For those who have never heard of FOA he is one of the most respected internet posters on the topic of the gold markets in the universe. In my opinion he is the best. Andy, What do you think of his latest post below?

Mike

FOA (10/09/99; 19:21:08MDT - Msg ID:15945) Where gold is now going, no other investment can follow! http://www.decisionpoint.com/DailyCharts/00goldDXY.html Tomorrow, this trail will begin an incline that few of us will make. After we make camp, consider this before the sun rises on our worst expectations:

Leigh and ALL, I just had a glass of wine to quiet my apprehension of what is to come. It is my belief that the "Gold wars" are about to begin. Please consider this "a very open viewpoint".

I think it's now to late for the dollar to "initially" surge with gold during this crisis. As an old, indebted currency, the dollar will have to share any flight to quality with the Euro. I say this in the same light that Michael stated in his: USAGOLD (10/07/99; 15:18:27MDT - Msg ID:15788) The Monetary Triangle.

------------From reading your most recent thinking as summarized in Msg#15713, I get the distinct impression that you believe that the Europeans have mandated their version of closing the gold window, thus making gold dear for any purpose, the settlement of gold carry trades being the most severely affected. Some have said that this event of September 26th by the European central banks ranks in the annals of monetary economics with Nixon's closing of the gold window in 1973 and letting yellow metal seek a free market price. Following the Nixon decision, we had ten years of dollar devaluation. On the other hand, the European closing of the gold window could lead to ten years of euro appreciation against the dollar -- the exact opposite of the 1970s U.S. experience.-------------

The ECB/BIS declaration was little less than an announcement that the dollar will now have to stand on it's own. The implications of this are awesome for all of us! Look at the link above and look slowly at the charts. I expect a type of currency war to now begin. No, not one of competitive devaluation's or tit for tat interest rate changes, rather a war about "long term viability " and "ability to weather the coming storm". The rules of engagement have changed and now include "real reserve values" in the battle. Truly the race to increase the value of gold has started. Review the words of Mr. Greenspan as given in PH in LA's 15926: (Note: There was rumour in Washington in the spring that the major powers were rethinking gold. I think PH's quote was made in that time!)

----------Greenspan told Congress then: "We should hold our gold. Gold still represents the ultimate form of payment in the world. Germany in 1944 could buy materials during the war only with gold. Fiat money in extremis is accepted by nobody. Gold is always accepted..."--------

If one stands high upon a hill and views the future battle scene, we wonder how in the world the hapless gold shorts could have wondered into the middle of this. Couldn't the entire gold industry see that this could not end without an asset war? They will be cut to shreds in the early attacks. Not unlike this first shot fired. Mines, the finance houses that support them, dealers that must cover their risk,,,, all of them must feel the rumble of heavy CB armour as it approaches. Make no mistake, the valves that control the flow of lent gold "guarantees" are being closed. In addition, from what I have just understood, I now fully well expect we will not see the 2,000 tonnes of gold sold into this coming crisis. In an earlier post I felt they would at least stay with the spirit of the agreement and sell some of it. The hard line I hear now is "damn the implications"!

The thousands and thousands of contract derivatives that now are outstanding today, cannot possibly be covered now with delivered gold at any price. This situation is going to "seriously" escalate.

When people say that they will gladly sell gold at $5,000, I counter that they must have never experienced war, "up front and personal". Remember, battles don't become "HOT" because everyone is "gladly" selling their "now in demand weapons" to the highest bidder! Gold will cross $1,000 because everyone is buying it at $1,000 and asking for more. Trust me, when your neighbours are buying 1/32 ounce wafers with whatever money is in the house, you won't be unloading bars to buy a new house. Nor will any strong spirit trader be selling short a ten lot on comex ! Believe it!

This same dynamic is not lost on the human controllers at the CBs. Yes, they breath and feel the same media vibrations you take in. During the events directly before us, any and all contracts will be swept along on this raging river of economic turmoil. Be they contracts for, gold, currencies, bonds, stocks or commerce, all of them will lose credibility as the worlds massive trade settlements shifts from one medium to the next. Just as in Greenspan's line of thinking, when the armies invade the grab the rare coins, art work and gold. Forget the currency!

As these events progress real assets don't devalue. No, just your ability to profit from their ownership comes into question. Like this: If a forest fire suggests that all forest owners may be at risk, then any gold miner will share the risk of his "rooted gold" being burned also. The currency that is at risk of change today is the dollar. Therefore we can be assured that any company that owns what has become a "currency war weapon" (gold) will own "questionable assets", especially US assets. With England now running into Euroland, the Anglo/Euro mines in South Africa may be less in play? The risk of a plunging American stock market is enough for US mines without the influence of the "gold money" issues that now impacts the dollar. Outside of the "Gold Fields" play for bullion being in the best interest of all bullion owners, I feel all world mines are at risk. However, for ones that must hold a portion in these asset areas, consider what I have said. Choose your holdings well!

