November 21, 2019 
 Thursday 
 
 

Forum
Topic:
Gold Enters Major Bull Market

       

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 By lynwood

06/03/2003  11:31PM

Bluejay, just reread all your entries from November 27,2002 to May,o3, 2003. You cite such diverse sources.

Your insight is unquestionably documented for history in the FORUM as to technical and fundamental wisdom. I grew to cast aside criticism when the gold market was freely open to US citizens in 1975.

Can you verify the sources of two separate reports of situations in Iraq? #1. Some $650 million in 100ís found in bundles. #2 Some $500 million of gold found in Mercedes truck. I enjoy your efforts.
 By bluejay

05/03/2003  9:31PM

Gold closed out the month on the COMEX at $339.40. The close is down from a high above $380 about two months ago and is up from a recent low of just under $320. What does all this price movement mean?

From a chart standpoint, the gold price at above $380 marked the top limit of its recently defined monthly upper channel limits while trading lower to about $320 confirmed the strong undertone of the channels over sold line. Both of these upper and lower limits of the channel lines are ascending.

For people that are unaware of the significance of charts and price channels within them, let's take a moment and discuss them.

Charts are a record of price activity usually with volume figures over a specific time period. Charts for simplistic purposes are usually displayed in price range bars for the trading activity in days, weeks and months

Viewing a price chart of a stock, commodity, currency or any other financial instrument is a basic approach to understanding what future prices might be expected. Once accustomed to viewing charts, it should become clear to you that prices usually move in up and down channels of restricted price behavior coupled with price congestion areas that may indicate a directional change of prices to be eventually identified with a new channel of price movement.

Within these ascending and decending price channels, prices become over-bought and over-sold. Gold by hitting just above $380 on the COMEX chart, its top on the rising price channel, and sinking lower to the bottom extremity of its over-sold area has traveled a chart distance of over $60 an ounce within eight weeks. On the graph being viewed, the price history starts in 1994 and includes monthly ranges to its currect close on April 30, 2003. The chart can be view by connecting to tradingcharts.com.

Chart channels are subjectively drawn by the student using high and low price points which are necessary for their construction. All price channel lines are to be drawn parallel to each other.

All of the above was mentioned so you will have a better grasp of the following: For the remainder of 2003 gold can trade as high as $420 by the end of the year and the current over-sold area currently stands at $323. Remember, last on gold is $339.40 on the monthly chart. The current over-bought area in the up channel is currently located at $393. So, what does this price comparison within the channel lines indicate? From a chart interpretation, gold is in not currently over-extended and is much nearer to being over-sold.

The price objective channel range for gold's closing out the year of 2003 will be a low of $347 and a high of $420. If a guess were to be made on gold's exact close at the end of the the year it would be the median point of the range at $383.50. This would indicate a 13% increase by year end for gold based upon its last price on April 30th of $339.40.

Interpreting charts is an art of probability and when combined with other technical indicators can be an extremly useful and unemotional tool as an aid to investing.

Before closing, a short chart discussion of the U.S. Dollar seems appropriate. The Dollar is trading lower on its monthly chart within a descending channel. The close on the Dollar on April 30th was 97.38. This is its lowest close since October of 1999.

The Dollar channel indicates that its price potential in the short term is lower to about 90.00. Its rallying potential is to the 100.00 level. The price of the Dollar is expected to sink lower during the balance of the year.

A lower Dollar will mean a higher gold price.
 By bluejay

03/12/2003  8:39PM

This is a follow-up to an original Forum entry reporting that gold had entered into a new long term bull market on 01-23-03 when it crossed $352.

The current price on gold is $345.50. Soon after the entry gold traded in the overnight gold market in Asia near $390 and has since softened in price toward the $340 level a few times where it has been finding current support. In an emotional news related arena relating to a possible military conflict, expect the unexpected. The technical perspective that gold is heading higher during the years ahead will ease the discomfort of any abrupt short term weakness and will present an opportunity for the acquisition of gold from the discount window.

