but with alloys. I doubt gold will ever be used in regular store / retail sales. In other words, I could go into my bank and use 50 Eurolands containing, say one ounce fine gold each, and pay off my $200,000 mortgage; minus some 15% excise tax on the deal? I could probably do the same thing with regular bullion, too, but would pay a somewhat higher gains tax rate; instead of the lower excise tax.
Anyway, this is all in the "for what it's worth area". Go ahead and take your hike,,,, I will be here giving the car a tune-up and changing the oil when you return. Then I want to talk some more about the words of Mr. Strauss (smile).
TrailGuide
Gold Trail Update (10/15/01; 07:49:10MDT - Msg ID:63645)
The Gold Trail Discussion has been Updated
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FOA (10/15/01; 07:49:09MT - usagold.com msg#120)
Continuing from my last talk:
(returning to the trailhead parking lot: walking along the road with a few Gold Trail hikers I ran into along the way)
Boy, I wish those other day hikers would have returned from their walk before I had to leave. Sure could have used a ride to the auto store. Who would have thought I couldn't get my oil filter off? It seems the more we advance our so-called "modern lifestyle", the more complicated simple things become. Now it takes a $10, special angled grip wrench just to undo a simple filter and the darn thing broke just when I needed it!!!!!
You guys probably think this is all normal? But, I tell ya, all this complicated engineering only works when nothing goes wrong; the fella that designed that oil filter never thought somebody (me) would accidentally push a little more than needed; breaking the wrench and causing a problem that
stopped the whole car from running.
(now done with the car, sitting on a log with the guys)
You know, the gold market was put together the same way as my car: over the decades, a whole bunch of financial engineers each designed their own little part of the mechanics. Each one of them structured their little part to work perfectly as it functioned in the overall operation of the engine.
These fellas did exactly what their boss told them to do; make your part work and don't worry about all the rest. In truth, this dynamic works fantastically in a mechanical environment; devoid of organic imperfections. But, apply this kind of design into an economic function and sooner or later you're asking for all hell to break lose!
You see, a fuel pump won't look over its shoulder to see if the gas tank really has all the liquid the dash board fuel gauge say it has. Such a mechanical system, as an overall part of the engine function, will keep right on running until the very end! Now understand that..... if a person, emotions and all, was running that pump, he would eventually see what's what and go running down the hall screaming "we're almost out of gold,,,,, errr, I mean gas!
Let's take a hike:
You know, modern financial engineering incorporates all the physical factors of "just in time delivery" management and labels it "just in time dispersion of risk". In other words: they try to take all the perfect workings of a mechanical operation and replicate it into financial dealings. But, financial instruments, while understood by us as being paper bonds, stocks and bank accounts, are actually completely organic! They are, like money, really concepts of value we hold in our head; not oil filters or fuel pumps we hold in our hands. The "worth" of things is a "value" we mentally
create thru countless interactions with each other as we go thru the day: interactions we call "the markets".
Onward
It's no accident of nature that our world monetary structure embraced derivative expansion as it has over the last ten or twelve years. I think we can say that this modern creation of risk management began around 1988 or so. ( It's funny, but I remember living in San Diego and reading a paper about a gold company called Barrick that just started only a few years earlier?)
The record of derivative evolution meshes seamlessly with the recent need for supportive dollar currency measures; a strategy of maintaining a failing system that was ending earlier than expected. Truly, a decade ago, noone was going to carry the dollar any further, waiting on the endless delays of Euro creation, without some way to hedge risk. We had hit the end of the dollar's timeline to early; we had missed the mark.
The US could not physically save the dollar, then, with gold backing or the production and sale of real goods. In the course of all the previous dollar expansion, the gross liabilities of taking dollar asset conversion into anything real, and originated locally in the US, would have made us economic slaves to the world for decades. The only answer was to let the dollar kill itself while you create an illusion of risk dispersion in the form of derivative protection; a form of backing if you will. With this "illusion of risk dispersion" in hand, called a derivative hedge, the world currency system and its denominated assets, continued on. This "just in time risk management" was and is adopted into every present day currency that carried the dollar as reserve backing. This includes all the old Euro moneys and the Swiss and British etc.. Thus, in time, derivative use supplanted IMF protocols and SDR functions; sidestepping the whole basic structure of controls built upon the old dollar based system.
This derivative buildup has effectively removed US fed policy from being a controlling factor in dollar use and expansion. Gone were the days when the Fed could force everyone to disinflate with us. Today, if we slow our money printing, the outside liabilities would crush our banking and ,therefore, our economic way of life.
It's no wonder that Alan Greenspan has commented so often on the need to control derivatives yet has no workable plan to counter their function. Truly this dynamic was created to counter his function and few can understand this! In effect, the dollar was placed on a one way street that required it to be inflated into infinity. All as a means of protecting dollar originators; the US banking system. Dollar leverage, that is actually US liabilities, is now built up endlessly. This all points to a nonstop, end time need for an uncontrollable inflationary expansion by our fed.
Randy S, over in the tower at USAGOLD, has shown us a complete record of this current era of dollar creation. While others were waiting for a "little bit of 6%, 7% or 8% inflation" to show its head, are given a weekly guide of this new Fed policy agenda and its dilemma. An almost endless acceleration of reserve creation that, strangely enough, coincided with each increase in the confidence that the Euro was for real.
Today, our fed is confronted with a daunting task. The Sept. tragedy served to force its hand and show its true policy in the open and the risk that is driving it. We as consumers welcomed a derivative driven dollar expansion, the stock market assets it produced and the better lifestyle it brought us. We even thanked the political will that made this so; not knowing that the seeds of leverage that produced our illusionary gains were handcuffing our ability to ever stop the process. We are now learning that managing a dollar economy and the "derivative risk" that brought it, all works very well. In our first real test of "just in time risk management" our Fed is and will provide buying power to gobble up any and all risk, "just in time" and without end.
With this the decade long cries for comparison of our "US free market driven economy" and "Europe's terrible socialist polices" fall silent. It seems that when our "free market" created assets are threatened to be exposed as an illusion of value, Americans embrace any and every form of government socialistic bailout known to man. Perhaps, our much exampled form of a "free market driven economy" was little more than "free as long as derivative risk is covered with social money" "just in time".
Now, we will follow this trend in an accelerated fashion, until all derivative process is exposed as nonfunctional outside a massive hyperinflationary policy. Our wealth is and was nothing but an illusion of safety and created in our own minds. Within this mix is contained all the various gold derivatives we have come to love so well. The future failure of a gold contract does not mean that the long holder gets his price or his underlying good; it means his derivative fails to shelter his exposure by matching his other loses. In terms closer to a gold bug's heart; paper gold in any form will not match up anywhere near the price of free traded physical gold.
We are on the road to high priced gold and under priced derivatives. The same thrust will be apparent in all financial derivatives. Further, we are on the road to a fully "cash settled" contract market for gold; here in the US and abroad. In the time ahead, just before serious real price inflation rears its head, look for most all dollar based contract commodities markets to be restructured into pure "undeliverable" cash settlement markets. Markets that, also, many gold producers will be forced to use. The day of big premiums on gold coins and bullion is coming and
coming fast.
Let's head back to the parking lot and home and get ready for another day. A real hike is coming.
TrailGuide
Randy, please rework the recent mistakes on the trail, in your time(big smile). Thanks
Gold Trail Update (10/18/01; 08:22:08MDT - Msg ID:63834)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/18/01; 08:22:07MT - usagold.com msg#121)
There they go!
(At the trail head, loading the packs)
Quick, use your binoculars, watch the action on the other side; across the paper gold valley.
Do you see them? Right over there, follow my point? Just under those low bushes; next to that big bolder; making their way out of the paper valley. Yep, that's a big paper gold trader, going over the top. Ya see em? Ha1 Ha! Sure sign the seasons are changing!
These guys, and others like them, are trying to run ahead of a trend we already knew was in process. They are going over to the other side of the paper gold mountain. If only they knew about USAGOLD a long time ago?
Yep, us PGAs beat um to the punch and those pikers
(slang for hikers on some peak in Colorado [smile])
will pay a big premium to be in our dust! Indeed, they are headed where our very own gold trail has been: in the middle of a physical gold market transition that finds its roots in
Europe.
Yup,,,,,, silver is back into the 4.20s as China sells it to buy gold; while the question of what to do about gold paper gets more official consideration every day! The dynamics of money is in flux, for sure!
Keep loading your packs, people, take lots of stores for a true wilderness experience under a starlit night; a big hike is coming.
TrailGuide
(thanks Randy)
Gold Trail Update (10/20/01; 08:50:21MDT - Msg ID:63932)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/20/01; 08:50:20MT - usagold.com msg#122)
Taking broader steps: heading towards a clearing
Onward
I'll repeat a remark made here on the trail before:
-----[One day the ECB will be] Moving their quarterly "marking to the market" of gold assets to using a local Euro Zone spot physical price; a price that will prove to out run the dollar "paper gold" market's ability to keep up. Such a play will emphasize "physical gold" positions for hedging as opposed to "paper gold" positions.-------------
Follow my steps
The coming dollar currency crisis will be, very much so, driven by an across the board failure of all derivative market function, not just in our gold derivative markets alone. As these risk dispersal markets built up over the years, that system allowed the dollar to continue in its reserve roll. The very failure of this hedge system is what will begin to transition the world away from dollar holdings. Not to mention settlement use and retention in CB reserve function.