All of this sounds a bit extreme, yet what I see directly ahead is extreme. Look again at the above chart and follow the gold lines. Unless the Dollar/IMF forces place several billion dollars of margin at risk to sell tens of thousands of contracts, gold just may run off that chart in the next week or two. Or less! Truly, the world has changed and I believe most of the gold industry is now caught up in this financial change. A realignment of epic proportions. As of today, I see the money for rescue is not coming. This market is about to be fed to the lions because this battle involves something much larger and important than the industry. The new gold valuations alone will negate the need for fresh supply and therefore lower the strategic need to maintain the owners value in these assets.

In addition, the two engines of wealth that were so long the saving force in the American economy are about to react to this major change of world value perceptions. Watch the chart above as the US stock markets parallels a failing currency. The next month or so may indeed make history. We shall see.

PH, you are right, in time perceptions of real events overcome a persons fear to react.

In time, """all true journeys eventually converge onto the same curve as they approach their destination"".

Rest well my friends, soon we will run like the wind blows! FOA

-- Flierdude (nospam@spam.spam), October 10, 1999

Answers

I don't have the slightest idea what he's saying here, his words are so coded and veiled.

-- Mara Wayne (MaraWayne@aol.com), October 10, 1999.

Hwe is saying that there is a major financial battle between Europe and America. It is all about what should be the reserve currency of the world. Currently it is the dollar. When we import, we get to pay in dollars, which are held or spent in our stock market. Either way, it is painless to the US economy.

Europe has introduced the Euro, which is nicely backed by gold. America has the dollar. It is backed by a great stock market (which is about to tank) and by the size and liquidity of our national debt.

Rather than look just at the price of gold, watch how Europe and the US are jockying for position. As the price of gold goes up, it is good for all central banks. Eventually, one currency dollar or Euro will emerge as top dog, the one that every nation wants to sleep with at night. If gold becomes central and defaulting debt bad, then things look bad for the dollar.

There is lots of talking about gold stocks. Gold stocks are the traditional high leverage way to get in on the gold action. But so many gold mines have sold short or are tied to low gold prices, that gold mines are not good investments.

If all the economic blather goes right by you, here is the boiled down version: the prices of precious metals are about to go through the roof. If you believe this (don't sue me if I am wrong) and if you have any loose cash, this is the time to by precious metals. They will never exist again at these prices. Don't buy gold stocks of buy gold options, get physical gold.

If I missed anything, someone else interpret FOA's words.

-- David Holladay (davidh@brailleplanet.org), October 10, 1999.

Mara, I consider this "Gold" talk. It really doesn't effect most of us "working class". Do I care? NO. Do you? that depends on your gold position. I don't have but a "little" gold. I have more silver than gold by a long shot. But I am not a silver man, either. He's looking for a "bird of his feather" so they can talk. Everything's Okey Doke.

-- space (hooda@thunk.it), October 10, 1999.

Nothing gold can stay.

Robert Frost

-- Lars (lars@indy.net), October 10, 1999.

As a gold and silver owner for some time now, I'm becoming somewhat sceptical about these rantings that some (is it?) $60 billion in gold shorts will bring about economic armageddon? $60 lousy billion? $200 lousy billion? Do you doubt that the U.S. and the Europeans won't intervene to save the existing financial structure for a few billions of dollars? My god, that's less than the budget of L.A. county and you think the powers that be will let their empire (if it is an empire) go up in flames for want of a few billions of dollars?

Now I can see the present economic bubble popping with disastrous economic consequences for billions of folks around the globe. But not from a lousy 100 billion dollar shortfall in gold shorts.

-- goldandsilver (nosogolden@metals.com), October 10, 1999.

Mara, he is saying buy gold now. Times up. If you don't buy now you will not be able to buy it because it will cost too much in dollars soon.

The world is changing. We have been shitting on all of the other nations in the world for thirty years and that is about to change. We will not be top dog much longer.

-- dave (wootendave@hotmail.com), October 10, 1999.

Thanks for the interpretations. There is one other thing here though. He says you won't be able to spend your gold, doesn't he? "You won't be unloading bars to buy a new house." Why not? (If we all still live in houses by then.) Thanks again, all.

-- Mara Wayne (MaraWayne@aol.com), October 10, 1999.

FOA is a mystic and a retard.

-- Hugh Aktston (hugha@home-net.com), October 10, 1999.

Flierdude

Thanks for the post. A shot over the bows of the good ship US Enterprise.

Went and checked out the USAGOLD forum, interesting bunch.

