FOA (5/11/99; 18:47:49MDT - Msg ID:5952)
PH in LA (5/11/99; 9:59:21MDT - Msg ID:5920)
Hello PH,
Thanks for your consideration.
I'll start with one very important statement, "the gold market is cornered"! When one reads your Clarification post it becomes evident that the "gold card" was never played. Or was it?
During the last number of years, possibly most of the 90s, the gold market was expanded tremendously. The result was that the holders of "paper gold" and "physical gold", as a group, now own more gold than exists! Is no wonder that the "technical analysis" and "supply / demand" "investment managers" are in a shambles to explain the workings of this new market. Truly, as said before, they are commodity analysis, not political currency analysis. For them, a cornered market must be soaring to reflect the imbalance of longs and shorts. Now can one understand that gold, the political money, is managed on a world scale for the purpose of control of currencies.
From the beginning, the BIS knew that if gold ownership was spread far and wide by leasing from a few European banks, one day, gold would control the value of the dollar. Today, the major longs, that are the recipients of all of that expanded gold, now control the bullion banks, and quite possibly, the CBs. All of this through the threat of delivery that the act of playing the "oil gold card" would "demand"!
Is it then, any wonder, that the quite, cool, suffering longs, watch as the Swiss, the IMF the BOE, all struggle to sell gold in an effort to only "maintain" the credibility of the shorts? All done in a desperate act to save the IMF and by design, the dollar! In this light, was there really a problem if gold falls?
A fine gentleman I know has said, "the Euro, it be a success, for I do see it written in the wind"
FOA
FOA (5/12/99; 8:54:40MDT - Msg ID:5984)
WASHINGTON — U.S. Treasury Secretary Robert Rubin is to resign
ALL:
Will the gold market see changes in the future because of this? You bet!!
FOA (5/12/99; 9:07:33MDT - Msg ID:5988)
USAGOLD report
Michael,
-----------Joining the growing Congressional chorus opposed to official gold sales, four U.S. senators, including prominent Democrat Tom Daschle, wrote Treasury Secretary Robert Rubin voicing their disapproval of the British proposal, backed by the Clinton administration, to sell
some of the International Monetary Fund's gold.----------
I wonder if he quit after they sent him this letter? Now that Britain is closing the books for some of their "preferred" bullion banks, the whole game is washing out! Now we must look at the timing of his resignation (BC, your BOE sales and comex contract correlation) for the fireworks to start!
Also,
Thanks for the reprint of Another's discussion. You are right, in that context, Britain is in the middle of a bad situation. FOA
FOA (5/15/99; 10:33:20MDT - Msg ID:6173)
Gold Talk!
I will also have some words to add to this Forum a little later in the day. Good posts from everyone, much to read and consider. thanks FOA
FOA (5/15/99; 20:44:11MDT - Msg ID:6207)
Gold!
Hello Everyone,
There are so many posters now, I no longer have the ability to reply / comment using each name. Because of my circumstance, I must read several days writings and then post! It is still very interesting to grasp the minds of so many thinkers. A true joy.
How many times have we seen this comment: "If gold went to $10,000 or $30,000 do you know what the price of hamburgers would be?" That is a good observation, but still, one taken out of context. I ask, what is the point of his statement? Does it say that it is no use to own gold if
common items are priced so high as to make the holding of gold a neutral action?
Usually, these side remarks are made with a "currency frame of mind". In other words, the person fully expects the present financial / currency system to continue to function for the duration and plans to profit from any ongoing crisis. The catch word is "profit", because this investor will "trade" the gold market, using leverage to multiply his currency holdings as the profit. Again, that mind holds that their is nothing to gain, if physical gold only maintains the loss of purchasing power during an inflation. It is at this juncture that I differ from most gold investors!
But first, a few questions / statements of mine to counter: " If hamburgers went to $100 each, for god sake, what would the price of gold be?". Or: If hyperinflation was 50%, and foreign exchange controls blocked me from buying other currencies, how would anyone possibly "afford" gold?" Or: "Gasoline just went up $.50 a gallon last month, now it's $8.00. My salary has not kept pace with this inflation, because it only doubled last year to $215,000. After taxes, I'm behind and now my broker says I should buy some gold at $6,346.00 an ounce. It's up a thousand in six months, totally unaffordable for me, an "average utility worker"!!" Or: "There is talk of rationing and bank withdrawals on a percentage basis, how can my neighbor still buy gold
with what is available, what a fool"!
The above train of thought paints a strange picture of a currency going bad, along with the human perception of that event. It is under these circumstances that our original "hamburger man" thinks he will "outsmart" the brightest paper traders on wall street. He will not have a chance! Not
to mention, he doesn't even think the system will fail in this manner. Perhaps, everyone will be getting killed while he outmaneuvers the government's new laws and regulations! Yes, they may try to seize gold and / or tax it's transactions. Or they may encourage it's use as an asset saving account However, these actions will be the "Result" of gold soaring in price, not because it's returning to $40 an ounce! Yes, the very regulatory actions most analysts exclaim as reasons not to invest in gold are truly the result of a world trying to grasp the yellow metal.
Search your own feelings and consider, If our "burger man" "REALLY" understood that physical gold could go into the thousands, would he not be buying it with both hands, regardless of any government action or price inflation offset. Killer investor traders do not walk away from
real things with a huge price dynamic on the horizon, they buy and hold forever, if necessary. But, only if they "believe in" the "dynamic" and the "real wealth payoff".
One of the strangest comments Another ever made was something to the effect of "gold is falling because so many people are buying it"! Some of you, no doubt remember it. What a ridiculous statement to consider,,,, if you are a "burger man" (or woman). He made this point some time ago without explaining clearly. Today, if you have read some of my other posts, it is becoming clear!
Truly, the reason people think gold is being manipulated in a conspiracy, is because it's price is falling while it's ownership is expanding. Usual supply and demand factors don't allow markets to react that way. "Burger people" resent this because it cuts them off from participating in this market, on the long side, using their favorite vehicle, paper leverage. They do not use leverage to short because the fundamentals say it should be going up. Indeed, today, the more the world gold market is expanded, the lower it's price. Yes, the only way to walk in these footsteps, is to buy physical gold.
The buying is not conspiratorial, and has been evident for some time. We have but to look at the massive volume on LBMA to see it. That is a fact, not something hidden away. A gentleman named "Big Trader" pointed out some time ago, that the buying would start as soon as gold fell below $360! It did and it did! Right after that, LBMA had to start announcing it's volume because it became so large. Most of you remember that day. Also, the fact that many brokers (GS) and bullion banks now guarantee the delivery of this massive new area of gold ownership (they are short), does not mean they are shrewd or smart. Or that they are "controlling" the market, it just means they are selling lower and lower. Nor does it mean that they are "profiting" from these
transactions as, to date, most of them are marked to the market, not completed or closed. Yes, some of them are concluded, but, you know and I know that these are but a tiny percentage of outstanding transactions.
If all of the "burger people" truly believe that the gold market is this short, then common reason must dictate that "the someone" is massively long?? An open fact for all to see. It is not hidden! Again, the problem with this state of affairs arises because gold is being massively brought at
lower prices, and expanding it's ownership, all the while, leverage players cannot make a dime from it! Manipulation?? NO!! Investment, done in the open by savvy, smart investors? You bet!
Now, why would major entities buy physical or buy the "short paper" of gold in a world of falling prices? It makes no sense to "burger people" because they expect gold to return to it's natural "commodity value" of say $500/ oz with the world financial system in tact. Just as soon as
the manipulation stops, that is.
My friends, what we are witnessing here is history in the making. Western investors, analysts and gold fund managers are asleep, holding gold industry securities with loses. They are waiting for "gold the commodity" to return to it's "deemed correct price", while major world entities are planning for the end of the dollar as a reserve asset. While local economist use the recent twenty eight years as a "precedent" to price gold in dollars, others use the "total history of currency failure" as the reason to buy real gold at ever lower prices. European lending of gold started as an
"inducement" for one oil producer to lower the price of oil and expand the use and value of a failing dollar. This began in earnest in the early 90s as a straight forward way to "buy" cheap oil. Then it expanded into a method of selling gold to anyone that wanted to trade dollars for it "And
Not Gun The Price"! It is painfully obvious for anyone to see, if they look closely. Gold was frozen from use when the IMF was formed and subjected the BIS into a locked dollar world. The late 1980s clearly demonstrated that no one would be allowed to exchange dollars for gold at a reasonable price. The world would use the dollar or the entire financial system would fall. Today, by effectively returning gold to currency status through multiple "gold carry" transactions, under the guise of mine forward sales and lending, the BIS has created a reserve asset base. A base that competes directly with the dollar and benefits the Euro when the dollar is "unreserved".
"Burger People" will and do find this offensive, mostly because they are not positioned for this event, nor do they believe this is happening. Events will prove that the next rise in the dollar price of gold will be from the beginning of a complete meltdown in the IMF / dollar asset world. That
rise, will most certainly not represent the "commodity value of gold", however, it will represent the "commodity value of the dollar"!
Now my friends, you know why I stand entirely in the center of the "footsteps of giants" and by reason, "what gold means to me".
Thank You FOA
beesting (5/15/99; 20:21:44MDT - Msg ID:6206)
@Christine msg 6176-Subject $10,000 GOLD!
GOLD IS NICE!
From msg.6176: If price of Gold went to $10,000 as FOA suggests would it not become virtually out of reach of most citizens?
Since a question was asked,here is my humble personal response.
Up until the late 1970's I always felt physical ownership of Gold was for very wealthy people only,Kings, Queens,Governments Central Banks etc.
In the 1959 or there abouts time period when Gold was fixed(in the U.S.)at $35 per ounce,I was in the military,they had the draft in those days.Take home pay for me was $80 dollars per MONTH,I also got $8 dollars overseas pay. Even if Gold ownership in the U.S. was legal in those days I didn't make enough after bills to own any.
Things have changed,in the world, and in my personal financial situation.
Private ownership of Gold coins is encouraged by most,if not all,countries of the world.
Lets examine $10,000 per ounce price of Gold with current choice of coins:
1 ounce pure Gold coin-cost $10,000 plus premium.
1/2 ounce pure Gold coin-cost $5,000 plus premium.
1/4 ounce pure Gold coin-cost $2,500 plus premium.
1/10 ounce pure Gold coin-cost $1,000 plus premium.
1/20 ounce pure Gold coin-cost $500 plus premium.
If Gold goes to $10,000 per ounce, coins with more alloy and less Gold(although it would be pure Gold.)would probably be minted.Gold is also measured in grams and grains:
1 troy ounce=31.103 grams.
1 troy ounce=480 grains.
So if my math is correct:
1/20 of an ounce=1.55515 grams or 24 grains.So lets make a coin using grains of Gold.
A coin with 2.4 grains of Gold(with Gold at $10,000)would be worth-$50 dollars plus premium.
A coin containing .24 grains(a little less than 1/4 grain)would cost(with Gold at $10,000) get this--$5 DOLLARS plus premium.To make another comparison:
Gold is about $280 dollars per ounce right now The *#*~^@* Bank of England just announced possible sale of 400 ounce bars of Gold they would cost $112,000 per bar at current prices.How many reading this are buying bars this size?FWIW........beesting
FOA (5/15/99; 20:59:43MDT - Msg ID:6209)
Comment!
beesting (5/15/99; 20:21:44MDT - Msg ID:6206)
Beesting, Excellent point!
FOA (5/15/99; 21:03:47MDT - Msg ID:6211)
Question?
Richard, Oregon (5/15/99; 20:19:40MDT - Msg ID:6205)
Richard,
Why didn't the USG just revalue gold to, say $200 and allow everyone to keep their money? Your comments?? Anyone??
FOA (5/15/99; 21:38:42MDT - Msg ID:6212)
Comment on earlier discussion!
Barrick - hedges
One of the first signs that a new gold market was being created was when bullion banks were allowed to sell Central Bank gold "ownership invoices", for cash to the benefit of Barrick. The CBs got only a very small rate of return for this risk. The money set in a bank account and interest
was made. The new owners of the gold paid cash but let the gold set in the CB vault. All that happened was that Barrick could earn interest on it's unmined reserves and call it "the higher price they were getting for gold"! In addition, the CBs said they could roll it forward for ten years +/-,
if the price of gold rose!
Really clear eyes could see that the CBs were paying mines interest on unmined reserves if they would replace the CB real gold with mine collateral. Because the gold didn't really leave the vault, the new securities were used to match the mine future assets against the new owners of the gold!
Neat trick. After the public bought it as "the CBs earning interest on a nonpaying asset", the gates were opened. It wasn't long before gold was lent without any gold at all! No different than "fractional reserve" banking. The mines were (are) being used to expand the gold trading arena
and they don't even know what is happening. Now, as the price has fallen, all mines must earn interest on reserves, just to survive. The dollar bears are, in effect, nationalizing the mines gold reserves at ever lower prices. Tell me the CBs are dumb? ??
FOA (5/15/99; 21:51:45MDT - Msg ID:6213)
Comment!
USAGOLD (5/15/99; 8:41:59MDT - Msg ID:6161)
"Beesting: Thanks for interesting link. I think alot of water is going to go under the bridge beforeLondoners fold euros and stick them in their pocket. (Sorry FOA)"
Michael,
I bet you one "Paper American Dollar" that England will "pound" the door of Europe in a desperate attempt to enter! The BOE would have never bailed out some of their Bullion Banks in such an "open" action, unless they were about to split from the USA money team. Watch for the US to push for higher gold prices because the game is lost. That's why RR quit, no? GS and the LBMA are in it now! I'll bet you will refer to me as a "hamburger person" after this! We will see. Thanks
FOA (5/15/99; 22:23:29MDT - Msg ID:6216)
Comment!
canamami (5/15/99; 21:54:44MDT - Msg ID:6214)
Hello canamami,
------------ "If "yes", will this disestablishment pertain to the $US solely as an international reserve currency, or also as the domestic US currency, leading to the introduction of a new American currency even for domestic transactions and savings?"--------------
If the reserve function of the dollar is degraded, that action will most certainly affect it's internal trading value. Inflation will rule the day as the local (internal) money is locked within it's borders with "foreign exchange controls"! Most external dollars exist in the form of interest bearing securities (US debt) and they will be handled just as the Russian debt is. No one will declare it
worthless. It will still trade on foreign markets at a discount.
-------------"Do you anticipate "Weimar Republic"-type hyperinflation? What are your time frames?----------
It has to! There is no practical use for the excess amounts or valuations of a reserve currency that has been replaced (unreserved). As I said several weeks ago, the change is starting. Yes the price of gold has fallen, but still within it's framework. Someone, here asked if the BIS would still buy in the open below $280? I think they will to protect the scale of the market. However, if the US is now actively, about to gun gold, the BIS may wait a bit. Also, If Bill Murphy of GATTA (??) really wants to get action, they should go to Switzerland and present a public appeal to the BIS. That could be all they need for a "precedent", especially if it coincides with a new US policy push!
----------An interesting tidbit. There is a program called "Cities at War" on a Canadian cable network called the History Channel. In the episode on Berlin, the narrator stated that the restaurants which had anything left to sell continued to do a brisk business, even with the Russians
within 35 miles. Can you imagine: Some restaurant owner hustling like crazy amid the destruction and mayhem of March 1945, for payment in Nazi Currency! I think payment in gold would have been a much better bet!!!-------
Good point! Add to that the present day action of citizens still using currencies like the Mexican Peso and we see how old habits lead to wealth destruction. FOA
FOA (5/15/99; 22:39:56MDT - Msg ID:6220)
Comment!
Aragorn III (5/15/99; 21:58:18MDT - Msg ID:6215)
Hello Aragorn III,
Nice answer. I hope everyone enjoyed it as I did. I know you have little time, but your responce demands a further question. Gold was money then, and the gold weight created a
problem. Then, why did the US close the gold window in 71 instead of just raising the gold price? Again, even $200 may have worked? Anyone?
FOA (5/15/99; 22:55:38MDT - Msg ID:6221)
Comment!
Peter Asher (5/15/99; 22:33:24MDT - Msg ID:6219)
Hello Peter,
Thanks for the consideration! No, my posts are, at best, food for thought in this changing world. As events turn, the fine writers that make this forum will grasp hold of world affairs with a writing style that shapes public opinion. This they will do using newfound "hindsight" that fresh readers will call "wisdom". I look forward to this as do all. Peter, what does gold mean to you?
FOA (5/16/99; 13:50:14MDT - Msg ID:6244)
Comments!
Christine (5/16/99; 0:50:52MDT - Msg ID:6227)
@FOA--It is unlikely that Barrick Gold is some passive foil of the BIS in this currency change. With board of directors like George Bush and Brian Mulrooney, Barrick has been a key tool manipulated by US. Cover your ears, conspiracy dislikers, but my guess is that at some point as gold soars, the US will come out with a new gold-linked currency similar to the euro. Still keep you ears covered--I also suspect that Britain is lowering the pound value to join the dollar, not the euro.
Christine,
Why would anyone conclude that Barrick was a "passive foil" of the BIS? At the time, they made a smart, innovative move that allowed them to earn interest in unmined reserves. Why would they want to be part of a grand expansion of gold ownership that drives gold lower to achieve that end? These people are miners, not goldbugs. The bottom line is all that counts, no matter who is on the board of directors. Gandalf the White is correct, in that the big names are on the "international" Advisory Board. That position is used to open locked doors for new projects, not plan strategy to counter declines in gold prices.
Barrick is only interested in the broad ownership of gold if it increases it's price. Had they understood the process, as you point out that they must have, leasing gold would never been part of the plan. They didn't need to, for their mines operate at a very low cost. The stock price fell, anyway, so what good did the return do for the shareholders? The precarious position of their portfolio, along with it's risk is now well understood! They, like everyone else, planed for gold to fluctuate in a range of "appropriate commodity value" and saw an opportunity to earn interest on ore reserves during what was perceived as a "lower price period". We are out of that range now and on the verge of blasting through to the other limit.
What of their exposure? It was never done before on this scale, but that is only because the CBs never had a reason to lend gold for almost zero return. I am taken by the naivety of the public and the boards of these companies. It shows the extent that greed holds when no one asked why the CBs were suddenly giving away gold to lend. Remember that interest rates were much higher when all of this lending started. That comparison makes the return discrepancy even
more obvious.
As far as your new gold backed currency for the US? Just how do you expect it to trade along side it's current unbacked unit? As much as the world has power struggles, there are "rules of engagement" that every must deploy under. For the US to issue a new currency, the old one
would have become completely worthless! NO? Comments?
FOA (5/16/99; 13:57:47MDT - Msg ID:6245)
Reply!
Tomcat (5/15/99; 23:42:09MDT - Msg ID:6226)
Sir, I thank you for your thoughts and consideration. Just as the new US movie Star Wars is about to play, the "Gold Story" is about to play out in "real life" fashion. It will contain more interesting "special effects" than the film. The game goes on! FOA
FOA (5/16/99; 14:05:58MDT - Msg ID:6246)
Comment
Xavier (5/16/99; 12:44:48MDT - Msg ID:6243)
Gold and the Chinese Language
Hello Xavier,
Thanks for the details. We should all learn about gold through Chinese eyes. They will be major players in the Euro transition. For then, trade with the US is a problem necessity, because the IMF / dollar does not allow for gold as an "ASSET IN TRADE". To this end, Europe is doing a fine job of playing the "China Card".
Are you sir, Chinese in mind?
FOA (5/16/99; 14:19:27MDT - Msg ID:6248)
Reply
USAGOLD (5/16/99; 10:58:08MDT - Msg ID:6240)
Comments/Responses
FOA....I take the bet, my good friend. Do I get odds? I've got another one for you, FOA. I think that Chancellor of the Exchequer Brown may have exposed the British pound to a speculative attack much like what Malaysia experienced a few years ago. The Asian contagion in Britain? Too far out to comtemplate? Maybe not. Remember Soros.
Hello USAGOLD,
No odds in this major bet! Seriously, the odds of this event will be exposed in a possible lifestyle change in the US. As Christine would say, "they are much too smart not to have known the outcome". I think Mr. Brown has placed the pound "in play" and that course of action will culminate with the British public reaching for the Euro! Politics requires the voters to voice a popular opinion, before action is taken. A pound, severed from the dollar union will crash resistance to a currency change. I believe oil money has been pulling out of London for over a year, now! The game continues!
Christine (5/16/99; 14:26:51MDT - Msg ID:6249)
@FOA--I propose another wager
How about Britain will be joining up with US in new US gold-linked currency. Do you know who has been buying all the gold at firesale prices these last few years. You have wisely pointed out that with all the selling, there has to be buyers.
FOA (5/16/99; 14:34:18MDT - Msg ID:6251)
(No Subject)
Christine (5/16/99; 14:26:51MDT - Msg ID:6249)
@FOA--I propose another wager
Indeed, please explain what would be the gain in such a combination?
FOA (5/16/99; 18:37:40MDT - Msg ID:6261)
Fahd Foresees Good Outlook For Iran Ties!
http://www.iht.com/IHT/TODAY/MON/IN/iran.2.html
------''The door is wide open to develop and strengthen relations between the two countries in the interests of the two peoples and the Muslim world,'' --------
FOA (5/16/99; 18:47:58MDT - Msg ID:6262)
Asia Hails Japan Plan To Guarantee Bonds
http://www.iht.com/IHT/TODAY/MON/FIN/apec.2.html
------Tokyo is eager to develop its yen-denominated bond market, which has withered since the financial crisis struck. But Mr. Miyazawa did not go as far as to say that all the bonds guaranteed would be issued in yen. He suggested bonds ''denominated in a basket of currencies'' including the dollar, euro and yen.------------
FOA (5/16/99; 19:18:34MDT - Msg ID:6264)
(No Subject)
Exceptional writing today. I have read each one and hope they continue!
FOA (5/17/99; 8:17:43MDT - Msg ID:6307)
Comment!
canamami (5/17/99; 7:38:58MDT - Msg ID:6303)
Canamami,
Most of the recent history of the world was written to record the human struggles for power and dominance. These efforts were compensated for, using the value inherent in real money, gold. Practically all of the activity in our past stands as the proof that "gold" represents the goals and aspirations of mankind.
The difference between "conspiracy" and "strategy" blur in the context of "the lust and greed to control political events" and "right planning for the nations future"! Only a sharp mind can separate the two and understand their implications. Often, a group of minds, as we have here, can find the truth.
Please continue.
FOA (5/17/99; 9:01:11MDT - Msg ID:6311)
Comments!
Christine (5/17/99; 7:55:29MDT - Msg ID:6305)
Christine,
Your position holds that the world is coming together. The "power leaders" are working together to create a "one world" "all controlling" currency /economic system. If true, your thinking will rewrite history as the actions of the past are not supportive in this aspect.
Nowhere in the recorded history of mankind have world leaders "colluded" successfully without opposition!. Always, our earth has been broken into power groups that have fought each other. You will find on agreement from scholars, that our "human nature" supports the actions you present.
What you ascribe to would represent a true international "conspiracy" of a strange nature, as the political elements would all be on the same side of the "gold position". They would "in effect" be buying gold from themselves. Nor do capitol flows indicate the US as the buyer. The vast pool
of dollars that support the purchase of gold, all reside outside that country. Indeed, the very concept of linking gold to the dollar, by the US would hasten it's demise under the current reserve system. You will have to resolve that conflict of political wills, for your thoughts to be
constructive. Also, you stated that the US could issue a new currency in the same format as the Euro. Again, you will have to resolve the debt / international currency reserve issue, residing with the dollar that is not present with the Euro.
Please do address these in depth, we look forward to your thoughts.