The important thought, above all else relating to the metal, is that gold is in a major long term bull market. As has been described in other topic section entries on the Forum page earlier, there is a powerful financial group that wants to see gold basically disappear from the financial radar screen.

The source of this group is people and organizations that will be hurt with the rising gold prices. To mention one, is governments who continue to print money that have no official gold backing. As gold rises the basic purchasing power of their created paper money depreciates and its creditabilty declines.

Governments operate off the books mainly through their Central Banks and Treasuries to restrain gold from going up and, hopefully, they can even drive it lower creating instant gratification for their "funny money." Central Banks basically bribe large money interests like investment houses, banks and the media to do their dirty work for them and even their efforts in this endeavor can even filter down through governmental agencies, both State and Federal.

Even as a long term bull market was confirmed by gold advancing past the $352 level, this Group has started working overtime to suppress investor enthusiasm for gold and gold shares. Most investors interested in gold will buy the gold shares instead of the metal mainly because it is easier to acquire and to dispose of. So the gold producing companies are targeted by the media.

There has been some talk lately that this Group has been selling short the gold shares to temper public enthusiasm. Controlling rising prices is easily done when the shares are overextended from an chart standpoint.

It is important to understand the concept of overextended. Go to the website http://www.bigcharts.com. Select a gold stock of interest by symbol or look up the symbol. Bring the stock up on the screen with the chart. Hit the red box marked "interactive charting." Select relative strength to track. Save changes, hit Ok twice and the chart appears with the relative strength chart just under the stock chart. The relative strength chart has a range on the right side from 0 to 100. Just for general instructive purposes as a starter, view what happens on the stock chart in time following the relative strength figures registering at or near to the 80 level. This most ofter indicates that a stock is overextended and will decline.

The key to attacking the gold stock group was zeroed in to the massive resistance problem that Newmont Mining had at its 30 level. The significant problem on the chart was that of a declining or flat moving 5000 day moving average line. Today, Newmont traded under $25 and is approaching an attractive buy area below.

Long term moving average lines are used by the big money players and by the Group players for their market advantage over other less informed participants. The big money players use these averages as an important guide in establishing their agenda in positioning funds for long term profit appreciation. The Group players use them only to apply short selling pressure at pivitol areas when they are present. This is exactly what happened when gold moved higher past $352 and Newmont stalled at the troublesome 30 level over the past months. The Group shorted it to death and it effected all the other gold stocks for the reason that Newmont produces more gold than anyone else and is viewed as the bellwether stock for the group. It's like people watching the Dow Jones Industrial Averages to get the feel of what the rest of the stocks should be doing.

Long term moving average lines of 500, 1000, 2000, 2500 and 5000 days are important and when combined with two or three in the same area, along with relative strength and Bollinger Band readings of significance, can be a most useful tool in identifying stock candidates to purchase that carry with them a reduced risk factor.

Recently, the Dow Jones Industrial Averages broke below a significant level at 7700 on the chart that was never discussed in the media or any investment letters that were available. The area on the chart is the location of the 2500 day moving average line. It had previously supported the DOW from sinking lower on declines on a few occasions or so in the past year or more and this event of penetration more than likely indicates a new down leg on the DOW is in progress.

Getting back to the Group that specializes in bad mouthing gold through negative reporting about the gold companies, a recent degrading of Royal Gold's price was orchestrated by a recent Barron's article. This is a current example of jounalistic predatorial behavior being extended to the gold stocks. Since the L.A. Times' November 2002 story about the Original Sixteen to One Mine, Barron's is now on the point wheeling their hatchet of carnage in the direction of shareholders that hold some of the best equity asset positions that are available in today's seriously ill stockmarket.

The following are comments that were taken from an article titled "The Real Question is: Was the three-day "Trashing" of Royal Gold Legal Long Sellers Or Illegal Short Selling, So Common Today?" by Mr. Jim Sinclair from the http://www.tanrange.com website. The complete article is available under MineSet by Mr. Sinclair at the same site.