Truly, our dollar's value would have never arrived at or retained its current level, for so long, had foreign CBs not supported it by making a background market for derivative exchange management and low rate gold loan commitments for major world investors to use. Within this tremendous mass of paper risk assets, our modern paper gold markets find their home.
When this whole quagmire of dollar support is allowed to fall away, the true nature and worth of paper gold derivatives will truly come to light. Prompting a trading recognition of their real value and their quick disposal. The ensuing price action will sever investor's faith that there is an equal connection between the owning of; what is the fundamental value and leverage of physical gold assets and simply capturing gold's currency price changes in paper asset form.
This change in market pricing dynamics will shift investor perception and force private and public wealth hedgers to see physical gold as having a far greater leverage over paper positions. An image and position the dollar gold faction and the entire gold industry have fought against for years.
This transition in hedge book policy will set off a new dynamic trend in our gold markets where physical gold soars to find a fundamental value modern gold thinkers knew existed. A value steeped in gold's rich history of being the very best barter wealth savings in the world. A value that gold could never find when tied into official money systems.
Our evolution of thought will find its roots in an inflationary financial crisis that is now beginning to unfold in dollarland. In fact, "all" dollar hedging systems will most likely meet the same fate as the effects of a real, serious price inflation in local US markets escalates. In the final overview, physical gold will be seen as the only real risk hedge; in fact; the only world class asset "that can perform such a task"!
Onward further
In simple political terms; the very leverage that all modern currency supporting derivatives represent, never could be allowed to perform; in large outright quantities! Once real inflation begins to demand that these hedges truly spread financial risk with real performance, resulting in a pile
up of loses, the political solution used time and again will return as the time honored utility that saves the day:
------change the rules------!
You see, just as there wasn't enough real gold stored in official US vaults to match pre 1971 dollars at the then existing exchange rate, there isn't enough "tradable gold" to match the inflated paper gold markets today. Both then and now, the paper derivative's function to relate and capture the value of gold was blocked from functioning.
Pre 1971; people held dollars because the physical gold that those dollars should have represented and could be traded for, hedged the risk of government sponsored price inflation. But, people found out, too late, that those gold derivatives; those pre 1971 dollars; would never be allow to function as risk hedges. We found once again that man's ability to maintain a constant link, a constant derivative value, between official money and gold,,,,,, was always an evolutionary failing trait.
The response will be exactly the same for our problems now as it was then.
-- Then --:
The dollar faction universally abrogated all gold delivery options against dollar currency and implemented cash settlement against all claims for gold. In other words; implement a pure fiat floating exchange rate and close out all gold claims by saying that investor holdings in dollars were equal to gold. In hindsight this was just another illusion; dollars were only ablr to capture the gold price if that relationship was controlled thru paper market valuations.
Then -- to -- Now:
By saying that dollar cash, using the old 35 dollar controlled rate, was the same as owning gold; the Western world embarked down the same paper road we travel today.
Modern "Western Thought" is convinced of an illusion; that capturing the price of gold is as good as capturing physical gold. Indeed, this thought was further extended to include capturing a leveraged price of gold.
--Now--:
A process is in the works to change our dollar / gold relationship again, after derivatives were inflated beyond use. Now, even the price of gold can no longer be captured on a par basis between derivative gold paper and real physical gold as the preceived value of gold is soaring. Once a super currency inflation breeds super price inflation; the derivative markets will begin to fail their hedge purpose and their trading value. These asset themselves will become the real risk.
Dollar supporters have no choice but to "NET OUT" at even any derivative hedge that may risk the system. That is, "Net Out" in a way that completely voids their risk transferring purpose as they are settled in dollar cash "no matter what effect inflation is having on the currency's value or your other dollar assets! Remember, the financial world today turns on dollar assets that are hedged; not just pure bare holdings! Block the hedge markets from performing and the dollar itself is unseated.
Make no mistake, every official rule and regulation ever written for currency crisis management involves not only currency profile assets, but also gold profile assets. With this concept in grasp; it's easy to see, with gold derivatives so widely used in current dollar support functions today, why they will be impacted as part of the paper mass.
Modern derivative usage involves gold derivatives and a new evolving crisis policy management will function somewhat the same as in 1971. It will arrive as some "net out" policy directive and universally abrogate all gold delivery options as part of the package. Any gold derivative that is used to support dollar currency exchange rates will be reworked to implement cash settlement against all claims for international currency derivatives written for gold.
Further
Is it no wonder that Euro Banks have no fear from writing short gold paper. Because the entire Euro money profile is in the background for them. Running in parallel to and not in conjunction with the current dollar system. Any Fed policy that must break the risk transferring dynamic of derivatives, to protect our US banks, will open the door to the ECB's dumping IMF protocols and using the Euro alone as their sole reserve currency. This will immediately shift all dollar derivative plays onto the market, dynamically devaluing our dollar in the process. The ECB would then be cashing out holders of their gold loans in Euros as dollar physical gold prices spike and paper gold prices plunge.
Higher still; we climb
Of course, the big difference is that Euroland will encourage a physical only market price that, in turn, also floats Euro gold values to the sky. All in an well balanced effort to replace the massive dollar asset base it lost. In this; the Euro will become the first currency block that functions as a local reserve, yet under scores its image with huge non- monetary gold assets. Is it no wonder that EuroLand citizens will be buying gold as much for its prospects to rise as for its ability to be a wealth savings. In this it will hedge the future remains of a dollar failure and its impact on the world system.
If Mr. Huge EuroLand bank owes the ECB system gold worth 100 million in current gold deals; with each 1,000 euro rise in gold he finds himself able to settle in less received physical gold. In a true "cashed out" transition of currency reserve hedges, each ounce of contracted gold owed could be
reduced many times. Every player in the gold system, that is caught with their pants down, will rush to be a part of any Euro workout. Indeed, for every major player that was long the gold loan system, for the purpose of buying gold, cash outs in Euros will offer the only return. Official players in the oil sector would eventually be receiving American gold (but that is Another story).
Pause here
Remember; we have presented, for some time, that official gold stocks were never physically "in play" to the degree the gold industry suspected. It has always been our position that it is and was "gold commitments" that were behind the market, while official physical gold was traded mostly within the CB system or delivered to the most pertinent oil players. The Swiss operation points to an end time settlement of these for the Euro side of things.
ECBMBs (European Central Bank Member Banks) never really sent out very much real gold; they just lent their good name to the BBs. That means cash pooling for the loans also. So, when a new currency transition workout proceeds, the members of the ECB are receiving Euro cash in payment for gold loans. In hindsight; it will be seen that they lent the commitment to sell gold only long enough for US inflation to end the dollar's timeline and bust its dollar system. Around ten or fifteen years over this recent concluding period?
Truly, the gold that is filling the fundamental demand deficit never was the gold coming out of CB ranks; this position was and is the gold industry just looking for an answer to explain what was truly an paper market problem impacted by official currency games!
Besides, if your business is financially structured within an ongoing paper gold market and needs said paper to trade at par with physical gold; you don't want to consider an outcome where you may be trapped selling your product at a discount! Better to fight for a rework of the same markets. A process that robs physical gold owners of fundamental value by reinforcing the paper market illusion for the benifit of a relatively small group of gold players.
That will not happen this time; believe it!
In a final thought that explains the fundamentals that tarnished gold:
The gold that filled "the supply demand gap" came from tired Western thinking gold bulls the world over. Over the last years of our dollar's timeline, they transitioned their portfolios from holding physical to holding essentially unallocated forms of leveraged paper gold. This took place in both public and big trading firms.
To the thinking of these smaller world players, who made up this mass of original physical gold ownership; future gold, options, gold stocks and long gold loans, all captured the price of gold in this modern era. Indeed, for them it was all the same and suddenly so logical and simple. But, they did and are losing their wealth to the paper monster and now,,,,, just when they thing gains are in their grasp,,,,, the rules were changed again.
let's rest here; that clearing is in sight; where some speaker if giving a talk
Packs off for now
thanks
TrailGuide
Gold Trail Update (10/23/01; 10:30:13MDT - Msg ID:64084)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/23/01; 10:30:12MT - usagold.com msg#123)
The real world
No backpacks today. Lets just stroll over to that clearing where I'll be giving the talk. In reality, I'm just sharing with everyone the thoughts and views of a like minded gold advocate. Someone we rarely understand but somehow always knew.
-------------------------
Hello again and I welcome everyone to these ongoing talks on gold. Talks that focus on where gold and its market is taking us: -- an evolving message from an ancient metal.
It's wonderful to be with you, here in the American West, with its clear skies and cool dry air. Meeting here on the gold trail speaks to our senses in ways no city location can; imploring our minds to hearken back to what is real and alive in our world. While standing here among the mountains and trees, our financial perceptions begin a change; recasting our thoughts of accounts and credits into hazy feelings of virtual wealth we never really knew. Suddenly, bonds, stocks and paper investments descend to lower levels of importance.