FOA
FOA (5/17/99; 9:03:42MDT - Msg ID:6312)
Correction!
You will find --NO-- agreement from scholars, that our "human nature" supports the actions you present.
FOA (5/17/99; 9:41:53MDT - Msg ID:6314)
Comment
canamami (5/17/99; 1:01:35MDT - Msg ID:6294)
A Troubling and Perhaps Insane Theory
Canamami,
Perhaps, the English definition of "conspiracy" will have to be rewritten! It is now often applied "out of context" as the definition of natural political maneuvers. I ask you, how can a country plan it's direction without establishing a protocol for responses to international assaults? Be they attracts of physical nature or economic in form. The average citizen goes about their affairs and
views these actions as "highly controversial", yet given the same set of attacks in private life, they would peruse the same course of action. We are governments of "organic" people with common wants , desires and responses not "machine like"!
Would the USA attempt to control events in the Middle East? Of course. The record shows this as an ongoing operation for many, many years. Why would it change now if oil was repriced to the degradation of American economic strength. Myself, and most of Washington would not label this "conspiracy" or even "theory", as it would be a just counter play on the world arena. It is a "given" and "accepted" action, not a "contemplation" of shadow groups. The question to be explored is: "What would the response be and how would it effect the flow of oil"?
I have a reply to this, does anyone else? FOA
FOA (5/17/99; 9:56:08MDT - Msg ID:6316)
Must go!
SteveH (5/16/99; 20:30:06MDT - Msg ID:6270)
FOA
Seems like this person had a few comments for you. I would be curious of your response:
Christine (5/17/99; 9:33:08MDT - Msg ID:6313)
@FOA--Please help check my logic
All,
I will return to discuss / reply to both of these later. Also the question of oil?
Thank you, FOA
FOA (5/17/99; 19:44:28MDT - Msg ID:6353)
Discussion
Christine,
Before we pursue this discussion further, I would ask you to please define your use of the word "conspiracies"? Because this forum is read by hundreds (or thousands) of lurkers, in all fairness, that term must be put in "context" as it's use is applied by the author. Your understanding of the term could be different from others. As an example, PHinLA offered a partial view of his "context", even though it was only a small application of his broad views.
(thanks PH)
Msg ID:6317)
"As far as the topic of the "conspiratorial nature of international power plays" is concerned, I would suggest that such labels tend to betray a shallow understanding of human endeavor on the part of the commentator. It is all too easy to dream up conspiracies based on what COULD happen without regard for what actually IS happening (either behind or in front of the scene). Such thoughts usually fall more easily into the realm of entertainment than into that of
understanding: Imagination unfettered by reality onstraints; certainly a valuable commodity in today's Hollywood-influenced mental processes, but hardly the way things work in the "real" world."
You have often referred to my views as if I was offering them in a "conspirator" format. I respectfully submit that , I do not offer them as such. At least in my definition of the term. As examples of your writing:
Msg ID:6331 " I do not think FOA has spent innumerable hours here and elsewhere posting of economic upheavals coming for no reason. However, all interpretations nvolvingconspiracies must be questioned and challenged, and none accepted on blind faith. "
Msg ID:6320 "Do you not think FOA is proposing a conspiracy for his view of why things are the way they are?"
There are many more. Therefore, as public discussion always demands, please define how you view my writing in your "conspiracy context", so as to allow me to agree or reject your conclusions. This is, of course, for the benefit of others understanding. Thank You FOA
canamami (5/18/99; 10:43:52MDT - Msg ID:6393)
Everyone - Thank You - A Courteous Forum
…To clarify my conclusion and beliefs, I agree with PH in LA that it is unlikely that the US would invade Saudi Arabia, because of the huge multiple risks involved and because the US populace and the world community would be suspicious of any human rights pretext, given the palpable possible economic motivations for such an action…
FOA (5/18/99; 15:05:10MDT - Msg ID:6403)
Comment
All:
I thank everyone for offering their conclusions to "A Troubling and Perhaps Insane Theory #6294".
The duscussion that followed this post offered a great example of "making ones point". Often thinkers discuss topics by stating what they think, without adding "why they think it". The "why" is always the most interesting part and the one that others learn from or challenge using respect.
In the world of international politics observers and analyst must often draw conclusions from historical precedent, natural human tendencies and sometimes just "feelings". Many times, just the "sequence of events" can create "a chain of thought" that leads to a "logical" conclusion. As much as the world investment community demands "facts" before investing, it is rare, indeed if that
luxury is offered. I submit that many generals have won wars using little more than "anticipated human reaction" to create a battlefield strategy.
Mr. canamami, in your excellent piece it was stated "Invade" can include a sponsored coup to set up a compliant regime". I do agree and believe that such an action may even be on the books. It is most certainly consistent with past / present US actions. Would it be accepted in today's
world? Let's see.
Whenever I read of a new US adventure, I always get the "feeling" that they are "fighting the devil" as you have stated. You continue with examples from the " Spanish-American War" on into the present. In each instance, America accomplished more good than harm. Standing in the
context of each event, using "sequence of events" for logic, most would agree that each conflict would have degenerated had the US not intervened.
Further, you use the term "US Elite" as the driving force behind an active "forcible seizure" (as Ann Ryan details it). I ask, why not the "public" as the driving force? Would a need to control oil not originate from citizens, caught in an economic turmoil? This would be a real event, brought on by a newly uncompetitive industrial base. A manufactured event would prove unnecessary as
every unemployed worker would know who the "devil" was.
I bring this up because in many instances, there is always a "background presence" in American thought. That being, "if the driving force behind our economy (oil) becomes so expensive, our leaders (elite?) would initiate the seizure of the oil fields". Do you see the conflict I observe?
Always, the corrupt power broker elite will do the job, yet, in the minds of the people, they demand a response!
While the use of a cause, Susan B. Anthony feminism, human rights or Christianity v. Islam could work, I question if it would be necessary, this time. Your point, " The American people won't support a war for such mercenary purposes" is well taken, in the context of the present
economy! But, would that view hold in the different economic world that would exist at that time?
Let's continue:
canamami asks, "Can the world continue to bank on US virtue?" And Cavan Man (6298) replies:
"do you mean all of us in the collective or are you referring to the government? If you are referring to the collective than you are implying that there are more virtuous citizens than not. In that case I hope you are right. If you are referring to the government than I submit that "US virtue" in that context is an oxymoron."
Mr. Cavan Man, thank You! My observation is that your statement does, indeed reflect the current US economy more so than actual held beliefs! I also extend my "hope" for the virtuous citizen when the times change. Perhaps, the government will be the moderating force in the future?
I offered my thoughts in: FOA 6314: "I ask you, how can a country planit's direction without establishing a protocol for responses to international assaults? Be they attacks of physical nature or economic in form. The average citizen goes about their affairs and views these actions as "highly controversial", yet given the same set of attacks in private life, they would peruse the same course of action. We are governments of "organic" people with common wants , desires and responses not "machine like"!"
Again, we view our leaders as "controlling elite" during the fat years, yet all of us hold the same human values in times of stress. That being, "not only protect what is ours, but grasp what is our given right to control"! The given prosperity of oil, of course.
In #6303, canamami states, "As great powers go, the US is positively saintly, at least most of the time." I add that saintly actions will be a "steep hill to climb" if the US dollar is threatened in a fashion that generated the German inflation leading up to the World war.
In PHinLA #6317, he writes,
"Such a military adventure would negate every historical trend in international politics of the 20th-century. The US does not pursue such naked political and military adventures; it prefers more subtle measures such as the cultivation and maintenance of a reserve currency to bring
about the desired results."
That, my friend is a very true fact! It is also the very "chain of thought" that leads me to ask: will the trend in politics be negated by the loss of a "reserve currency"?
PH, I should just print your entire article, as it says much about western concepts. Here is more:
"Any contemplation of such a military course of action, even if it were labeled a civil rights campaign in favor of women's liberation (a concept I doubt could be seriously entertained by any sane and/or thinking person in 20th-century America) would imply so many philosophical changes in US policy that the natural evolution of this idea would change the world as we know it beyond recognition. It would bring about enormous and radical changes in the global balances of power it would seek to prevent; an obvious contradiction! The flow of oil and today's economic system
would be vastly and unrecognizably different."
The next paragraph in your post was (I believe) directed towards another discussion about "conspiratorial nature of international power plays" and did not apply (completely) to this subject.
And this fabulous discussion continues with:
canamami 6367:
"I submit the main change in the international order is the abandonment of the theory that what goes on within a country is that country's sole business (let's call it the "Westphalia principle"), replaced by the new notion that the international community can intervene to protect "human
rights". The current actions of NATO (unapproved by the UN) in Kosovo are conducted in the name of "human rights", to prevent ethnic cleansing. When the Soviets "cleansed" eastern Europe of ethnic Germans, when India and Pakistan religiously cleansed themselves, when the Turks cleansed eastern Cyprus of Greek-Cypriots, where was the international intervention in the name of "human rights". I submit that something new now exists - countries will now go to war in the name of "human rights".
And he add the question of: "The problem is: what are "human rights"?
I would add that this answer will be in context in the future, to repeat myself, "the human right to a sound reserve currency and a stable economy brought about by cheap oil"!
Mr. PH writes again in 6373,
"No, it is one thing to topple a dictator here or there in a marginal country with little clout. It is quite another to take on a behemoth like China or Saudi Arabia. I take the liberty of putting those two countries in the same category because an attack on the Saudis would be taken as one on all
countries in the region by local inhabitants."
PH, I think the recent move by Arabia to bind with Iran is telling in that they may have read our minds. However, their conclusions were directed towards a future era. Not the present atmosphere that produced this excellent discussion. With the US unable to complete it's goals in
Iraq and now other parts of the world, a charge into the oil fields brought on by the repricing of oil would be a disaster. The precedent (and soon the troops) are now in place. All that would be required to triger an event, is an incident, financial and far reaching in nature. When, as
USAGOLD #6386 noted, "Britain's Tony Blair is about to step up pressure on the Clinton administration to use "American" ground troops in the Balkans." it becomes evident that the
financial system is at risk today, more than ever in history. And the only currency that can survive "risk" will move to the forefront of attention. I believe that in the future, this discussion will take the lead in world media, if no other reason than "this cannot be happening"!
Gentlemen (and ladies) please continue. FOA
FOA (5/18/99; 19:43:43MDT - Msg ID:6421)
Britain was the only European Union country without an ambassador in Tehran.
http://www.iht.com/IHT/TODAY/WED/IN/iran.2.html
Paris, Wednesday, May 19, 1999
"Britain and Iran Move to Restore Full Ties"
Compiled by Our Staff From Dispatches
LONDON - Britain and Iran, whose relations plummeted 10 years ago after Tehran issued an Islamic death edict against the writer Salman Rushdie, announced Tuesday that they had agreed to restore diplomatic relations to the level of ambassador.
Britain was the only European Union country without an ambassador in Tehran.
''This step marks the end of years of dispute,'' Foreign Secretary Robin Cook said. ''It fulfills the agreement we secured with the Iranian government in New York in September 1998.''
Note: A very European action! Why Iran now? Why Britian now?
FOA (5/18/99; 20:06:59MDT - Msg ID:6423)
comment
Aristotle (5/18/99; 15:54:52MDT - Msg ID:6407)
FOA, here is a reminder of our ideological roots. I wonder how far our wisdom has strayed?
Hello Aristotle,
I don't reply to your posts very often, because so much time is spent studying them for reference! I understand that the life of Mr. Madison was one of inner conflict and turmoil. Strange how such stress can create one of fine qualities.
If I may shrink his last sentence to, " the presumed opinion of the impartial world may be the best guide that can be followed.". Have we strayed?
"the appearance of honor becomes the mask of deceit as the tempest does rage"
author? I do not know. FOA
FOA (5/18/99; 20:19:32MDT - Msg ID:6427)
comments
Atahualpa,
Good day and welcome to you.
TownCrier,
Perhaps your added thoughts will also create a montage of ideas for everyone to consider. thank you
FOA (5/18/99; 20:35:31MDT - Msg ID:6428)
Reply
Christine,
Thank you for reading and offering your interpretation. I have some discussion for you that dates back several posts. I hope to offer it tomorrow, USAGOLD time. FOA
FOA (5/19/99; 6:39:26MDT - Msg ID:6438)
Reply / Comments
These are my replies / comments to several of your posts:
Christine (5/18/99; 20:51:07MDT - Msg ID:6429)
@FOA--Timing of oil rise
------"It appears that every manipulation possible is being done right now to hold the price of gold down, the dollar up, and the euro down."------- I agree, it does appear that way. But manipulation is not the best word. "Manage" would work much better because this is done in the spirit on national politics, not "internationalist control" as you often state!
------"Consider my hypothesis (I know you don't like this)"------ I "like" all discussion that offers
a "chain of thought" and / or the "sequence of events" that brings one to make their "logical" conclusion". These may be offered in many posts, over time, or all in one. If able, please state your "historical precedent, natural human tendencies or "feelings" that brought you to make a
statement. Facts are always good, but often unavailable.
------"Consider my hypothesis that all this manipulation is going on right now to facilitate the internationalists in exchanging dollars for euros. I know your thought is, like most others, that we are simply seeing the last gasp of the dollar as the US struggles to maintain the stock market,
etc."---------- Christine, many have read "my thoughts" many times and drawn their conclusions, good or bad. What are your thoughts? How did you conclude "internationalists are exchanging dollars for euros" not necessarily why? What do they gain?
-----------"Price of oil was raised firmly by OPEC in March. This was likely orchestrated in response to the euro being "ready to go."-------- Did you infer this from my thinking? Or do you have another "chain of thought" that makes this clear?
----------"Recently we have seen the tone of OPEC as well as the price of oil soften again some. Do you think it is possible that OPEC has been maneuvering for some additional advantage via controlling how rapid the price rise in oil is."--------- No. Reading through my posts should
suggest that their moves are much more slow and long term. The price rise in March, was because the Euro was "ready to go". However, is was a long term change. Again, I use the the thought of "management of price" in a political format, not "conspiracy" as you often infer that I do.
------------"My thought is that OPEC knows that the process of dollars to euros is underway, and they would have some leverage to gain advantage during this time" -----------This is very different from mine and Anothers thinking, as their "advantage" and "leverage" was established some time ago. Please read my posts and his Thoughts. What is the advantage and leverage you speak of? Are they buying dollars, or silver, farm land? Why do you think they would do this, your thoughts?
----------"A too rapid rise in price of oil would hurt the dollar and interfere with dollar to euro exchanges at a bargain rate. Just a thought."------------ How would the dollar to Euro exchange be interfered with by a rise of oil? And, what brought you to conclude this?
Christine (5/18/99; 20:07:09MDT - Msg ID:6424)
@FOA--I can only say bravo for your post today
----------" canamami states, 'As great powers go, the US is positively saintly, at least most of the time.'---------- (FOA note to Christine: I stated the next line ) I add that saintly actions will be a 'steep hill to climb' if the US dollar is threatened in a fashion that generated the German inflation leading up to the World war."
-----------"You have verbalized what I am very fearful of in a very different way than I have been able to. I feel the US has lost its way."--------------------I agree with this!
----------"Those that control our country are out of control. I don't know what can be done to stop them. And I don't know if we the people have the will to stop them. They will mislead us with many lies and false blame for what is going on. Will we the people be able to see what they are doing and the wrong of it."--------------- I did not say or imply this. This is your interpretation of my post. I concluded that it was the "people / citizens" , "NOT THE Leaders" that would demand action. Please read it #6403 again! Please explain "your theory" about "out of control
leaders" and how you came to that conclusion?
------------"And FOA, the only point we now disagree on, I realize, is that I do not think those who are running the US are going to be defeated by these currency events." ------------- What historical precedent, human tendency or sequence of events brought you to the idea that "currency events will not defeat them? In review of my many posts, one may conclude that the US / IMF factions will be defeated. Please read them.
----------"I do not think "they" have been outwitted or outmaneuvered."-------- Why?
----------"I believe that they have engineered this for their further gain and control." --------- How did they engineer this? Thoughts?
--------------- Christine (5/17/99; 23:37:04MDT - Msg ID:6374)@OverHerd If I understand you correctly, you are offering a similar argument as FOA. And certainly not implausible. But you raise one of the core issues that has made me a "conspiracy theorist" I do not think the BIS has some great wisdom or vision that the IMF does not. What I
mean is, IMHO, the IMF/dollar has been well aware of the eventual outcome of what it was doing all along, as has been the BIS. After all, someone else commented that there is much overlap in who are key players with BIS and IMF. The fact that the IMF must have anticipated the present situation just as the BIS must also, forces me to look for another explanation. I have concluded that this is a designed outcome by the IMF/dollar. ----------------
What actions has the BIS taken that leads you to this? If not actions, then what is the "sequence of events" or what "political advantage" would they gain. Their written history has always been one of "adversity" with the IMF. What actions have they recently taken that change this "feeling"?
----------Why would the IMF/dollar deliberately set the dollar up for a huge crash. For one thing, I think it will create the kind of economic disruption to convince the US citizens and Congress to start entering a global currency, as Martin Armstrong of the Princeton Economic Institute suggests is the goal.----------- I agree that this may be the outcome, but the only other currency to replace the current system would be the Euro. Unless the trend is changed, it will inherit the global currency system. The BIS is much more politically and financially aligned with the Euro. A review their many written articles will confirm this. You must offer how the IMF / dollar faction will benefit by crashing their system. Trillions of assets will be lost, long before they are exchanged for Euros. If your theory is that they are holding the Euro down to facilitate an exchange, then how will the lost assets be moved without spiking the Euro? The dollar faction would be wiped out , as I have stated in many posts. Please address these issues.
As OverHerd 6372 states: -------"The BIS is merely getting out of their way and letting them fall on their own." ---------
I absolutely agree with this assessment and do not offer that the BIS is in a "secrets deal" to bring down the dollar. Christine, that is your interpretation of my posts. The ECB, BIS and the Euro faction are only filling a void. Indeed, it is to their liking and have done nothing to support the dollar, rather it is a political / management operation, in place from the early 70s. The actions of
the private citizens and companies of this world will strengthen the Euro, as they leave the dollar. Not, the "industrial controllers theory" you subscribe to. We are very, very different in this aspect.
----Christine (5/17/99; 20:50:22MDT - Msg ID:6360)------------- "FOA, I do not use the term conspiracy in a derogatory way, although others may view conspiracy in that manner. I believe your hypothesis that there is a covert attack on the US dollar by the BIS is a conspiracy theory.-------------
My hypothesis does not and never has concluded that the BIS is operating a "covert attack". That is your interpretation. Just as stated above, they are working in the open as events reveal this.
---------"One of your main arguments is that in your opinion such a secret maneuver by the BIS would be both justified and necessary on the BIS's part, to save the world from dollar fiat currency" ----------- Wrong again!
------- I do agree that the world is in a mess now because of US dollar expansion/inflation. I do agree that we are going to see some dramatic economic events.------------- Agree.
----------"But your statements that the BIS has planned a secret attack on the US dollar to save the world from the dollar problem is strictly a theory" ----------- Your thoughts!
------------" I believe there are likely a number of equally plausible theories to explain events going forward. What is a theory versus a conspiracy theory. There really is not a difference in my mind" ------------- In my mind and many others there is a large difference.
-----------------You or others may say the BIS/euro motives for the hypothesized attack on the dollar are logical economic policy and high-minded, so therefore it is not a conspiracy theory. ----------- High-minded, no! Logical, yes, because they follow a historical political
precedent that continues, unbroken through this day. One must use a thinking process of evaluating past events to gain future perspective that is used successfully to guide national leaders today. You have not offered this to support your ideas, therefore they do remain in a "more theory" form.
--------"The BIS is doing this to save the world from the dollar. My opinion is the world needs to be saved from the BIS and the IMF, the euro and the dollar. What if I am correct that the US is the country that has been buying the gold, and is also planning a new euro-like currency, and the
game just goes on and on, only with further loss of freedom." ----------- Is this your "feeling" or can you offer "political analysis and history" for support?
-----------"I do not think there is only one interpretation of what is unfolding. It may be logical to assume the world needs a new reserve currency, but I would not be sure the US dollar can be simply overthrown."----------- History has shown that currencies are "overthrown" by citizens
failing to respect them. When people no longer want to hold or use a currency, it is thrown down from lack of value. "Internationalist" must conform with the medium of exchange and can only control a failing currencies use, not value. Therefore, they gain nothing from it. Christine, this is
not logic, it is the history of your past!
--------(But overthrow might be the best thing that ever happened to the US in terms ofstrengthening ourselves, our economy, and our freedom.) We are all either proposing theories, or we are all proposing conspiracy theories, but IMHO, I am not proposing a conspiracy theorywhile you are just reporting the inevitable logical valid scenario of what is going on. That does not mean that in the end you may not be 100% correct, FOA, but at this time we are all
unproven.--------------
As Another has said, "time will prove all things" and "the history of your past is before you"! My money is on the "never" changing history of human interactions with
paper currencies. A theory for some, real life for many.
-----------"I would be curious as to why you worry as to what those lurking will think"--------- I deplore the callous nature of that remark. We all search for understanding of current events in the context of how they impact our lives. I do not worry "as to what those lurking will think", rather, I am considerate of what they (and myself) understand"
I repeat my earlier post.
FOA (5/17/99; 9:01:11MDT - Msg ID:6311)
Comments!
Christine,
Your position holds (#6305) that the world is coming together. The "power leaders" are working together to create a "one world" "all controlling" currency /economic system. If true, your thinking will rewrite history as the actions of the past are not supportive in this aspect.
Nowhere in the recorded history of mankind have world leaders "colluded" successfully without opposition!. Always, our earth has been broken into power groups that have fought each other. You will find no agreement from scholars, that our "human nature" supports the actions you
present.
What you ascribe to would represent a true international "conspiracy" of a strange nature, as thepolitical elements would all be on the same side of the "gold position". They would "in effect" be buying gold from themselves. Nor do capitol flows indicate the US as the buyer. The vast pool
of dollars that support the purchase of gold, all reside outside that country. Indeed, the very concept of linking gold to the dollar, by the US would hasten it's demise under the current reserve system. You will have to resolve that conflict of political wills, for your thoughts to be
constructive. Also, you stated that the US could issue a new currency in the same format as the Euro. Again, you will have to resolve the debt / international currency reserve issue, residing with the dollar that is not present with the Euro.
Please do address these in depth, we look forward to your thoughts.
FOA
Your reply came as follows:
Christine (5/17/99; 9:33:08MDT - Msg ID:6313)
@FOA--Please help check my logic
------------------------------FOA, even though I have some economic education, it is not even in the ballpark of yours. In response to how the US would liquidate debt, I will have to rely on Mozel--
Date: Tue May 11 1999 05:04
mozel (@If I have this wrong, tell me.) ID#153110:
Gold is at about $300 in round numbers. If the greenback falls to 10,000 per ounce of gold, then Euro denominated debt will have an improved exchange value ratio against greenback denominated debt. The advantage will be a function of the ratio of gold as reserve and is
theoretically unlimited. The more greenbacks required per ounce of gold, the greater will be the improvement in the exchange value ratio. This circumstance has the potential to liquidate greenback denominated debt from the international monetary system pretty quick, I should think." -----------
------FOA, please give me your thoughts on this. After the dollar was devalued, assuming that the US has been accumulating much of the gold involved, then wouldn't it be
feasible to establish a new currency at the point, converting the old inflated dollars into new
dollars at some rate"----------
Christine, Mr. Mozel is an excellent thinker and uses his sharp mind to "make his point". The above is a fine example of the dynamics that support my statements. Among other things, it outlines the "impossible nature" of the US buying gold to back it's money or further create a new reserve currency. Long before this action was concluded "greenback denominated debt", the very assets that would be used to conduct the transaction, would be destroyed or immobilized!
