Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: CuriousGeorge who wrote (7680)	2/19/1998 6:04:00 AM
From: Michael	Read Replies (3) \| Respond to of 116762

CG, Paul, O/49r, Thanks for the post of Another's "thoughts". I read it through and have summarised what I understand are the major points below with some questions that occur to me. I would be grateful if you could review and advise me if I have missed anything or if ANother has addressed the questions I have raised somewhere else. Another's basic thesis is that some of the major players among the Oil Producers have basically agreed with (dictated to?) the Western Economies that oil will be effectively priced in Gold. Therfore these Western Economies have manipulated the POG down to keep the nominal cost of a barrel low in US Dollar terms. Have I got that right ?? If that's so then surely the first question is where/how have these Oils Producers got the leverage to make the West agree to this. As we speak OPEC are having an emergency meeting to discuss the recent slump in the Oil price. That's not the act of a group with the kind of leverage such a deal would imply. What could they do. An embargo like the 70's could not be organised today, firstly because Oil Production is not as concentrated as it was then, secondly all the Majors have strategic political ties/dependencies on the West that makes it politically infeasible and finally most of them desperately need the money !. Secondly assuming it was true, what's the exit strategy. If gold stays down then there is no benefit to the Oily boys, as they don't gain anything. If the assumption is its all going to go up at some stage then what's the west going to do. "They" now have all the Gold and nobody can afford to buy their oil anymore. Why would the West agree to a strategy that would make them vulnerable in that way?. Now lets say that you accept his thesis, he goes on to explain that the price of this manipulation has been massive inflation in the amount of paper gold (IE futures contracts etc) which now way outstrip the amount of physical gold available to satisfy them if delivery was actually demanded by any of the players. This sounds plausible. The shortage of physical has been commented (speculated) on by many different observers. He then goes on to say that when this huge paper market start to unravel, Gold will briefly spike then cease to be traded. To use his words all 'Paper Gold' including shares in Miners etc will be "consumed". The only safe strategy therefore is to invest in physical. What does this mean? Every Gold Mine in the world will ne Nationalised ?. By Whom, on what basis, and if so what then ? The implications of that statement are major and he does not seem to provide much in the way of justification for it. His thesis is beguiling if you accept the assumptions but those need IMHO to address serious challenges before they can be considered credible. However for all that he gets serious "air-time" and respect on the Kitco board so I am wondering if I am missing something. Comments anyone ??? Michael