I cleaned up the bottom drawer today and found a old IRiver MP3 player and it had a interesting file on it.Who here remembers it ? specie-man (11/11/03; 15:28:48MT - usagold.com msg#: 111626) Predictions (ANOTHER/FOA Summary?) A while back, I posted my take on the writings of Another/FOA - an essay on where we've been, where we are, and where we are going. A bit of pure "what if" speculation. Here is the newly-edited (but basically the same) version: Gold Price Countdown - the Fall of 2005 A speculation by "specie-man" - 10 November, 2003 In 1997, a mysterious individual began a series of anonymous postings on gold-related internet bulletin boards. This person, and their associate, seemed to have inside knowledge of world gold dealings. The information they relayed indicated, in a somewhat cryptic way, that there were two completely different gold markets in existence. One of those markets is the paper gold market that we all see (COMEX) - a market who's hidden purpose is to suppress the price of gold and to generally manipulate the market in favor of commercial (short) entities, at the expense of speculative (long) entities. The other hidden market was larger, and traded in physical gold only - at prices far higher than the paper gold market. As the theory goes, this market was the vehicle for transferring large quantities of gold to rich oil-producing countries. This arrangement was secretly agreed upon by banks and governments, so that in return, the price of oil (as measured in US dollars) would remain stable even during the economic boom years of the late 1990s. This was at the core of the so-called "strong dollar policy", which the US Government frequently mentions but never seems to be able to explain. The two markets worked together such that the paper gold market would effectively siphon off world gold supply and production at reduced prices, and deliver it to the secondary "hidden" market at a profit. Why would the large buyers acquire gold on this hidden market, rather than buying contracts for future delivery for lower prices in the paper market ? Because it would have been impossible to purchase the desired quantities of physical metal on the limited paper market, and any attempt to do so would send the price of gold much higher on both markets, possibly destroying the paper market and ending the price suppression of gold. This would cut off their supply of relatively cheap gold. Perhaps the intentions of these major buyers are to first obtain large quantities of gold, and then go to the paper market to drive up the price. The individuals responsible for bringing this information to light predicted that at some point, the world price of gold would be revised sharply higher (by orders of magnitude) in conjunction with a move by oil-producing nations to officially reduce their intake of US dollars and increase their intake of other currencies and gold. This monstrous gold price increase would signal the beginning of a new world order. That prediction was made around 1998, possibly to occur in the 1998-1999 time frame. These individuals correctly predicted a badly-faltering stock market and economic malaise. But now, four years later, their predictions about a rapid gold re-pricing event have not taken place. Gold has increased in price significantly in the last four years, but the rise has been relatively gradual. Gold bugs are still waiting for that big event. Will it come and, if so, when ? Before any major gold price upheaval (increase) can occur, certain conditions must first exist. Some have already occurred, and others are developing. Watching the progress of these conditions will be like watching a rocket launch count-down ! Those who are watching will know when their last chance will be to jump on board before lift off. Here is the count-down as towards an explosion in the price of gold (as a result of a crashing US Dollar): 12. Rapid expansion of world-wide credit (debt). 11. Stock market declines. 10. US government, state/local governments, corporations, and households go much deeper in debt. 9. US trade deficit expands relentlessly. 8. The US dollar starts declining in value relative to other world currencies. 7. Long-term interest rates increase relative to short-term interest rates, bond market declines. 6. Housing prices level-off and start declining in some areas. 5. Other (Asian) countries counter the falling US dollar by working to devalue their own currencies. 4. Gold starts rising in price relative to all major world currencies, including the Swiss Franc. <===== WE ARE HERE ! 3. Inflation/stagflation starts taking hold in Japan, China, and other countries that have a large trade surplus with the US. Bad debts are monetized en-masse (paid off by "printing" large quantities of the local currencies). This is highly inflationary. To forestall hyper-inflation, Asian central banks will be forced to cash in some of their dollar reserves to bail out large debtors (commercial banks, etc.). This will bring an end to the "strong dollar" policies of those governments. Japan, for example, will no longer print and dump as much Yen on the market and buy dollars to weaken the Yen relative to the Dollar. 2. Consumption in foreign (especially Asian) economies starts growing more rapidly and oil-producing nations realize that they will no longer have to rely as much on the US market to sell their oil. At that point they won't have to worry about how much oil the US consumes (or how much a barrel of oil costs in US dollars). Due to the world-wide glut of declining-value US dollars, and a revulsion for US foreign policies, some oil-producing nations begin switching their official oil pricing currency from US dollars to another currency and/or gold. 1. The paper gold market (COMEX) shows a large increase in speculative long positions. The long speculators have been trounced many times over the years by the commercial (short) traders. This time, however, the ranks of the long speculators will grow and grow. They will hold firm in the face of the commercial shorting onslaught, as if being commanded by General Stonewall Jackson himself. The commercial shorts will break and run as people world-wide attempt to take delivery of gold. Some major financial institutions will fail as a result. 0. Blast-Off ! Foreign countries no longer have a need for the excessive amounts of US dollar assets (US Treasury bonds) that they hold because it becomes increasingly difficult to purchase oil (and/or gold) with them. Foreign governments do not buy and hold US Treasury bonds out of the goodness of their hearts. The second that they no longer have the need or ability to hold and acquire those assets, or the instant they perceive that their ability to exchange them for something useful is diminishing, they will dump them for something else. A world-wide "crash" in the US dollar will result, leading to a world-wide revulsion of anything and everything US dollar, much higher US interest rates, a severe case of hyper-"stagflation", and higher prices for all tangible assets. The derivative pyramid will crumble. The US dollar will become the "laughing stock" of world currencies - akin to some of the weak currencies of the Central American and South American regions. All this occurs just as the first wave of American "baby doomers" are scheduled to retire. Life will go on in the US and it won't be all bad, but it will be very different and difficult. Right now, the countdown is at 3 and counting. Many of these events have been (and will be) occurring concurrently. What is still lacking is significant world-wide wage inflation (but world-wide commodity prices are now escalating). When you hear the phrase "wages are increasing to keep up with inflation", you will know that the time is very close. Current indications are that the final prerequisites for a blast-off in the gold price are forming. Hints of inflation in Japan, commodities, and elsewhere are starting to appear, as is talk about doing something about the bad debts in Japan, and bad debts rapidly increasing in China. The US Federal Reserve will aggressively fight any significant downturns in real estate prices. They will do anything, even drop cash from helicopters, to prevent consumers from defaulting on their mortgages en masse. The alternative is just to catastrophic. The COMEX open interest in gold is now increasing. Battles between the commercials (short) and the speculators (long) have usually ended in favor of the commercial traders. This time, it will end in a stalemate - a moral victory for the longs. The day when the longs totally rout the commercial shorts is coming fairly soon. History is riddled with unfulfilled predictions of gold's price soaring (and collapsing). Gold is heating up now. But realistically, how long might it be before the price explodes rapidly upwards in an economic upheaval of epic proportions ? That is hard to say. The old saying definitely applies here: "markets always do WHAT they are supposed to, but never WHEN they are supposed to". Such drastic economic realignments are always fought against by governments, and they always take longer than expected. Should all the current COMEX longs hold firm and a quantity of them demand physical delivery, then the countdown could go to blast-off immediately. Other "wild-card" events (war, terrorist attack, major California earthquake, etc.) could ignite the rocket as well. The countdown process started in the mid 1990s and it should last about ten years. The closer the countdown gets to zero, the faster it will tick. Gold will continue to increase in price during the remainder of the countdown. ! Lacking any unexpected triggers, the countdown will finish during the Fall of 2005.