------------"I have always contended that everybody who is anybody is busy right now exchanging their US dollars into euros-- those who have power will not suffer the devaluation. ----------------- True!
--------------"Once the devaluation is over, then they can move back into the new US dollar".------------
"Human emotions" and "historical logic" do not suggest that this would happen, even if a new dollar was offered, it would be "politically scarred". Besides, why move back? Just stay in Euros and or gold as they will perform the "one world currency" function you subscribe to.
-----------------"Regarding your second question/critique--I can only surmise that Western nations are hardly separate nations any longer. Whoever runs things(internationalists) already is esentially running things.----------------- OK
--------I would repeat my reference to Martin Armstrong of PEI's comments. Global currency implies a single global power. I have heard recited that historically a currency does not survive if the entities that use the currency are not politically as well as economically integrated. The
euroland countries are moving toward political union--that right there would go against what you suggest. How is it possible that euroland is cooperating and moving toward unity. -------------
It is not only possible, it is happening! Current events as reported daily point in the direction of unity. Even the American Enterprise Institute has commented on how the European family is finding happiness with the Euro system. If Martin has erred, it is in that the Euro will become the
very global currency he is looking for.
Christine, I offer this montage of comments (as TownCrier called it) out of respect to everyone's interpretation. Your thoughts / theories are interesting / enjoyable and I wish to read more of them. As events change the landscape, so does public opinion change political outcomes. More
analysis will be needed. Thank You FOA
FOA (5/19/99; 12:20:49MDT - Msg ID:6454)
Comment
Peter Asher (5/19/99; 11:26:11MDT - Msg ID:6452)
FOA's morning course in Logic #101
Peter,
No one, including myself, always follows these protocols. Sometimes, I try to make a point over several posts using ongoing news events. Even the logic and knowledge of Another is still in the process of playing out over time (perhaps years?). My purpose was to address the many items Christine had applied to my writing, but I was never able to respond to. Even now there are several posts from others I want to discuss, but have no time.
Also: I have now completed another addition of bullion to my portfolio, as have many others. We shall see if I have the chance to "make more gold" if prices drop further. Several weeks ago I offered that "NOW" was the time to buy bullion, as it's price was in a stable range due to political changes. Even with the BOE "emergency" shuffle, gold has only dropped about $10US from the $283 range at that time. It would be "our loss" if the BIS does clamp down on the market, as this opportunity to "make gold" would be lost in a spectacular flash. It seems that most people still do not grasp how the currencies will react to a major spike in gold. I read where they are trying to find an entry point to buy gold stocks or futures, so as to sell (trade) for more paper on the upside. As Another says, the move in this market will be "as none before". Indeed, the dynamic
selloffs and runs will lock 90% of the traders out, and they will never ever, in their lifetime catch it again.
I don't know about everyone, but some people are "making gold" on this move! FOA
FOA (5/19/99; 20:36:30MDT - Msg ID:6486)
Comment
TownCrier,
Looks like the WGC knows who controls the gold in the US! Your link to them through the USAGOLD site offered this: -----"Reports that the Bundesbank, the Bank of Italy, the US
Treasury, the Japanese Finance Ministry and the Australian central bank had denied any intention to sell gold then appeared to lend a measure of stability to the market, and gold firmed to a fixing of $279.45 on Tuesday afternoon."--------- Sharp eye, "Professor Gandalf"!
FOA (5/19/99; 20:39:31MDT - Msg ID:6487)
Reply
canamami (5/19/99; 12:40:59MDT - Msg ID:6455)
How long before the BIS intervenes?
Canamami,
I have to ask the same question, how long?
When one looks at the total exposure of longs in the physical gold market, it amounts to major money! It's major if for no other reason than the total amount of gold in existence is owned by "someone". Add to that the longs that have taken the opposite side of all of the short paper, and we have a huge block of real investors, many of whom are influential! Viewed in this light we can grasp that it isn't just gold miner stock holders that have a stake in the value of gold.
There is another class of gold owners that are the most influential of all, the Central Banks. Yes they are portrayed as the villains, but, "as a group" they have actually sold very little of their reserves as a percentage of holdings. A look through the WGC site will give details to confirm this. Most of the industry is consumed by the short side of the story and their connections to CBs.
However, the long side faction also represents some "big time connections" to the CBs and they share a common interest of not allowing gold to fall too far! The difference between the two groups is that the shorts utilize louder mouthpieces. I think Mr. R was talking again today! The longs are more quiet but are truly the larger guns. People in the background (Another?) already know where these players want the price of gold to stop. The public gets to hear it when the price passes a certain "no fly zone". TownCrier #6458 posted: "Market players today paid little
heed to statements by Bank of France governor Jean-Claude Trichet, saying that France, US Federal Reserve, Bank of Italy and Germany's Bundesbank were not planning to sell their gold reserves."
All of these entities are major "ticket holders" on the BIS! Even the US is talking now, in obvious conflict with Mr. R..
Canamami, when I offered several weeks ago that now (then) was the time to buy, I said that the US was throwing in the towel on resisting an upmove in gold! They now want it higher, because all of the major benefits of having gold fall against the dollar (making it look strong) have
dissipated with the advent of the Euro. I offer this because the Euro is now the competition, not gold! The ECB stopped all gold sales / leasing this year because big money (oil) doesn't need to take gold any longer. It's a political "sea change" of huge proportions. That's also why I feel the
BOE made a sudden "emergency" turnaround and sold gold. They were not trying to force it down, they were wise to the "new currency competition" for the dollar, and what that implied for gold! As I said, they are only partially bailing out some of their favorite Bullion Banks (not Goldman S.) because the gold carry game is over. The US is now going to try and make some "political hay" out of the fact that it has a lot of gold, just like the Euro! Even though, it belongs to the US Treasury and is not treated the same as the ECB gold. It's will be seen as a ploy to attract
further settlement of international trade in dollars, if it has high priced gold in the background.
With Arabs tying with Iran, it's obvious they are about to "disinfluence" themselves to a small degree with the US. For them, a loud political statement like, "we will now settle oil sold to Europe in Euros" will be the beginning of the change. We have but to only look at how much oil
Europe gets from the Middle East to see how they are tied, trade balance wise. Note that England has now sent ambassadors to Iran. I posted this the other day, TownCrier, did you see it? All of these factors, lead me to see that Britain is going to drop dollar ties and head for Europe.
To answer the BIS timing question, I think JCTex may have hit it:
JCTex (5/19/99; 14:05:14MDT - Msg ID:6459)
FOA and Canamami: BIS
Could it be that BIS is following the old adage, "when your enemy is destroying himself, let him alone."?
Thanks and welcome JC! My thought is that the BIS may wait for the US to privately push for gold through the contention that the LBMA has created a monster and let's do something. That would most certainly work politically for the US if England has "cut and run"! After all, London is the one on the hook if gold takes off. I can add more if this is not clear. Am open for interpretation or critique. Discussion? Anyone? FOA
FOA (5/19/99; 21:05:41MDT - Msg ID:6489)
Euro Is Emerging Again As a Key British Issue!
http://www.iht.com/IHT/TODAY/THU/IN/brit.2.html
By Tom Buerkle International Herald Tribune
LONDON - The euro moved back to center stage of Britain's political and economic debate"--------
Michael, they are at it again!
FOA (5/19/99; 21:13:33MDT - Msg ID:6490)
Time to go.
Aristotle,
Thank You. The "make gold" item is not mine. I took it from Another. It does give a different slant as opposed to "make money". Yes, Gold. "Make" you some! That's good.
HB Mitchell, Hello! You are one of many new faces here. Welcome!
FOA (5/20/99; 6:57:55MDT - Msg ID:6513)
Comment
Christine (5/20/99; 6:01:24MDT - Msg ID:6507)
@Aristotle
Don't you find FOA's words unusual--"If the trend is not reversed".
Christine,
You took my meaning as I intended. Thanks. I do believe that the ECB issued Euro will become the dominate currency system. Much as the dollar has to date. The largest difference between the two (Euro / Dollar) is found in how the exchange rate value of each is "Managed" for political
purposes.
The dollar is ruled by one country and one country only. This implies that only one Economy is taken into consideration when policy is discussed, the USA. The management of interest rates, inflation, dollar value and crisis intervention, are therefore politically motivated to benefit one world group, again, Americans. We have seen the news events of how this tramples upon the needs of other geopolitical groups (countries).
On the other hand, the Euro will utilize a totally different structure of consensus management. It
will be governed by many nations of obvious conflicting needs. This very weakness, that is so well documented by analysts, is the "major" strength that will contribute to the popularity of the Euro. In time, it will be governed by many cultures, including an "open market" valuation of gold.
Your observation of it becoming a "all controlling" system may come about. However, I submit that people will be drawn to it more so than the current "America only controlled" dollar system. I "feel" (my interpretation) that you are looking far across the valley of plenty, to observe the mountain of fear. Let's see how it works out as we (Another says) "walk this trail together".
Thanks FOA
FOA (5/20/99; 7:11:37MDT - Msg ID:6514)
Comment
The Flying Scotsman (5/20/99; 6:29:20MDT - Msg ID:6512)
The Euro and Gold
Hello Scotsman,
I don't know if gold will follow the Euro. It may at first, but I believe that all currencies will fall
dramatically against gold in the crisis atmosphere that is coming. Then, because the BIS and the ECB saw fit to isolate the Euro in, what is currently perceived as a private trading block, the Euro will be seen almost as the only alternative after gold. This perception of "geopolitical isolation" of Europe's money is working against it now, but will be an inspiring attribute later.
The countries that "make gold" from the ground will get a good run in their currencies, even as the authorities "try like hell" to keep them down. The Aussies will no doubt sell gold again, but this time in a rising market. Will the All Ords. follow gold later? Your call!
FOA (5/20/99; 7:16:19MDT - Msg ID:6515)
Comment
SteveH (5/20/99; 5:09:00MDT - Msg ID:6506)
Steve,
Excellent point on investor / public perception! thanks
Also, did you ask me something using Ted B.? I lost it.
FOA (5/20/99; 7:37:20MDT - Msg ID:6517)
Comment
Chicken man (5/19/99; 22:17:02MDT - Msg ID:6497)
FOA-msg 6487
US treasury owns gold?.....the 260 million ounces the treasury is "suppose" to own is listed under "assets" on the weekly Fed data....260 mil.oz @ $42.50 = 11 bil...same number Fed uses.....so the citizens might not own anything...the shareholders of the Fed have OUR gold!
Chicken Man,
Have you ever tried to sell American Real Estate with a Deed full of attachments? If yes, then you know how it will be for the Federal Reserve to sell gold. Just because they say they own it doesn't mean they can sell it. It's held "for the benefit of the treasury" as an "asset of the Fed". Right now, the Fed would like to sell it privately "for the benefit of GS and LTCM and the like", but that would conflict with the treasury's rights. Don't you think Mr. R. would have sold it by now if it was available? As vocal as he is, it would have been published in the WSJ as each ounce was sold.
No, between the old BIS attachments (perhaps judgments is the better term) and Congress, the US gold is available only as a "talking tool". Besides, the BIS would only allow it to be "auctioned" off in the true meaning of the word. Just the way it was sold in the late 70s. That way they could buy some of it through 2nd parties. thanks FOA
FOA (5/20/99; 7:46:44MDT - Msg ID:6520)
Comment
Christine,
Your grasp of this English language should allow for "concepts and context" to create the interpretation. Or, at least those latitudes are needed when one reads my posts.
How about this: "If the trend is not reversed", as in "a train coming down the Swiss mountain with burned out brakes and the engineer just jumped out". Yes, it could be reversed, but, "Oh Lord"!
Smile please, because, I am!
FOA (5/20/99; 7:51:43MDT - Msg ID:6521)
Reply
canamami (5/20/99; 7:46:08MDT - Msg ID:6519)
Reply to FOA's post# 6487
Canamami,
Very good conclusion. It adds even more! I keep trying to drag USAGOLD into this British
thing and your #2 may do it.
Please continue!
FOA (5/20/99; 7:58:57MDT - Msg ID:6522)
Reply
Christine (5/20/99; 7:38:31MDT - Msg ID:6518)
Christine,
Ask Mr. Mozel? He will tell you that most people (especially Americans) have lost their freedom a long time ago.
FOA
"fear is held low by the weight of gold"
Another
FOA (5/20/99; 14:25:20MDT - Msg ID:6535)
http://biz.yahoo.com/rf/990520/1q.html
WASHINGTON, May 20 (Reuters)
"Rubin says U.S. should not sell gold from reserves"
"Rubin told the House Banking Committee:
``I do not think the United States should sell its gold for a whole host of reasons.''
"Federal Reserve Chairman Alan Greenspan noted that the issue of U.S. gold sales had been debated in 1976 and the authorities had decided not to sell."
``The reason is that gold still represents the ultimate form of payment in the world,'' he said.
``Gold is always accepted ... and is perceived to be an element of stability in the currency and in
the ultimate value of a currency.''
ALL: With statements like these, do we suspect there has been a policy change in Washington?
Greenspan saying in public that gold is the " ultimate value of a currency"! Remember, gold is no longer the competition, the Euro is!
I will be back later to discuss! FOA
FOA (5/20/99; 14:29:38MDT - Msg ID:6536)
(No Subject)
Usagold,
That sounds like a derivative contract, or something! OK, because I am new at this, let's start
with just one. FOA
FOA (5/21/99; 10:39:11MDT - Msg ID:6567)
Comment
koan (5/20/99; 9:44:31MDT - Msg ID:6525)
future of US economy
I would maintain that the US has never been in better economic condition, except for the trade deficit. The US has low inflation, low interest rates, control of an emerging world economy where it holds all the cards: the computer hardware, software, internet, markets, money, language
(english future world language), management organization, accounting systems, laws, computer literate populace, best farmland, best factories, best transportation systems and best political system. We are a full blown democracy!. These are the reasons the $ stays strong and probably will continue to do so. For all the US's faults we are like democracy: "a terrible system except for all others" (sic). I wouldn't bet against the US economy.
Hello Koan,
I would like to comment on the above, and also an old post I think you produced some time ago. It was offered that the new currency of the world is now "knowledge"! A most interesting thought and one that has been considered by many of the "new age" investors of this era.
I agree, in that investors often hold their assets as the value (quoted on an exchange) of ideas and how that knowledge is used to create a better world. It has most certainly promoted a new "medium of exchange" that can, in this new day, be used as a currency.
The problem is that this is not a new concept! It is only new to those that suddenly grasp it as it pertains to this modern economic system. Truly, a search of history will produce many examples of people using "productivity enhancements" and "inventions" as wealth for centuries. It's only, the "meager form" of these old thoughts, as compared to modern advancements, that render them "different in concept to modern minds".
What this generation of "modern thinkers" is about to experience, is the "ages old" human emotions of greed, robbery, cheating and distrust. This old "mental baggage" comes back to haunt every "new era". It's only when people start cheating each other as economic conditions
deteriorate, that the "new currency of ideas" becomes fraudulent. This is the reason that, in the old days, the "medium of exchange" needed gold as the "medium"! When hard times force humans to steel, "knowledge" becomes a currency of "unknown" value because people always "hold back some of it" for insurance. Suddenly, the "trading of knowledge" as money, also needs a "medium" or "something in between the transaction" that has a long standing, trusted, historical value that completes the trade, "up front". Gold.
All that I have offered above also applies to the new concept of "paper money"! Yes, No?
In discussion of your above post: I submit that all of the favorable attributes, you subscribe to the American economy, were purchased using a "fraudulent" dollar reserve system. That system has cheated many world citizens into selling goods and "knowledge" to the US for far less than it
was worth! All of this to the benefit of the American consumer, yet cheating honest workers of a fair exchange. Truly, a new "medium" is needed. As for your "I wouldn't bet against the US economy", neither would I. My bet is for a replacement of the dollar in world trade. Yes, no?
Thanks for your thoughts, please continue! FOA
FOA (5/21/99; 11:27:15MDT - Msg ID:6570)
Reply
------SteveH (5/20/99; 14:55:10MDT - Msg ID:6538)
FOA Question
What hold does the BIS have over USA gold?
What would happen if USA ignored hold or whatever claim has to USA gold?-------------
-------------canamami (5/20/99; 15:03:38MDT - Msg ID:6540)
Further to SteveH's Question re US and BIS FOA,
Further to SteveH's question, at one point you said that the Europeans could pull out of the IMF once the new financial/currency order is established. What if the US simply pulled out of the BIS?
Then the right of the BIS to US gold at about $42.00 (which you once mentioned) no longer exists. One negative result of the negative balance of trade is thus eliminated. (Excuse me if my grasp of the currency settlement rules is shaky, but this field of knowledge is new to me.)-----
Steve, Canamami,
I want to discuss both of your questions, but first read what someone sent me from Mozel:
--------Date: Fri May 21 1999 04:35
mozel (@JP @What would your scenario be if you found out that USG has no gold) ID#153110:
to which to connect its paper legal tender ? Gold it has in possession, but how much of it has clear title ? How much is due BIS for claims ? How much is due other creditors that were seized from in 1933 without due process of law ? Claims of perpetual entities never go away. If USG exposes gold in its possession to settlement via its currency, it exposes the gold to claims and process. International Law outlaws 'R US ? Financial armageddon 'R our fate ?------------------
Right on target! It's the same reason we cannot go back to a gold backed dollar, the old dollar never lost it's international contract as an "exchange contract for gold" as in "the gold exchange standard". Read up on the history of how the dollar came out of this.
Just because the US said, in 71 that it would not ship gold any more does not mean the dollar isn't still a contract to represent it's old international obligations. Every analysts makes comments like, "let them sent their army if they want it", but that is simply not the way the world works. It's cheating, fair and simple! Why didn't the US send out all of it's gold at $41 to the ounce, then go
off the system? As Another say's, "think long and hard on that one"!
The entire international financial structure is based on procedure protocols that are not binding, repeat, not binding, but without them, the system will not work. If the BIS did not coordinate inter bank (CBs) transfers the whole system would stop. Using the same "line of reasoning", the US cannot just back it's currency with gold at say, $10,000 and start all over again. What manner of "rules of engagement" would prevent them from halting gold shipments again? "Come on", people of the world are not that stupid!
No, the dollar would have to be totally destroyed, and a new currency, sanctioned by the BIS, and most likely controlled by them, would have to be created. The US will go down to the wire before that happens, therefore, the Euro was created!
Canamami, The IMF is a function of the dollar reserve dynamic. If the IMF did not the guarantee dollar debt of countries that could not pay, it would start a chain reaction of dollar reserve destruction. When dollar assets (debt) is no longer serviced (interest paid and debt rolled
over) it no longer can be carried on the books as the backing for local currencies. Hence forth, all currencies that are based on this system are "imploded". Now you see why the IMF does such "perceived dumb" maneuvers, it's to maintain the dollar, not rebuild the foreign economies.
When the BIS, ECB and the other major world economies are ready to drop the dollar, they will stop supporting the IMF and pull out. The IMF "needs" their support, they do not need the IMF. Likewise, if the US ever disassociated itself with the BIS, they would simply stop all transfers of dollars and most likely buy gold in the open market with them! At that point the Euro would become the only tradable currency. Simple political blackmail, or should I say
"international protocols". It's nothing new, but some call it a new "world order conspiracy". They just haven't liven through enough years, as Another has. By the way, he is back from travels. I don't know if that means he will write? Thanks FOA
FOA (5/21/99; 11:50:51MDT - Msg ID:6572)
Further Comment
ALL: If you follow my logic in #6570, then you can also under stand why the US can never call in gold from it's citizens again! As long as they are using "dollars", the same dollars that were exchangeable into gold in the 30s, they cannot Rebecca it with gold. To reverse that decision
would open the American government up to lawsuits from local dollar holders to return gold at 41 (or whatever price). If they again, called in local gold, prior to re-backing the dollar, Everyone would demand, first the exchange of gold at the old price, then they would send in that gold! The
Government would "Never" risk it!
Yes, they could call the dollar "dead" and issue a new gold backed currency for "internal use". See my last post to understand why a new currency would be unacceptable "externally". But, that money would not function, as it could have no ties to outside transactions. Nothing would be
gained. As noted before, they would most likely encourage gold holding by citizens while taxing the local gold industry and private transactions. Still, a dyeing dollar will spell massive gold increases in value for private bullion holders as this proceeds. FOA
FOA (5/21/99; 11:54:42MDT - Msg ID:6573)
Correction
Please change this:
"cannot Rebecca it with gold" to "cannot Replace it with gold"!
Where did that come from? Time to go!
FOA (05/21/99; 18:09:04MDT - Msg ID:6587)
Re-Correct?
ALL:
I hope anyone was able to understand my #6572. This is what happens when you are half out the door and trying to make an additional point, quickly. I corrected it once and even the correction was wrong?????? Oh well! The word "Rebecca" should have been "re-back" . Actually, Rebecca is someone I know. Word association, I guess?
Julia, I get your point and will try to offer what you ask. Keep in mind that this is all like a chess game, with each player holding a different motive for their course of action. Just as has happened with Britain and the BOE thing. Their purpose differs greatly from the wants of the USA. Even the US was walking one direction and may now have changed that!
As for the citizen / investor, their perception of most modern political maneuvers is difficult at best because most Westerners have no formal education of real money and how the recent (20 years) events have been an anomaly.
We will talk at length about this. thanks FOA
FOA (05/21/99; 19:44:31MDT - Msg ID:6591)
Comment
Peter Asher (05/21/99; 17:53:56MDT - Msg ID:6586)
Peter,
I read several articles / opinions about how the fed has talked "raising rates" while doing "coupon pass" operations (adding money). What a mess they are in! M3 (broad scale of percentage of money creation) has been falling for some time, even with the massive money creation (by the fed)
during this same period. The group view, from where I sit is that the world dollar expansion during the 90s has hit the end of it's mathematical ability. All of the various "carry trades", weather using currencies or metals, no longer add liquidity. They are being neutralized by an reserve asset
shift away from the dollar. This is not to say investors are buying Euros, but all it takes is a "pause for thinking" to change perceptions. That pause is slowing world money growth and it is being reflected in the local (US) money supply. What does this mean? The system is shutting down, stopping the fed from raising rates. We are at the very edge of a major world reaction to the loss of dollar liquidity.
Did you read the article in the WSJ on May 20 " The Dangers Of Derivatives, by Martin Mayer. What a fine piece! Many of the areas covered could easily be applied to the gold market. We are very happy that so much of this is coming out and more is to come.
Smoke and Mirrors, you say / ask? I find it interesting that so many of the world investors see these actions as new (not necessarily yourself). It has been going on so long, I forgot when it started. I guess, with so many fresh investors entering this arena, with "new era thinking" that they are shocked when finding out that things work this way. Yes, the derivatives action has taken on a "higher level" of respectability and use, but they are just a substitute for "ego insurance" by managers. It used to be if a maneuver went against your company, you lost a lot of money, the
business and your job! Now you lose all of that plus some other persons hedge. When they reapply for a job, they state that they had "insurance" but it didn't hold! Things never change.
FOA (05/21/99; 19:54:21MDT - Msg ID:6592)
(No Subject)
Mike55,
Thanks for sharing that. Very open evaluation. Now I must go back and read Crossroads and several others. I have the time now.