It was as true yesterday as it is today, and will again be so tomorrow; that the touchable things in life are what make us whole as much as they make us wealthy. Our bodies are real, so too is the earth and all upon it: is it such an unreason that our wealth should not be real also?
For myself and many others that hear our message, the answer is no. No, it is not unreasonable to clearly own and touch what our efforts in life have brought us. I suspect that during this era, within this moment in time, events will eventually define such logic more clearly and prove it to be sound beyond any doubt.
Times change, my friends, history moves on and so too will mankind's perception of wealth. Once our perceptions will evolve, not in a forward matter, but rather in an ages old oscillation that returns us back to saving wealth itself; instead of a paper promise of wealth. With a regularity of seasons, as sure as the phases of moons, a changing of "political will" is once again about to redefine what our virtual written worth really is. In response to these changes, often made with little more than the stroke of a pen, mankind will seek a secure position. A position that will more so value an ancient wealth: a golden savings that no politicians could ever write the value of.
- As my friend would say out here: onward we move
Once again we hear the voices of shock and dismay among modern gold bulls. Followers of paper values who, ironically, display the same emotions each time their gold strategy fails them. In cycles that seem to repeat on regular schedules these investors wager on the price of gold instead of investing in the physical attributes of the real thing. In doing so they fall victim to their own misunderstandings: -- falsehoods represented by their own perceptions of what our Western gold market does and does not do.
Somewhere over the course of these last decades, Western Gold Bugs learned that it was very easy to wager on the price of gold. During this time a market evolved that made it far more convenient to bet on gold that to own it. But as this market expanded to include retail gold buyers, even simple reasoning seemed to be cast aside and all logic was lost. Truly, these were becoming markets that traded opinions and failed to produce wealth.
---- Did we Consider that: if it was easy for me to buy a gold wager, is it not just as easy for one to sell a wager?
Throughout this period, Gold Bugs seemed to reach conclusions about their paper markets that were never real. They understood how rare and valuable gold was. Yet, they fully well expected these same attributes to be reflected, not only in physical gold, but also in the price of their paper wagers. The reasoning was presented as such: -- investors that wanted to bet on the price of gold going up were unlimited in number and their demand could easily overwhelm the supply side that created these paper wagers. -- Conversely; investors that wanted to bet on the price of gold going down were limited in number and their supply of these paper wagers could never keep up with demand. You have got to be kidding?
But why would this be the case?.
They looked at this paper market and tried to think of it as a physical market. They figured that any investor that sold a wager, had to have his hands in the actual gold market, so as to supply the physical gold his wager was created against. Somehow, in our gold bull logic, we never grasped that perhaps 99%+ of the "world's" paper gold game always settled in cash. With the wager / seller simply losing his currency if he is wrong.
In a further convolution of logic, paper gold bulls never thought real world reasoning applied to them. If our paper gold bears didn't have the gold or the cash to buy the physical item, if they were demanded to do so; -- neither did our paper gold bulls ever want the physically delivered gold either! Nor did they have their hand in a cash bin deep enough to to do the deal.
---- The purpose and structure of these markets was always ignored.
The reality that confronts gold players today is that their perception of this paper market is flawed. The entirety of the world's paper gold markets are structured to capture the currency price of the metal; not actually deal in a majority of the physical aspects of it. Lost in this reality is the understanding that these markets do not impact the supply and demand for gold as much as they make a "virtual" price for gold.
Those in the business of selling paper leveraged gold to investors love to point out that long buyers can and do demand from the shorts to deliver bullion. But these same sales clerks quietly ignore the fact that short sellers can and do demand delivered cash from the bulls! When we have a market where both sides run from the other's physical demands; you are left with a paper arena that makes a "virtual" market price; not a fundamental supply and demand price.
-----Supply and demand
Also lost is the very real perception that the sum total of dollar based paper gold wagers, that can be created on both sides, is only limited by the sum of dollar liquidity floating in the world. In this logic; the number of bets on where the price of gold is going is unlimited on both sides and has no corresponding connection to the actual physical supply of gold bullion.
What "IS" firmly grasped by every major player in this market is: -- If at any time a majority in the market were to attempt to use these paper markets to extract a gross amount of physical product, the rules would not be changed! Rather, the rules would be enforced and the players would be cashed out and sent into the real physical markets to do their deals. Only then would fundamental supply and demand, based on gross dollar liquidity, create a "non virtual" real price for the product.
-- Disappointment rules the day!
Time and time again Western gold players are finding out that as dollar inflation creates more liquidity, the same of which will eventually drive price inflation, it also creates more liquidity that paper wagers can use to sell against our "virtual" gold price. While this is truly a fundamental fact of currency supply, Western paper gold bulls want to use this liquidity to leverage and effect their long side only. So as to capture a gold price moves on the upside. But they don't want others to use an equal amount of this liquidity driven leverage to supply the other side of these wagers to send gold's prices downward.
We wanted a free market and a free market is what we got: -- but it doesn't move the virtual price toward the gold bull's favor. Now they are mad because their bets are countered while physical gold advocates scoop up an almost free metal: -- using the liquidity that dollar inflation is producing. Truly, if ever there was a way to profit from gold mining, today, it's by buying this almost free physical gold the mines are producing; while mine players and paper gamblers pound their wealth into the dirt. This is what PGAs call benefiting from the leverage in mining (smile).
--- Supply and Demand: one more time
In a convoluted stretch of reason, "virtual" gold bulls wanted these markets to be regulated so the supply side of these paper creations would pay off on their bets. The bulls wanted to be able to create all the buying leverage they wanted while the bears would be locked into delivering a metal who's total world amounts are fixed. The bulls wanted free leverage without the using full amounts of real cash but wanted the bears to mark to the market with real gold buying power for every wager they made. If there is manipulation in our paper gold arena, it's in this area of investor understanding. What these markets "truly represent" is the misconception about gold in our time.
If the gold industry is unhappy with the prices their product if bringing from this paper market's leverage; they should be pushing for a change in the rules so as to force physical delivery upon everyone in these markets. That is; force delivery upon both sides! They don't, because their
financial structure is so completely immersed into the current function of these markets. Many of them and their banks could not handle a real gold price that runs out of their derivative's trading ranges.
Western paper gold bulls fueled the creation of these markets by supplying the demand for such gold vehicles and governments helped their currencies by using these same as FDIC like stickers on their reserve positions. They all wanted a place where they could bet on gold, using maximum
leverage, and not have to fully fund the physical delivery of bullion if it came to that.
Somehow in the process, everyone was thinking they were doing an end run around the slow thinking, stupid gold advocates the world over. Hoping that coin and bullion buyers, who were creating the physical demand, would one day feed the leveraged paper profits of paper players. Hoping that the rules would be changed just enough so gold could be kept in a nice tight range (300- 500).
We are seeing the results today as this fraud of a paper game as it comes to an end. It's not nice to watch. Busting, not only the dollar factions that played this sector for their best interest, but also denying any profits to the whole gold industry that chose to ignore the long term best interest of gold's market value. The same industry that decided to cater to the singular greed of a small group
by sacrificing high gold prices so leverage plays would work. In the process they played a political game to limit gold prices from getting too high and will now suffer on the altar of a "gold price without a range".
They can call the outcome anything they want: "bullion at a premium to comex" or " comex at a discount to bullion". Either way the whole system is destine to split and leave the paper players holding an incredible bag as bullion runs away with the help of fundamental gold factions in Europe.
So the message to paper players, gold mine owners and the gold industry is clear:
--we are in a world where free markets rule and political games bite the hand that feeds them
-- if you don't like your profit margins on the market you are forced to sell into, close your mines like the rest of the world's business is told to do,, if you can!
-- if paper players don't like their investment returns because the leverage is eating their lunch, move to another area,, you are free to choose -- or better yet
-- go control your controllers if you don't like the way it is in this evolving political world
-- in the mean time we PGAs are and continue to exercise our free market rights
-- we will keep doing something to advance our wealth: buying physical gold!
---------------------------
Next talk is about inflation, titled:
---- "Forget deflation! The deflation theorist are losing their wealth fast enough for all of us!" --
------------
OK: lets head back and rest up for the next round
Thanks
TrailGuide
Gold Trail Update (10/25/01; 09:30:27MDT - Msg ID:64182)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/25/01; 09:30:26MT - usagold.com msg#124)
A quick report and comment from my office on the trail.
Once again the ECB is acting in a way that lends credibility to it being a true hard backer behind the Euro currency system. The ECB is taking an international, long term stance to managing their money and the dollar faction hates it. They hate it, because such a policy position is no longer open to them as we are forced into a super inflationary direction from which there is no turning back.
It won't be long until this downturn in the US drives the dollar into the toilet and leaves the Euro as the "last man standing". As the gap between inflation rates and returns on Euros grows, that currency will be seen more and more like a world class money. World class; in that the Central Bank is more driven to keep the money strong and not base its policy on local politics the way the US does.