Mara

 The lingo takes some getting used to but it is hugely relevant to Y2K. This is an upset in the gold market and it happens "100 days" before the rollover. I think the Euro banks saw that there was a higher risk in the gold owed than having the gold in the bank. A bird in the hand is worth two in the bush :o). But to the US markets gold was a dead issue and they "sold it out" speculating that it would never rise over $300 again. Well it did and at some point and time they are going to have to pay up the difference.

The difference is bearable now but the availability to replace the gold they have to replace is dependent on supply and demand. Suddenly there is more demand than supply. So the price of gold will rise which puts the speculators at more risk, to much risk and they start defaulting. Not to mention the gold mines did the same thing as the markets and sold their own gold for years in advance at a higher price,,, at the time. That would be around $290 say and now they are looking at  loosing money big time.

I hope this is correct, it is info from Andy's posts and reading a bit of Kitco gold forum. Anyway for the real dirt try the link below. The forum is not well laid out, it is the reverse of this forum, the top is the most recent.

 USAGOLD | Forum

 Some of the real speculation about the "big picture" with the gold move is whether it is a Europe verses the US power play. I think this is good, the US needs a equal on the world stage economically. Japan is still to weak and Russia is a cripple. China is still in the grips of the past and the region is still very third world. But in world history the US is just an upstart, Asia will be a force in the 21st century, but now Europe is coming together slowly but surely. They need Briton and somehow they convinced Briton that they had better be on side. A most remarkable post on the USAGOLD site mentioned that this move got the nod from Alan Greenspan, which could be the case as he has not mentioned it recently despite the effect it has on world economics.

-- Brian (imager@home.com), October 10, 1999.

Mara

If I understand FOA right (don't bet on it :o) he means you would not, not that you can't. A real problem is the overvaluation of land (at least where I live) if there is economic turmoil land prices could drop (happened in Japan) and folks are holding the bag. This is very "imaginitive" but could happen. IMHO

-- Brian (imager@home.com), October 10, 1999.

Brian is right, Mara. FOA is saying that you would not sell because gold is going much higher - $10000-$30000 per ounce - so high that only central banks can buy it.

And when he says no other investment can match, that includes all gold mining stocks, gold futures, options on futures and all paper forms of gold.

Some other background material on how we got into this situation is explained in a response I made a few weeks ago.

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001Uu3

dave

-- dave (wootendave@hotmail.com), October 10, 1999.

Thanks flierdude (Mike), I was going to post this myself but frankly I'm fed up with all the abuse I get on this forum whenever I talk gold- which I have bored everyone to tears with for the at least the last 6-9 months :)

I recently bought physical gold from USAgold, and had to call in personally to their office in Denver to give them a checque. I picked up the two books they publish, one of which is called "In The Footsteps Of Giants" - pieced together by Michael Kosares (who owns Centennial Precious Metals and the www.usagold.com web site) - it details the original postings by ANOTHER and FOA (friend of ANOTHER) on the Kitco forum going back 2-3 years.

Nearly EVERYTHING they talked about has come to pass or seems likely to play out very soon the way they said it would...

And having worked in Saudia Arabia I have a feeling for the ANOTHER mindset (he's rumoured to be a Saudi with contacts at the highest levels in the oil/gold/banking business in Europe and etc.).

I believe both are totally genuine and on the up and up.

I have read the book several times, printed out stuff from Another/FOA from the archives, read the latest from Another (his last, quite chilling post, was about a week ago... making it clear in no uncertain terms that the dollar was going to be trashed... maybe someone can dig the post out) - and FOA who is posting pretty much daily at usagold.

I don't think FOA can make it any more plain really. There are going to be fireworks in the gold markets, in the VERY near future, and the mines, hedged or not, may suffer from the immediate fallout, together with bankruptcies from major players, hedge funds, bullion banks etc. resulting in domino defaults and the eventual cessation of gold trading.

By this time the POG will have gone through the roof and the street price with no official London "fix" :) anymore will be anyones guess.

I'm now out of stocks and will be buying more physical gold at $325 on Monday. I may buy silver instead, as I believe that will explode too, and leverage up much more than the POG. I will only do this to sell the silver and buy the gold when it hits say $1000 an ounce - seems crazy but I will be able to buy more ounces this way... and if silver doesn't explode, I will have plenty of y2k barter power... and if y2k is a BITR I'll offload it... for uh, something...

I'm approaching all this from a y2k perspective, and I am convinced that the broad plan they outline will come to pass.

Go get some gold, Monday morning (or Sunday if you live in Vegas :) )

-- Andy (2000EOD@prodigy.net), October 10, 1999.

This is the post last week from ANOTHER that I was talking about...