FOA (05/21/99; 20:30:26MDT - Msg ID:6596)
(No Subject)
Crossroads (05/21/99; 14:28:21MDT - Msg ID:6576)
Hello crossroads,
It's hard to stay on the trail when people around you are being picked off. I have seen the exact thing you describe, happening in other countries also. The best advice is to get liquid and out of debt. Such a drastic change from what life was suppose to be like in America. A taller
order, indeed when we see "gamblers" and "major risk takers" offering up their lifestyle as something "everyone" can do if they just "apply themselves"! What isn't seen behind their success is the complete "immoral" business ethic that is applied in the process of "applying themselves"!
This kind of "dynamic" can infect an entire economic structure, as every person tries to grab a piece of a smaller pie. An education in reality, that teaches what the impact of false economic values can have on people that have trusted a paper prosperity. Holding gold through such an
upheaval will not be fun, and humor will come at a premium. However, as "Aristotle" says, "He who has the Gold, has the last laugh." Please
FOA (05/22/99; 08:32:57MDT - Msg ID:6609)
Comment
SteveH (05/22/99; 04:44:22MDT - Msg ID:6607)
SteveH,
Would it work? You tell me? What is your opinion? Given a choice between two competing currencies backed with gold or silver and not considering political stance, where would you go? Everyone??
other thoughts:
Also, considering the current framework of economic conditions in Britain, I don't think they would want into the Euro either. However, would a floundering industrial base, soaring inflation and high unemployment, brought on by a failing dollar change their minds? Perhaps Another was
right, in that they will remain a "lost country", caught between a future prosperous Europe and a sliding America? It has happened before and may happen again.
The outcome of England is important to gold holders, if for no other reason than that is where LBMA is. The changing of London, from the "financial center" to the outskirts of a new geopolitical block would also rework the denominations of much of the worlds gold trading. I think this was considered when the BOE decided to close out some of it's bullion house loans.
The considerations of this are many and may require the support of a "star trek" computer, if it were not so busy. Michael, would the citizens change their minds? FOA
FOA (05/22/99; 08:45:14MDT - Msg ID:6610)
On the topic of England--- Did you know?
http://www.khaleejtimes.com/
BRITONS' love of fast food and curries received unusual affirmation this week after burger giants Burger King's launch of the world's first fast-food curry hamburger. Burger King unveiled its latest creation this week claiming the BK Masala Burger created a mix of two of the UK's most popular take-away food - hamburgers and curry. The Masala Burger features Burger King's usual flame-grilled beef patty topped with two onion bhaji rings and a spicy Masala sauce. The burger goes on sale today priced 99p.
A Burger King spokesman said the company had enlisted the help of curry experts from among its Asian franchisees to develop the new burger and that it had been given the thumbs up in taste tests among curry lovers. The burger will be launched with a television advert featuring at Bhangra band.
Curry is the most popular take-away meal in the UK with around £1.6 billion spent on Indian cuisine every year. A Burger King spokesman said: "By tapping into this trend Burger King is offering its customers the very best of the East-meets-West eating phenomenon."
The Masala Burger is the latest in a long line of ethnic variations from the two burger giants. McDonald's recently held an Italian themed season and previously ran a Chinese promotion.
FOA (05/24/99; 11:30:02MDT - Msg ID:6665)
(No Subject)
ALL:
From a psychological viewpoint, I am always amassed when hearing people discuss the aspects of using common gold coins as currency. Usually it contains the phrase "how could the average citizen ever use gold, no one would know if it was real. Nor could anyone afford it when the time comes to use it, it would cost to much!"
Boy, these real life comments do indicate just how far western thought has traveled from a true understanding of commerce and the money that makes it possible. The people that made these statements (and many more similar posts, mentioned in text) are mostly, well educated, entrepreneurs with successful backgrounds in business management. All of them have a firm grasp of economic theory as it applies to their field. The basic concept is that you provide a "real"
product in "exchange" for so many units of another real product. In this case "product" represents, services, concepts, thoughts, entertainment, items or resources, etc.. The business of "exchanging" these "products" is what the world economy and life in general is all about. The human factor in all of this that the "worker"/ "creator" of these "products of exchange" operate in an even tradeoff. Nothing is gained or loss. Even the difference in human productive capacity allows for a "time / energy" balance.
It is only in the realm of "business" that a profit is made to coordinate the "exchange" of these "units of production". The profit is the difference in the value of the "exchangeable products" and by definition cannot be anything different. We all know that in today's world, a "medium of exchange" is used to compare the diverse values of "products in exchange" so one may fairly determine the "business profit". We also understand that this profit is not the "medium of exchange itself", rather it is the value of the "excess products from the exchange" that this "medium" may purchase.
From this point on, it seems that most people have lost the concept that the "medium" truly has no value, and never has. It is only a "subjective evaluation" in the human concept of product trade. The medium has "use", not value, and the "need" for that use is manifest by the value of billions of transactions of products done daily.
This brings us back to the original comments above. If we hold a dollar in one hand and a gold coin in the other, everyone will agree that the gold has value. This is obvious, however, the dollar is used daily for trillions of transactions and it has no value what-so-ever! So why the concern as to "is the gold real", yet no oponion of the dollar? It is it's "use" as the "medium" that generates the
human "need" to poses it. Not it's value as a commodity. Therefore, when one "needs" the use of a new "medium" to exchange products, we have but to look for it's "use" among people to affirm it's "authenticity" as a currency. In other words, when you see many others around you using gold
as money, just as using the dollar, don't worry if it's real money, it's use say's it is!
To conclude: Don't expect the commodity value of gold to generate it's use as a "medium of exchange". The commonly used phrase "it has value as a commodity, therefore it's money" was never the reason gold has maintained it's demand as money. That may have been the reason it "evolved" into money (read it's history at WGC site), but it's not the modern reason it's needed. Gold in your hand need not represent any more value than a paper currency for it to gain the "need" for use. Paper currencies will destroy their own ability to be useful "mediums", as the weight of the very debt that created them becomes "overwhelming". People will grasp and "use" gold as a replacement, because history has proven it to be the only money that the weight of
billions of daily transactions cannot corrupt. Unlike government controlled "paper debt currencies", gold can and will increase in "it's unit of product exchange value" to accommodate it's "need" for "use" as a "medium". It's use and need will, no doubt, be reflected in it' new paper
currency price.
As this transition occurs, remember, in this new roll, it's not something you "afford"! Just like the present dollar, "it's something you earn for it's use". FOA
FOA (05/24/99; 13:39:22MDT - Msg ID:6671)
Comment
Gandalf the White (05/24/99; 13:03:56MDT - Msg ID:6667)
Gandalf,
I may have "dove deep and came up dry" with that last post. Hope it offered some consideration for everyone. You state; "most people are not able to determine if an gold coin is real or fake" and "they may be scammed and endup with nothing". I ask, have you rver gone to a country
outside your oun and not only couldn't talk the language, but had no idea what the currency was all about? Truly, for yourself, that money was "worthless", except that everyone around you used it efficiently. Even the actual paper in your hands could have been "fake" or "counterfeit" but you
used it and learned. We take the risk because the commerce around us determines our position!
So is the case for gold!
I will return to discuss more and consider Mr. Dorchester. Also, the issues USAGOLD brings to this table. thanks FOA
FOA (5/24/99; 21:13:38MDT - Msg ID:6688)
(No Subject)
I must return at another time. Tomorrow for some.
Pioneers:
"the first step is taken and thus defines the trail,
a second step brings others and upon this journey we do now make sail"
"pioneers bring light, for directions long unknown,
new spirits shine like stars, so bright the seeds are now all grown"
"quickly to the heights we climb, even the top of the mast,
for there I see the the end of knowledge, as it was written in the past"
FOA (5/25/99; 7:01:54MDT - Msg ID:6708)
(No Subject)
Dorchester (05/24/99; 13:06:07MDT - Msg ID:6668)
Dorchester,
I think it would be imprudent or harsh for me to just comment or reply to your post. Or to clarify what you suggest of our origin. Therefore, I will offer what I feel and what I see. Much of it learned from Another.
What you have said, not only strikes at the heart of who we are, but where all of us are traveling. It could be said that it is a snapshot in time. For you, I know that picture represents the moment of the entire journey. Truly, it is not.
The worldly knowledge we have gained during our travels in life does represent part of our wealth. Sometimes a price is paid in real things so that people gain in experience equal to the history they never lived. The scale of such wealth is measured by the loss one takes to gain that
moment in time. For many, this moment pays a lifetime of return!
Some become lost in this moment and never find the path that leads from this forest of emotions. Trapped are they by knowledge because fear rules the heart. The mind is indeed willing but the feet will not move. So, as it is in the poem "Pioneers", so must it be for you, the first step taken will thus define the trail.
Dorchester, others would divide the assets, they wish to redirect into ten parts. Sell the first ten percent and convert it to the wealth of the ages. With this move, mentally, the path becomes clear. As gold rises each five percent, sell the next ten percent and so on.
"Good fortune follows a determined path". Therefore, make your trail clear, for yourself first, and you will not walk this journey alone. FOA
FOA (5/25/99; 10:05:24MDT - Msg ID:6718)
Reply
Dorchester (5/25/99; 9:11:21MDT - Msg ID:6715)
No! No, Dorchester,
I did not mean my post to you in such a light. You have read outside the spirit it was offered in. If others have done the same, it is withdrawn. All of the terms were in a general sense, as applied to everyone. Trust, me, Another and myself have received serious public criticism with little impact to us. Your words were constructive and analytic. Please continue. FOA
FOA (5/26/99; 20:00:20MDT - Msg ID:6766)
Gold
USAGOLD, and all,
Now it should be easy for everyone to see that the gold market has become two separate operations. One is the physical and the other as a paper market. This new paper market was created and encouraged so as to increase the base of gold owners world wide. This increase could not have been accomplished prior to the 1990s because, basically only physical gold was traded in size, worldwide (comex futures were much too small then) and the dollar price of gold
would have exploded, thereby shutting down any expansion of ownership. As gold was the only competition for the dollar at that time, the BIS embarked upon this "encouraged" expansion as a means of offloading dollar reserves into gold at a decreasing price. It was known then and now that much in the same way the US / IMF controls the dollar market, the BIS manages the gold market. In this light, one can understand why certain entities would willingly buy gold , at a decreasing price, as a means of adjunction the settlement of trade in dollars. With the confident
knowledge that each dollar of paper gold purchased, during an extended time would eventually represent ten, twenty, or thirty times the present reserves.
At some point in time, the BIS would help deploy a new reserve currency that could be used to "settle" all paper gold trades that could not be closed, to the benefit of the paper gold holders. To further encourage / guarantee this "new market" the BIS would not allow gold to fall under
$280. With the successful launch of the Euro, the BIS / ECB will now allow the paper gold market to "implode" from it's own weight! As such, we arrive at today's point with gold
ownership, some ten times what it was during the 1980s. Most of this "dollar contract" gold cannot and will not be delivered, because "there was never enough gold to satisfy these contracts at present dollar prices"!
My friends, the choice is now "clean" and "clear"! The writers of paper gold "outside" the Euro realm are cornered with the lack of available gold! Completely! Presently, from inertia, they still control the "paper price" in the dollar / IMF arena, but they can never convert. They must do what
any cornered being will, continue to create (short) contracts of worthless nature. At some point, their market will suffer a total collapse and cease to function. It will happen no other way. Now we understand why England must enter the Euro world, if they are to have any hope of saving
some part of LBMA. One can also see why the US will encourage a higher "world" price for gold, even as it's native market is destroyed! Politics will always make good use of a unretractable situation. That being, the US has a gold reserve it can "talk about" but can do nothing with, on a large scale. Perhaps, a western reason to buy gold for cash "now", as it's local market may soon end?
Perhaps, this is why Another (long ago, in the $350 range) pointed only to the physical gold, for ownership. Much of what was said, makes sense now. The call for $280 gold was made some time before the Euro was born, and no one even knew if it would happen (BIS either???). The point that this was a "New Gold Market", "unlike none before", in that the dollar market of gold would totally disappear in a blaze of paper fire! Not to mention that the entire world gold industry is on a "dollar gold contract" standard. Is it no wonder that no analysts of the gold industry can afford to see the outcome of Another! Conversely, every free citizen, worldwide, that holds and continues to buy physical gold will welcome this change. Dynamic times, indeed! We speed
quickly to the conclusion of one of the greatest changes in currency values ever seen. thank you FOA
FOA (5/27/99; 6:44:13MDT - Msg ID:6783)
More on Gold.
SteveH (5/26/99; 20:15:31MDT - Msg ID:6767)
An addition to my #6766.
SteveH,
I missed your earlier question. The physical buying of gold, in coin and small bullion form is the smallest portion of real demand. As such it is the easiest to supply. "Big money", of world proportions does not travel into these areas. I have written of this in other posts. Over the years, the large private and almost private holders of gold physical have slowly sold it to purchase paper gold. This trend is the very action that multiplies gold ownership and supplies the demand deficit. Large holders still consider their new paper as gold. A good deal of that paper is as good as the real thing, but some of it will have to be converted into a Euro currency in the future. That trade
will be to the benefit of the holder, if it has ECB genealogy.
One of the reasons this trend worked so well is because the US went for it, early on. A falling gold price encouraged a strong dollar and offered Western dollar holders an avenue to hold gold in leverage form. An action they will, no doubt regret, later, as it has taken the form of stripping gold from western hands. For them, this new allocation allowed for free dollars to earn a return. Do not confuse these entities with non-western dollar reserve holders, as they (mostly) purchased straight gold future certificates (with BC backing) using resources as the leverage, not gold. Usually, this was the actual gold in the CB vaults as it was leased out, but never moved. Truly,
this was the source of the same money that went into mine forward sales (barrick?). The gold and the money stayed in the CB house and control. The entire above outline is why some analysts (Ted Butler?) cannot understand why the gold doesn't physically move, yet physical demand is being supplied. This conversion process was accounted for in the LBMA volume, as it became evident after gold fell below $360US. It was then, and only then that LBMA announced these
huge monthly transactions. Truly, it was here that one could witness the dollar being removed from it's reserve status. For many, it was the only public conformation they would ever get.
I think this view of "one world electronic currency" is a "joke" on investors. The entities that are now locked into standing behind short positions are trapped and will be saying anything to get investors to sell physical into the market. The black hole they are sinking into will crush them from the weight of all the further paper sales they must now make.
As the ECB faction has aligned itself with physical gold and cut off any new supply, the mines found themselves in the only position of having to continue to sell forward because they are part of the dollar gold market (see my #6766). A process of taking in ground gold reserves from the
stock holders. The entire industry of mining and trading dollar future gold is failing. Even now their paper has value only if the fabricated dollar gold price continues to fall. The time has arrived to witness the final destruction of the US market for gold. As the authorities have taken the stance of allowing this action to play out, it will later create a phenomenal spike in the "real" physical gold
market as all futures "lock up "from lack of backing. They will become worthless because the only way to support them is by selling more paper short, an action that will be stopped when it can but political votes (by you're SEC?). It's an obvious contradiction, that is becoming visible to
everyone. In such an atmosphere, I expect the US to state that the futures gold market is a threat to the public good and allow only physical sales (at huge increases in dollar price). I would also not be startled to see the BIS take this moment to buy gold. The dollar would "implode"
worldwide! Now you can see why many of the local US Bullion Banks are now truly trading for their lives.
I believe many investors ( myself included) are executing "final" transitions into physical gold. As events play out, this course of action should be a rewarding one.
I will be busy for several days. FOA
SteveH (5/28/99; 12:22:00MDT - Msg ID:6820)
I think I have this figured out!
Permission granted to repost the heck out of this.
Major Currency Battle Now Underway Masked by Equity Bubble
by
SteveH
Current economic events boil down to a two economic forces at work that
essentially divide the world into two camps: debt holding countries of
the US dollar and countries who are distancing themselves from US debt
by way of physical gold possession and the Euro. All current world
events seem to be explainable when viewed in this manner. The two camps
are the US/IMF faction and the Euro/BIS faction. The US/IMF camp is
dollar based paper and debt; the Euro/Bis camp is gold-based currency
and gold bullion and oil.
The current run up in the US dollar and equities market is a result of
the skewed influence of the US dollar in world economic events and shows
its strength when viewed from its holding the existing role of the world
reserve currency. It is this role of 'reserve currency' that is the
center focal point of a currency war currently in progress. This war is
masked by the power and control of the media of the US/IMF faction and
by the apparent strength of the dollar and the dollar stock markets. It
is this apparent strength that blinds all of us to the hidden currency
war now playing in the world's markets. But it is this media influence
that hides the battle from our view. Yet knowing that the battle is
progress does provide a perspective from which current economic events
become crystal clear.
The strength of the dollar might be its aquilles heel, though. The
equities market in the US has been fueled apparently by two major
sources of funds: baby boomer 401K mutual funds and Yen and Gold-carry
money. It is this latter source of money that has just now come into
question as legitimate and healthy -- just look at Japan's economy and
what the YEN carry trade has done there. It is the gold-carry trade that
maybe the David of the dollar Goliath or the hair of Samson, the dollar.
Carry trading in Yen and Gold is simple to understand. It is borrowing
Yen or gold at a low interest rate, selling it into the market -- which
drives the price down and the dollar up -- then buying US bonds or
equities at a higher interest rate. The loan is repaid and the
differential interest is pocketed, and the process is repeated for as
long as the price of the YEN and gold drop. Not long ago, the YEN carry
trade was essentially stopped. More recently the gold carry trade has
been slowed or stopped to, but in the case of gold-carry, many of the
many borrowers of gold rolled over their loans and NEVER paid them back.
This is because they didn't have to until NOW. Now the gold price is at
or below production cost for most mines. Once the Central Banks (mostly
Europe) stopped leasing gold a short while ago, the estimated 14,000
tons of gold that has been involved in the gold-carry trade needs to be
paid back. It is impossible to pay it back in gold as most of the
Central Bank loans demanded so now it would seem that the financial
parties in the gold-carry business need a source of gold to pay back
these loans. It appears that only two escape hatches exist for the
gold-carry players. Keeping the price of gold down by shorting it on
COMEX (this is akin to naked shorting as insufficient gold bullion
doesn't appear to exist to cover the 200,000 open interest contracts) or
repaying the loans in a medium acceptable to the banks who loaned the
gold in the first place. It seems as though the Euro may become the only
accepted means of repayment.
One can see that the carry trades have driven the Yen and gold to all
time recent lows. In the case of the YEN more can be printed or made
available for repayment. In the case of gold, only 2500 tons of gold are
mined each year. To cover the 14,000 (alleged) shortage of gold would
take over five years at current production levels.
The remarkable thing about the carry trades is the shear number of
financial institutions who have participated in it. In other words, the
carry trade is pervasive and to unwind it will affect major world
financial institutions.
So back to the war of the Euro/BIS and the dollar/IMF. Two anonymous
representatives of the Euro/Bis camp have for the past two years come
forward with their interpretation of events. They have used the Internet
as their medium of discussion and have provided a tome of information
and opinion on this hidden war now unfolding. I believe they believe
they came forward after the cards, have been played that will ensure the
outcome of the currency war for title of world reserve currency ends up
in the Euro/Bis camp.
Let me explain. They claim that the BIS and the European Central banks
allowed the gold-carry trade to go on for years to proliferate
gold-based debt and ownership worldwide, using leasing as gold leverage.
Now it has become so pervasive that much of modern financial
institutional debt is a direct result of the carry trades, especially
gold-carry. Simply put, gold is the payment due in short order.
Insufficient physical gold stock exists free and clear of central bank
vaults and mining production of many major mining companies is hedge up
to 10 years hence that the only way to pay back without gold appears
destined to be Euros.
In other words, somebodies were suckered. Nearly risk-free (or so they
thought) interest money was available through the carry trades that
everyone got on board that knew about and cashed in. The result? The
Central Banks are owed an alleged 14,000 tons of gold with interest by a
wide-variety of institutions. Now you can see why they believe that the
dollar/IMF faction has lots. They can't pay back their debts without
converting to gold or Euro's and that means converting US bonds and
equities into Euros or gold. Since their is virtually no physical gold
to be had, we see gold continuing to be held back in price and kept away
from the $300 number that could trigger a failure of the COMEX exchange.
Now, light has been shed on the hidden battle for reserve currency. Up
until the Euro was introduced the only possible competitor for world
reserve currency status was gold. Gold doesn't lend itself freely for
exchange. (hard to email it) But with the introduction of the Euro with
nothing near the debt load of the US dollar and 15% in reserve
currencies being that of gold bullion, a proxy for gold was born that
can now compete with the dollar for the reserve currency status.
So, look now at recent world-wide financial events using the above as a
filter:
--Gold approaches $292. Bank of England announces a sale only available
to members of the LBMA (London Bullion Market Association). Price of
gold drops to a 20 year low.
--IMF announce a sale of gold to help poor countries (who would have
benefited more if the price of gold was higher as most them were
countries with producing gold mines.
--Swiss vote on a national referendum to delink gold from the Swiss
Franc and it passes.
--Major TV and printed press publish countless stories about gold is
dead, gold is no longer a modern requirement for currency. People become
confused by this. Gold's popularity falls to an all time low. Gold no
longer acts normally during major world crisis. Normally it would rally
in the event of war or inflation.
--Major rumors of Goldman Sachs and other investment banks heavily
shorting gold on Comex further holds gold down during these major
world-crisis.
--Formation of GATA (Gold Anti-Trust Action) committee to investigate
the apparent manipulation in gold markets. --Recent announcements of
copper and drug company price fixing.
The list goes on and on.
Where are we today? If you asked the two anonymous person called ANOTHER
and Friend of Another who post at the www.usagold.com web site and who
used to post on the www.kitco.com web site, they would tell you that in
their opinion, we are seeing the last leg of the dollar as the world
reserve currency and that the Euro will soon replace it in that
capacity. The would further tell you that when that happens, in their
opinion, that the COMEX gold exchange that trades in gold futures will
cease to function or become totally ineffective in establishing the true
value of gold in US dollars as the open interest contracts that trade
their can not be satisfied by physical gold as it is all spoken for.
Because of that, they would say that gold will rise to over $10,000US
per ounce. They have said that owing physical gold is the only true
measure of secure safety for ones wealth.
As extreme as that opinion is, recent events behind the scenes seems to
point to their theory of current gold markets events as the only one
that plausibly explains why gold and the dollar are behaving as they
are, why it seems that gold is being held back no matter what the cost.
I for one am open to any suggestion as to what else could really be
happening. But for now, I think Mr. ANOTHER and Friend of ANOTHER have a
message worth understanding.
Some of discredited Another and FOA (Friend of Another) because they
made a few predictions based on a timeline that in hindsight wasn't
entirely under their control. Because humans can't predict the future
rather only report it when the future is past, we shouldn't really
discredit the A and FOA message because a timeline is tampered with or
changed due to events beyond their control. If we remove the predictive
or human element of prediction or surmise from the A and FOA message
what remains?
I believe that what the A and FOA message represents is the inside track
of a powerful group of nations that have difficulty with the debt load
of the US/IMF faction and the negative influence this debt will
ultimately play upon them. The A and FOA thread then becomes one of
viewpoint within the larger realm of world economies that essential have
two major influences: the US/IMF faction with the dollar as the reserve
currency (major players are US/England/Japan) and the Euro/Bank of
International Settlement (BIS) with the European Union Countries and the
Bank of International Settlements. From their standpoint, they believe
the Euro has already won because gold is owed by so many institutions in
the US/IMF camp that it is too late for the dollar not to succumb to its
own debt load. They believe that what we are witnessing now is the last
act of the dollar as a reserve currency. Like it or not, their opinion
deserves to be heard if not for the sole purpose of the US/IMF faction
to gracefully deal with its current situation with the full
understanding of what exactly might just be going on.