---- Remember: Unlike the Fed, which has a mandate to boost jobs, the ECB's main task is to combat inflation.------
----- Over the last decade or so, my nation (the USA) has always played it's economy and financial arena as a free market driven system. Well, it always looked that way as long as the dollar's reserve function helped deliver those free trade benefits. But, low and behold, let us turn down a little, come under a little preassure and our socialist printing pressed go into overdrive.
The call goes out to bail out the Airlines, banks, brokers, insurers, post office and anyone else that's in trouble. Protect our Steel industry and to heck with the world: this free market idea can take a hike, boys. --------
The media concentrates on treating the dollar more like a stock investment than a major international reserve. Considering the way our Fed is socializing our money policy now; perhaps the dollar has embarked down that road and is becoming " just a quick trade investment"! Perhaps a Hyper Trade investment, at that.
I think the majority of Western money theorist want this perception in place:
--"lower rates build the economy and therefore the currency, too!"--
Never mind that this flys in the face of everything we and the IMF taught the third world about money policy over decades! A policy that says: your country is going down the drain because your money policy is not free trade structured like ours is! Now, we suddenly cheer any policy that trends to support us and try to explain it in a "dollar supporting" slant.
We do this, because we want the dollar market to deliver our investments out of the current US fire storm; it has nothing to do with the strength or hardness of the dollar. In this respect, media cheer leading has little to do with the dollar being a sanctuary for foreign holders during troubled times, either. It has everything to do with local internal US investments going bad. To hell with the hard currency policy we taught you: -- a return on money that's above inflation or free market competition to weed out the week: -- We want my money back and hang the world!
This is a repeat of the same message sent in 1971 when we dropped gold.
I think the ECB and the BIS have known, for some time, that this would be the typical US reaction whenever some trouble really came along. They just waited untill the world twistes the wrong way and sure enough, the US dove for the bait! This is why Europe and the BIS structured the Euro system so it could completely discard all dollar reserve function if needed.
Truly, if the dollar IMF system can be the reserve for all internal US banking assets; then the Euro could easily do the same in Europe. Especially as US inflationary money printing eventually drives our price inflation rate to a level that makes dollars and dollar debts, outside the US, valueless assets! Paying back those debts will be like tossing a nickel where one once launched a bill to settle a debt.
Today, many dollar investors have a terrible flaw in their view of Euros; not unlike Western thinking gold investors. They curse the Euro as it strives to reverse the very trend that dollar lovers say is taking down their own currency. Standing next to them, gold players curse the dollar and buy illusions of gold assets; but at the slightest move up can's wait to sell their gold paper for more dollars. Then they tell everyone that they are making wealth by building up their holdings of a failing currency. I tell you this simple minded human game has bankrupted more than one nation of
peoples.
I buy Euros because that's the currency I intend to keep through out this transition era. Of course I own dollars and will likely keep using them right thru any super inflation. I never expect the dollar to disappear. Most hard money investors, with extra funds to hold, also have that same view. They are simply wanting some of their wealth in the next international currency trend. A trend who's management policy is based on creating a real return; not socializing the currency holder wealth thru US and Japan like give-a-way interest rates.
Apart from our Western trading crowd, who consistently lose their money, Euro owners and Physical Gold Advocates own these items with no intentions of selling these to make more dollars. They hold them because the world financial system is changing faster than trading can compensate; and this trend will accelerate to run right over traders as their markets shut down around them. Believe it.
So, I say, good for the ECB and more so, good for gold. I'm playing the leverage that modern dollar derivatives are delivering to my door step; buying cheaper gold and cheaper Euros. The leverage in gold mines is delivered to us; in that derivatives markets force them and stale physical longs to supply the world with gold at almost free prices. At least until the dollar crashes this illusion gold market price. The leverage in dollars is delivered to us; in that the US must super inflate their currency to support its derivative hedges, in the process creating Euro exchange rates at low levels.
The game goes on and Physical Gold Advocates keep right winning while leverage hard money types pour their wealth on the ground. In this day, at this time, investments in most dollar assets and any other "gold want to be" metals is to be doing little more than to play the leverage side of a
failing derivative.
Physical gold is the only wealth to hold and the only wealth that can and will stand beside to the next reserve currency system; the Euro. The history we are writing will further prove this to be so. Events are moving our way. I say; find yourself a coin and bullion dealer that has a grasp of these
events and stay with them thru it all. The world is moving towards high priced gold on a free physical only market and physical shops will find themselves at the center of this evolution.
USAGOLD: get you one
(smile)
Thanks
TrailGuide
Gold Trail Update (10/25/01; 17:19:55MDT - Msg ID:64192)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/25/01; 17:19:54MT - usagold.com msg#125)
More Thoughts and Comments from the Trail House
http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news&news_id=reu-l2510670&feed=reu&date=20011025&cat=USMARKET
Somewhere in the 1970s era I was exposed to the thinking of several different deflationist. It seemed that all of their conclusions came to the same end: that dollar deflation would rule the day, no matter what. Mind you now,,,,,, most of them were split on the finer points of the issue, but for all of them; inflation would have its day even if prices would rise somewhat. Deflation was always the final outcome.
One of the central themes, in these thoughts, was concerning how this coming deflation would impact plain old residential real estate. You see, most of these guys advocates selling excess residential property because it was, sooner or later, going down for the count. Mostly because the mortgage markets would be destroyed in the deflation and nobody could buy.
-- Note: The reader has to understand that these discussions were directed towards people and investors that had plenty of net worth. And I do mean Plenty! The argument wasn't about how to survive; rather how to balance a truly conservative estate portfolio. --
As time has passed we can see several major flaws in their thinking. Flaws that cost them a bunch of credibility, if not personal money. One point, that I have touched on here several times, was in understanding just how much ourselves and our economic structure would and did evolve into accepting fiat money use. Even though it was, "god forbid", separated from gold.
In one area alone, the bond markets, investors reacted far different than deflationist thought they would. Twenty ++ years ago, it was expected that just gross increases in money printing alone would be enough to crash the bond markets. Not talking about price inflation here, but money inflation and that should have started a deflationary fall in our credit markets. It almost happened, several times, but never followed thru. It seemed that the market function had evolved to accept fiat inflation as a prerequisite to modern economic function. In a like comparison to today's thinking; investors assumed that as long as we had an expanding economic stance, sourced by inflating fiat supply, price inflation would not impact long bond credibility. We saw confirmation of this over many years. We saw that our credit markets, especially long bonds, were used in spite of
the price inflation threat. Indeed, there was a ready market demand for bond purchases.
In hind sight, long term holders of bonds did do very well if their position was part of a balanced holding and they didn't need to sell at bad times. Even now, dollar bonds have gained as rates are pushed lower.
Back to the thought:
This whole IMF dollar system has always been based on an expanding fiat theory that swells GDP over time. Investors that bet on deflation coming along, after each of our bouts of inflation, were badly burned as deflation was overcome. Economic function returned, essentially because price inflation could not rout the overall market for long credit.
The flaw in all of this was in the reserve structure of our Dollar IMF money system. The fact that the world had to walk, lock step, with our money policy meant that their goods production would almost always be cheaper than ours; keeping local US price inflation under control. In other words; local US based price inflation could not get out of hand as long as the rest of the world was willing to use their economic production to control it by selling into our expanding fiat system.
In this, the dollar could be inflated without end while our credit markets functioned in a non inflationary environment.
But there is an end.
A money system like this has a definite timeline and that point is reached when the world can move away from keeping price inflation low in the US. That point is reached when Another money system comes along to challenge the dollar and, in the process, offer these other goods producing countries a chance to buy some "lifestyle" for themselves.
At first, the show is dull as investors keep right on buying into the dollar argument above: that an expanding fiat base builds non inflationary growth. This is one reason traders still buy US long credit, not to mention chasing rising dollar exchange rates; they expect more of the last several decades of economic theory to keep right on going. It won't.
The dollar faction saw its match early in the 90s as the Euro was taking shape. To counter this threat, as I have outlined here in several ways, they promoted derivative hedges as a way of insuring dollar dominance. These hedges, including gold derivatives, only served to leverage the entire dollar / IMF system beyond its ability to serve as a real fiat money system, today.
I mean; that our whole dollar landscape has now become just a trading asset arena: its now evolving away from any meaningful currency use to trade for real goods. It can head in no other direction because our local economic structure, the USA economic base, cannot possible service even a tiny fraction of the buying power currently held in dollars worldwide.
So what does this have to do with Real estate?
Take a look at any broad section of the US; Northeast, SouthWest, etc.. If any of the deflationist were correct, their reasoning back in the late 70s and early 80s should have produced at least an average fall in Residential real estate. Can any of you find an "average" of property today, that is lower than early 80s prices?
Of course I'm not talking about the spikes in Hawaii, New York , Denver or San Francisco; those are just blips on an ever rising inflation scale. Even if they fall some from here, it isn't part of a deflationary act playing out. Average home prices will rise all across this country no matter what the future economic holds. A super inflationary stance by the Fed means that even unemployed workers can buy a house and pay for it! Watch how this all comes about. The dow will not be much different when seen ten years from now; a drop to 5,000 then off again, is a real possibility!
