OT - Gold tanking: FED unable to bail out Andygreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Yes, it's official.
Reuters, November 08th 1999 09:13UTC
London - The markets are set for a major upheaval today as the realization dawns that an individual working for Cutter & Paster Inc. has singlehandedly tried to corner the bullion market.
Recent rises in the price of gold, which went as high as $336 per ounce, are now being attributed to this person's gold buying frenzy. With the amount of bullion now entering the market due to central bank sales and increases in Russia's production now outpacing his rate of purchasing, prices are falling rapidly. The revelation that one individual is responsible could set the markets nose-diving.
Wall Street officials have called on the FED to intervene, knowing that reserves are in no way sufficient to cover losses. The President is expected to sign an executive order directing all national lottery proceeds for the forseeable future in this direction.
-- Pass (firstname.lastname@example.org), November 08, 1999
Pull the other one, it's got bells on...
I know it's you ASS king, because the attempt to wind me up is so lame and transparent... dear oh dear...
Just to cheer you up however...
A few more parts to the puzzle may be falling into place. We might even say that the next act in the play is starting. It's a foregone conclusion that the IMF [International Monetary Fund] has been forced to revalue their gold. Most everyone gives the US congress credit for this action. True, they did make it clear how the voting would go if a "sell gold" proposal came before them. But, the selling of gold was only one part of a larger proposal to further fund the IMF. Given the terrible record of "good money down the hole", not only was the single debt relief provision for poor nations at the center of the funding debate, so too was the question of the existence and need for the IMF in the background.
The current problem facing the IMF is in justifying more member commitments that allow the continuation of their operations. It can be looked at two ways: 1. They either are in a squeeze for funds because the extraordinary failure of their policies now require much more money. OR 2. They have been put in a squeeze, more so because major member contributors will no longer support a policy of maintaining foreign dollar debt at the expense of nations outside the IMF/Dollar block.
Indeed, politically one must wonder; why support a system that is built upon a "strong dollar" policy for the benefit of only one country? This rift was opened wider during the last two years as the very "strong dollar policy" that flowed from the US, is the very catalyst that has helped destroy the assets in nations now absorbing most of the IMF flow.
A major item that has been part of this US support structure for the dollar was the G-10 policy on gold. The falling gold price, as seen in the world reserve currency has contributed immensely to the ongoing settlement of all trade in dollars. Indeed, the very continuation of the world trade system. Leading the dollar support component of trade was the use of crude oil settlement in dollars. That one item required practically every nation on earth to buy dollars (or at the least run a positive dollar trade balance with other dollar holding countries) to pay for oil. (NOTE: this post assumes the reader has retained the knowledge presented in the USAGOLD Hall of Fame posts [http://www.usagold.com/halloffame.html])
If a low gold price (indicating a strong dollar) could induce an overflow production of oil, then oil prices in dollars would fall. A steady, neutral or falling price of oil was always an indication that the settlement of oil in dollars would continue side-by-side with the purchase of BB [bullion bank] leveraged gold securities. In addition, the continued physical function of the established world gold markets was paramount in holding this oil support for the dollar. When the day comes that the paper contract gold markets are seen as "in question", the flow of oil will slow and its price in dollars will rise. From early this year, this process has begun.
The beginnings of this change was born in the success of the EMU [European Monetary Union]. With that Euro creation, the ECB/BIS [European Central Bank, Bank for International Settlements] has slowed, stopped and now reversed it's support to lower the price of gold in dollars. In effect, for them, the world's reserve currency position is now slowly changing towards the Euro.
Every day, new evidence emerges that shows Euro liquidity becoming as deep as the dollar with little threat of "dirty float" interventions in exchange rates. The fact that Euro interest rates have remained below the dollar rates indicate this currency's long term perception of strength.
The ECB can now slowly phase out dollar reserves as the Euro assumes more of the world trade settlement function. A function in and of itself, that will further lower the dollar's world need, use, and therefore, value. Because the US still runs a trade deficit, it still ships a surplus of dollars to most countries. In today's new Euro world, the dollar exchange rate will eventually be forced to fall enough to balance this flow. Further, a falling dollar will release ECB dollar reserves as fair game to buy physical gold from any and all entities. However, this buying will most likely be through the BIS and member CBs, not the over leveraged LBMA [London Bullion Market Association] or world gold paper.
In addition, because the Euroland external debt is very low compared to the US and they posses a positive trade balance, a rising price of gold reserves (in Euros or dollars) will support their currency with extra reserve value. Their policy of marking gold reserves to market (on a quarterly basis) and eventually establishing a "true physical" marketplace offers every enticement to get the dollar (and Euro) price of gold higher. Because this process creates a unique reserve benefit, not used in the old gold standard, they will never officially back the Euro with gold. Rather, allow a new "free market" in physical gold (not paper) to supplement their currency operations. The efficiency of modern trade requires a digital currency. That need alone will always support the use of a currency. If gold can trade beside paper money, neither will drive the other out of circulation (as old money gold coins did to paper gold money) as long as they can each seek their own values. ( a very interesting concept??)
During the last several years, the dollar-established gold exchanges created more paper gold than existing gold could ever cover. All done in an effort to create additional world support for a strong dollar. The middle of last year it became apparent that the successful Euro launch would, in time, remove most of the major physical (sales and lending and lending guarantees) support from this marketplace. The result was an IMF/dollar move to sell the physical gold of others into the paper gold arena. In as much as this supply would help, the continued further building of "fractional gold paper" has completely overwhelmed any ability for large physical stocks to cover it. I believe, the BOE sales have been part of a last ditch effort to salvage their London gold operations. Truly, the last round fired in this final battle.