SteveH
The following is an actual exerpt from Friend of Another. You can see
within this text much of the substance I address above. The introduction
is by the Michael Kosares who was the editor of the "In the Footsteps of
Giants" and the system operator of the Gold discussion group at the
www.usagold.com web site.
8/10/98 Friend of ANOTHER
(Editor's Note: Please read what's below carefully. This is an
extraordinary analysis from the Friend of ANOTHER at a time of much
confusion and uncertaintly in investment/currency markets. We are told
at the outset that the largest pro-gold groups -- the Europeans and the
Gulf states -- want a world currency "not subject to the performance of
the American economy." In other words, a currency not tied to American
treasury obligations, or the percpicacity of any other nation for that
matter. That currency for those of us who have reached for the deeper
truths of economy is called gold. As an American, I must say that I have
never seen the concept of American hegemony explained in quite the same
way before. Perhaps, my eyes were closed. I keep getting this feeling
that Americans must necessarily begin to understand a new role for this
country in a rapidly changing international political and economic
environment -- a role for which our political and economic institutions
appear ill-prepared. I will not be so presumptuous as to explain what
the Friend of ANOTHER is saying, I will let you read for yourself. I do
not think it could be said any better than Friend of ANOTHER says it.
The fact that his analysis implies how one should design one's portfolio
is a happy side benefit.)
Michael Kosares,
It has taken some time to send this, but now I can also offer my
thoughts to your questions.
Your statement: "As a matter of long term policy, do you believe that
ECB will "sell" gold to defend the Euro or "buy" gold to defend the
Euro? Each of course would entail a different course of action with
respect to reserves of the new national bank. Along these lines,will ECB
buy gold from its member treasuries, or will it simply force them to
transfer it to ECB coffers if needed to defend the Euro? I am prompted
to ask this question in view of your assertion that there will be much
selling of Euros to defend the dollar. If the Euro, as you suggested, is
being printed to buy dollars isn't this just another manifestation of
the U.S. exporting its inflation? It appears to me that the Euro will
need to be defended -- and not with dollars -- but with gold! "
Michael, I believe the most difficult part in understanding the modern
gold market is overcome by seeing all the various political factions
involved. Essentially and basically, the largest pro gold groups are
those who want a world currency that is not subject to the performance
of the American economy. At this moment and in this period of economic
history, all currency reserves held by foreigners (non-Americans) is a
debt of the US Government and by extenuation through tax collection, a
debt based on the ability of the American economy to function
profitability!
In essence, America has told the world that as long as the business of
this country is functioning, your wealth, as represented in Marks, Yen,
Pesos, etc. is backed with performing US debt. It's like saying, "as
long as your neighbor, next door, does not loses his job, you will not
lose all your money! Most people would be surprised at how clear this
is, outside the USA sphere of influence. This, the largest of the pro
gold group, is largely made up of countries with economies that have no
need to sell most of their production to the US. The business of these
communities would not totally fail without the American engine. Yes,
they would slow down, but not collapse, as trade with other countries
would continue. To add what was said before: If your neighbor loses his
job, you can still trade with the other people in the town, as long as
the currency system is not based on your neighbors debts!
This group, made up of much of Europe and the Middle East, is not
looking for a return to the old Gold Standard, but perhaps something far
better. They do not see any advantage in holding the currency bonds of
one country, as a reserve asset of future payment, over holding physical
gold as a reserve asset in full payment. The fact that the debt reserve
asset pays interest is little more than a joke in these banking circles.
Any paper currency, the dollar included, can fall in exchange value
against your local currency far more than the interest received! In
today's paper markets, the only true value in exchange reserves, held by
a government as currency backing, is found in it's effectiveness for
defending the local currency from falling against other currencies. In
other words, use the reserves to buy your countries money. But, this is
a self defeating action as sooner or later the reserves are used up!
This fact is not lost on many, many countries around the world, as they
watch their currencies plunge, lacking reserves as defense. Ask them how
important the factor of earning interest on reserves is under these
conditions.
On the other hand, buying gold on the open market, using your local
currency, works as a far different dynamic from selling foreign
bond\reserves. This action takes physical gold off the market, and in
doing so increases it's value in dollar terms. Gold is and always has
been the chief competitor with the dollar for exchange reserve status.
The advantage here comes from the fact that governments do not run out
of local currencies to use in buying gold, as opposed to selling foreign
currency reserves to buy the local currency on the open market. Of
course, the local price of gold goes sky high, however, in this action
you are seen as taking in reserves, not selling them off.
Also, as gold begins to rise against the dollar, the local gold reserves
are seen as assets of increasing value, backing the local currency.
Under these conditions, with a stable currency, citizens will purchase
more gold as it is seen as a positive asset. Not unlike a rising stock,
everyone wants an increasing investment. Contrast this action against
that in Korea, where everyone sold gold as it increased in an unstable
currency!
Basically, this is the direction the Euro group is taking us. This
concept was born with little regard for the economic health of Europe.
In the future, any countries money or economy can totally fail and the
world currency operation will continue. What is being built is a new
currency system, built on a world market price for gold. Michael, you
are absolutely correct in that the USA will see a hyper inflation of
it's currency and a gold price in dollars that reflects it.
Unfortunately, for most investors, the gold price rise will be sudden
and also hyper fast. as it will occur just after a rapid plunge in
dollar based assets including, stocks, debt and the entire banking
system. This action will destroy virtually all gold based paper assets
as they are also dependent on a functioning economic system. A local
gold mine, in any country, must sell production to realize a profit. The
contract system they deal with will not be functioning during this time.
Contrary to many hopeful investor, local treasury officials will not
allow miners to pay employees or buy equipment with physical gold. When
the dust does clear for mining to continue, gold will be recognized
worldwide as real money, and the mining of money will, no doubt, carry
Extreme taxation. Stock prices of these operations, after being priced
to zero, will then double or triple in price. Zero times three equals?
Back to your original question. The Euro will not replace gold, it will
evolve into a gold transactional currency. It will also price Euro gold
very high, perhaps $6,000 in current dollar terms buying power. However,
in actual dollar terms of the future, $30,000 US will reflect the
American debt as the negative reserve asset it truly is. The ECB will
have an easy time issuing Euros to buy gold from the member banks. The
real political warfare will be in trying to force them to sell the gold
at all, once this ball starts rolling. The Euro has, in effect already
been dispersed in the form of Gold Leases not gold sales. One has only
to look at the official gold holdings of most central banks to see that
physical gold sales are little more than the average, with a good amount
of that coming from nonEuro countries. Gold is a funny thing, it can be
sold many times and pass through many countries and still remain in a CB
vault. Truth Be told, some 14,000 metric/ton have been sold this way.
Far more than the street thinks. Using this amount it's easy to see how
certain entities have moved off the dollar standard in the last few
years. If we use a future price of $6,000+US, the move is about
complete.
The process: An oil country (or others) goes to London and purchases one
tonn of gold from a Bullion Bank. The BB borrowed this gold from the CB
(leased). The one tonn gold certificate is transferred to the new owner.
The gold stays in the CB vault and the owner goes home. The CB leased
this gold to the BB and expects it to be returned plus interest. The BB
financed the Actual Purchase of this gold mortgaging assets of the
buyer. The BB, who created the loan, then uses the cash arranged in this
venture to contract with a mining company (or anyone wanting a
gold/cross financing deal) to purchase production gold, using this cash
to pay for it. In the eyes of the mining company, the BB just sold gold
on the open market, for cash, and will purchase future production at the
contracted price. The mine does not know where the gold came from, only
that it was sold and a fixed cash price is waiting. Of course, most of
this made more sense when gold was higher. There were thousands of these
deals, structured in every possible fashion. Look to the volume on LBMA
and you see where the future reserve currency is traded today!
Now when we look at this picture, who is at risk here? The Euro CB Group
still holds the physical gold and will buy it back from the new owners,
if asked, using printed Euros. The new gold owner has just replaced his
dollar reserves with either bargain priced gold, or Euros at an exchange
rate never to be seen again! Some of this was done to buy the pricing of
oil in Euros. The BB owe the CBs 14,000 tons of gold that they must
collect inthe future from producers or currency speculators. And they
must collect it by paying what will be a, then, ridiculous price of
$300/$400US, while the world market price will be, well, a little
higher.
With Canada, Australia, and perhaps England having sold much gold to
hold US$, much of the English speaking, IMF/dollar world is about to
change. Any country, Japan, Mexico, etc., that has locked their future
by selling most of their production to the American economy , is headed
for a depression. Another is answering some of your mail questions and
is also sending a letter. Will send it on arrival.
Thanks Michael,
FOA
FOA (5/29/99; 15:12:37MDT - Msg ID:6828)
Comment
Steve,
I want to thank you very much for your clarifying post (#6820). There is little I can say that would change any aspect of it. You have presented these views in a manner that reflects a "local" style of thinking. For many, it will now be much more clear to understand.
I am not and never could be Another. My writing is an effort to further his thoughts to conservative people that wish to grasp future events in their true light. Not the illogical, often conflicting reasoning presented by "money traders in need of clients", "the media in need of viewer
ratings" or "political leaders holding debts that control their public pronouncements".
Another's reasoning and writing can be summed up as such (my writing / editing of his words):
"If someone knows who you are, they will first look to your status as confirmation for your Thoughts. The message receives not true consideration. Indeed, why betray your close friends and associates by divulging "privileged and private information", what means of honor have you
gained by presenting this same into public view? Nor does it build the character and reputation for someone that acts upon this new knowledge by making the unfair deal ahead of their friends. No, it is better for people to "travel their path" using the signposts of "human nature", so readily
displayed along the trail. If we state that a bolder is about to roll down a hill, most would not hear it. So let us show why the rock occupies the hill for the wrong reasons. Some will openly berate others for considering such nonsense. But, truly, behind the quiet mind, the fair person with an ear for such pronouncements will keep the most private eye upon the hill.
"the profit in life is paid in the honor never received, for respect has no price higher than when truth is displayed for free"
I am very busy, but may have some time later, and will reply to some recent posts. Also some ideas about recent events. thanks FOA
FOA (5/31/99; 17:13:48MDT - Msg ID:6928)
Gold talk
ALL:
I am again able to share time with everyone here. What a tremendous outpouring of discussion on this forum! I will go back a day or so in time to offer some discussion on comments made then. Hopefully, catching up into today's recent posts by Town Crier (good effort TC!). Will return and post shortly.
FOA (5/31/99; 18:43:56MDT - Msg ID:6930)
Comment!
-------TownCrier (5/25/99; 9:30:58MDT - Msg ID:6717)----
Eddie Georte: British Gold Sale "A Very Sensible Portfolio Decision" http://finance.uk.yahoo.com/news/19990525/businessday/busstory142283.html
"He (Eddie George) dismissed accusations that the policy was a device to prop up the ailing euroas 'conspiracy theory gone to extreme'.
Towncrier asks: "What happened to the days when central bank reserves existed to defend one's currencies, not garner the best returns?"-------------------
TownCrier,
The above is only part of your post, but still an important part. Most of the public discussion concerning the BOE gold sales revolves around the obvious. Such as "they sold gold to bring reserves in line to join the Euro" or "they leased gold earlier and now this move is just to cover
those leases gone bad" or it was "open manipulation because they announced it first in order to push down the gold price".
My point all along was that they did none of the above. Your statement, TC, is the closest to the truth. Let me explain:
If they (BOE) were selling gold as a direct course to join the Euro, they would have handled it exactly in the same manner as the Dutch and other EMU nations did. Sell the gold quietly and direct it towards contract completion. This was done quietly to bring the best trade and to deliver
the gold into "private EMU friendly" hands. All of the pre EMU deals were done in this fashion and the BOE would have done the same "IF" the purpose was for "reserve balance" prior to Euro application.
It is true that they are active in the gold leasing market. No one would expect anything less when the members of the LBMA are so very close to the BOE. I believe one of the members is the very agent for the government! (Someone here should be able to help confirm this for the group). However, this new sale of gold could never be used to "square the books" for gold already leased because the old leased contracts were done at a much higher price. The "auction" would have to be concluded at a much higher price than today for the numbers to match. A rare event, indeed!
The open announcement of sales did move the dollar price of gold, but that was not the purpose of this "verbal action". They had no choice but to announce, because they (BOE) were about to sell "unencumbered" physical vault gold to LBMA members. It was an obvious public statement to show that the LBMA had a "line" on "freed up real gold" to satisfy "a pressing situation"! Someone in the world community needed to know that this "future" gold was available with no way to reverse the sale. A public statement does just that! The credibility of the BOE to
perform was put on the line. Otherwise, the sale would have been held quietly and privately, over time, just as the EMU sales were.
Back to your item, TC, "What happened to the days when central bank reserves existed to defend one's currencies, not garner the best returns?". Well you have hit the nail exactly upon the head. This BOE gold "IS" currency reserves and it was being used to defend the currency. Only,
it was not the pound that was being defended, it was the dollar! As USAGOLD once said, some nations grow weary of using their reserves to back a foreign reserve currency, so to do the british grow tired. Because they were part of the IMF / dollar faction (thanks again Steve #6820), England used the services of the LBMA and the gold reserves of the BOE to help strengthen the dollar. They expanded the gold supply (and world ownership) by selling various paper gold
securities. They did this because the dollar is "their" reserve currency also, it mainly backs the pound! Today, we come to a point where a major reserve currency change threatens every dollar holding nation, and London is in danger of becoming the "odd man of Europe" during this time.
With the BIS having succeeded in leveraging the dollar into the brink of "implosion" Briton must make a dash for the EMU, even if the resulting "dollar slaughter" will destroy their LBMA through an exploding physical gold price. This, my friends, is what the BOE gold sale is all about. They
are clearly saving a small portion of their bullion bank empire prior to EMU. The sale has nothing to do with "balancing reserves" to meet ECB criteria.
Many words to make a small point. On to other comments. FOA
FOA (5/31/99; 18:57:01MDT - Msg ID:6931)
Reply
Cavan Man (05/25/99; 10:39:10MDT - Msg ID:6719)
FOA & Another
I am new to the Forum and the subject near and dear. With the help of this Forum I am learning a great deal. Many times in reading your posts I am uncertain as to the meaning. Could you recommend a short reading list for my continued enlightenment and edification? Many thanks!
Hello Cavan Man,
It has taken me a lifetime to grasp how money is used among nations. Hopefully, with the internet it will require only 1/4 a lifetime for you. However long it takes, I can assure you it is an interesting and useful endeavor. Sorry, I know of no short list? thanks for reading and discussing
FOA (5/31/99; 19:18:33MDT - Msg ID:6933)
Comment
----------USAGOLD (05/25/99; 20:37:01MDT - Msg ID:6735) Stever.......and All.....
"For those who say this has been an exceedingly long and dark period for gold, I would counsel that these cycles play out over many years period of time. The stock bear market that started on a constant dollar scale in 1965 did not come back to the level from which it first descended until
1982-83. Similarly, the stock market high of 1929 was not reached again until 1942. Bear markets can be long and merciless but always darkest before the dawn. Gold's overdue, Steve, but I still wouldn't go out and load up future's contracts or call options."------
Michael,
A very nice post. I read it all. Your last item should give people an idea of how long term these things can be. We must all remember that the perspective that most analysts write from (the last Barrons article?) is only using the action of gold from 1975+/-! They do not allow the "history of paper currencies" to influence their thinking. The US dollar is only some 30+/- years old when one considers how long it has been off a gold standard. During that time it has created more debt than has ever existed during the use of "any" form of money! Truly, a failure of this modern paper would turn the current analysts of gold on it's head and make the wait seem like only a moment in time. We will see it happen and chronicle the results on this forum.
thanks for providing it, FOA
FOA (5/31/99; 19:38:51MDT - Msg ID:6934)
Comment
-------beesting (05/25/99; 22:57:14MDT - Msg ID:6742)
Gold seen well supported near lows.
http://www.barney.co.za/reuters/may99/gold25.htm
Flemings global mining group said in a report:
The unique liquidity provided by Central Bank lending to the Gold market had prevented severe lease rate spikes, allowing the market to be played for the short side for extended periods.((3long years)).
While it was hard to say when this dynamic would change, for now and while there was negative sentiment,"this structure creates an Achilles heel which invites attack,"Fleming said. Click above URL for more.------------------
Hello beesting,
Boy, "unique" is the right word! If I wanted to expand a market, the best way to do it is to offer almost "zero" rates to finance it, right? Then, after some 10,000 to 15,000 tonnes of gold were leased around, I would control the equity of every player by controlling the lending interest rates. The above "lease rate spikes" can easily be created by withholding supply through open bidding for gold! It's a political sword that the BIS now holds over the paper shorts. All the market can do now is keep creating short paper by using "company equity" instead of gold. In time, the entire paper gold market drowns in "fictional" sales and becomes completely discredited as a true physical supply source. What a mess for them! What a success for real gold! thanks FOA
FOA (5/31/99; 20:02:57MDT - Msg ID:6935)
Comment
---------------The Flying Scotsman (5/27/99; 4:08:42MDT - Msg ID:6779)Farfel.............Gold Price
G'Day,
Weel, it lokks like the Gold price is going down like a "pork chop in a synagogue". This current compression of the gold price, how long can it last ? If as FOA infers that there are now two "Gold Camps", which one has the deepest pockets ? The "other" markets, well they appear to be in and out like a fiddler's elbow. Aye---------------
Hello and welcome Scotsman!
Your question of "which one has the deepest pockets ? Well it used to be that the one with the most gold made the rules and maybe it still does. Currently, it's the geopolitical group with the "world reserve currency" that holds the reins. However, this new open market for gold is about to award that title to a new entity. You see, it's not just "how deep the pockets are", but rather "what supports them that counts".
FOA (5/31/99; 20:17:39MDT - Msg ID:6936)
Comment
---------canamami (5/27/99; 6:03:41MDT - Msg ID:6781)
Brief Musings I only have time for a couple of sentences.
1. The POG is not completely unimportant, even for hardcore physical gold buffs. Would one still feel the same about gold if it were valued at $10.00 per ounce, to use an extreme example?
2. The recent and continued price slide appears to me outside of the realm of the hypotheses of FOA/Another and must subject those hypotheses to further examination, to any person who seeks objective verification of hypotheses. Obviously, the BIS is not intervening to hold the POG
at $280.00. The POG has dropped more than a $5 to $6 fluctuation from about $283. Our friends are learned, and I eagerly look forward to their input on this, IMHO and respectful opinion, unpredicted weakness.
Thank You, canamami.
Hello canamami,
I know you posted again about this, but I wanted to comment. If you have kept up with the massive writing here, I hope you were able to grasp some of the other fine points made by all. In addition I add:
The range to purchase gold looks to be the same. Yes, it has dropped further (another 10 lower?), but as the shorts attempt to lower it, the physical market will, no doubt "discredit the paper market" through a large disparity in prices. Soon, one may not be able to purchase bullion
as the entire system begins to break down. At the point of breakdown, physical may not be available, except at much higher prices. The "risk" is becoming obvious and clear, worldwide! We shall see. Thanks, FOA
FOA (5/31/99; 20:23:16MDT - Msg ID:6937)
(No Subject)
-------------USAGOLD (5/27/99; 9:29:58MDT - Msg ID:6787)
Today's Gold Market Report: Central Banks Cannot Print Gold---------
Fine report USAGOLD! We should all read this again and save it!
FOA (5/31/99; 20:39:01MDT - Msg ID:6938)
Comment
-------------Cassius (05/27/99; 12:09:10MDT - Msg ID:6795)
FOA's msgs 6766 and 6783
-----Also, could you please expound on your statement (msg #67660)"One can also see why the US will encourage a higher "world" price for gold, even as it's native market is destroyed!" This isn't intuitively clear to me why the US would do so. Thanks for your shared insight. Cassius----
Hello Cassius,
I hope some of the recent posts added to your other stated considerations. As for the US anticipated actions? It's the only play available to them! They cannot sell their gold in quantity (see my other posts) and the current shorting is based on the "equity" of the local bullion traders, not the future supply of gold! That equity is at "major" risk as I write. The dollar "will" be devalued
with a rising world gold price and there is nothing the US political factions can do to stop it. As I said before, they will make as much political hay out of an inevitable situation as possible. In that light they may close the paper gold markets as they begin to fail from non delivery (a future event). Then begin a series of verbal prouncements about "how much gold the US has" and "how much backing it provides for the dollar". Remember, gold is no longer the threat, the Euro is! Thanks FOA
FOA (5/31/99; 20:47:00MDT - Msg ID:6942)
Reply
tlc (5/27/99; 14:42:54MDT - Msg ID:6798)
paper gold contracts
I am puzzled by the statement that there is an excess of paper gold "shorts" in the market. It is my opinion that you cannot just open a "short" position without an offsetting "long" position being created.
Can anyone shed some light on this for me?
tlc,
Hello, usually, the short side of a contract must (theoretically) supply real gold to complete the transaction. The long side must supply currency to complete. True, every position offsets. The problem arises from shorts not being able to supply gold because they don't have it. It's not that there are excess "shorts", rather no excess gold. does this help? FOA
FOA (5/31/99; 21:10:17MDT - Msg ID:6943)
Comment
canamami (5/27/99; 14:44:45MDT - Msg ID:6800)
FOA,
Is it your position that the BIS will not intervene to protect the POG at $280, or any level, given the existence of the Euro? How does this theory jibe with the Euro's declining value in relation to the $US? When did you arrive at the conclusion that the BIS will not, or no longer, ensure the POG stays above $280.00?
I look forward to your return, to hear your contributions to the discussion. Thank You, canamami.
Canamami,
They gain more leverage against the dollar with each new gold short written. I believe they decided to allow the market to "implode" when it became apparent that the US was going to encourage gold. This political decision came about around the time that Mr. R. quit. As I said earlier, they now hold a sword over the market that everyone should be aware of. It could fall at any moment and end any further purchases of gold at today's values.
I think the $280 price was based on an old formula they used long ago. I'll offer it later when I have more time. Also note that the Euro was never to rise against the dollar until the dollar fell from it's own weight. The Euro was to become the "fallback" reserve currency that received the
flight from a failing IMF / dollar system. The BIS / ECB was very surprise that it opened as strong as it did. Many who criticize the ECB for not supporting it are the same ones who object to the "dirty float" and "rigged" dollar. Yet, here the ECB is trying to offer a fair, self evaluating currency and the speculators are crying for "intervention"! No doubt the same ones that currently "intervene" in the paper gold markets to save their skins. We shall see. FOA
FOA (5/31/99; 21:16:18MDT - Msg ID:6947)
(No Subject)
PH in LA (5/27/99; 15:20:47MDT - Msg ID:6801)
Probing the downward limits
PH,
Your support for open duscussion and consideration should be very encourageing to everyone.
It is to me. Please find time to offer your views on these markets, as your concepts are important.
thank you FOA
FOA (5/31/99; 21:19:02MDT - Msg ID:6949)
Time to go.
With the poor spelling in that last post, I should depart. Thank you all and please continue.
FOA
FOA (5/31/99; 21:30:30MDT - Msg ID:6950)
One last note!
Cavan Man (5/31/99; 21:18:07MDT - Msg ID:6948)
FOA IF you are out there tonight....