"This last period has to be classic. In the last two weeks, I have read no less than nine articles in major publications of one nature or another concerning the ill-advised rise in the value of gold and gold shares. Never in my 44 years have I seen more intense use of the media to attack an investment medium. Then came the assualt against the leader, Royal Gold. Was that event an accident or coincidence? I personally doubt that it was coincidence."

So what does the breaking of the 5000 day moving average line on gold mean here? It means absolutely nothing. The bull market has arrived and it will just be only a matter of time until this child's play ends from the Group attempting to attack a bull market. Some months back Freeport McMoran's stock was declining toward some rising long term moving averages that were congested at roughly the 13 plus area. The stock qualified for purchase or repurchase. In some weeks later the stock broke through and headed lower into the 10 area on the night club/restaurant explosion disaster. Some months later Freeport was headed towards 20. Sometimes stock related news throw you an unexpected curve ball when your dealing with excellent long term moving average ammunition, but overall, they are reliable when interpreted correctly.

In the current gold market atmosphere there is an expected impending action in Iraq which will be reflected in gold's trading personality in some manner or another. The Group has been busy using the media to brainwash the public into believing that gold will travel lower as it did following Desert Storm. The Group, the gold cartel, will do what they have always done, try and maneuver gold lower by enlisting the efforts of all their agents.

If it comes about that there is a war and gold takes it on the chin, expect the price to accelerate way past $400 an ounce in the short time following any manipulated selling. If gold does get temporarily pushed lower, expect the Chinese and the Arabs to buy it all. Don't get sold down the river with your gold assets by believing what you might be hearing or reading in the media concerning the metal prospects following any military action.
 By bluejay

03/04/2003  11:54PM

On the front page of today's Financial Times appeared the following titled article, "Buffett Likens Derivatives to Weapons of Mass Destruction." In speaking of derivatives Buffett warned against them by saying that they were, "financial weapons of mass destruction and potentially lethal" to the economic system.

The Times went on to say, "In his letter to shareholders of Berkshire Hathaway, Mr. Buffett said he and Charlie Munger, the investment and insurance company vice president, viewed derivatives and derivative trading as "time bombs."

Continuing the Times made the following statement, "the bankruptcy of Enron, the U.S. energy trader, in December 2001 came after it began to emerge that it was using derivatives contracts to hide volatile assets and inflate the value of new businesses."

The entire gold market is laden with derivatives. There are more outstanding complex derivatives in this market than Carter has pills. Buffett never mentioned gold in his preview of the forthcoming annual letter to Berkshire shareholders but you have to know that gold is on his mind.

Berkshire Hathaway currently holds 4,000 tons of silver which is 2% of Berkshire's assets. In gold, like silver, there is an annual supply deficit and in both markets there are large outstanding derivatives contracts.

The time seems right for a Buffett position in gold as he recently stated that, "despite three years of falling prices, which have significantly improved the attractiveness of common stocks, we still find very few that even mildly interest us."

Buffet in the past has been buying junk bonds which return higher than normal yields. These bonds yield better for the reason of their attached credit risks. Buffett likes income. Although some of these credit risky companies may not make it during the current bear market, the high returns Buffett has been collecting reduces his risk in them proportionately.

If Buffett does announce gold holdings at the annual meeting or buys some in the future he will be taking physical delivery as he has with Berkshire's silver position. This will be bad news for the shorts or the metal exchanges as the vast majority of their trades are on paper. If Buffett buys gold he will take delivery and the commodity people will have to cough it up. In the past a story had circulated that a buyer of a 100 ounce contract had great difficulty in taking delivery from an exchange. They persisted in telling him to roll over his contract to another month.

As the stock market is at a pivotal juncture with today's close at about 7704 in the 7700 area of the Dow Jones Industrial Averages, one wonders if the market starts to collapse could this event engineer yet another wild card for the holders of gold?
 By bluejay

02/07/2003  9:10PM

Rick

An important commentary and reprint from a FINANCIAL TIMES article is available at http://www.jsmineset.com/s/Home.asp entitled "Figures Lie and Liars Figure."

