GOLD PLUMMETS - SPOT CHART

http://www.kitco.com/charts/livegold.html ^

[Fitzcarraldo]

Source: www.kitco.com

[Poohbah]

"They" changed the rules?

Uh, wrong. All speculative bubbles burst eventually (witness the dot-com stocks on NASDAQ). My dad saw it coming long before most did and sold short. Made good money on a minimal investment. A family friend put his kids' college money into the bubble--lost everything and then some. Kids got to go to the local community college instead of Stanford.

[jackbill]

No, they had it up to over $40.00 per ounce.

And one of the guys who worked for me bought 80 pounds at just about the peak. Carried it to Riggs Bank in D.C. for storage in two bags, with a gun on his hip.

I have no idea about what he subsequently did with it.

[OK]

You know nothing about gold as money.

[rollin]

The Comptroller of the Currency report.

[rollin]

Go to http://www.adrich.com

and read any of the monthly 'Tis only My Opinion! articles on the economy for the past year or so.

[Poohbah]

Ouch! That had to hurt.

A neighbor of mine believed the "Gold will hit $2,500 an ounce" folks and kept buying gold up to and after its $800 peak. Lost a huge sack of money, filed for bankruptcy, and lost everything, all because he kept scooping up every newsletter that talked about gold and how the stock market was going to crash Real Soon Now.

[discostu]

One slight correction, the mentioned section of the Constitution (1-10-1) doesn't prevent the states from issuing paper money, it prevents them from issuing any kind of money including precious metal coins. They're allowed to use gold or silver coin to pay debts and nothing else, but they're not allowed to issue anything.

One of my big arguements with the gold bugs is that cash itself is becoming a thing of the past. With the vast majority of transactions being forms not created by the US Mint (credit cards, checks, electronic transfers) the concept of what a printed dollar "represents" is frankly immaterial. And any "constraints" put on the physical money supply by tieing it to a commodity are meaningless.

[OK]

Re: "They" changed the rules?

Yes, the way I understand it, the COMEX put on a ruling that nobody could add new longs when silver spiked up past $40. It proceded to go limit down for something like 3 days in a row and crashed to around $8. That is what wiped out Bunker Hunt.

[rollin]

Britain sold gold last year. They have now lost over $750 million versus the price of the gold if they had kept it. Moreover, they took a lot of the money and invested it in US bonds which are payable in US dollars and have since gone south against the pound about 15%.

Real smart financial people in the Exchequer these days!

[rollin]

Greed can often box people into a corner!

Since I know many of the JPM people and those at Goldman Sachs, they are capable of and do make mistakes.

Up to now, they have been able to use the massive credit of the US government via the Exchange Stabilization Fund, the IMF, the BIS, and central banks to skate.

Unfortunately, the ice is getting very thin and is cracking with the market tanking.

They will and must do everything to attempt to stay afloat even if that means running M3 at historic high rates.

The foreign investor has finally seen through the smoke and mirrors and is pulling their money out. Inflation is raising its ugly head and despite the various adjustments to all the statistics, you only have to go to the grocery store to see that prices are increasing.

[Poohbah]

Inflation is raising its ugly head and despite the various adjustments to all the statistics, you only have to go to the grocery store to see that prices are increasing.

What neck of the woods are you in? Prices are holding steady out here in Southern California.

[Deuce]

While the founding fathers prevented the States from issuing paper money they did not place the federal government under the same restriction.

No but it did grant the responsibility to Congress and the Coinage Act of 1792 established a silver standard.

Gold as money...would have to increase by at least a 4% rate for a growing economy.

Nope. A growing economy does not need more money. A constant money supply with increasing purchasing power will do the trick.

[justshutupandtakeit]

Of course these prohibitions didn't stop States from chartering private banks which then issued their own money. It was allegedly convertible into gold but only in theory. Some banks had reserve ratios of more that 100-1. Any time a run would start the banks just folded.

Part of the genius of Hamilton's program was that it immediately gave the U.S. a supply of capital it did not have prior to the passage of the financial acts. U.S. debt then became as good as gold and created a money supply acceptable to the entire world.

[OK]

Yes, Congress is planning a 4% COLA increase for federal employees. No inflation, they say. Apparently Congress sees 4% inflation.

Additionally on the silver thing, a similar thing happened to Warren Buffet a few years back. He had a pile of silver call options that were about to expire out of the money. He called his broker and said he wanted to exercise them. This would have made the silver price go ballistic. Shortly after that he got a call from Washington and was informed that he could do that and spike up the price of silver, but if he did, the government would make him regret it later. This was during the Clinton years.

[Poohbah]

Yes, Congress is planning a 4% COLA increase for federal employees. No inflation, they say. Apparently Congress sees 4% inflation.

And, of course, politics never enters into the COLA determination process, right?

Good grief, some people are gullible.

[headsonpikes]

Bump.

[rollin]

Since the US gold reserves have not been audited since the 1950's and since in 2000, the classification of gold underwent a change that has not been set forth to the public, e.g., "deep storage gold," the question of just how much real physical gold the US has is open to question.

Many people who have studied the IMF and the SDR question believe that less than 20% of the physical gold reserves are actually in the possession of the US Treasury and the rest is nothing more than pieces of paper promising to pay the US Treasury for the gold that has been leased.

The bullion banks, i.e., JP Morgan, Citibank, Goldman Sachs, Morgan Stanley, etc., are some of the entitites that have leased this gold from the US Treasury and/or the Exchange Stabilization Fund.

[OK]

And, of course, politics never enters into the CPI determination process, right?

I just repeated your statement and substituted CPI for COLA. The CPI has been falsified for years now.

Some people are really gullible to believe government statistics.

[rollin]

Yes, the exchange changed the rules.

If you would give me your telephone number in a private post, I will provide you with the number of a person who was Bunker's attorney in this whole mess and who will give you chapter verse, timeline, etc., and even provide you with the court documents.

That is if you really want to know!

[OK]

Additionally, SDR's are not backed by anything. They were created by central bankers out of thin air. They all just agreed that each SDR was equal to something like one ounce of gold, I believe. It is all based on fiction and a gentleman's (crooks) agreement.

Each country received an allocation of these "paper gold" SDR certificates in the beginning and were allowed to use them as reserves and for transactions with other central banks. What a scam.

Source: "Gold Wars" by Ferdinand Lips