Mr. Cavan Man,
I am a "less" than average bear that knows nothing except what other fine humans have taught me. I believe that when one displays credentials in public, it only proves how little understanding they truly have! I must go now, thanks FOA
FOA (6/5/99; 10:45:10MDT - Msg ID:7188)
SteveH (6/5/99; 5:37:09MDT - Msg ID:7186)
SteveH and ALL:
Steve, I believe you are following a chain of thought that leads to many answers about this gold market. Most everyone agrees, even more so today, that this is a "new gold market". It truly is unlike anything seen sense the dollar went off the standard in 71. Analysts have often used
"technical interpretation", "supply and demand" or "price inflation changes" to explain it's past value trends. Yet, during these twenty some years, each of these "methodologies" have been shown to work only "part of the time". Truly, a thinking person can plainly see that the correlation between the dollar price of gold and the amount of "dollar currency inflation" is far out of line.
Some other factor is clearly at play, yet few will accept any "premise" that could, potentially, destroy their "present paper gold portfolio". Many investors talk about the terrible "gold - carry trade", "CBs leasing gold", "bullion banks shorting gold", "mines selling gold forward", and they want it all to stop so gold can return to it's proper commodity price structure! Yet, their perception is as such that all of this will end in a blaze of "short squeeze fire" with their own paper gold investments intact. Yes their personal "gold options", "comex gold futures", "mining stocks" and "gold certificates" will soar in value as this entire industry "practice" melts before the eyes of a disbelieving "wall street"!
This form of "gold investing logic" was born during the recent history that allowed for a super - expanding world dollar reserve to exist along with a gold market of "static value". As few as five years ago, no one questioned how the equity value of practically every world asset could be
expanded far beyond their economic worth without the gold value reflecting that "asset inflation". Lost in the reasoning was the "common sense" conclusion that only an "expanding currency base" could represent these asset values beyond practical, useful, economic purpose. So, many gold
bugs just shrugged off this "extended conflict" and said "someday people are going to recognize it and buy gold".
The lost fact in all of this was that "people were buying gold" on a massive worldwide scale and the dollar price was not reflecting it. Current "gold investing logic" says that cannot happen because "there is a buyer and a seller" for every commodity and the price quickly reflects it. This is true, except that only gold has been warehoused as money, to an extent far beyond it's commodity use (thank Mr. Parks of FAME for pointing this out to the WGC). It is here, that we confront the reason for "why gold has not kept pace" these past years. And why this new market is coming to the end of it's "era".
Steve, I again thank you for reposting my writing. In those posts it was offered how the overall gold market ownership was exploded during these years as every entity embraced the concept of lending gold. Truly, they all saw the money to be made for themselves, but did not fully question the "motive" behind lending gold for almost "no return" by the lenders. Most just accepted the public pronouncement that the "CBs were at war with gold" or that they were "obtaining a return on assets". I think any person, with a brain in their head knew that no one in this world lends anything for free (without a motive), so lets not discuss that one. Also true, some of the CBs are at war with gold, but only "some of them"!
The Euro / faction only appeared to be "at war" as some of them sold gold. However, one must look at the facts behind this, before reaching a conclusion. Haruko Fukuda, World Gold Council chief executive, pointed out on Friday that only two EURO CBs had sold gold, Belgium and Holland. I (FOA) know that those sales were done in private with the gold going into "friendly hands". It was the US / IMF faction that proclaimed to the world that "all of Europe was
selling off their gold reserves" with the purpose to "unmoney gold". Nothing could have been further from the truth. A quick look at statistics as given by the WGC offers:
""In fact the NET amount of sales from the official sector in the last 10 years was only 312 tonnes. Hardly a
landslide," she (Haruko Fukuda) said."
Steve, that is only an average of 31 tonnes a year hitting
the streets. This very fact negates the analysis of many "gold thinkers", in that they say the "CBs are filling the gold consumption deficit. The current deficit is being filled buy investors selling physical gold and holding paper gold. This was recently pointed out by myself, using Another's Thoughts from long ago. It was scoffed at then, now this logic is coming into view.
If one looks, clearly the most gold being sold onto the market is coming from entities that occupy the US / IMF sphere. Australia, Argentina and Canada to name a few. Yet, even these sales are consumed into this massive "new market" with only the small amount mentioned above set free. This same faction is also the one that is flooding the world with "gold paper" that has little behind it except the "currency equity" of the issuer. Their idea of a backed short sale is the holding of "OTC options". Many of the sales over the last few years were little more than "naked" shorts.
In this light it should be easy to see that the world paper gold market is "degenerating in quality", to a point of no return. Small investors are clearly "at risk" from an impending destruction of the current "paper mechanism" that sets the world price of gold. In much the same way the US
stopped the function of the COMEX silver market (in the 80s), because of inability to deliver silver. So will it shut down the gold market. Let's face facts, it was never intended to deliver gold, rather it's purpose was to "bet" on and manage the direction of gold's price! It's an old function, of this short history of gold that worked well as long as investors wanted to expand holdings using paper. But, all eras come to an end and so does this one.
The world wanted cheaper gold to replace dollar reserves. Some entities have taken advantage of this and invested in gold marked with a new "genealogy", that of the Euro and the BIS. Others will have to fight the war on a different front. I suspect that many "IMF / Faction" paper gold holders will be in the US courts for years trying to pursue what never existed, real gold. We shall see.
More likely than not, the BOE sales will mark the end of the road for this current gold market. While their decision appears "foolish" in public, Another knows that these actions are not taken lightly. The currency creators of other nations (Canada?) must also be "feeling foolish" as they stare into future national bankruptcy from price inflation. An inflation brought about from backing a failing dollar by selling their peoples gold to other CBs. The citizens find them to be "smart operators" as the appearance is that of earning interest as gold falls in price. Few understand, as do the treasury officials, that the lower price of gold comes from hollow paper selling. Nor will
they equate $200 oil to a lack of national gold. Later, many investors will grasp why physical gold purchased anywhere from $400 down was a fantastic chance of a "century in nature". Seldom does such a major change take place in ones lifetime.
I ask, what comes first in creating dollar value, "confidence in the dollar" as many think or "confidence in the ability of the dollar to settle contracts"? The history of paper currencies shows that citizens will continue to use even worthless currencies as long as they will settle old contracts. Find your books and research it for yourself. Then ask the question, "in the near future, will I be
holding paper contracts in need of settlement in dollars"? In this light, one can see why the real gold market is cornered, the physical market, that is. You see, oil and gold mix well in these new troubled times.
Thank you for reading and discussing. FOA
Reference Link:
http://www.yahoo.co.uk/headlines/19990604/business/0928478578-0000020982.html
FOA (6/5/99; 13:56:21MDT - Msg ID:7204)
Time to go again.
Julia and ALL,
I have not forgotten our discussion from the other day. It will be pursued in time. As I am still
very busy, I offer what I can. thanks FOA
FOA (6/6/99; 21:01:57MDT - Msg ID:7258)
(No Subject)
Michael,
Your post about the convoluted court "workout" of bankrupt mines is one for much consideration. In the event of mine assets being managed by a court trustee, I add: A massive increase in gold prices during this time would require the trustee to reopen the mine at a large profit, even during long drawn-out negotiations. Any new government taxes on such profits would require escrow for later payment "ahead of other players". Also, bullion bank claims would be
fully paid in gold (over a very, very long time) as the new economics of mining make such claims worthy to be satisfied. I do think the BBs will be fighting the government over any new taxes. Truly a mess. Please see below!
Please note that Mr. Faber suspects some CBs to buy back gold at a much higher price. I would add that they will use Euros to do this as that currency will be the "transactional" settlement medium for gold world wide. A price of $1,000 and higher will mark the end of the dollar as is presently known.
Also, his thoughts of "excessive profit taxes" are becoming a more common view as trends reverse. Again, I add that the "journey" from $280 gold to $1,000 gold "will" bring his massive increase in mine stock prices. The problem for most investors will be in timing the selling point. I
think, few will be able to sell their positions in the two or three days time required for gold to make this trip. Does anyone that thinks the shift from this era of gold price management into the era of paper gold "loss management" will bring a gentle price rise over months and years. If one
trades their position on that "premise", I think they will be holding these mine investments for much longer than anticipated. Any new tax legislation will be, no doubt, "grand fathered"! We shall see.
I apologize for not having the link to this story. Perhaps someone can provide it?
Dr Doom: gold, Murdoch, Soros
By Tony Boyd
Dr Marc Faber is the Hong Kong-based contrarian also known as Dr Doom. He writes a monthly newsletter called the Gloom, Boom and Doom report for 900 institutions and wealthy private individuals including some of Australia's better known multi-millionaires. Here he talks to Tony Boyd about his latest views.
On the gold price
Let's assume for one reason or another the psychology in the world changes in favour of an inflationary psychology
or for whatever reason people say they want to own gold.
With the world's population of 6 billion people, if each
person buys one gram of gold each worth about $13 that
would be about 6,000 tons of gold when there is an annual supply of 2,500 tons. The swing factor will be dramatic.
On gold and central banks I am prepared to bet with anyone in Australia that the central banks, which today are selling gold at less than $US300 an ounce, will go back and buy it at more than$US1,000 a ounce in a few years' time.
I am convinced it's going to be that way because I think
eventually the power will be taken away from the central
banks and the world will go back to some kind of financial system that has automatic built-in stabilisers.
The gold standard had some faults but the whole industrial revolution and the tremendous growth in the
world that occurred between 1800 and 1930 occurred under a gold standard, so you cannot dismiss the fact that the gold standard had some merits.
On a soaring gold price I think the gold price will go up so dramatically that governments will introduce excessive profit taxes on producers or, worse, expropriate them altogether.
If the gold price moves from say $US280 at the present
time to $US400, gold shares will go up by up to 200 per
cent, easily. So you have more leverage in gold shares, but if the gold price goes to more than $US1,000 then I would worry about excess profit taxes.
FOA (6/6/99; 21:38:40MDT - Msg ID:7261)
(No Subject)
Beasting, thank you for thinking through my post #7188 (7186 was steveH). I have always found that the "masterful" mind belongs to the one that can understand what the writer has written! In this day of language "slang", offered in every country, reading has become the most difficult task.
SteveH, also thank you for your grade of "A". I believe everyone that follows USAGOLD will pass this class in good economic health (myself included). We live our lives to produce something of value to others. This is indeed the basis of world trade. However, "fair" trading requires
understanding of each other as much as mastering the knowledge of "the transaction". This forum exposes the true nature of that progress as we gain the knowledge understanding people as well as ourselves.
Also, I add this story to your evolution. "Have you ever talked to someone that said the sun would rise in the east and then the world would end? When asked if they could explain? The reply was, I don't know the mechanics of rising suns. I'll leave that to the experts. But truly, this
world will end after the light, because it came to me in a dream. Dreams, I asked? I could never figure those either, but they are true, came the reply.
Thanks FOA
beesting (6/6/99; 21:19:50MDT - Msg ID:7260)
Question to FOA or any of our European friends.
Question: DO the workers in the 11 Euro Countries make the same wages performing the same duties?
Example:A grape picker in Italy,a grape picker in France,a grape picker in Germany?
FOA (6/6/99; 21:46:38MDT - Msg ID:7264)
Comment.
beesting (6/6/99; 21:19:50MDT - Msg ID:7260)
My answer is no. But, I suspect there is more to your question. Please, continue?
I will make time to return and reply in seven hours or so. Other duties call. thank you beesting
FOA (6/7/99; 7:45:04MDT - Msg ID:7282)
Reply
beesting (6/6/99; 23:51:29MDT - Msg ID:7269)
Follow up to msg#7260 to FOA.
In the U.S. there is currently demand for certain skilled occupations;Doctors,nurses top athletes. These occupations can very easily legally work in the U.S.(with proper immigration papers) demanding and receiving higher wages than they may get in their respective home countries.Hence, a higher standard of living for themselves and their families.
Now, my point is,wages may not vary from country to country(as they do now)with the use of a single currency(Euro),in the long term,when workers are payed in Euro's only.FOA do you agree with this?
Let me put this thought in perspective for our North American friends. Example: A Canadian,or Mexican loses considerable purchasing power when exchanging their
Peso's or Dollars for U.S.currency when traveling to the U.S. In my humble opinion if North America and other Latin American Countries ever went to the all U.S. dollar system (similar to what the Euro Countries are doing) after a long time would an equilibrium be established?
beesting,
I see your point, and it is a good one. Yes, wages will tend to converge and compensate equally for each form of production and skill. However, this will only work if the money creation is under one "many government" roof, such as the Euro zone. Many point out that this is a weakness of this new currency and will pull the union apart. I disagree and state that it will become it's strength.
Prior to EMU, each country changed it's exchange intervention policy to the benefit of local workers, usually providing a loss to it's currency. At least that was the overriding game plain. Now, the currency will retain the favorable attribute of "management" with the control of "diverse government needs" and lose the baggage of "maintaining mismatched skill compensation". Yes,
some citizens will be shocked to learn that their "better pay" was the result of currency intervention, not their special standing in life. It will promote a bitter struggle over time. But, it will result in far lower inflation rates in the member countries where citizens had no strong currency.
In contrast, this dynamic is far different from your example of Mexico converting to dollar use. They will have no "usable opinion" in the money policy of the US and yet still retain a lower living standard. As an example, Kansas as an independent country? All labor and resources would be
exploited from that state for the benefit of the rest of the US.
Also, note that the dollar is well past the point of management. It's timeline has come to an end as it's debt has rendered it into a "collection only" currency. For it to regain any balanced reserve use, worldwide, it's base would have to be contracted many times over. A loss to US citizens that will never be allowed. Again, this is the very attribute that so drives the quest for Euro success. In
time I would expect many other countries to join the EMU and convert to exclusive Euro use.
The gold of Arabia has made this path, for them, a very level one, indeed. The coming free market in gold will, not only judge all currencies and nations for the entry status, but create a fair way to value their contribution to world trade. We shall see.
Please continue your consideration. FOA
Voyager (6/7/99; 0:40:11MDT - Msg ID:7270)
Sir, Excellent post!
SteveH (6/7/99; 1:25:42MDT - Msg ID:7271)
FOA, I am still trying to figure out your story of the rising sun???
Steve, perhaps best applied to NWO discussion?
"Regarding the rise in the price of gold, if it goes from 267 to $1,000 in three days, and then moves higher still, these excess taxes you mention make sense, but I have yet to see our government move that quickly."
Steve, on this issue, they will move no slower than with the speed of one who finds a gold coin upon a sidewalk!
FOA
FOA (6/7/99; 20:00:03MDT - Msg ID:7307)
BIS?
Gandalf the White (6/6/99; 21:51:59MDT - Msg ID:7265)
Question to FOA
-----------Where in your opinion will Aragorn III's "Thunder in the night" occur ? --- Now we watch the Spot gold start out the week "Downunder" and move to HK before reaching London and ending in the US. -- Do you await the BoE, bailout of the Brittish BB's before the blastoff in the price of Au ? -- OR will the cause be from another tightning of the OPEC taps before the Y2K effect sets in ? -- Let us hear your pronostications on the timing of this event. Thanks for everything you have pointed the Goldhearts toward, and we shall all meet you sometime at the future world gold trading site in the East.<;-)-------------------
Hello Gandalf the White,
If we listen closely, I think Mr. Aragorn III's "Thunder in the night" may have just begun with a quiet statement. As USAGOLD and TownCrier pointed out today, the BIS is talking.
"General Manager of the Bank for International Settlements (BIS) Andrew Crockett said today that despite sales of gold reserves by central banks, gold would continue to play a major role in the reserves of central banks.
He said that since most central bankers seemed not to want to sell much more of their gold soon, he did not expect the price of gold to fall much further."
I suspect this statement is the beginning of a "threat of action". The WGC knows that (GW, read my last few posts) only two Euro CBs sold gold for "reserve alignment" prior to EMU. No public accounting was ever made as to the placement of that gold. It is no longer on the books, but did it remains in Euro friendly hands? Now consider all of the writing that analyst and officials have offered over these last few years, that Europe was unloading gold! Yet, after untold physical sales and paper shorts by dollar / IMF factions, the BIS states "gold would CONTINUE to play a MAJOR ROLE in the RESERVES of central banks"! I ask you, what Central Banks could they be referring to? Does the ESMB (Euro System Member Banks) come to mind?
Does this statement, "He said that since most central bankers seemed not to want to sell much more of their gold soon, he did not expect the price of gold to fall much further." really mean, if the dollar / IMF wants gold lower in price, they will have to sell gold (not paper)??? And, if they don't / can't sell any more real gold, the paper price will fall no further?
Further, as I have stated before, the current paper short position only has "credibility" if gold falls further in price. Otherwise, the paper is worthless as no gold can be delivered against it. Also, with the G-8 meeting about "derivatives" about to open the shorts books for viewing, this gold era is about to close! Watch Comex OI these next few weeks!
GW, the timetable will be as long as it takes for the next chess player to make their move. Not long, I think! FOA
ANOTHER (6/8/99; 18:27:21MDT - Msg ID:7353)
USAGOLD (6/8/99; 13:57:54MDT - Msg ID:7343)
Mr. Kosares,
I again, thank you for presenting this forum. It does give the fair view for eyes "not so clear" in nature of world. Your thoughts, are smooth for all that touch. A needed display and welcome relief from common banter. Writing here does attract other persons of the "honest feelings" and "deep views". They do carry with them the "reality of life", a quality lost to many of this day. A
quality so needed for future defense of ones family wealth.
My words are slow for a time, as events move forward. Truth spoken once be priceless, spoken many times and value is lost. Time will prove all things, not the repetitive voice, yes? Later, my speech will discuss "what has just occurred" and meaning of such. These future events will demand much text and and thinking, wait we do.
I not mean to slow my good friend, FOA, for he does offer a great deal for the reading. I does tire even my eyes, at times! It is the fair say, I speak, for some require many words, others few.
Sir, I write soon again, on the changing tide. The new flood tide of gold! Another
FOA (6/8/99; 19:56:57MDT - Msg ID:7359)
Comment
Mike55 and ALL,
Hope you understood that Another was complimenting everyone here for their fine posts. I think the banter remark was directed at other mediums. It seems I am the one that's overwriting at times??
Aragorn III,
Santa Claus gold prices for anyone that can get it delivered! You bet!
FOA (6/14/99; 5:40:12MDT - Msg ID:7561)
The two months of opportunity to buy gold is ending!
http://www.iht.com/IHT/TODAY/MON/FPAGE/seven.2.html
""""" If approved this week at a summit meeting of the Group of Seven industrial nations in Cologne, the proposal would""" See link above.
At this same meeting, new rules of disclosure, for international hedge funds, will again be considered. The gold sale will, like the BOE sale, also be used to balance a very chosen few of the "out of balance books"! All of this is done prior to a major shift in gold valuations, brought on by Euro / BIS actions. The US will openly go along with this change. Please see my posts stating that these last few weeks were the last opportunity to find gold at affordable (and deliverable)prices! The "era" of "this new gold market" that Another was scoffed at for discussing years ago, is over!
SteveH, the long fuse on the dynamite has been lit. Everyone is grabbing their gold and running like hell! Why, because, this time no one is remaining to attempt to put out the burning string. As Another last said, the tide is now changing. I will stand, quietly at a safe distance for a
while. FOA
FOA (6/19/99; 9:34:41MDT - Msg ID:7804)
"Thinking Through The Thoughts"
http://www.smh.com.au/news/9906/19/national/national4.html
ALL,
I had considered writing many letters (posts) to address each of the different questions / concepts posed on this forum. This was as a similar process that Another used to get readers to view and analysis events in a different light, using their own concepts. However, this subject is
now much to large and all consuming for brief points of comment. We have reached a time when "everyone" has seen the obvious management of gold prices and accepts this as fact. Only a few years ago, most investors considered the gold market as a "somewhat free" supply / demand situation and invested using that premise. As Another pointed out that "events" would prove all things so do we witness the evolution of investor logic into the realm of "reality"!
Gold: Saving Real Money In A Time Of Transition
I am going to offer a series of posts (chapters) starting at the "beginning". We will use simple logic and common terms to explain "what has happened" along this "journey through time". Another will edit it for direction (as he has this post). This will be a long process, and I hope it will
offer a real value for "thoughtful minds". As many are now starting to discover that most of the Western ideas of gold investment were flawed from the beginning, so to will they find their present (gold) portfolios "unprepared" for the storm that approaches! With that I leave you with a portion
from the "Sydney Morning Herald" and a quote from Another.
---------Miners and prospectors at the historic town of Kalgoorlie, 550 kilometres east of Perth, said big operators were sacking staff and marginal mines were facing closure as gold plummeted to around $US260 ($400) an ounce.
One high-profile prospector, Mark Creasey, said this week that although Australia's$5 billion gold industry had experienced periods of economic gloom in the past, this was its darkest day. "It is the quality of the gloom that makes
the difference: pitch-black and horrible. This is the worst downturn I have ever seen."------------
""""Your wealth, it not as large as this paper money say it is!"""""" Another
I will offer my first chapter as soon as possible.
Thanks FOA
FOA (06/19/99; 16:43:16MDT - Msg ID:7809)
(No Subject)
Cavan Man (6/19/99; 10:38:45MDT - Msg ID:7807)
Hello Cavan Man,
Thank you for your comments about these writings. I hope I did not give the wrong impression in reference to timing my future posts? This will take many days (weeks, months?) to offer as each section will be reread and edited.
I was asked to do this because it's time to deliver a clean road map of this long discussion. We are truly near the end of this "new era of gold". By the time I complete and offer the last chapter, the markets will be very loud with the noise of change. This message will then be old
news.
So, we will for the last time, walk this trail of gold and discuss how so many lost their way. At the end, our group will gather to view the path that is directly ahead. After such a trip everyone will clearly see that this road was well traveled by today's world investors.
Thank You FOA
FOA (7/4/99; 10:55:22MDT - Msg ID:8382)
Aristotle
Mr. Aristotle,
Your "Aristotle Life on Earth: Gold and the Free Market" is a fine work! Myself and everyone thank you for writing it. I did not wish to offer my posts during your composition, so I waited. If I may, some of your thoughts will make a good addition to further this cause.
Time, is very close to "proving many things"! We will most certainly document these "eye opening" revelations on this forum, as they occur. Today, I offer my brief introduction.
FOA (7/4/99; 10:57:06MDT - Msg ID:8383)
SteveH
Steve,
I have been busy for a while. Will discuss with you several things later. thanks FOA
FOA (7/4/99; 11:01:14MDT - Msg ID:8384)
Gold: Saving Real Money In A Time Of Transition
Introduction
------ A gentleman leans over the fence and tells his neighbor that gold is going to rise in price from it's current $300. As the person on the other side of the fence thinks differently, they both agree to a binding bet. In three months, we will settle up with a payment of the change in the price of one hundred ounces of gold. Whatever it rises, the "bull" collects that amount. Likewise,
whatever it falls, the "bear" collects from the bull. Each puts a $1500 payment guarantee into a common shoe box and gives it to another neighbor for safekeeping. ---------
As an observer of the above, we have just witnessed the creation of a wager not unlike a comex futures contract. On each side of the fence stands a long and a short, that together create an open interest of one contract. Neither has any intention of buying gold, nor do they expect
physical gold to be a part of this bet. Yet, at cocktail parties and on public internet forums, one claims to have "brought gold" and the other states that he "sold gold".
To build a further understanding of this transaction: Both of these gentlemen, probably don't have the $30,000+/- to buy or deliver 100 ounces of gold. Human nature being as it is, if they did have that much, they would most likely increase the bet to ten or twenty contracts. Clearly, the
intent of this paper market, is to bet on the price of gold as it is determined by the buying and selling of other physical traders. The western public should take these trades for the concept they truly represent. ""I (the long side) bet on the "price" of gold not because we need or want the physical metal. Rather, my wager is that others will need real gold to protect themselves from bad monetary systems. In fulfilling that "need to own", these others will drive up the dollar price and I will make money while working within the confines of our good monetary system.""" The shorts make the opposite bet, in that they think the world monetary system will work itself out and induce "the others" to sell all their gold. That is, gold they brought in the first place, because they did not know that our money managers could repair the world financial system.