The same is true for anything perceived as something real: "even silver" (grin).
The difference is in the drastic ups and downs derivatives will place on all asset markets. Silver may hit my .50 before taking off and so will many other real assets. My point is that we are on an "end time run" in fiat dollar production that will soon produce a spike in real price inflation that crushes hedge vehicles. One item alone, physical gold, because it is the main wealth asset behing the next currency system, will outrun everything by a wide margin. No matter the derivative's hold on it!
As the Euro builds a base, it will drive an inflationary recognition into our credit markets, then freezing up our derivative markets. That perception will fuel a complete failure of our bond markets and force the fed to buy up any and all credit; paying in full. If needed, Bush and congress will see to it that enough money is printed so we are paid in cash for everything! Don't laugh, this is where we are headed. In the mean time, whether or not our economy is growing, stalling or failing, will have little or no impact on price inflation.
You see, living with real serious price inflation goes something like this:
---- "Honey, I talked to Fred again, he can't sell his house! Poor guy, he has had it up for two years now and has to raise his asking price again. No takers, yet. The last couple was just about to close but took a month too long; they almost got the cash together, too. He backed out to raise the asking price, again. Oh well, that's not so bad, we had to jump ours up three times before selling."
----------
Inflation runs crazy when a money system is forced to "print out". We will "print out" our dollar, too. Getting there just takes time and an alternative system to cause it.
In the mean time look for the premiums on cash bullion and cash coins to begin rising well above contract and futures prices. I have been watching for this confirmation for some time. This one signal is all we need to confirm that a breakdown and total failure of dollar based bullion markets is near. I expect we will hear and excuse like this:
-- The settlement price on future contracts is really a wholesale price. Besides, because we are moving into full cash settlement of gold, without physical delivery, you can take this wholesale price and add whatever premium is necessary to buy your physical gold. No matter that our wholesale settlement cannot match a payment for bullion cost plus premium; just use more leverage to buy more contracts than you need for outright physical. See,,,,, it all plays out! (BIG BROKER SMILE with little horns sticking out of his head) ----------
------------
People, take a hard look at Randy's post on the main forum. His ----# 64186 Monetary choices -- ECB holds rates solid, dumps dollars------- goes a long way to showing the mindset of the Euro system. (thanks for sharing, Randy) This stance is very appealing to a whole host of nations outside our dollar faction world. We have but to look no further than Britain to see that this is true.
------Blair says 2002 EU summit key for euro, economy -----
Thursday October 25, 2:41 PM EDT --
LONDON, Oct 25 (Reuters) - British Prime Minister Tony Blair said on Thursday the success of the euro and the wider European economy hinged on the EU's ability to push through
long-discussed economic reforms next year.
Blair, launching a Belgo-British conference in London, earmarked the European Union's Barcelona summit next year as a key staging post and said the success of the launch of euro notes and coins was crucial not just for the 12 euro zone members but for Britain too.
"We have an interest in this," he said, stating his policy that in principle his government wanted to join a successful single currency.
"Barcelona will be critical in how the world views the development of the European economy," Blair said.
If the summit is a success, it will help make the euro a success, he said.-----------------
------------
Another thing we can count on and I mentioned this before:
The moment England is seen as even a "virtual" member of the Euro club; the world will jump on every physical ounce of gold available at whatever dollar amounts anyone will part with it,,,,,,,,,,,,,,,,, and sell every paper gold play into the dirt in the process!!
I say, know your dealer, buy your bullion early and watch for this act to begin. It's closer than you think!
------------
Thanks for hearing my thoughts
TrailGuide
PS: I'm going to stay on this track for a while because I think something may be in the works. I'll post as able (smile)
site steward (10/25/01; 12:12:28MT - usagold.com msg#: 64186)
Monetary choices -- ECB holds rates solid, dumps dollars
http://biz.yahoo.com/rf/011025/l25344987_2.html
FRANKFURT, Oct 25 (Reuters) - The European Central Bank left interest rates unchanged on Thursday, ignoring calls from politicians urging it to do more to prop up the euro zone economy....The [independent] ECB angered some euro zone governments, worried about rising job losses and stalling growth, when it kept rates unchanged at its meeting two weeks ago, arguing that still high inflation left it little room for maneouvre.
-----
Central banks have learned this lesson in the past three decades (but politicians have not): the provision of easy monetary policy does not create jobs nor does it stimulate real economic growth. Therefore, a "good" (competent) central bank will not meddle with monetary policy under the premise of affecting the unaffectable. The best contribution a good central bank can ever be expected to make to the well-being of a national economy is through the successful delivery of price stability -- thus providing a stable basis upon which business planning and contracts for the future are made.
The Federal Reserve surely knows this fully as well as the ECB. The problem is that the Fed does not have the independence to resist the off-base political/legislative mandate to foster full employment via monetary policy. But even if we were to put that consideration aside, the Fed would likely be aggressively easing anyway, simply to save the banking system from collapse during this downturn in our manic economic cycle.
Sure, the Fed tries to maintain the stance that no bank is too big to be allowed to fail, but we always find that theory and reality serve different masters. So, as the officials at the Fed ease rates, they put the best political spin on it by saying it is to satisfy the politicians and to stimulate the American economy. In reality, they are trying to keep the banking machine from seizing up with ample applications of easy grease.
Meanwhile on another front, the latest consolidated financial statement of the Eurosystem reveals that gold reserves during the past week were held at a steady level, whereas the net position in foreign currency was allowed to drop by EUR 600 million in value. The prevailing trend continues to be a net dishoarding of dollars.
Within the Eurosystem, foreign currency assets now stand at EUR 258.1 billion in value, while gold assets stand at EUR 128.235 billion (valued this quarter at 318.53 euros/ounce).
R.
Gold Trail Update (10/26/01; 09:01:39MDT - Msg ID:64222)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/26/01; 09:01:38MT - usagold.com msg#126)
Still at the Trail House
Ok!
Check out those new home numbers? How can this be; people are financing and buying homes in the middle of massive layoffs and cutbacks. It just goes to prove that if you expand a fiat enough, the physical market for anything real will be brought. The secret is in "expanding enough" and using the right kind of fiat to expand with.
----- New Homes Sales for September were just released and came down 1.4% at an 864K pace. This was slightly stronger than the consensus estimate for 860K though softer than August's reading of 898K. ----------------
Well, our fed isn't shy at all. They don't hide behind some hard dollar theory when it comes to giving out free money; especially when the currently they are giving away is the world's reserve. No sir, our American home buyer has the right to buy himself a roof no matter what his economic fate.
This is the game plan that works,,,,,, has worked,,,, for decades. As long as your local economic structure is based on a "fractional credit reserve banking" that is not affected by price inflation: then the people using your internal dollar market will buy goods using whetever "almost free credit" that's avaliable.
Americans exploit the system because they use credit created buying power to buy real "non inflationary priced goods". No matter the debt load as long as the fed will cover their cost by refinancing said debt at ever lower rates. And the Fed can do this as long as the world has to support the "only currency game in town" by delivering their real goods for our dollars.
Again; this all works as long as the world "buys into" using our dollars. As I said; an expanding fiat works to grow the economy thru expanding credit buying power because the fed can support the system with credit creation that has no "inflation premium". That lack of premium only exists as long as Americans can exchange free credit for real physical goods. Once this perception changes its over. Once the world understands that it's not local US goods that stands behind dollar growth, but less expensive foreign goods,,,,,,,,,, the stage is set for our "supporters" to sell to themselves!
Making themselves "lifestyle rich". All they need is Another currency unit.
Today, the ECB said that their M3 was rising at a 7.6 rate and doing so because people were moving more wealth into savings. Can anyone figure that one out? Hello,,,,, they keep their short rates well above inflation (or at least above the US dollar rates) and international people are saving the currency. In the face of this our fed is expected to lower rates again to around 2%?
Somewhere in the middle of all this; real savers will supply Euroland with a solid base of credit wealth that can be borrowed without driving their local price inflation thru the roof. Then: other national economies will have a market that shares realistic price levels for all goods. Then; all economic systems will begin a non inflationary expansion that centers around Euro use! All of this period will mirror our (US) internal coming inflationary expansion that limits our ability to import or export. Think about it.
-------
There is a lot going on now,,,, so: Later today I'm going to address some posted items made on the Main forum in an effort to expand on the political game in process. Will be back later.
TrailGuide
Gold Trail Update (10/26/01; 21:21:34MDT - Msg ID:64243)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (10/26/01; 21:21:33MT - usagold.com msg#127)
A few comments on comments!
----- The Euro is a mere convenience for trade among the group of user nations if it cannot buy a bbl of oil in international markets. That's a fact.----
I hear that some French buys are already being invoiced and settled in Euros. But, then again, they don't like to admit that they even use the awful stuff. (grin) Actually, with so much of their electric needs provided by Nuclear,,,,,, what doooo they need oil for?