A short Harry Shultz commentary on http://www.financialsense.com today mentioned that gold production will be off 30% over the next 8 years.
 By bluejay

02/06/2003  2:38PM

Rick

I am a technical analyst of price movements which means I don't rely on fundamentals but I will make an attempt.

Currently the U.S. Dollar is in an adjustment phase of going lower. Gold will increase in value as the Dollar descends because it will take more of the depreciated Dollars to buy the same amount of gold. The reason for this adjustment process is that in this country we have a current account deficit of 5% of the Gross National Product. This is unhealthy, as 3% has been the norm. If this country gets involved in a war the 5% figure is expected to go higher.

There are others reasons. Our economy is mainly being run on debt purchases. During the 80's consumer debt wasn't anything like it is today. I've heard the current consumer debt is six times larger than our Gross Domestic Product. The high debt condition weighs on the Dollar and in turn puts upwards pressure on gold.

Our trade balance deficit with our other trading partners is at an all time high and it is forecast to even get bigger. Our factories are being shut down and reopened in China. Even the Mexican factories that were opened following the NAFTA agreement are closing and that capital is headed to China. China is fast becoming the exporter of deflation. All this means is that some items we were accustomed to buying that were made in the U.S. will have to be imported adding to the trade imbalance. Also, the imports from China will force what's left of currect producers in this country to lower their prices which will put pressure on their bottom line. This is because the labor rate in China is something like 40 cents a day. This event could cause some debt repayment problems.

I believe from reading many related articles that all this debt will eventually lead us into something much larger than the "soft patch" Alan Greenspan says the country is currently in. I believe we may have a credit crisis in this country and people will want safety and that safety will come from something that carries no debt and that is gold.

In addition, central banks around the world have attempted to depress the price of gold by controlling it with sales and lending it out for short sales for years and this game is about over as all the sold gold has been puchased by smart long term money and the rest has been made into jewelry. It will be difficult to repurchase the metal from short sales and other financial contracts which has been estimated to be from 10,000 to 15,000 tons. As gold goes higher, the sold short contracts are being squeezed to repurchased the borrowed gold at higher prices. After watching markets for years, the fear of an impending short squeeze results in swift price movements. The recent strength in gold to the $390 level a few days ago may be just the start of a new series of patterns where we see gold continuing to trend higher and then a flurry of buying results as the shorts do some partial covering.

Higher prices of gold will be aided in the period ahead with a forecast decline in world gold production during the next five years.

Contributing to higher gold prices is reduced gold hedging and the calling in of part of the past hedging contracts by the world's gold producers. Thus, taking away some of the producer hedging that had pushed gold prices down for the last years.

Another item that we don't hear mentioned too much recently is the fact that demand for gold exceeds world mine production.

I hope I have touched on the most important changes that are different this time. If you would like to be kept up to date with gold news from independent writers visit the financialsense.com web site.
 By Rick

02/04/2003  6:46PM

Last time gold "topped out" it sat over $800, (Thanks Jimmy Carter)while inflation loomed over (correct me, please, since I don't have the actual numbers in front of me) somewhere near 18%.

Bluejay, respecting your perspective: what's different this time, besides that inflation's not even in the picture?
 By bluejay

02/04/2003  1:06PM

One of CNBC's mouth pieces, Ted David, is asking the question, "when does gold top out?" What an ignoramus! Gold has just recently entered the early stages of a new monster bull market. It appears that gold doesn't qualify for any cheerleading from these people.