Yes, today Western longs and shorts are playing out these two views of the gold market. Yet, both sides are using paper gold bets to represent their beliefs. Truly, the major majority of this market does not buy or sell physical gold to represent their investment concepts. There are a few
that buy coins and bullion, but, even in their large amounts, it is only a drop in the paper gold bucket.
This, my friends, is the very nature of western trading of gold. The mindset is to treat it as a concept for making currency, not protecting existing wealth. The exact same mentality exists when one invests in the gold mining industry. Even when these players see the faults in the dollar, and loudly proclaim it's inflationary downfall, the largest part of their assets go into the business of
producing real gold in exchange for more of the same paper currency. It is a means to build wealth through paper asset appreciation, using the very financial system the "concept" says will fail without physical gold.
There are many mental angles and philosophical side steps one can take when understanding the above. But, in this concept lies the very basis of the flaw in the current gold market. A paper market, built upon world misconceptions of currency values and the historical reasons for owning
gold. The present deployment of world assets into a paper system of valuations is liken to traveling a trail of no return. History has shown that the assets accumulated in this way will never be transformed into "the things of life"! The paper wealth you currently own is no where near the real value your currency says it is. With the above introduction, we have begun close to the end of this journey. In the upcoming chapter one, we return several miles to walk ground already well traveled. We will observe concepts on the right and the left, not discussed by other guides. The very sights that make such a trip, "worth wile".
" You will see this trail thru the eyes of history and feel old ways as new Thoughts!" Another
FOA
FOA (7/7/99; 19:02:17MDT - Msg ID:8531)
Open intrest?
ALL:
I hope to offer our first chapter on Saturday, July 10. In it we will begin to see some answers to hard questions. Truly, the price of gold is plunging because the governments are running out of unsecured bars to offer. Physical will become more expensive than paper, very soon. As they run
out, did you think the London gold market would just sit there and allow the paper price to soar and wipe them out? No, the world gold market as we know it will be completely dishonored from inability to deliver. But only after they have flooded the system with worthless short securities.
Forget the options, futures, otc paper and the mining industry, as they will all burn. Just as Another has warned for some time. The chess game continues and we wait the next move.
FOA
ANOTHER (7/10/99; 17:35:55MDT - Msg ID:8633)
Gold: Saving Real Money In A Time Of Transition
Gold: Saving Real Money In A Time Of Transition
Introduction
------ A gentleman leans over the fence and tells his neighbor that gold is going to rise in price from it's current $300. As the person on the other side of the fence thinks differently, they both agree to a binding bet. In three months, we will settle up with a payment of the change in the price of one hundred ounces of gold. Whatever it rises, the "bull" collects that amount. Likewise,whatever it falls, the "bear" collects from the bull. Each puts a $1500 payment guarantee into a common shoe box and gives it to another neighbor for safekeeping. ---------
As an observer of the above, we have just witnessed the creation of a wager not unlike a comex futures contract. On each side of the fence stands a long and a short, that together create an open interest of one contract. Neither has any intention of buying gold, nor do they expect
physical gold to be a part of this bet. Yet, at cocktail parties and on public internet forums, one claims to have "brought gold" and the other states that he "sold gold".
To build a further understanding of this transaction: Both of these gentlemen, probably don't have the $30,000+/- to buy or deliver 100 ounces of gold. Human nature being as it is, if they did have that much, they would most likely increase the bet to ten or twenty contracts. Clearly, the
intent of this paper market, is to bet on the price of gold as it is determined by the buying and selling of other physical traders. The western public should take these trades for the concept they truly represent. ""I (the long side) bet on the "price" of gold not because we need or want the physical metal. Rather, my wager is that others will need real gold to protect themselves from bad monetary systems. In fulfilling that "need to own", these others will drive up the dollar price and I will make money while working within the confines of our good monetary system.""" The shorts make the opposite bet, in that they think the world monetary system will work itself out and induce "the others" to sell all their gold. That is, gold they brought in the first place, because they did not know that our money managers could repair the world financial system.
Yes, today Western longs and shorts are playing out these two views of the gold market. Yet, both sides are using paper gold bets to represent their beliefs. Truly, the major majority of this market does not buy or sell physical gold to represent their investment concepts. There are a few that buy coins and bullion, but, even in their large amounts, it is only a drop in the paper gold bucket.
This, my friends, is the very nature of western trading of gold. The mindset is to treat it as aconcept for making currency, not protecting existing wealth. The exact same mentality exists when one invests in the gold mining industry. Even when these players see the faults in the dollar, and loudly proclaim it's inflationary downfall, the largest part of their assets go into the business of
producing real gold in exchange for more of the same paper currency. It is a means to build wealth through paper asset appreciation, using the very financial system the "concept" says will fail without physical gold.
There are many mental angles and philosophical side steps one can take when understanding the above. But, in this concept lies the very basis of the flaw in the current gold market. A paper market, built upon world misconceptions of currency values and the historical reasons for owning gold. The present deployment of world assets into a paper system of valuations is liken to traveling a trail of no return. History has shown that the assets accumulated in this way will never be transformed into "the things of life"! The paper wealth you currently own is no where near the real value your currency says it is. With the above introduction, we have begun close to the end of this journey. In the upcoming chapter one, we return several miles to walk ground already well traveled. We will observe concepts on the right and the left, not discussed by other guides. The very sights that make such a trip, "worth wile".
" You will see this trail thru the eyes of history and feel old ways as new Thoughts!" Another
FOA
(( 1. )) Thinking Gold: A montage of views
-------- Pioneers:
"the first step is taken and thus defines the trail, a second step brings others and upon this journey we do now make sail"
"pioneers bring light, for directions long unknown, new spirits shine like stars, so bright the seeds are now all grown"
"quickly to the heights we climb, even the top of the mast,
for there I see the the end of knowledge, as it was written in the past"----------
To fully understand the past and present concepts of gold as money, we are going to have to use logic and common sense. In addition to these attributes, the ability to place oneself into the context of the moment of history will also be helpful. For people who demand solid facts and figures to make investment decisions, I submit; we are not trying to create reasons to invest, rather our purpose is to build a background for the understanding of these Thoughts.
In this light, all that read this will become the pioneers of new insights. Travelers in search of new vistas that best present the lost concepts of money. The real money that this generation has never known.
In our introduction, we witnessed two friends with a fence between them. Neighbors, betting on the "price direction" of gold. Not it's future impact on their daily lives or the use of gold as money, but rather how much currency would other people use to buy gold at any given time. Contrast that perspective to our concept of gold and you will see that a wide gulf of understanding stands between our "minds from different worlds".
-------- "They never said it wasn't money! Only, that they could no longer use it as money for their purposes" ------
The author of that statement is unknown, but it was spoken sometime after the "Smithsonian Agreement" of the early 70s finally closed the door on using gold as part of the world monetary system. The old Bretton Woods articles were then officially dead and the dollar would no longer
be a "contract currency" for the delivery of gold. Shortly after this event, banks, governments and large investment entities still agreed that gold was real money, but it should be held only in reserve. So, instead of using the dollar as a contract for gold, the world would substitute it as real gold in the currency system and thus sent it down the road of being "demoneyized".
From the 1920s to the 1970s (with striking similarities to today), gold loans between private and official sectors had periodically become so great that they simply couldn't be paid. The world economy was being built upon a debt of gold that no one could pay off.
Early on, it was agreed that because the repayment of loans in real money would break the banks, payments in newly created real money substitutes would suffice as gold. Over time, the reaction to this concept was easy to understand. Every thinking person knew that creating more (inflating) paper currency to cover existing debts would lead to devaluation's of such fiat currency. Therefore, we will all hold gold in reserve, while these bankrupt deals are worked out with fraudulent money payments. Money that was no longer "contract currency". Later, gold will be revalued upward to balance these newly created money substitutes. In time, all world currencies would finally be officially devalued against gold. That, my friends is why so many investors
continued to buy and hold gold as a long term savings asset throughout the 1970s. It was perceived that the world would eventually return to using gold as the money for payment of debt, instead of using paper money substitutes.
This perception was extremely prudent because history had proven, through the actions of countless generations that creating paper money to save governments and banks from bankruptcy eventually destroys the "concept" of using created money for currency. No one ever expected the general populous to continue using and saving "non contract dollars" for any extended period of time. Mostly, everyone expected the citizens to patriotically continue to use the "new inflated paper legal tender" as asset savings until price inflation exposed that they were sharing their life savings with the state. A process that would require five years at most. Never the ten to fifteen years that have passed. In the end, it made little difference how long it took, as the
adjustment in value always compensated for the inflation plus interest. The only investors that didn't think gold would outlast this new system, were the ones with a "short life of little history experience".
Again, from the failure of Bretton Woods to this present day, there is an ongoing event being further played out from the early twenties. By now (2000) the world can no longer use gold as money because to do so would require virtually every debt to fail. But, what is never considered is that a fiat currency system always "fails" the debts anyway. When the price inflation begins, old currency debts lose value at the same rate as the inflation. A history lesson soon to be performed today right before our eyes. We have but to watch and learn!
But, why do we nowhere read that it would be OK for these banks and businesses to fail, thereby allowing others to buy them up for pennies and save the system? Truly, this was the same real problem with the use of honest gold money as it forces "the important" people to fail. People of influence and prestige. Persons that will not allow their debt assets to fail, even if they gain only a few years. For them the world cannot function without an "expandable monetary system"! An ages old scam that is presented to each new generation as a new and improved currency system.
Custom tailored for their own technological advances and special time in world History. A special system that wil force the average worker to "share" in the loses but still retain this new generations wealth! With this system, any government can then borrow or print money to inflate (expand) the money system so as to bail out failing businesses and foreign entities. Does this sound like the
present IMF?
Yes, gold was our money back then (pre- 1920s). But, the bad business debts and wars of the world had "used up" much of those gold savings. Over time, the savings stock of much of the gold that every citizen, business, government and bank had, was borrowed to finance expenditures. It is imperative to understand that using the expression "gold used up" meant that it was "lent out"!
Of course, back then, even if gold is "lent out" it went somewhere, and from that new savings account (somewhere)it can be borrowed again. However, if the world financial strains become great enough, failing governments and businesses could not borrow gold at all. Therein lies the solid law of real money that scares governments today. We must totally fail and start again.
"It is to say, the gold you thought be in your bank, was not. In your account, the real money was lent and the credit claim represents your wealth" Another
It was here, in the 20s 30s 40s, in that context of time, that we witness the harsh reality that wars and governments are financed by borrowing real savings assets and spending them. When gold is used as money, it effectively demonstrates the real risks in lending ones life savings. That being: you may not get your money back. Is it any wonder that many families decide not to lend their savings? A compelling truth, that allows one to separate their money from the state and not share in the loses of others. In this light we confront the real issue of why so many governments always move from using gold as money, to using fiat currencies as money. It enables them to force you to lend!
During the time (1930s) that the American government called in gold from it's citizens, it would have been very simple for the US treasury to revalue gold upwards into the $300 +/- range (from the low twenties). Yes, many major financial players would have fallen from this dollar
devaluation. In addition, America would have lost much international prestige. However, the real productive assets of this great country would have been kept, "intact"! Those assets were much of the private savings of working people, and most of it was in gold, in their hands. Again, in that
time, it was the only money not lent out. This unprecedented action of devaluing the dollar would have clearly identified the loses from wars and poor lending decisions. It would have forced the large wealth holders and governments to lose assets in proportion to their size. As it was, the small citizens were forced to share in balancing the destroyed assets by turning in unlent gold.
History has shown that "some great leaders" have taken the honest gold "deflation" route when they are not under the influence of "money lenders". In these situations, the context of deflation is not the destruction of the money supply, which was gold, rather it was the destruction of the debt securities held as assets. Assets, due to be paid in gold, and cannot! Deflation, in these terms is a far different animal than what is discussed today! In our time, all currency assets are debt securities. That is why any form of price deflation or price inflation, today, will destroy the entire world monetary system. Forcing people back into using real gold, the only money that cannot be
deflated!
"It is the clear view for an honest eye, yes?" Another
The Bretton Woods system was bound to fail because the world governments continued to pursue a a strategy of saving the integrity of all debts. Even while holding an international pledge to use the dollar as a "contract currency" for gold as money. After the US had robbed it's citizens in the 1930s (of gold money) to help balance the books, the stage was clearly set to proceed into currency inflation. They continued to print "dollar currency contracts" as the dollar was a legal contract to deliver 1/35 of an ounce of gold. They did this knowing full well that this process would further demoneyize the dollar. The final destruction of Bretton Woods was but a further step to no longer using gold as money: not using gold because it's use required debts to fail. If the debts are "to never" go away, the currency substitutes must be continuously nflated. Thus, the savings of workers must be diluted in order to always save the system from default. As long as the next generation believes that their money assets are growing, they will accept the currency and the fraud it represents. The price inflation (that history shows will always follow this process), is totally dependent on how many currency units the citizens will hold without spending them! If the
world population can hold one trillion dollar debt units, and ten years later hold ten trillion without spending them, then no price inflation will show. However, even though each person thinks they have ten times more assets ( and are as much more wealthy), that wealth is quickly degraded if and when such currency savings are exchanged for real goods. Again, history shows that only the spending of a small percent of such highly inflated currency holdings will quickly jump the price of things to such a level as to revalue the remaining existing currency. It then becomes equal to real world buying power, not the fiction in your savings account. This, my friends is the realm of price
inflation and currency destruction! No currency has survived even a short time, once this spending process begins from the money inflation levels that exist today.
Now you have read some many views of the old dollar and gold. We will discuss these much further in other chapters. So, how do we (myself and Another) view gold?
I want to openly state that we have absolutely "NO" faith in gold! None! We do have "absolute", "unending" and "complete" faith in the judgment of our fellow humans. Because we travel this life journey as a society of like kind, our success over time depends on the ability of
people to deal fairly with each other. There is nothing to gain in this life but the honest productive efforts we bestow upon each other. These are represented as the goods and services each of our special talents can produce. We also believe that no one, in this life, should be cheated out of any portion of their savings and will act to protect themselves from loses. This act of protection can and does take many forms as the "lessons of a long life" become the "tools of a families defense". For most of us, indeed, money is "the" lifelong lesson.
I believe, that in the time just ahead, most people will use their natural good judgment and leave the "world monetary system". Mostly because they will begin to lose savings from price inflation. If the history of human kind is any guide, they will return to the safety of the past. They will use the only "conservative money" the world has ever known that cannot be deflated or inflated They will do this until the currencies are correctly revalued against gold. Gold will then become the de facto world money as currency will be used only for commerce and trade. It's
value in trade closely governed by it's exchange rate into gold.
To this end, we do not hold gold for any currency return. We hold it as money. No return of any kind is expected because it is not lent or invested. What is expected is a continuation of an open world market for the purchase of gold at lower paper substitute exchange rates. These values of world currencies, as expressed in gold will be governed by the "tolerance" of world savers to hold ever increasing amounts of paper currency as savings. In addition, the ability of governments to keep the market open with physical gold at lower prices are necessary for the
continued use of the present currency system.
It is our current perception that the performance of both of these functions is coming to an end as the dollar currency creation process has ended. As this progresses, the value of gold will be best judged by it's ability to purchase real things. Out of necessity, the failing paper market place presently called the "gold market", will price gold at ever lower values even as their ability to deliver gold is failing. This situation is not unlike the massive gold loans of years past. Using dollar "contract currency" as a proxy for gold, the world found out that the promise to pay at even $41=/- per ounce was a fraud! We shall see.
In chapter ((2)) we will build upon the workings of the gold market as it represents oil, the most strategic world commodity. Thank You FOA and Another
ANOTHER (7/11/99; 17:07:45MDT - Msg ID:8673)
Reply to: USAGOLD (7/10/99; 19:35:16MDT - Msg ID:8634)
Mr. Kosares,
The time from our thoughts has been long as your Forum does well for all. As you ask, then Intellectual our conversation will be.
In reply to your post I add. The sands have indeed moved a considerable distance, and we should not seek to survey it's new location. For it seems the same grains of sand, like gold, can have many owners at the same time. Better to stand your face to the wind and prepare for the next storm. It may be many seasons before the fury comes this strong again.
I suspect that many are unprepared for this gold market. They write in many places about it's falling dollar price. A common conviction all share that the dollar price will one day explode. True this be as the sun will rise. Yet, blind in one eye are they! For all paper gold will burn first
from a "destroyed world market"! First it be destroyed from a fabricated low price. Contrary are their paper portfolios to this wisdom of ages. Gold bulls, fully invested in securities that must have the higher currency price to return profit, even as history proclaims the dollar war that attempts to bring gold to zero. Say they, "All paper gold will burn, just not my paper, yes?"
The dollar, once the "contract currency" for gold at $35. Even the fool did know that $35 could not be right! Yet that paper market was accepted around the world as the true value and price for physical gold. Gold loans were outstanding for millions and millions of ounces from the
US treasury to foreign treasuries. Non payable then as they are non payable today. The dollars Europeans held were as the same as the leased contracts we see now. Part of the financial landscape that provides liquidity, liquidity that saves the system. Never to be paid, but still accepted, then and now! The trading of old dollars represented the low gold price that closed mines and broke markets, yet the fraud did continue for some time.
Today, the gold sand blows from Central Bank to Central Bank, and is loaned many times. It has become the "fractional reserve" currency that we dare not speak of, but have it we must. The BIS and the ECB now hold the London market in the palm of their hand. And this old British
market holds the fate of the dollar in it's hand. Truly, if no fraction of Euro gold is forthcoming as reserves for the Bullion Bank market, then it will become as only a "wager" arena.
As the old dollar was once a "contract currency" that everyone accepted as creating the $35 price of gold, we soon found that value was a fraud. Today, it is gold that has created the value for the dollar. A value to be lost as this currency is put to rest in the pages of history.
At all costs, England will save all of their houses possible, before the Gold market is destroyed. We may see gold at "any dollar" price. Every entity in the world that trades gold, will have some loses from "non delivery" as this work is done. Some major gold mines may see their shares at "0" before this is completed. Physical gold will become "almost impossible" to obtain on your "legal"
market. I suspect, that the "legal" trading of gold on the Euro market will find the dollar buying 1/
10,000 of an ounce (or less), in time.
Yes, my friend, this "lost land" does hold much control of the currency price of gold, because the currency price of gold will now have no influence with the House of Europe. I believe oil wealth is leaving the Pound for the Euro. If oil do not join the EMS soon, they will suffer. If England stays with the dollar, they will fail.
My words to you,
Another
SteveH (7/16/99; 4:03:16MDT - Msg ID:8964)
ThaiGold
Good sense of humor.
Re: your leasing post. Generally, I agree. I think when making a point about dangers of gold-leasing, the part about gold-property leasing for mineral rights, although, valid, is not poignant. It has relevance to gold-mining operators but not MA and PA. Now, your gold leasing explanation itself was on the mark. I would have to re-read it, but I did see a point about Comex not having to deliver. It is my understanding that deliveries occur every day and in fact they are being made. The problem with a COMEX delivery is it takes a while. To my knowledge they don't give a hard time about it other than make you wait a bit (I have heard six months). So although it can be used as a delivery method, it is not efficient.
Secondly, the Central Banks (as a rule) act as a guarantor who backs up a Bullion Bank with a promise to make good on their gold loans. A bullion bank only need make sure they can deliver if they have to, but they will get gold from the market or another bullion bank. By obtaining the backing of the CB, the bullion bank is free to make trades with more gold. Since much of it is for hedging from mines, and the mine is the source of most deliverable gold, with the CB guarantee, the bullion bank can use mines as a source of gold but not more than the production amount. It appears to be the period of time that is being relied upon from the mines by the BB's -- up to 10 years of production is now hedged. Now here is what I think has gone wrong. The mine sold forward up to 10-year production. This allows the BB to sell out gold in the amount of 10-years production. It is back by the CB. Since most of this gold is used in derivatives and counter-party risk, physical delivery wasn't an issue until recently, as a BB could borrow from Peter BB to pay Paul BB. Now the demand for physical is increasing, as more and more dealers and brokers, and countries are taking delivery. Since the only gold available is in a CB or the production of a mine, the more physical gold is demanded to satisfy any futures contract or gold deal option or derivative or demand, the fewer places gold can be had. Some of these BB's are rolling over their contract in hopes of not having to deliver or ever having to deliver.
Add to this, the thought that certain Mid Eastern countries are buying up these contracts for repayment of mining company gold in gold. As the production is mined the country(ies) then receive the gold. In return for receiving the gold, they funded the BB with oil money. But now that physical demand is increasing, I think some of these countries are concerned that others may make a claim to the physical gold from the mines. I believe that this concern has prompted a country(ies) to ask for settlement of some payments in gold (as a show of faith that the gold will still be delivered). It must be the country(ies) didn't want to wait six or more months, nor to affect the price of spot, so they went after the BB to get the gold, who in turn went to the Bank of England and said, "We's got to deliver 25 tons of gold, you said you'd back us, that's why we pay you the money, now we are in danger of defaulting here, help us out, ok? Please?" The BOE probably figures that the ripple effect of these one or more BB's not being able to deliver will cause a lack of confidence in the paper gold markets, so they are obliged to deliver in a way to not force further demand of gold, thus the dutch auction method and the secrecy and the limited subscribership. If they admitted that the reason they sold their gold was to prevent a BB from not delivering on a gold demand, the world would know that gold is in short supply. This would further increase demand for physical delivery. Since it would take 10 years to deliver some of the gold, the price would be forced higher thus spiraling out of control.
In essence the BOE move to auction gold bought time, keeps the dollar at its position of strength and the pound too. I believe the theory of CBs must be that if we can keep the dollar strong, gold down, and let it be known that leasing needs to stop, then they may be able to unwind some of the positions and turn things around. My fear, and I believe most peoples fear, is that it can't be unwound without major harm to bank and market. As a crashing market and skyrocketing gold price are politically unfavorable, I believe the stalling game is in place.
I believe some of the CB folks are well-intentioned and are using what leverage they have to hold it together, but as you can see by ORO's post earlier that this is becoming increasingly more difficult.
Since, as I have previously stated, their is a Money clash between the Euro and the Dollar for reserve status, the trump card to be played in all of this (and here is what Another and Friend of Another (FOA) come in) is the following: A/FOA claim the Euro will become the payment media for oil. It seems that even as we speak, this is coming closer to reality, because NOT ENOUGH GOLD exists from the mines and the CENTRAL BANKS don't want to let it go. So, the only other alternative aside from accepting dollars to settle the gold debt is to settle in Euros. Check.
Gold and the Euro, that is where it seems to be heading. Since we are but bystanders all we see are the arms and legs in the fighting dust ball. We don't actually get to see the gory infighting and negotiations. Problem is the tickets to this fight have been free to the Consumer (a gift in the form of a rising stock market) because goldbugs paid for their tickets with their money). Yes, the gold lending, hedging, and derivative market money made its way into a behemoth stock and bond market, which has been our prosperity for the last four or five years. Throw in a twist of yen-carry trade, which was much of the same with the YEN as it was with gold, and you can see why we have a stock bubble and a beat up gold market.
SO, HERE IS THE BIG CONCLUSION: BOE AND IMF GOLD ARE DESTINED TO BAIL OUT BULLION BANKS TO MAKE GOOD ON GOLD DELIVERY CONTRACTS TO OIL COUNTRIES BECAUSE ENOUGH GOLD DOESN’T EXIST OTHER THAN IN CENTRAL BANKS WHO DON’T WANT TO LET IT GOLD. NO BOE GOLD SALES; NO IMF GOLD SALES, EURO WINS. CHECKMATE.