------ Could it be that some dollar holders are buying up US stocks at what will later seem to be bargain prices? What better place is there to dump dollars without upsetting prices?-------
Well,,,,,,,, some small players may be doing this. But, big holders of overseas dollars have to ask: "what would foreign exchange controls do to my big stock gains"? Besides, if they can only get 5 or 10% of their dollar wealth into physical holdings,,,,, the rest of the cash could evaporate later and they would still be light years ahead. Considering the coming gold / dollar free market revaluation. Only, the problem has been for a number of years; how do all of these old Euro Dollar accounts get into even 1% physical when the whole market has such a waiting list. But, ask about paper gold? Sure,,,, all you want. Has anyone ever figured how much gold 1% of the whole Euro Dollar float would buy? Even at $1,000 US per ounce?
----------Europe has not matched US efforts to stimulate growth since the September 11 attacks, Breuer said, because "we have no common, defined, decided economic and financial policy in Europe".-------
(comment by USAGOLD site steward) More importantly, it does have a single independent authority steering monetary policy down the middle of the road so as to be neutrally suitable for a wide coalition of interests. ------
You have that right Randy! Rolf Breuer sounds like all the late model financial planers in Europe that still don't know where EuroLand is headed. These guys got their economic stars while studying at the socialist feet of our political Federal Reserve. Only trouble is that they never understood that fiat inflation using a world reserve currency, like our dollar, is different from other systems. We buy cheap social policy and economic expansion with the blood and sweat of foreign productivity. I bet Old Breuer thinks its ok for a business to buy $1.00 running shoes from asia and sell them in Dollar land for $120.00. Then he would point out that shoe inflation is only running at a few percent
because those shoes went up $3.00 last year. Oh well.
The Euroland Germans, and the ECB studied our ways for a long time and now fully understand how to attract other nations into a fair game. The Euro will become a "world standard" more so than a reserve because they want it to be a fair currency that's accepted for it's value. For the Euro to gain American financial acceptability later, it will do so because it will be the "last man standing" when this inflation storm resides.
------ Government gets "tennis elbow" from throwing the ball of string --------
I know where that one came from (smile). All of us concentrated much too long on when the Fed would eventually fail to push our monetary string. Did we ask this question as if the US was about to become "suddenly dollar responsible"? Or was it because the markets would over rule the fed's hand? I bet we asked because "fiat credit theory" said the fed would eventually meet such a fate.
Double baloney! Our fiat world would and did evolve around this problem. Once the dollar inflated itself to the end of its "gang plank", it was into the inflationary drink sailor! The Euro will take over and we will become like any other national currency; subject to pay as you go politics and social policy. Can't push that string? Pick it up and heave it in a third world like inflationary pitch. That ball will fly, brother,,,,,, oh will it fly!
--------Putting these two together, I observe the following -- So, really, the Euro Banks don't mind selling gold short, because when the big blowup comes, they suddenly have a use for the the dollar reserves they have piled up. Is this a fair conclusion? ---------
Well sir,,,,,,,, we should all think about this for a bit? It's awful clear, to anyone that has just a little of the facts, that the paper gold markets cannot ever be converted into physical gold. The numbers would be????,,,,,, That's just a rhetorical, don't even try to put a real number on it.
You see, all the armchair gold bugs hold onto their paper leverage and cheer for some big paper short covering blow up. A paper squeeze that forces the "virtual" price of gold way up. But, who exactly is it that is going to be a threat to the paper Bullion bank market? You,,,,, me,,,,,, that man
behind the tree?
What if me and a thousand others came up with a 1 trillion in cash and used it to lock down paper contracts to deliver us 1 billion ounces of gold. The paper gold market has the means to match our commitments dollar for dollar. I mean, they could put the money up, not gold ina a vault, and get
on the other side of us,,,,, margin to margin.
OK, now we stand face to face. Even if we had enough free cash to pay for delivery,,,,,, what jurisdiction would let us settle; England, US, South Africa, Canada,,,, who? No, we would be told to cash out and buy our gold on the tiny physical markets. In a Hunt like joke,,,,,close out would come and we would eat it, big time. Even if we broke even, how exactly would we exchange our cash for metal in the tiny bullion markets without driving the price to the moon?
The reason I play this out, in text, is for others to understand that there ain't gona be a run up in paper gold. That market is a derivative style currency support and it was never set up to be a big time deliver machine. Its control will end when the currency system, it's built on, fails and takes the "virtual" gold market price with it,,,, to the floor! But, long before that plays out, the real bullion markets will get extremely thin and build up a huge premium to contract settlement. It will do this because some financial disorder will invalidate, and most likely, force an official deferral in physical delivery; indefinitely. From there the show will proceed.
The big dollar gold shorts in Euroland have real market exposure but no political exposure. Their political house would just as soon settle this at whatever level the paper prices sink to; this is their real market exposure and it will most likely be profitable. There will be no political exposure, forcing them to settle in physical delivery; because the US system will opt out first because of inflationary preasures! Very simple political logic, right? Try asking someone that is hip deep in gold stocks or futures if they grasp it? Hard thing, that political perception is,,,,, especially when your pocket book controls your brains. (smile)
Again; this all mostly covers the bulk of the markets. Paper gold owners that have oil to trade will get their ticket clicked,,,,,, believe it. However, I bet that by then most of them will be asking to settle their gold in Euros.
----- So, Japan has excess fiat they don't know what to do with.------
Japan is a different problem. They have been locked into the US dollar economy for so long that they cannot escape. There is simply no way that China will let them into the Euro house. The HK / China central bank system, also known as Big Trader, simply wields too much economic sway between Asia and Europe. In historical precedent, the orient express always headed to Europe and never saw "The Japans".
Actually, Japan doesn't want to go there and has risked a decade of time waiting for some economic change in the US. I have said from way back, that Japan will go down with our (US) inflationary tide. They will waste away their dollar assets following our lead. Those that think that these peoples want to be part of a third world currency block do not know them. I do,,,, but that is another story.
--------- A Trail house? A Trail office?! Life on the Trail is growing much more comfortable than before, when we all "pitched camp" and ate pork 'n' beans around the fire! ----------
Believe it or not,,,,, I was in a real tent on my last vacation. Tell this forum the truth,,,, my-Lady,,, when was the last time you went for a wilderness experience,,,,,, slept in a tent and watched the stars while around a fire? On the GoldTrail such an expierence is valuable beyond all things, no?
Pork-n-beans??????? I should not have saw that,,,,,, I'm off to eat! (smile)
thanks
TrailGuide
Gold Trail Update (11/2/01; 12:35:28MDT - Msg ID:64561)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (11/2/01; 12:35:27MT - usagold.com msg#128)
Gold,,,,,, Gold,,,,, Who has the Gold?
Let's take a walk and think about the big picture for a minute. Then we can get back to that question.
-----------
If you followed most of Another's Thoughts over the years the line of reasoning below will fall easily into place.
Somewhere during the late 90s, when events made it more certain that the Euro would be formed, the threat to use real gold as a partial pricing unit for oil was moved to the back burner.
By including an extremely small amount of delivered gold in trade for oil, along with digital dollar settlement, gold would once again be returning to it's ancient roots as a world class wealth used in barter. Instead of allowing it to be controlled by bankers and governments, gold's socialist tie in with official money use would be all the further distanced.
So, if swapping oil with third world nations, for grains, finished goods and other commodities, offered lesser countries another way to circumvent their lack of hard currencies while using the dollar system; then using gold to partially settle world wide oil trades would bring more balance into this one-sided dollar economic world. Trade alignments, such as gold for grain, grain for copper, copper for oil, then oil for gold would easily be adapted into our current solo dollar realm; forcing the dollar to share it's fiat use demand with real barter trade for real goods. In this, allowing international trade to abrogate the dollar's iron clad pricing of goods and services to the singular benefit of American lifestyles.
Where official dollar supporters have structured our paper gold market in a way that values gold only upon it's money backing merits; a returning of gold into it's barter trade realm would force a realignment of values between physical and paper. Once again allowing gold's value to soar and creating a large enough liquidity mass to serve not only as an oil trading medium, but wealth savings for all.
---------------------------
On the back burner, perhaps, but not out of the picture.
In this premier position of barter trade for oil, gold itself would have been backed with a demand component, the demand for oil, that would last as long as the world remained advanced. As dollars and Pounds were once backed with delivery of gold, in a turn of events, modern physical gold would be backed with delivery of oil.
Even matching a barrel of oil to just 1/100 of a gram, the long term demand for oil would have brought physical gold trading back into the forefront and shown the true worth of gold in it's non money barter roll. Such a price valuation that has not been seen in, perhaps, a thousands years.
With physical pricing again setting the level for derivatives pricing, the dollar reserve system's evolution from gold standard to derivative standard would permanently dissolve. Not only would our current form of paper gold would lose it's effective control in price discovery; in a repeat of 1971, our paper gold game failure would once again costing paper leveraged investors many fortunes.
-----------
For now the Euro: the vision held together
Once again the choice would be clear for both common man and international trader; use fiat if it's economy of use is efficient and controlled or use taxable barter to help control your controllers. Within the confines of the US, this may not become a reality (I think it will), but internationally, with European support, it cannot be avoided. All nations will use gold as nature intended and do so for the betterment of mankind.