You can make a safe bet that when gold crosses $400 an ounce on the chart CNBC won't be giving any parties like the big one they gave the day NASDAQ crossed the 5000 level. NASDAQ 5000 was part of the biggest securities bubble of all time.
 By bluejay

01/30/2003  11:41PM

Your attention is directed to an outstanding article relating to gold and a future role that it may play in supporting the Dollar in the year 2005.

http://www.financialsense.com
"New This Week" 1-30-03
Sinclair Editorial
 By bluejay

01/26/2003  11:27PM

Gold is trading at $370 this Sunday evening in overseas markets as the anti-gold rhetoric continues in the newspapers.

This time the Boston Globe is cautioning its readers in its Sunday's edition about possible troubles ahead for gold.

The Globe says, "What would happen to gold if we woke up tomorrow to discover Saddam Hussein living in exile somewhere other than Iraq? Crisis over. "Lots of things could derail the bullish gold outlook (The Globe published a few quotes from gold fund and hedge fund people). Economies could recover and begin to grow out of debt problems. A more stable global political environment would help. Increasing corporate profits would redirect more money back into stocks and other financial assets."

In a today's publication of the Harry Schultz Letter he says that investors should have 1/3 of their funds in gold/gold coins/gold stocks to take advantage of the higher gold prices that are coming over the next generation.

It is apparent that successful independent financial writers like Richard Russell and Harry Shultz along with James Sinclair and others differ greatly with their optimistic outlook of gold as compared to our city's newspapers.
 By bluejay

01/25/2003  4:58PM

On Friday, January 24, 2003, the following headline was printed in the USA Today's newspaper, "GOLD HITS 5-YEAR HIGH, BUT GLITTERING PRICES MAY TARNISH QUICKLY."

To put it mildly, this kind of reporting is irresponsible. Gold has hit a 6 year high not a 5 year high. To say, "glittering prices may tarnish quickly" is historically unfounded based upon mega long term moving aveage studies. This remark is no more than "trash talk" intended to keep you out of gold.

You have to ask yourself this question, what is the "big deal" to the newspapers when it comes to the price of gold moving higher? As far as percentages are concerned, the recent move in gold is no big deal. We can clearly see its percentage advance by dividing its last sale of 368 by 100 and hypothetically arriving at 3.68. This is up from it's hypothetical low near 2.50. This represents about a 47% increase in value. As everyone remembers the run-up in the NASDAQ stocks, some of those issues went up from pennies to unbelievable prices, unbelievable percentage gains. Those gains greatly overshadow what has occurred over the two years in the gold market.

So, what is the big deal? The big deal is the U.S. Dollar is not backed by gold, contrary to public opinion. When gold goes up the Dollar declines. When gold goes up the EURO, which is backed by 15% gold, smartly advances against the Dollar.

The U. S. media is owned by or influenced by the super rich in this country as most everyone already knows. When gold goes up, their wealth is reduced. That is the big deal.

The newspapers and the rest of the media don't want you, the concensus of all their readers, to buy gold because you might assist higher metal prices and depreciate their accumulated wealth. That's the way they think.

Since most people find it easier to buy gold mining companies as opposed to the metal itself, is there really any wonder why the November L.A. Times article attacked a little U.S. gold mining company?

Don't listen to the media when they give you their indirect "free advice" to stay out of gold and the gold mining companies. Believe this, they do not have your best interests at heart.
 By bluejay

01/23/2003  4:12PM

This is intended for the shareholders of the Original Sixteen to One Mine, Inc.

A spectacular event has occured concerning gold's future that you won't be reading about in the papers or hearing on the evening news.

The price of gold has bettered a very important long term moving average line at $352 per ounce. Gold is currently trading in the low $360's. The average is the 5000 day moving average line. Preceeding this event, gold had only done this twice before in the past 21 years. Once, in early 1979 and again in late 1996.

When gold crossed above its average line at approximately $240 in 1979 it eventually traded higher to over $800. In late 1996 it traded below the average in the vicinity of $390 and continued lower until hitting about $250 in the summer of 1999.

Based upon history, it is totally reasonable to expect a much higher gold price during the many months ahead.

The tide has turned.
 By bluejay

12/31/2002  10:44PM

The following was submitted to dowtheoryletters.com today by a subscriber with the initials of JD.