ANOTHER (9/28/99; 16:15:40MDT - Msg ID:14770) Reply USAGOLD (09/17/99; 21:11:52MDT - Msg ID:13862) Another, my friend, I have missed our discussions in recent months as it seems that you and I, both, have been occupied elsewhere. Much has changed since our last exchange(s). I sense that our friends at the central banks have begun to worry about their outstanding gold, as should the private lenders. The Dutch central bank felt it necessary to call off the dogs by saying they are no longer an easy mark. And now Japan tells us that they will buy if the IMF should want to sell -- a gold poor island nation in the East with too many dollars and no longer enough time. So is lending gold at 4% a good deal? Or should we consider anything we lend at that price, "lost assets"?........Is the golden intention floated by Japan today as important as I think it is, or something to be discounted? I remember your words of wisdom on England...a lost land. I remember your words warning us of the state of the LBMA which is now so apparent. What next? my good friend. Is this "a night to think about gold?" What say you about Japan and Europe and the future of gold?

Mr. Kosares, we speak again. This gold market, it be not as before, yes? For six years and a time, we build the "alliance". Now all join and say "no more" unfair currency. This day I stand with Europe on ground that is stable for the future of our children. Ground made hard with gold that moves "no more"! Your dollar will now fight the "good battle" on it's own. From early this year it finds no support from "cheap oil". Soon it will find no support from "oil settlement". Without the "good backing" that comes with others "holding dollars", the world must now settle dollars in a true gold price. It is time, gold again becomes the money our fathers knew. It's dollar price will run now. Fear this as the banker is afraid of his creditors, for it now runs long my friend and stops only for the destruction of its market. From the days of our youth we see not again a market such as this. All will soon race for the bullion metal and few will walk away with gold. Your mind does consider the "right number" for gold yes? I say, add that ten times and this you will pay if one waits. Japan? With no trade how will a nation supply its oil? The oil that built them does now break them. Buy gold we say, years ago, hear us they did not. The yen eyes and ears always face across the pacific. Even as their future was thru Hong Kong to Europe. Now this yen will fail a nation that forgot how it's sun still sets at their backs. Sir, the bullion in the many thousands will change the common landscape of your land to as rocks and bushes. It will also grow the most green lawn for holders of Euros.

May many flowers present your home in the good light of old wealth. The old wealth that we find in the new value of gold!

Thank You Another

-- Andy (2000EOD@prodigy.net), October 10, 1999.

And a follow-up from last week from FOA...

FOA (9/28/99; 17:12:39MDT - Msg ID:14775) Comment Goldspoon,

What a day it was! The "Bullion Boys" at USAGOLD Forum got to march at the front of the victory parade. How about that Golden sun? It's a triple crown winner again! Up over 8% while the other metal horses had to eat his dust. Even most of the major gold mines went up, but are still out on the track coming in as stragglers (except for Goldfields, up about 17%) (I hate it when my only little mine investment goes up) (very bad for credibility) (smile). Somehow I think this is a bad precedent to start doing this. I'll stop while ahead.

We can be sure that some Bullion houses are now the proud owner of defaulted gold paper. More of it will come pilling in through out this week. This is just the beginning, because this house of cards just collapsed. For a while there (back in the summer), it looked like the ECB was just going to let the dollar / IMF slowly flood itself with gold paper until the market failed. Truly, the only way to make it more valuable, was to sell more of it and make the paper price fall. Now, they pulled the plug on them and will let the market eat itself. Make no mistake, this is no too way trading market! It's going to run until someone big fails and shuts it down. We don't just work out thousands of tonnes of short gold positions with a few days and $50 up. I think the gold shares see this and are trying to realistically price in what several locked limit days will do to the infrastructure. Yes, everyone is hedged and covered, but this little move has most likely cleaned out the present counterparties equity already. If the dow, bonds and dollar start selling off big, they (funds) have run out of money and are selling for more. More cash will bring waves of paper selling on comex. Yet, the very equity selling that raises the funds for those waves will bring even more loses to the hedge funds. They used the old gold financing to buy what will be sold now. So look for intraday waves of more exaggerated form than today's +44 move. Still, all in all, if the banks or the Fed can stand it, this market will run through 500 or 600 on this first kill off.

I'm standing here and watching all this with no risk assets. For me it's all very interesting. As for the bears being cut into bar - B - Q stakes, they can't lose what they never had. Most of the US paper game is all in ones mind anyway. I have a mountain of notes to cover, so I'll step away.

Thanks FOA

-- Andy (2000EOD@prodigy.net), October 10, 1999.

This is an answer for goldansilver...

Let's do the simple math. At 6000 tons, a conservative estimate based on the usual reputable sources, the mark to market value of the short interest in gold at $330/oz is approximately $66 billion. That doesn't sound like a very big number in today's financial markets with flows several multiples of this amount, until you consider how concentrated the exposure is relative to the thin financial resources of the participants.