At this point in time, there is no longer a concern that the Dollar's timeline might have no end in sight. With the world's more favorite form of trade settlement, digital currency, about to be represented by the moneys of a group of nations; the dollar's singular drive to enhance the lives of only one people is about to end with the currency's credibility.
First and foremost in the ECBs political will to establish a credible fiat, gold was and is set free to be valued at whatever level free physical trading would allow. We know now that the dollar marketplace for gold paper is coming to an end with this process. Not only will they be allowing limited, taxable gold barter to accelerate, but to also encourage it's bilateral barter use within international trade settlement. Something the IMF has fought so hard to contain.
Therefore, by the end of the 90s, the need to employ gold for partial payment in oil settlement, as a means to block our dollar faction, was removed from the table. With that the threat that buyers, traders and hard money players would join oil sellers in flocking into the physical gold markets, also disappeared. The thought that driving this suddenly new oil pricing tool thru the roof, was simply restructured. For the time being, the complete burning of our paper gold markets was put on hold; along with the 280 floor big trader and other official gold holders said "must stand" at that
time.
Indeed, from hindsight, the often repeated remark that "all paper would burn" was not invalidated; rather expanded in scope beyond just our dollar paper gold markets. It now seemed that this paper burning would also include the entirety of dollar assets, both debt and equity. With the
acceptance of a Euro based trade protocol, our dollar system would now be forced into a super inflationary fire. Truly, this day has arrived with current events literally shouting "monetary inflation" as we have never seen it before!
Not only Euros, but some form of freely priced barter gold is now firmly on the road to becoming a real competition for use in world wide trade. Within this evolution, the currency trade settlement game is being slowly switched from virtual to real time as the act of slowly accumulating gold over
a long transition period is drawing to a close. Over several past years and for the remaining time ahead, selling the illusion of paper gold short while buying free gold will come more into open view and no longer be the sport of kings. The coming premium price, paid for physical delivery, will develop for all to see. Something I will personally welcome as an open confirmation of our views.
The events begin to unfold:
To the bane of Western thinking hard money gold bugs, who craved the leverage illusion our gold markets seemed to create, the death watch for their favorite game is about to begin. As if out of a fog, an end to our gold pricing illusion will march, hand in hand, with an end of our economic prosperity. The coming inflationary fire will now sever the wealth our reserve dollar system created for all of us Americans. In the same scope of time a, Euro based, free gold price will evolve out of these inflation fires. I for one do not relish this outcome, but welcome the good such a staunch reality will infuse into our national values.
We pointed out earlier this year that our Fed would begin it's inflationary march "now" and never turn back again. They did "then" and we are well into it now! Our point was made in spite of all the past decades of similar "dollar inflation" calls other hard money people declared were coming. Our dollar's decline never arrived for these people because they based their calls on economic theory; instead of "political will". "Political will" won then and will so now as we point correctly in the next direction.
Many said that the "bond vigilantes" would hamstring any effort to price inflate a credit driven money like the dollar reserve. Perhaps causing our Fed to eventually lose the war as it "pushes on a string"? Many of you have read countless opinions as to why our credit markets would implode into deflation as a "mise" style economic theory surfaced to control the controllers. Truly, these people confuse theory with human action as much as they do not understand real physics! Indeed, strings that cannot be pushed are either thrown or cast aside in the real world.
Reference today; we see where the "political will", trumps economic theory hands down, as the dollar people remove 30 year bonds from the system. In the process, forcing rates all the lower. The next time someone reads to you reams of hard money theory; ask they why they said the same thing 30 years ago about the dollar and the US economy? But it kept right on running; proving them repeatedly wrong? Now, for the hundredth time they say: "mise is correct, the markets cannot be faked, so a little deflation will follow this inflation!"
Baloney! The evolution of Political will is now driving the dollar into an end time hyper inflation from where we will not return. That is our call. Bet your wealth on the other theorist's call if you want more of Their last 30 years of hard money success.
More is to come!
Are you worried about South America? Don't! We will print all the money it takes to save any and all US financial interest in that sector.
Are you worried that we will enter an Japan like economic environment with rates at zero, economic stagnation and falling real asset values? Don't! They do not use an out going world reserve currency and we do! We will print what ever amounts needed to keep real Estate up, the Dow up and our economy purring: no matter what the value of the dollar on foreign exchange becomes. Or our eventual price inflation.
Our local economy will soar in dollar terms; no matter what our dollar is worth.
Are you worried that our 10 year bond, the new bench mark, will soar and squeeze off any recovery? Don't! We will just remove it from use and move to the 5 year,,,,,,,, to be replaced later by the 2 year,,,,,,,, to be replaced later by the 6 month,,,,,, 1 month,,,,,, 1 week,,,,, 1 day,,,,,, then
CASH!
-----------------
Who has the gold?
I do and so should anyone that wishes to participate in the next currency system. Only, don't expect your gold to become money, it won't! It will become the most valuable wealth asset in your portfolio,,,,, by a long shot. For the simple thinker; gold is good. That's all we need to know. For the man with a question: Gold must vise in value many many times just to regain it's wealth barter asset value. Perhaps $10,000 to start. Then, it will run with any and all dollar inflation,,,,, even Euro inflation that ECB people openly admit must be a part of a dollar to Euro transition.
The EuroLand Central Banks have every bit of gold in their vaults their accounts say they do. For that matter, so does the USA (for now!). So what if they or we swapped it out on paper? It means nothing because the gold never moved. Remember, EuroLand is playing a dollar gold market game
for now. If we walk, and they know we must will walk first, they will simply opt out of the dollar bullion paper system. Period! Why do you think England it trying so hard to enter the Euro fold? Think: saving their bullion liabilities by opting onto the other side!
Hell, pre 1971 the US swapped it's entire vault of gold to foreign interest by issuing dollars overseas. In a news flash, some seemed to have missed, we killed that arrangement by simply keeping the gold! Today, because the ECB would love to see the entire dollar gold market fail, I cannot imagine them shipping gold to support it if we default on shipments. Well, perhaps gold bugs would think this appropriate because it saves their leveraged futures, options and mine investments?
No,,,, most of these theories about missing gold are extrapolations that attempt to explain how the industrial / physical gold market is meeting demand. Hard money thinkers simply cannot believe that private Western gold holders have been unloading real gold for the paper variety and filling the physical demand void in the process.
If this paper buying is true, it goes a long way in explaining how fractional gold paper has filled the real demand for gold. It also ruins the dreams of investors in "illusion gold" because it points to a colossal default and asset seizure (via windfall taxes) is coming to a mine near you. Events march on and will soon begin to prove "who knows what" about our political world. Watch carefully, the
show is beginning.
In a final note: I see that in spite of world shaking events, the downfall of our paper gold markets is keeping the "virtual" price of paper gold very low. Just remember; inflation in the paper gold markets works the very same as inflation in currency markets: it cheapens the value of the paper holding and works against allowing leverage to return real gains. Conversely, physical gold will gain as leveraged gold assets fail.
Once again, I see where Big Trader is selling silver to buy real gold. Some people just know where "political Will" is going. (smile) Others don't.
Thanks
TrailGuide
Gold Trail Update (11/3/01; 14:39:17MDT - Msg ID:64622)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (11/3/01; 14:39:16MT - usagold.com msg#129)
An "inflationary depression" is in the cards -- a "price deflation" doesn't have a chance!
----------------------
Back in the mid to late 70s Sir John Templeton always drove his point home for investors watching Luis Rukiser's show. (how does one spell his name,,,,, we always called him Lou Baby (smile))
Sir John, living here on Layford Cay, kept saying that the Dow of the 70s was very under priced and would soar. He was the most absolutely correct person stating that then! But more into the mechanics of his perception: he knew that anyone buying the Dow and waiting a decade or more, would gain way beyond mere price inflation. Monetary inflation would eventually drive the perceived virtual wealth of US stocks ever higher. So high, in fact, that their percentage gains over price inflationary gains would be incredible. They were!
Truly, what John was referring to was the effects that simple "passive inflation" has on paper assets; especially in a "reserve currency's" domestic market. In this; real price inflation is mostly exported by importing "real goods" competition. This happens as we export excess credit dollars to buy things. It also has another effect; some of that same exported printed money flows in a circle and joins native investor's buying of local paper assets. When this process first starts, "passive inflation", in the form of massive money creation that's far beyond real price inflation, allows one to gain "virtual paper wealth" even before the markets price out the gains. That is; the Dow stays cheap at first then eventually rises to absorb the money inflation! As long as prices don't rise too much.
People that followed his advise, accumulated the Dow over a decade or more; buying "virtual wealth" before the fact! Stock investors made a killing by positioning their assets where this created "passive monetary inflation" would eventually end up. Even though hard money players laughed at them all thru out the 70s, 80s and early 90s! Look who is laughing now? Stocks tromped hard money plays hands down for over 20+ years! Even considering the latest fall on wall street.
My friends:
Today, this same "virtual wealth" effect has been created again and is located in physical gold bullion. I believe Sir John has already made part of my point but I will repeat.