WHAT WE ARE ALL MISSING

It seems that know-body is looking at what the central bankers are really doing. They are not stupid and they are acting out this drama precisely to their plan. And what is their plan?

Their plan has and always will be to hold that which is of value when it is valuable and get rid of that which is going to become worthless. They are masters of the world of investing because they are given the power to control instruments used by the masses to transact. And most importantly we must never forget the CBs are always run by the most corrupt, greedy, blood-sucking, exploitive scumbag individuals the world can produce. They pay no allegience to any country, leader, race, religion, ethnic group, or god. They are interested in bettering their own lot at the expense of others. Most people do not hold these qualities to the degree necessary to become a central banker which is why they make up an elite, 'above the law' group of people.

So what kind of animal are we dealing with? First, we must remember that CBs, like governments and private corporations, come and go. There have been many times in history in which central banks or moneychangers did not exist. Second, the power and/or existence of central banks is cyclical. These parasitic organizations plan their arrival and departure from the scene depending on when and if it is safe and advantageous for them to operate. They exploit in peace time as well as in war time. Their aim is to control the instruments (money) that the masses use to transact. This can be fiat paper currencies, electronic digits (debt) on a computer hard drive, gold, silver, rice or any other commodity in demand. Their ultimate goal is to keep everyone indebted to them, esprcially puppet, corrupt governments who do not represent the people. They have no client preferences and are flexible: indebtedness is the same to them whether you are a Hitler, a Stalin, a Roosevelt, or a Churchill, or even a Bin Laden. And, they always make sure to distribute to the masses those instruments which will lose value in the future and accumulate from the masses those instruments that will appreciate in value.

So what is the game plan of Greenscam and others of his ilk? The FED has been around since 1913. It is going to celebrate its's 90th birthday next year; that is 90 years of confiscation of the wealth of the American people. This is the longest running central bank in the history of the U.S. and appears to be closing in on its 'use by' date. I believe they knew this by the early 90s after decades of printing fiat U.S. paper instruments that caused government debt and trade deficits to soar. It was more than clear that by the 90s the U.S. had economically been obliterated by Europe and Asia. The trade deficits told us that in black and white. And they only got worse.

They have known that Bretton Woods was the official beginning of the impoverishment of the American people by establishing their fiat U.S. dollar as the world reserve currency therefore creating the illusion that we could get something (real goods and services) from the rest of the world for nothing (our fiat U.S. dollar). And now they know that their printing press orgy is about to be turbo-charged; that is, they are going to print the U.S. dollar into oblivion. And all the other fiat currencies trading along with it are going to meet the same fate. Greenscam has let the world know that he is going to print until the press breaks down. The end of the dollar means the end of the FED. The 'issuance of fiat' game is about over.

The FED 'use by' date is rapidly approaching. They have know (known) this since 1987. So what does a true-blue CBer do when its time to exit. They do what they have taught Wall Street to do. They pump and dump that which they want to sell: pump up fiat dollar instruments (their own TRASH) and dump them on the masses (distribute that which is going to become worthless). And at the same time they take Jesse Livermore's advise and first dump what they want to buy and then pump. So, they dumped publically-owned gold (CB gold auctions) in order to privately accumulate that which they will pump in the future. So, the CBs are doing exactly what you would expect them to do. Of course, know-body will ever know who bought all that gold at those rigged auctions, will they? CBers are never generous. You can be assured it landed in the right hands.

So, what are we missing? The fraud is not the manipulation of the gold price. That's the side show. The main attraction is the TRANSFER OF THE PUBLIC'S (OUR) GOLD INTO PRIVATE CENTRAL BANK HANDS.

THE CB'S HAVE BEEN DUMPING THEIR OWN FIAT PAPER ON US AND AT THE SAME TIME BEEN SELLING OUR GOLD OFFICIALLY TO THEMSELVES PREIVATELY.