Today, all roads point to a break-up of the world established gold pricing system, as settled in dollars. The IMF gold hoard is constrained to stay in place from lack of further world support for the debt of the dollar block community. The US has changed it's view of gold and views this IMF holding as the only asset that can still be used to support their floating dollar debt overseas. They did this because when a chain reaction of defaulting on foreign dollar reserve debt begins, the dollar would quickly crash!
In choice, the IMF must either release/sell their gold back to the original countries that committed said gold into the IMF, or revalue and use it as money. I think the USA congress knew they needed that gold to remain in the IMF system. They used the "gold fire sale hurting debtors" story as a political ploy to block the gold returns. Let's face it, IMF members would have been glad to return unusable dollar reserves into the IMF for gold. Especially with the ECB thinking of buying other CB gold through the BIS using Euros! In any event all now know, the IMF gold path has been chosen. This will become the trail of no return for the dollar.
Each new revaluation and money usage of gold will bring further reductions of member dollar support for IMF operations. Perceptions will slowly change, especially when oil is seen priced better in a gold "friendly" currency. In a reverse of policy, higher gold will bring cheaper oil. With each further IMF budget reduction, gold will be revalued again higher to create more reserves. One has but to grasp that this is no longer subject to SDR [Special Drawing Right] (also a dollar/IMF creation) paper calculations. This is the absolute revaluation of physical gold for official world debt settlement. The SDR articles will slowly die in this atmosphere. As will the Arabian currency link to SDRs. Perhaps a link to the Euro or complete EMU will occur?
Today, gold has just become set free as "money". In time, officials will review their need to "lend" gold for a return, where as they may "revalue" gold to create a increasing reserve source. As gold rises, there will be "no contest" in this conflict of thought.
With physical gold being quickly withdrawn from a position of support for the established world paper exchanges, the imbalance will become very visible in "lending rates". As these rates rise, the gold pricing market as we all know it will grind to a halt. I am sure it will be closed for "renovation"; use your best imagination. In 1968, on 15 of March, the US asked for the closure of the London gold markets. On 1 of April it reopened, fixing in dollars for the first time. This time I expect the official dollar gold markets will not reopen for a long time.
It was pointed out to me that our great world gold market is the most liquid it has ever been. The members have many reserves and even insurance companies to back them. I completely agree! They will not fail one investor with the lack of cash settlement for all remaining, unsettled claims. The dollar/IMF block of countries will print whatever money is needed to clear out this arena. Just as the US once before called in gold and settled up in "local gold backed cash" because the foreign dollar gold loans had failed, this time will they call in "real gold paper" and settle in "absolute fiat cash".
Some say gold will be confiscated! I reply as in the "Bear Joke" about two hikers confronting a bear. I don't have to out run the bear, says one to the other, I only have to out run you. My friend, in that day of gold turmoil, I will hold my gold and have but to only outrun you! For people with goods to sell will SEEK MY GOLD FOR ECONOMIC TRADE, not the government collection man.
Buy physical gold to hold. In the time to come, this money in the hand will outperform any investment you have ever known. Few today accept just how high physical gold will rise. Be a part of the "physical gold advocates" and tell a story your grandchildren will grow tired from hearing! (large smile)
-- Andy (2000EOD@prodigy.net), November 08, 1999.
Maybe someone'll read that garble if you bother to repost it with wrapped lines.
-- Ron Schwarz (email@example.com), November 08, 1999.
That wasn't me, Cut & Paste. Why would I not use my regular handle? Remember, you're such a large and slow moving target that others are also tempted to take a lazy shot at you as you flounder by, cutting & pasting. It passes the time.
BTW, I heard you were taking a holiday on the strength of your gold profits. So how was the bus trip into town and back?
-- Asking (Asking@aquestion.com), November 08, 1999.
I'm leaving in 5 hours time for a decent pint in London. Even better, some Stella Artois in Antwerp, ohh yesss...
I will be back in 3 weeks and gold will be, uh, higher than it is now...
When it eventually moves it will be explosive, let's see, $100k at cost av. of $280 x ???????
Yep, that'll do me :o)
Acapulco, Ferrari, Babes, lookout!, I'za commin....
-- Andy (2000EOD@prodigy.net), November 08, 1999.
We iz on 'da lookout. But we are quicker and smarter than you, and aren't too worried that you will catch us.
-- Acapulco, Ferrari, Babes (Running@from.Andy), November 08, 1999.
I get no respect
-- Andy (2000EOD@prodigy.net), November 08, 1999.
I think Andy made it to town but had to hitchhike home.
Bwhahahaha BWAHAHAHAHAHA!!!!!!!!!!!Can't believe anyone actually listened to this blowhard.
-- (GunieaPig@mypalace.com), November 08, 1999.
Hamburg, Taxis, and Transvestites for Andy.
-- Andy (firstname.lastname@example.org), November 08, 1999.
The Gold game is just beginning, this game is probably going to last several years. When the game is over gold will be the winner. However when the new game starts gold will loose.(They will cast their gold and silver in the street's)
-- Gambler (email@example.com), November 08, 1999.