For example, a 1% increase in the cost of carry equals $660mm. When most of this business was put on the books, the cost of carry was around 1% per year. Based on current lease rates, there has been a negative swing of $2.6 billion. By the way, as the price of gold moves higher, so does the interest burden. A $10/oz increase in gold equals $1.9 billion. In the last two weeks since the ECB announcement that lending would be capped, the $60 adverse swing has added over $11 billion to the shorts' obligation to repay. Who's paying the price?

What is the equity of the gold mining industry, hedge funds and bullion desks involved in this position? The world gold mining industry's equity on a very rough basis is only $20 to $25 billion. The equity of the ten or so major bullion traders is very likely less than $1 billion, even though the resources of the institutions that stand behind them is far larger. The depleted equity of the hedge fund community may stand at $30-$50 billion. Only the bullion desks are committed to trading gold. Hedge funds of course have no generic interest other than to make a profit. Even the mining companies have other things to do with their capital than trade bullion.

For example, Chase Manhattan reports gold derivative notes outstanding of $20 billion. These are "structured" notes where the obligation of the issuer varies, possibly quite dramatically, with the spot price of gold. Chase was among the most aggressive of the bullion banks, doubling its gold derivative position over the last 18 months, at the same time gold prices were plummeting. The book value of Chase was $23 billion as of 6/30/99. One of their clients, Ashanti Goldfields, is suffering severe margin calls on their gold hedge, which stands at 10mm ounces. Each $10 increase in the gold price costs Ashanti and/or its bankers an additional $100mm of pain. Ashanti's stock has declined by more than 50% in recent trading, despite the sharp run up in gold prices. Ashanti seems likely to disappear as a freestanding entity, and their shareholder equity could easily vaporize despite valuable, world-class assets.

Ashanti is not alone. Several other companies suffer from hedge book troubles at current prices. A further $100 run up in the gold price would raise questions on even more. Since the liquidity and financial resources of the gold mining industry are limited, the financial exposure to higher gold prices will inevitably pass through to the bullion dealers that were so eager to put this business on the books in the first place.

In a conference call, Ashanti management characterized the relationship with their 17 bullion banks as "orderly and stable," yet another misleading statement emanating from the current mess. In reality, the only step that will spare Ashanti and its bankers further misery is a 10mm oz buyback and delivery of physical gold to satisfy the credit. Of course, a $3.2 billion purchase order for physical gold cannot be filled for the time being. More likely, Ashanti will be carved up and its credit subsumed by that of Barrick, Anglo, the government of Ghana, or some other better balance sheet. The price of a rescue will be high both to the existing Ashanti shareholders and the bullion dealers. The risk profile of the bullion desks will then deteriorate in return for the appearance of "business as usual," awaiting the next disaster. As the gold price rises, the credit position of the bullion dealers and producer hedge books will deteriorate further. The process could well accelerate, and possibly culminate in a divine intervention by the central banks in yet another spectacle of "too big to fail." By then, the good name of gold should be restored.

Expect to see a retreat of capital from gold hedging and short selling in the coming months. Within the gold mining industry, a witch-hunt mentality towards hedge book risks is certain to commence. Pressure for buybacks will grow. The speculative blood lust for shorting gold among the hedge funds is a thing of the past. If anything, hedge funds are likely to line up on the buy side to attack the short position. We doubt whether risk managers of financial institutions will favor additional allocations of capital to the trading of paper claims based on gold in the bullion trade. Essentially, credit has seized up in the paper gold market.

Once the initial shock has been absorbed, the paper gold market should enter a protracted workout mode in which producers buy back hedges and speculators steer clear of the short side. Issuance of equity shares to fund hedge book buybacks, in other words, outright purchases of gold, would not be surprising. There is just one problem. If the gold producers all act simultaneously, as they did in herd-like fashion on the way down, the gold price will skyrocket. Reason: there is no physical gold to buy, other than from the central banks, and the only if they choose to sell or lend additional quantities.

This short squeeze has the potential to send gold hundreds of dollars higher. It took years of stupid collective actions by many very clever people to set this trap. A miscalculation of this magnitude is unlikely to be rectified in a few short weeks or with just a proportionally small change in the gold price. We have a long way to go before the market is correctly balanced. In the meantime, the squeeze has the potential to threaten the health of some major financial institutions. It certainly has the potential to disrupt the earnings and finances of mining companies who have hedged excessively or foolishly. The degree of "excessive" hedging will rise with the gold price. Even those companies that will soon be proudly proclaiming their "hedge lite" position stand to be shocked at the degree of risk they have undertaken. Officers and directors should understand the potential for shareholder suits from investors who bought shares as a play on higher gold prices. Without hedging and short selling over the last several years, the gold price would be several hundred dollars higher based on the short fall of mine production relative to consumer demand. Panic short covering could drive the gold price well above any theoretical equilibrium.

The existing and potential exposure of this massive trade gone wrong must be frightening to those trapped in it. Still many others have no grasp of what is happening and regard themselves as secure. Time will tell who's holding the bag on basis risk and lease rate exposure. For now, it is safe to say that nobody knows or is telling the truth.