And life on Wall Street goes on..... The CEO's and Insiders of Enron, Worldcom, Tyco, et al stole the people's fiat paper by pumping and dumping their respective shares. The FED has stolen the only real asset we ever had and left us with a broken down, 90-year-old printing press.
 By bluejay

12/19/2002  9:40AM

Blanchard and Company has filed an anti-trust lawsuit charging Barrick Gold and J.P. Morgan Chase of cover-ups to manipulate the gold price. Blanchard is the largest retail dealer in physical gold in the United States. The gold dealer accused Barrick and J. P. Morgan of making $2 billion in "short selling" profits by suppessing the price at the expense of investors. Blanchard is seeking to end the trading agreements between Barrick, J.P. Morgan Chase and other bullion banks.

Blachard is seeking payment of losses caused by the alleged manipulation for its clients. Donald Doyle, Blachard's chief executive made the following statements, "Since the end of 1987, when the collaboration between Barrick and J.P. Morgan began, the growth of global income and wealth would have lifted the gold price to $740 if the price had been able to respond to the normal laws of supply and demand." "If gold had kept pace with inflation, the price today would be approximately $760."

In addition, the following complaints were made:

1- During the past five years the two companies injected millions of additional ounces of gold into the market or several times more than the annual production of every gold mine in South Africa, the world's largest gold producer.

2- Barrick and J.P. Morgan used privately negotiated derivative contracts and concealed additional billions of dollars worth of physical gold with off balance sheet accounting, Barrick made it virtually impossible for gold analysts and investors to determine the size and the market impact of its trading position.

3- Barrick and J.P. Morgan repeated short selling with advantageous terms not available to others including deferred repayment and no margin calls.

The question is posed, do other gold mining companies join in a class action suit against Barricks Gold and J.P. Morgan Chase for damages? If Blanchard's allegations are true, was this scheme just a part of a concerted effort to suppress the price of gold by other unamed sources?

While people in North America slept last night the price of gold traded above $355 per ounce in Hong kong. Shortly afterwards the price of the metal was smacked about $10 an ounce. Was this selling facilitated by physical gold or just by paper entries? When will this house of cards come down? Trained market observers will tell you, when the spring can't be tightened anymore prices will explode. It's just a matter of time.
 By bluejay

11/27/2002  6:00PM

Some thought provoking comments by a subscriber to the Dow Theory Letters http://www.dowtheoryletters.com appeared in the Members Section today. The following is the complete text of those comments:

"let's see ....262 million ozs. times $320 market price equals roughly $84 billion to collateralize $6 1/4 trillion of debt...not including GNMA,FNMA etc. which are not guaranteed just approved by Government...but they would probably bail them out anyway...national debt grew over $525 billion in last 14 months...gold supply at market equals $84 billion .....in 14 months national debt grew more than 6 times the value of the U.S. Gold supply....I'm getting dizzy from this madness.....think I'll hug my gold investments tonight...however being prudent I'll start with my wife.... R Rosen"

Prior and up until 1935 holders of the the Dollar could exchange $20.67 of them for one ounce of Gold. From 1935 to 1968, the U.S. redeemed dollars held by foreigners only at the rate of $35 for each ounce.

The following is from the website http://www.cals.ncsu.edu/course/are012/lecture/lectu4/sld003.htm: "Some folks still think that the U.S. Dollar is backed by gold. It is not. What do I mean when I refer to the dollar being backed by gold? Well years ago, the U.S. treasury could only print as much money as the U.S. treasury had in gold reserves. For example, if the U.S. treasury had $1 billion dollars worth of gold in reserves, then only a $1 billion dollars of paper money and coinage could be printed or stamped out. The only way to increase the money supply under this system was to increase gold reserves. If gold reserves decreased due to payments in gold for imported commodities, then the money supply had to be decreased."

For some expanded thoughts on Gold, Dollar and the Federal Reserve go to http://www.house.gov/paul/tst/tst2002/tst061002.htm where Representative Ron Paul of Texas elaborates.

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