Euro was introduced with 15% in gold reserves.
ANOTHER (7/16/99; 6:22:04MDT - Msg ID:8973)
Gold
SteveH (7/16/99; 4:03:16MDT - Msg ID:8964)
Mr. SteveH,
Excellent post! My good hand to you, my friend. In the next day or two I will discuss your Thoughts in public, and a good talk we must have. Mr. FOA has not sent his next chapter for my read, but the time is now for further discussion. Good are these days in gold. The exchange rate
continues as expected. A fine rate, that is for the benefit of all. Thank You Another
ANOTHER (7/16/99; 6:43:05MDT - Msg ID:8974)
Thoughts!
I add also:
Mr. Aragorn III and Aristotle, your writings are to become the rock of this forum. All of us may build upon these foundations of truth. Over time, every one here will become "pioneers" of these new concepts of "modern money". Modern money that will use a free market for gold. Another
ANOTHER (7/17/99; 14:03:07MDT - Msg ID:9054)
THOUGHTS! OIL, GOLD, DOLLARS
To ALL:
The thinkers here have some very interesting posts. I will be reading and writing for a time now. With the help of FOA, some good discussion should prevail. Another
ANOTHER (7/17/99; 15:42:31MDT - Msg ID:9057)
THOUGHTS!
Mr. Aristotle,
Your book of posts, "Life on Earth: Gold and the Free Market" is very well done, indeed! It will bring forth much use and discussion in other chapters (Gold: Saving Real Money In A Time Of Transition) from FOA. In the interim, I will touch the many points you have made "so well".
Another
ANOTHER (7/17/99; 15:44:38MDT - Msg ID:9058)
THOUGHTS!
jinx44 (7/17/99; 13:31:51MDT - Msg ID:9051)
Mr. jinx44,
In your post, we should consider using a much higher currency price for gold. If it does become necessary to demand a gold based evaluation for oil payments, the number of gram per barrel would be very small. Remember, the purpose is not to control the commodity use of gold,
rather it is to implement the monetary usage of real money. In the real world, all money does circulate to buy things and does not stagnate in accounts to monopolize value. The flow of gold in this new era would truly occur in a free market. A new market provided by the demand for oil!
Not a new concept, my friend, only a new evaluation of the worth of domestic currencies as reflected in real things. Even today, gold does participate beside the currencies as money. However, today it's price as a money continues to reflect the need to "prop up" currency values
already lost to debt deflation. A process that was expected and ongoing. The final destruction of the "reserve dollar" will not initially be shown as an extreme dollar price for gold. Understand that the real dollar implosion will be manifest in it's inability to honor "gold contracts" and "gold loans". Just as did happen to the "contract currency" this dollar once was. It only failed when it could no
longer honor the $35 contract to deliver. The present reserve currency is not "backed" by gold as it may not default twice. However, the "fractional liquidity" of gold has created the assets, as "gold loan" paper assets "marked to the market" do provide backing. Backing needed to balance the financial books. The breaking of a "contract currency" in the 70s was but a bookkeeping entry, where this new default will be of real terms. Such will be today as all forms of "gold commerce" as denominated in dollars is put to fire. It is, "the" very reason nations of resource wealth do not invest in "gold in the ground". Our wealth is already under the earth, in liquid form (real and financial meaning)! Gold above the ground is the real money for the future.
Why will gold paper be honored for special resources?
More later
Thank You Another
ANOTHER (7/17/99; 20:27:12MDT - Msg ID:9079)
THOUGHTS!
canamami (7/17/99; 10:19:16MDT - Msg ID:9043)
Mr. Canamami,
I do ask, what in this life can be proven for you? Does one not fall asleep for fear of awakening into a new day of unknown? Without proof, a new day may not arrive.
Many expected outcomes are born from the understanding of social interactions. If the king declares all thieves are to be executed, one does understand that death is to befall an apprehended pickpocket. It is the unproved, but "expected" result, yes?
Such is the case as one evaluates the world political game. A game we play with many kings. I place my wealth with respect to the past actions and present thoughts of current rulers. Seldom does one have the luxury of experiencing the actions of leaders, prior to the events that trigger said response! I would bow low before such knowledge!
Truly, $280 was an inflection point that would, indeed, have ended this present currency system as it is known. An action to have been taken, in another time and place, for a
predetermined event. Without the birth of the Euro?, as the expected action, "the purchase would have been done". For yourself, at that moment, it would have been proven. Yet, perhaps unprepared were many for such an outcome.
The "currency war" of Mr. SteveH? The lines are clearly drawn, the troops deployed and smoke in the field, but no proof is seen by many? As said before, I suspect most of the western gold investors are not of a portfolio position to weather this storm. They need evidence that this plunge in dollar gold price marks the end of this currency as has been known.
Your World Gold Council openly presents that over the last ten years only some 300 tons (net) of gold are sold from the Central Banks. That is 30 tons (average) per year, my friend. Yet everywhere, I see posters such as Mr. H. proclaim how these banks are filling the public deficit for physical gold. World investors accept the paper liquidity this gold does offer. Yet, fail to understand that this new gold is owed to someone at a price that can never be delivered against.
Sometimes proof comes as mountain air, so clear and clean it cannot be real!
Thank You Another
ANOTHER (7/17/99; 21:17:11MDT - Msg ID:9081)
Thoughts!
jinx44 (7/17/99; 15:52:06MDT - Msg ID:9059)
Mr. Jinx44,
It would require only one large producer to demand a small amount of gold as payment. Even the smallest of payments would introduce gold as a functioning currency. Every other seller of oil would then ask for this payment method, as a higher price it would present. The draw upon
physical gold supplies would be very little, as the intent is to "transition" gold into said "functioning money".
At present, gold is used as an "asset currency", for the addition of liquidity. A process that builds upon the dollar use in trade. It is (and has been for some time), as you say, "the one way street of no return". Always lower gold for lower oil to build economy. With the Euro intact,
Europe does no longer need lower gold, as oil will join the EMU in fact or in practice from the use of their currency in settlement. With said intentions, no longer do the ECB lend gold.
It is now the obvious change of position, as oil prices do rise as gold falls. The falling gold price no longer represents the past intent of payment for oil. Today, the dollar world does war against gold without offering much real metal. It seems they do reach the end of this "one way street". The only outcome can be the destruction of the dollar gold market thru a "low price with no delivery".
Truly the BIS/ECB will stand ready to create the new "Euro Bullion Market Association" (EBMA). The present rising price of oil, so soon after the EMU does indicate this new
expectation.
Thank You Another
ANOTHER (7/17/99; 22:18:17MDT - Msg ID:9083)
THOUGHTS!
beesting (7/17/99; 18:20:45MDT - Msg ID:9074)
ANOTHER/FOA
Would be very interested in your response to Mr. I.V. Holtzman's 3 posts yesterday 7/16/99--msg. #8986--msg. #8987 and msg. #8988. He makes many valid points, that seem to
be the majority view, here in the western world. Thank You......beesting
Beesting,
Mr. Holtzman does indeed hold the secure western view. His support is found in the history of the dollar, as it's short life applies to ones assets. His last paragraph:
"The next few months, and probably the next few years, are going to be horribly demoralizing for gold bugs. But don't panic and sell at the bottom. Hold onto at least some of what you already own, if for no other reason than that selling it all now is exactly what "they" want you to do. And hold shares in the big gold mining stocks as well as holding coins. True, if Another proves right, the shares will be worthless and the coins will shoot for the stars. However, if Gordon Brown proves right, the coins will be permanently halved in value but the stocks will more than
compensate for that. Someone who owns both will have a small chance of watching both soar, a decent chance of having one soar more than the other falls, and a small chance of watching both fall. That's why you should own non-gold assets, too. Remember, the best revenge is to be
diversified enough so that only a small part of your wealth is having a bad year."
------
I submit that every thing upon this earth is the potential "asset" of an individual. Social order requires the diversification of ownership and use of these "assets" to promote a reasonable life thru trade and commerce. The interaction of this commerce requires "honest money" with a
"proven" history of "use" that allows for a true valuation in trade.
When an individual offers that he is "diversified" in holdings for the purpose of only some of it having a bad year, I agree. However, I ask, how will you assess your assets when the currency is changed? History has shown that society destroys government paper currencies when the debts
denominated in them can on longer be paid with honest daily work.
In this light, a bad year comes from owning assets that derived a high value solely from their association with the currency. This is evident in the wealth of most of the western world.
It is to say, your wealth is not as much as your currency say it is! Another
ANOTHER (7/17/99; 22:20:58MDT - Msg ID:9084)
Return!
I will return a time later. Thank You
ANOTHER (7/18/99; 9:31:04MDT - Msg ID:9099)
THOUGHTS!
SteveH (7/18/99; 6:10:38MDT - Msg ID:9091)
Mr. SteveH,
Your words: "gold up -- gold stocks up -- sell gold stocks -- get dollars -- pay off mortgage, cars, credit cards and put kid through college, and buy gold at 10K per ounce."
FOA did demonstrate in his "book of Posts" how two neighbors bet on gold. In addition, I add, one must make the bet on the survival of the dollar first, before investing in the gold industry.
The perception of most have been wrong about the dollar price of gold. All increases in price from the 70s thru today, were the result of "foreign" holders of dollars bidding for gold. IMF / Dollar nations did only supply gold at ever higher prices. A process that quickly stopped the
bidding before it became "out of hand". In such environment, investors projected this action as "normal" gold response to inflation. Modern analysts did now considered that gold "the
commodity", today, has the "natural worth of $400 to $500. To this day, all (westerners) invest in gold industry and wait for this "natural trend" and "tendency" to reassert itself. A poor conclusion that has lost the wealth of many.
Some also expected (correctly) that the dollar destruction would bring explosion in gold price. What was not understood in this perception, was that entire world gold market is based upon dollar system and the liquidity it provided. The destruction of this reserve currency would first bring the total loss of confidence in the dollar pricing of gold. The "setup" of a run by official Central Banks from dollar reserves would be preceded by total "non support" of the London Gold Arena". In such a process the paper price of gold could go to $10. Yet delivery would be
the "joke on the holder" of such paper. Just as the old dollar "contract currency" of Bretton Woods was also "joke on holder". However, today, most gold paper holders are "Western in nature". History in reverse, yes?
There is enough gold in world market to supply some coins. Even some paper is delivered to, if asked. If BOE, IMF and Swiss supply, some Bullion Banks will be only partially "made whole". How long will paper holders stand with "gold loans" as the new "contract currency"? I suspect a further increase in oil price will demand delivery of gold.
My friend, do you expect the mining industry to continue in business when they have a world market for gold at, perhaps $100? If London Bullion Houses cannot deliver to total conversion of paper to gold, would not their world market price, a paper price, be discounted to said $100 or
less? Just as a bond is discounted from "par" as it ability to pay is questioned, so do we witness the falling price of paper gold. The same world paper price that every mining house must sell into. A perception many have not known, yes?
The price of gold to me is an exchange rate between currencies. The dollars I hold are worth more as the exchange rate falls against gold. It does balance against the "perceived" less value of gold already owned. The difference between you and myself, is that I feel the dollar will soon have no rate of exchange with gold.
As one sold old Russian debt into a rising market, so do I sell dollars into gold. Like the dollar reserve of old, the Russian debt is no more!
Thank You
Another
SteveH (7/18/99; 10:33:37MDT - Msg ID:9100)
Another
Another,
You provide much food for thought.
Here is a summary of your point as I view them:
Dollar/IMF/BOE digging a hole by staving inevitable inability to deliver against paper gold contracts at world future exchanges.
Most Western countries, led by the BOE, the Swiss, and perhaps the IMF and its represented countries, are the ones entrenched in paper gold leasing and loans. These will be defaulted, but not before driving the price of paper gold to possibly $10-$100 per ounce.
As paper price declines against dollar, physical gold demand will increase even more at lower and lower prices until it is apparent that no physical gold can or will be delivered at such ludicrous prices.
Then, the dollar will be discredited (as will the British pound), as it no longer can be used to buy gold: no one will accept it.
Gold mining stocks and perhaps even silver stocks traded in dollars will flounder because their perceived values will follow the price of gold downwards, such that they will be had for pennies on the dollar (an occurrence that is now in progress mind you).
The EMU is prepared to step in to offer a true and fair-priced market in gold in Euros, which will launch the Euro as the world Reserve Currency, forcing the US to convert its dollars to Euros at an increasing exchange rate, thereby devaluing the dollar and launching the US into major economic upheaval.
Somewhere in all this oil will become fairly priced in Euro's but exorbitantly priced in dollars, if available at all.
You defend the $280 price you predicted early by the event of the Euro's actual introduction on the world currency market. Had that not occurred on time, the oil countries or country would have demanded a small amount of gold with each barrel of oil.
Finally, you believe that London, the Swiss, and the IMF will permit the dollar price of gold to go as low as $10.00 as they attempt to defend the inevitable.
Have I missed anything?
Comments: I believe your perception on the sidelines of the greatest chess match in history is superior to most, as you show an ability to play several moves ahead of others. Being an American, and a proud one, I hope that our leaders make the right decisions to protect our way of life but at the same time be fair to those who you have pointed out have been (in my words) screwed by the dishonored 1971 gold debts. I believe I sense a certain animosity and a certain predilection that you don't or won't see this happening again. In fact, and as I have stated earlier on, I believe you believe the pieces of the puzzle are in place and their for all to see and that has been your mission to expose or to teach those in the forum of this. If it weren't for you, most would have been blind sided by such moves as the BOE auctions, the IMF gold sales, and the Swiss need of selling, as the reasons they have given are not honest reasons. Although I can understand this, I do not condone and in fact am disappointed by their lack of forthrightness.
What each of us chooses to do about your words in on each of our shoulders. I hope and pray that we do what is right. Thank you.
Steve
ANOTHER (7/18/99; 17:24:36MDT - Msg ID:9119)
THOUGHTS!
SteveH (7/18/99; 10:33:37MDT - Msg ID:9100)
Mr. SteveH,
I read your post and find agreement with most of these words. Indeed, your perspective comes from: "Being an American, and a proud one". A same view and feeling you do share with FOA, for he is also, as you say, "born in the USA"!
You write (analyze): "Most Western countries, led by the BOE, the Swiss, and perhaps the IMF and its represented countries, are the ones entrenched in paper gold leasing and loans. These will be defaulted, but not before driving the price of paper gold to possibly $10-$100 per ounce."
You have read my post, yes? #9099
Again, in this comment (analysis of my thoughts), I note your western perception of these countries now "driving " the price of gold. I think, one should observe that this possible pricing level is achieved from a lack of "confidence" in the gold market to honor it's paper! My friend, it is the "buy side" that has backed away from this arena and forced this new evaluation. They withdraw, not from want of metal, rather from no need of fraudulent contracts. Mr. Canamami once asked, in a recent post, " what is holding up the big players"? I add, indeed, at these levels should not they be buying hand over the fist? (more on this in next item)
A true market must have a buyer and seller of good strength, to provide the fair value. This current market has both, and the value is "fair" in light of paper product offered.
You write (analyze): "As paper price declines against dollar, physical gold demand will increase even more at lower and lower prices until it is apparent that no physical gold can or will be delivered at such ludicrous prices."
The demand for physical gold has already taken all supply for some ten years out and more. Only, at present, this demand is manifest in the holding of paper gold. The realization that this current falling price will create tremendous demand upon what little "spot" physical there is, will ignite a rush to convert existing paper gold into real gold. A rising oil price in the face of falling gold may generate this fresh buying and expose this false market into action. To this end, your present gold market system will fail.
I offered to continue my Thoughts from an earlier post, with: "Why will gold paper be honored for special resources?" This will explain why "gold paper" of oil will be honored at all cost.
Thank You Another
ANOTHER (7/18/99; 17:27:35MDT - Msg ID:9120)
THOUGHTS!
koan (7/18/99; 14:55:23MDT - Msg ID:9108)
Mr. Koan, Your words: "I believe we are witnessing the beginning of the industrial revolution part II, with the US the main beneficiary."
Please expand your thoughts as they are interesting to all. Understand, that I offer my Thoughts for any mind that thinks. Do find the fault in these writings and pursue the "untruth" you perceive. Draw your sword and slash with power. For only in the "conflict of thought" will fact prevail.
ANOTHER (7/18/99; 18:52:35MDT - Msg ID:9130)
Thoughts!
Mr. Jade, to reprint your post:
Jade (7/17/99; 17:52:07MDT - Msg ID:9071)
Another look at the Gold to Oil Exchange rate. I have not posted these calculations for a great while. The numbers are becoming rather dramatic.
Gold/Oil Exchange Rate. These calculations are approximate.
Oil in USD per Barrel [Avg. for Yr]….Date….Gold Price [Avg. for Yr]….Gold/Oil Exchange Rate [Barrels of Oil per 1 OZ Gold]
14…..1988…436…31.1
15…..1989…381…25.4
17…..1990…383…22.5
15…..1991…362…24.1
14…..1992…343…24.5
13…..1993…359…27.6
12.5.. 1994…384…30.7
13…..1995…384…29.5
14.5...1996…387…26.6
14…..1997…325…23.2
13…..1998…300…23
11.5..Dec98...297…25.8 Averages for Months
12.8..Jan99…287…22.4
12.3..Feb99…287…23.3
Event [Gold manipulation downward and rise in Oil
15.25.Mar99…282-284…18.6..18.5
15.9..3/6/99…..279…..17.55
17….3.31.99….280…. 16.43
19….5/2/99…...286….15
20….7/17/99….255….12.75
Average is 21-1 for 1968-1999
Average for 1986-1999 is 26.5 to 1.
We are now at 12.75 to 1. This has been a dramatic movement over a very short period of time. Oil has been in the position for a number of months to acquire Gold for Oil at an absolutely favorable rate, which has only occurred before during a few brief moments over the last 30 years. What is Oils plan for Gold?
---------------------------------------------------
Mr. Jade,
Thank you for posting these numbers.
A new trend of a rising dollar price of oil may destroy the "dollar gold market" with liquidity. All past oil for bullion deals now become a stronger asset for Euro banks to hold. This improving ratio does speak much for the integrity of these loans. I should think that $30 oil will "gold plate" these assets for "preferred delivery".
For some time I have asked persons to consider that all gold paper will burn! The investment in physical gold by dollar holders will collect a lifetime of value. A value hidden in the dollar price of gold! Today, all "gold industry" paper is on fire, for all to see, as the present system for trading gold falls into failure. Indeed, $10,000 gold may prove a "contradiction" that cannot be true, yet
does exists in the future. In the past, the thought of such a price of gold did present the "irresistible" urge to buy into the industry, this "Dollar based market represents". Only greed can explain the need to gain more than the value "real bullion" will one day present.
Perhaps, it be the same "ages old" human emotion that forced America from a contract with gold! A contract with greatness, that now passes on to others.
I will be gone for a time!
Thank You Another
ANOTHER (7/18/99; 19:39:15MDT - Msg ID:9138)
Last Thoughts!
The Stranger (7/18/99; 18:47:50MDT - Msg ID:9128)
Yet ANOTHER New Gold Market?
and
Leigh (7/18/99; 18:50:38MDT - Msg ID:9129)
Mr. Stranger and Leigh,
Many do often find that my words do not express the Thoughts I wish ones to consider. My intent is to promote "consideration" of these thoughts and the events they propose. Also included in my post was this: "You will soon see gold begin to strengthen the Euro as the dollar continues into a mighty fall.". The collapse of dollar and dollar gold market is the event that begins this process. Also, expressed in this: "The order of events will show that the dollar will now fail, first, then all will race for Euro."
However, the context was not well presented. My effort was lost. Some find pain in these words even as others find direction. My wish is that all will find understanding in their own way.
We watch this new gold market together, yes?
Thank You Another
FOA (7/19/99; 6:17:09MDT - Msg ID:9155)
A lot to read!
ALL and SteveH,
Rereading what Another sent this weekend and all the other posts. I'm going to have to think about this as some new thoughts are coming into view. Am still working on Chapter 3. This post was sent to me from Kitco (interesting?):
Date: Sun Jul 18 1999 05:02
mozel (@SDRer @a new currency system, built on a world market price for gold"
FOA) ID#153102:
Copyright © 1999 mozel/Kitco Inc. All rights reserved
A Sovereign can stiff other Sovereigns if it's willing to risk war. The United States Government has stiffed all other Sovereigns since 1971 when it reneged on its gold contract. When USG reneged on it gold contract, settling current account deficit on a country to country basis broke down. This was not new. But, it had never happened before with the official creditor nation. When it happened with lesser Sovereigns, they were invaded and the debt was collected by soldiers. For example,
Mexico in the 19th century, France the collector; Haiti in the 20th century, USG the collector. What is the solution ?
The solution is to require international trade to settle in gold so no deficit can accummulate and so the war power of the Sovereign is removed from the commercial equation. This is the BIS part of it. You can't securely and conveniently settle internationally without BIS's participation as neutral third party ( "moneylaundering" is how the drug trade does this ). Gold will assume the role that the reserve account has in the Federal Reserve System. The settling party's CB or the party itself will have to have gold on deposit to complete the transaction, I suspect.
Now, consider all that part of the world whose unpayable debt is denominated in greenbacks. Further, consider the proposal to sell IMF gold to buy US bonds to relieve their debt burden. It's a mighty small carrot, isn't it, compared to the carrot of having your debt devalued by a revaluation of gold against the dollar in the numbers from $6K per oz to $30K per oz which FOA is speaking.
As I see it, countries are going to have to step to the mark and declare their currency's international trade value against the gold pricer ratio set by the Euro. China is pondering on this.
China and Russia now buy gold from domestic mines with local currency. India is moving to buy gold with local currency. In case this is not familiar to you, it's the FDR official local currency POG money system.
"
"Currency system ?" "World market price ?"
Observations. Currency system means international monetary system means IMF.
Or it means a new principle for currency.
World market price means gold is the pricer. Gold is now the pricer in the Euro.
There is also a presently inactive gold as the pricer ratio in the Articles of the IMF.
The alignment of these two ratios would create a world market pricer. Can you see
this as a possibility from your window ?
The other declared currency is the dinar. What is the relationship between the dinar
and the Euro in terms of gold grams ?
From here, it's starting to look like what the POG is in London and New York is purely a problem for the anglo-american bloc.
A Tribute to the Thoughts of Another and his Friend
"Everyone knows where we have been. Let's see where we are going!" -Another
Subscribe to the Speakeasy
$150.00 USD for 6 months
Paypal Account Is NOT Required - Just email me at fofoamail [at] gmail [dot] com if you have any problems
BullionStar.com (Singapore)
BullionStar.co.nz (NZ) BullionStar.com/?r=1025 (Shareable link)
Donate
Email Contact Info:
If you'd like to read more…
- It all starts here!
- Then here
- Here's more
- And more
- Some highlights
- Linkable ANOTHER (THOUGHTS!)
- Linkable Gold Trail
- Linkable regular forum 1998-2007
- Alternate regular forum archive
- Linkable Kitco forum 1997-1999
- Red Baron's LBMA EXPOSÉ
- AFTER (THOUGHTS!) 1-2 PDF
- AFTER (THOUGHTS!) 3-5 PDF
- My blog in portable PDFs
- Glossary of some acronyms I use
- POG for buyers and pot watchers
Total Pageviews
Evil gold hoarders, jerks, time misallocators and brainwashed cult members:
Disclaimer
The above is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the author alone on the current and future status of the markets and various economies. It is subject to error and change without notice. The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.