John Hathaway

October 9, 1999

-- Andy (2000EOD@prodigy.net), October 10, 1999.

Now you may think Lyndon Larouche is playing looney toons BUT...

he has nailed what's going on behind the scenes - fits in perfectly with what ANOTHER/FOA are saying...

The announcement Sept. 26 by 15 European central banks including the European Central Bank, the Swiss National Bank and the Bank of England, regarding limits on central bank gold sales and leasing for the next 5 years, is much more significant than a simple reversal of this year's collapse of the price of gold. The move must be seen as an institutional reflex by central banks to reaffirm the decisive role of gold in global monetary affairs, in view of unprecedented financial crisis eruptions in the near term. The almost $60 rise of the gold price within 10 days simply is "the markets'" reflection of this underlying reality.

Thus, the central banks' gold move represents an implicit admission of the systemic nature of the world financial crisis, and a base-line recognition, that without a central role of monetary gold, any attempt to deal with the crisis would be doomed. This is the assessment of Lyndon LaRouche, who stressed: "There is now a certain potential, for using gold as part of a gold-reserve system, as was done in the original Bretton Woods system, as opposed to the 19th Century-type gold standard. It represents a base-line of common sense, institutionally, among the central bankers. They know as the disintegration of the speculative, paper-based bubble proceeds, they have to have a certain base-line position through monetary gold, or, forget everything."

The European central bankers, led by the Bank of France and the Bundesbank, worked behind the scenes, in close coordination with the US Federal Reserve chairman Alan Greenspan, to prepare the dramatic gold reversal of last week. The fact that Greenspan is clearly, if silently, so far, backing the European central bankers is manifest from comments he made back in May, when Britain announced its policy of selling off central bank gold. Greenspan told Congress then: "We should hold our gold. Gold still represents the ultimate form of payment in the world. Germany in 1944 could buy materials during the war only with gold. Fiat money in extremis is accepted by nobody. Gold is always accepted."

In parallel, Herve Hannoun, Deputy Governor of the Bank of France, stated on Sept. 15: "By reaffirming that gold will remain an important element of their monetary reserves, and by announcing together their policy ... the central banks have determined a clear horizon for the gold market, contributing to a restabilization of the market." Hannoun then added, "Gold remains in the long term, an element of trust on currencies, and remains, until today, a guarantee against major problems of the world monetary system."

The recent free-fall collapse in the gold price, down to 20-year lows of $253 an ounce, had been triggered by orders from the Blair government, instructing the Bank of England to auction 415 tons of its gold reserves. As LaRouche had remarked last May, the Blair government deliberately talked gold down in an insider scam to steal the public's gold to the benefit of Blair's oligarchical cronies.

The Federal Reserve is the largest central bank holder of gold in the world, with some 8,100 tons. The combined gold reserves of the central bank members of the ECB total some 12,000 tons. The unified US-European front on gold seems to have backing from Japan, China and India.

Another "sign of the times" of systemic financial disruption is the likely resignation of Michel Camdessus, the Managing Director of the International Monetary Fund (IMF). Camdessus' regular term as IMF chief would expire only in 2002, but it is expected that he might resign this month.

link at

http://www.eirna.com/cgi-local/alert.pl#A1

-- Andy (2000EOD@prodigy.net), October 10, 1999.

Mr. Decker, calling Mr. Decker, may we have your comments PLEASE !!

Ray

PS Deano, we need your expert opinion on thie thread.

-- Ray (ray@totacc.com), October 10, 1999.

Thanks for the ANOTHER & FOA posts!

-- Mitchell Barnes (spanda@inreach.com), October 10, 1999.

Andy,

What part of that LaRouchie stuff do you regard as having "nailed what's going on behind the scenes"?

Jerry

-- Jerry B (skeptic76@erols.com), October 10, 1999.

Okay, big question--WHY would Greenspan back a plan that sees the dollar go bust? (I can understand his saying we should keep our gold.)

-- Mara Wayne (MaraWayne@aol.com), October 10, 1999.

Mara,

Just a guess as to why Mr. Greenspan may have chosen not to support the dollar:

To do so interest rates would have to be raised significantly - interest rates would have to go high enough for business and individuals to reverese their desire for liquidity. This could affect capital formation and devastate global financial markets.

I suspect the Fed models show the least painful of the two scenarios favors low interest, weak dollar, and some inflation.

Low interest will keep some maret activity going that would not take place otherwise.

Weak dollar could stimulate US Export.

Inflation would allow debt reduction using future cheaper dollars.

IMHO, the Powers that Be are between the proverbial rock and a hard place. The alternative high interest rates, strong dollar and deflation could rival the 1930s depression.