When a currency system comes to the end of it's reserve use, I'm speaking politically, it's domestic market will come to a point where it can no longer export "real price inflation" in the format of; "shipping it's excess currency outside it's borders". This happens because internal money inflation, that is super currency printing, is increased so much that it overwhelms even it's export flow. Worse, even that export flow later tumbles as the fiat falls on exchange markets.
The effect is that local "passive inflation" , built up over decades and fully reflected in "Sir John's" paper assets, spreads out as "aggressive inflation" and hyper price rises begin. In this action, the very same wealth effect that was eventually priced into "John's" Dow stocks and other assets, begins a long march of being priced into real gold.
Anyone that has accumulated physical gold over this past long period was doing the exact same thing Dow buyers of the late 60s and early 70s were doing: ------ saving "wealth" as unpriced "virtual wealth" stored up over that "passive inflation" period. ---
----------------------
As "political will" begins to impact the economies of the US,
our old "virtual wealth" that is no longer in the form of "passive inflation" nor limited to the currency, and is openly displayed in our vast sea of paper assets values including stocks, bonds--------
must now be defended in the open with official printed money flow.
---------------
The "virtual wealth" in gold, saved over years by patient investors, will also be priced to market in this process.
Never mind that during the Dow years paper gold markets could not work in parallel with all the other asset gains; it couldn't. Hard money players, trying to somehow play the Dow's game, never caught on to what was happening. Instead of buying "virtual wealth" by saving real gold; they brought
leveraged bets that gold would be priced correctly during the "paper asset" years.
Obviously, this "trade" failed hard money players as the waves of value from other paper gains and derivatives leverage were employed to match against their every long bet on gold. Not only that; the "virtual wealth" in gold was never opened for them with the super price inflation they all thought was coming during that era!
Now that the paper game is about to stop for the dow, it will also cut off the leverage of gold bets. Just as the real game begins.
The reason for this is that our massive, decades long gains in our stock markets did not bankrupt the leverage in the money system. Where as any massive rise in physical gold values cannot be priced into "derivative gold" without crashing the system.
Remember; in political inflation's, money is printed
to save the assets as they are currently priced; not create new loses by saving the liquifying the leverage that's countering your play!
This paper gold market will be cashed out at prices far below real bullion trading so as to inflate further the books of the Bullion Banks,,,,,, not destroy them. At least this is how the US side will proceed.
------
Michael Kosares-- A thru Z
In this perception USAGOLD has been guiding it's clients, and now the world, in much the same way Sir John did decades ago.
"Buy what has value at the greatest discount and wait for the politics of money to price your new savings correctly"!
The politics of wealth today is centered around gold bullion and only gold bullion: that is where the wealth and power will be manifest: this is where the gains will be! To bet on the rest of the hard market ; is to bet against the coming inflation making your asset whole!
Place as much of your wealth in physical gold as your understanding allows and save this "virtual wealth" of the ages today: waiting for it to become real wealth, priced correctly in the market place, tomorrow.
Make no mistake, the wealth is there "but only there in bullion"! Because a free bullion market cannot be denied or controlled
----- when it stands between the opposite goals of political powers! ---
In this: it will separate from the politically crushing reality the current dollar based paper gold markets represents. The premium on bullion will soar!
The "Political will" of old world Europe is about to help make our investment real. For myself, a large percentage of my wealth is being saved by going with the evolution of paper moneys: not against!
This trend is visible now and based on the forward flow of human affairs, not the backward rules of money theory!
Our future is today; if not just around the trail!
Sir Douglas; aka FOA
your: Gold - Trail – Guide
Gold Trail Update (11/5/01; 18:31:03MDT - Msg ID:64763)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (11/5/01; 18:31:01MT - usagold.com msg#130)
A quick note from the "TrailHouse"! (smile)
http://www.forbes.com/work/managementtrends/newswire/2001/11/05/rtr415069.html
----------------
You just have to give the devil his due,,,,,, Wim Duisenberg gave a clear signal today and his timing
allowed him to hit two birds with one rock.
First target: He has all of Political officialdom now holding their tongues because they learned that
the ECB is not the same animal as our Fed. From the link:
---- "Politicians have been scared of publicly pressing the independent ECB to act for fear it may
dig in its heels and remained cautious Monday" ----
Ha. Ha. They now know that these guys (ECB) are looking out for not only the money of a large
diverse group of nations, but perhaps a new bench mark currency a good portion of the rest of the
world may use. Their stance, recently, states that a currency should be valuable too and even offer
a real return for those that hold it for a while.
Don't expect Western dollar investors to fully taste this flavor just yet. But, they will as their local
economic structure begins to hold complete sway over the Feds actions. And all those deflation
boys thought our Fed would not inflate? Shoot, even our treasury in manning the guns now!
Second Target: Wait long enough for the US to have to drop dollar rates even lower before you move. "Watch him Alan,,,,,, Old Wim keeps his Euro biding a little higher than your dollar! I got a bad feeling about
this trend!"
---------------
Leigh,,, thanks for reading and thinking. I also want to thank everyone for using the fine services of
USAGOLD. Because then they further offer this entire forum library to further expand your understandings of gold. It takes a lot of effort by
everyone, who thinks and writes here, to offer such a broad spectrum of Gold thought.
---------
Gold has always been the most political metal our world has ever known; political because it offers
so much power to those that hold it in their hand. Many of the downtrodden look at government
policies and say:
-----"they dictate our wealth and put us in debt so as to control us"! -------
Conversely; A simple person can control his controllers by staying out of debt and owning a wealth
no government can dictate the value of: Gold Bullion!
GOLD:
-- value it with official contracts and currencies and your wealth is their power ,,,,,,,,,, keep it as your savings of ages,,, and your wealth becomes their master!
TrailGuide
Gold Trail Update (11/8/01; 15:10:36MDT - Msg ID:64956)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (11/8/01; 15:10:35MT - usagold.com msg#131)
Words of a fool!
These are parts of several posts presented today on the main forum. This person does not know me or my associates. Indeed, most of us let blood for this country in a war long gone. I will say this for the record: Another is English and not Islamic!
But you have no trouble at all casting me in with the same evil that crashed into our nation on the 11th., do you? . Sir, you have spit upon the "flag" that waves outside my window. I do so now spit upon your name. You are not part of the same country I served!
I have spent years teaching and debating with men great and small. And have learned that only the mean ego of a useless fool uses such tactics. I am ashamed to have read your words at all and will do so no more. You are but a reflection of the very political hatred you condemn. It is a sad, sad day when someone wants your story silenced, so badly, that they resort to such comments. My spirit is low, I will walk this trail in silence.
-------------
-------However, I do not say "all paper will burn", and I definitely don't send demented religious fanatics to crash into the paper trading house and burn it down. -----
------ Finally, when FOA started putting forward his economic theories, I realized that he had spent too much time listening to an Islamic cleric who had not a clue as to economics.----------
------ So, from my vantage point of budding economist, FOA's explanations come down to being non-arguments and economic gibberish that would even shame Marx and Keynes. ----------
------ The motives of these people complaining of US defaults and monetary imperialism are simple: the greed for the unearned, envy grown of a zero sum view of social life that is characteristic of feudal societies such as Arabs still live in and Europe has barely made one step out of, and fear of their economic and financial future as a result of their stealing and wasting of their people's wealth. -------------
Gold Trail Update (11/12/01; 16:31:29MDT - Msg ID:65193)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (11/12/01; 16:31:28MT - usagold.com msg#132)
There comes a time
There comes a time in all things when one must do nothing and simply wait. This is an ages old truth that crosses all the boundaries of life's endeavors; for everything is not always in the doing, but also in the watching. Any good farmer knows that he does not grow a crop; he only prepares his field so the growing, he knows is coming, can take nature's course.
My friends, we have crossed time and space, while plowing these fields of understanding, and the unfolding drama before us must now sprout it's own life. For now, it is my time to watch the trail and let the crop develop. Indeed, it will and it will do so for all to see.
Enough has been said to prove our reasoning is true, especially when the fields become full and in a shade of physical green only our seeds will produce. And planted them, we did, by hand, one at a time, over many years.
Enough has also been said about myself as this story was never about me; perhaps too much untruth was also said by others?
I am going to travel for a while and watch the trail from a distance. It won't be long before the rains come and the ground begins to open; in that time I will return. Until then; this farmer will rest from this work.
Thank you USAGOLD and all the fine people that make this media the best gold site in the world! Another time, we WILL hike again.
Sir Douglas
Your Trail Guide
Gold Trail Update (12/16/01; 15:27:35MDT - Msg ID:66977)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
FOA (12/16/01; 15:27:34MT - usagold.com msg#133)
(No Subject)
Seasons Greetings and a Happy New Year to the entire USAGOLD GROUP. Certainly, this includes every reader / lurker at the forum, hikers on the Gold Trail and the staff at CPM!
Of course, the largest thanks must go to Mr. Michael Kosares; as this media would not exist without his enormous efforts. Thank you Michael (smile)!
We rest from discussion during this holiday season; a season that also happens to be ushering in one of the most dramatic financial changes the world has seen in our time. As the rains arrive and our crops begin to grow :
---- "We watch this new gold market together, yes?" -----
A happy (smile) to all!
TrailGuide
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