This is not to say that we may see both inflation (of essential items) and deflation (of luxuries, non-essentials, big ticket buys that could easily be delayed in purchase.

Peace.

-- Bill P (porterwn@one.net), October 10, 1999.

Andy --

Many thanks for the lead-in to the USAGold site during the spring and summer. I've been reading it completely (only one thread) since July- August and had the thrill of watching the Sept. 26 and onward action with that community. Also the satisfaction of understanding to a greater extent what was behind the big move up.

You've given generously of your time and energies and I believe many who post and lurk here appreciate you more than you might realize.

-- jor-el (jor-el@krypton.uni), October 10, 1999.

I have no understanding whatsoever of the fiscal/financial dynamics involved in the discussions here. I also hold no precious metals (wedding ring excepted), no equity in any mining operation, and no derivatives of any sort.

Reading through this thread, I gather that some imminent catastrophe seems to be expected.

In 1834 the U.S. began backing its currency with gold. In 1934 it abandoned that policy. In 1959 the Bretton Woods agreements (begun in 1944) re-established

"...international convertibility of the major currencies into gold or gold-convertible dollars",

a system which

"...lasted until August 15, 1971, when President Nixon suspended gold payments to foreign governments."

(Ref.: http: //www.empower.org/html/pubs/speeches/lehrmueller.htm

In all these periods, before 1834, between 1834 and 1934, between 1934 and 1959, and since 1971, the economic cycles have had their way both domestically and worldwide. Barring another great war, what can happen now that hasn't happened before?

What difference may the events discussed here make for ordinary wage-earners in the United States?

-- Tom Carey (tomcarey@mindspring.com), October 10, 1999.

Tom: I'll try to be gentle. You are lumping yourself in with the average wage earner. The average wage earner is the one who gets buggered with these manipulations. It is the stupidity and/or ignorance of the average wage earner that makes this possible.

Scenarios, briefly:
Dollar devalued. Depression. The average wage earner is out of work. (like the 1930s)
Dollar inflated. Inflation, with economic depression. The average wage earner is out of work, and his paltry savings by even less than "yesterday"
Dollar inflated, but economy continues. No one willing to lend you money for a new SUV, and your paltry savings disappear. Then economy goes into recession. Out of work plus everything cost more.

Any questions?

-- A (A@AisA.com), October 10, 1999.

A,

Too brief, for example:

Dollar devalued relative to what, by about how much, over roughly what period of time, and as a result of what economic process?

Jerry

-- Jerry B (skeptic76@eerols.com), October 10, 1999.

Mara asks "WHY would Greenspan back a plan that sees the dollar go bust?"

Mara, in the simplest of terms, Greenspan is facing the unraveling of a Ponzi scheme of huge proportions. There is no way out. His choices are limited to how much he can delay or cushion the blow.

"It can't be so", you say. Oh, yes it can. It's called unmitigated greed. Like it or not, you will be witness to what happens when too many people get too carried away over profit. Our economic parade was close to being rained on with the recent Long Term Capitol Management debacle. If you follow these things, you would understand that their financial gamblings could have brought down the US economy with one stroke. The Fed chose to come in and orchestrate the bailout, and for good reason.

We are now talking about hundreds of LTCM scenarios coming down all at once. A simple $75 dollar increase in the price of gold is causing an unraveling of the portfolios of these large corporate speculators and gold mining operations that have pre-sold their un-mined gold deposits. What happens when gold goes higher?

When it was suggested that Greenspan could step in for billions to rescue these firms and why wouldn't he, it is because it would only be the tip of the iceburg.

What does it mean for the average every day US citizen? What would a stock market crash mean? What would massive inflation/depression mean? What would the banks not wanting to lend money mean? I could go on, but I think you get my point. The average JOE will not get out of this unscathed, I am sorry to say.

-- OR (orwelliator@biosys.net), October 10, 1999.

The End of the World has been predicted so many times, yet we're still here. Still -- maybe this one time the prediction will actually come true. We'll see soon enough.

If Y2K exceeds a 5 in Europe, the Euro will have its own problems, and this gold play (Euro-based, according to the posters here) may be the least of anyone's worries.

-- Tom Carey (tomcarey@mindspring.com), October 10, 1999.

Thanks Andy for the Hathaway article. However, I still can't see the damage to a multi trillion dollar system from a liability of a few hundred billion dollar default. Such a small sum will be handled just as LTCM was handled. The powers that be will change the rules in some fashion to make the collapse of those exposed to default go away.

But then I don't have much knowledge of how the world economic system works. And apparently neither do the bears who have been predicting the 90's boom demise as imminent for over 5 years or so. It's apparent they despite their brilliant articles have no idea of why this boom as persisted for so long and gone to such dizzing heights.

However, I'm prepared for most things with cash, gold and silver in physical possession unless there really is a "new paradyne" and the DOW goes to 30,000:)

Good luck to you all come the rollover.

-- gold n silver (goldandsilver@metals.com), October 10, 1999.

"It is the stupidity and/or ignorance of the average wage earner that makes this possible."

That a real stretch! How do you make the "average wage earner" responsible for the reckless actions of bankers and speculators? I'll be gentle, too, and say only, this is ridiculous. Some folks blame the Jews for the Holocaust. Same line of thought, right?

I don't even know any of these people. And if I did I doubt very much I'd be able to persuade them to change their ways.

-- Tom Carey (tomcarey@mindspring.com), October 10, 1999.

Thanks, all, for the info. In short, it doesn't sound good. I hope that whatever our strategies are, they will pull us through.

-- Mara Wayne (MaraWayne@aol.com), October 10, 1999.

Listen to Uncle Andy.

Don't sweat all this stuff.

Do yourself a favour and buy as much gold as you can afford (assuming all preps are complete) as soon as possible.

In a year or two you will understand :)

-- Andy (2000EOD@prodigy.net), October 11, 1999.

Tom: I stand on the point I made about stupidity and/or ignorance. Stupidity is incurable, but ignorance cna be cured. However, that takes will. Banking/money/credit is really not all that complicated, but the powers that be (PTB) have made it so. However, there are many authors, writing throughout the years that have discussed how the PTB have been screwing us. But they are ignored. Have YOU ever heard of Henry Hazlitt? Leonard Reed? Murray Rothbard? James Dale Davidson? Harry Shultz? Harry Browne? Doug Casey? ... I thought not. And so have not most of the people. Even though all those I mentioned are known by hundreds of thousands, even millions, of people, those who know of them are but an insignificant portion of the population. We can scream at the top of our lungs, and we are drowned out by Klinto, Bush, Rubin, Dan Blather, Oprah ... If even a significant minority were aware, and did no more than "drag their feet" or otherwise monkey wrench, the corrupt system we are subject to could not stand. But too many people, I repeat are ignorant -- and it is their fault. This has gone on throughout recorded history. "Screw me once, your fault; screw me twice, my fault." We've been screwed innumerable times.

-- A (A@AisA.com), October 11, 1999.

Jerry B: for a deflation scenario, look to the U.S. depression of the 1930s. For an inflation scenario, look to the German inflation post WWI.

Assuming the economy stands, post Y2K (ha!) a devalue of 25% would mean imports cost 25% more (U.S. imports more than exports) -- your Nikes, Toyotas, VCRs, beanie babies, etc.

Note my response to Tom. Look up on Amazon some of those authors I mentioned.

-- A (A@AisA.com), October 11, 1999.

A,

I have read Leonard Read, Henry Hazlitt, Murray Rothbard, F A Hayek, Lugwig Mises, etc. (For several years I lived a few miles up the road from FEE. Spent many hours there while Read was still around.)

I took aim at your "dollar devalued" statement because the defacto devaluation of any currency occurs as a result of some economic process. It does not just happen without something causing it to happen. For example, inflation is one cause of defacto devaluation.

However, if Y2K, or anything else, causes a collapse of the current credit bubble, and since most of the money supply consists of a subset of existing credit, such a collapse would be deflationary, causing the dollar to appreciate in value, "other things being equal", not devalue. Of course, other things are never equal, and they will have their effects, and what the net net on the dollar will be may be anyone's guess.

Meanwhile, if economic activity shrinks substantially but the credit bubble somehow remains intact, we would probably end up with defacto dollar devaluation. But is that the particular combination that you are expecting? If so, I would ask on what basis to expect the credit bubble to survive the widespread defaults inherent in substantial shrinkage of economic activity.

So, rather than my speculating on your rationale for the dollar devaluation statement, let me ask you for your rationale.

Jerry

-- Jerry B (skeptic76@erols.com), October 11, 1999.

David, or others

What makes you think that the euro is backed by gold?

-- Rick (rick7@postmark.net), October 11, 1999.

The Euro is partially backed by gold. The percentages bantied about from press reports suggest 18% to 23%....for now. Evidently that is enough for many market players to make their move into Euros for reserves, because it has already happened.

-- OR (orwelliator@biosys.net), October 11, 1999.

"If even a significant minority were aware, and did no more than "drag their feet" or otherwise monkey wrench, the corrupt system we are subject to could not stand."

I've understood since 1963 that the game was rigged. I also understood that it was the only game in town. Never saw any realistic opportunity to "drag my feet," though. Had a family, had young children, had to keep 'em all fed, clothed and sheltered. Didn't inherit megabucks, the only money available was what I could earn.

Just what forms might "dragging their feet" take? Inquiring minds need to know. Presumably any activities you propose along these lines will not reduce one's life expectancy.

-- Tom Carey (tomcarey@mindspring.com), October 12, 1999.