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Old 07.10.2004, 20:55   #1
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Exclamation System very low in ressources

Your attention please.
The System is very low in ressources. Please save all precious files and kill and delete all buged applications. If not the System Failure is inevitable.

Your Hay-Araru Operation System, copyright 12000 years after the first crash

=====

AN INTERVIEW WITH JAMES TURK — We've found it worthwhile the last two years to pay a call to one of our favorite authorities on the yellow metal. Publisher of the Freemarket Gold and Money Report and founder of Goldmoney.com, a company that facilitates cross-border transactions using gold as currency, Turk's ability to assess the underlying dynamics and direction of gold has been uncanny. Author of The Coming Collapse of the Dollar, soon to be published by Doubleday, Turk makes a compelling case as to why gold will resume its march higher.

Barron's: How imminent is this collapse of the dollar?

Turk: I thought the dollar was going to be under a lot more pressure this year than it was. But it's an election year and that has the markets jammed up. Central banks are continuing to mop up all the dollars from the federal budget and trade deficits and the credit expansion that continues to go on in this country. Without the central banks willingly picking up those dollars, the value of the dollar would be in a lot deeper trouble than it is at the moment.

Q: How much longer do foreign central banks support the dollar?

A: The natural inclination of the exporter countries is to buy dollars to keep their currencies from appreciating against the dollar in order to protect their domestic industries. This is particularly the case with Japan. They want to continue to try to support the dollar relative to the yen to make sure their products remain relatively competitive because their domestic economy isn't that brilliant. The Chinese currency remains fixed against the dollar, although probably for not much longer. There is a good likelihood we could see a revaluation of the yuan because of the huge amount of dollars that are being accumulated there. What the Chinese are doing, too, is slowly announcing changes in their foreign-exchange controls and the capital controls. They may be moving slowly to a process where they try to keep their currency linked to the dollar, but enable people to start investing outside of China with the foreign currency they earn on their exports. But it seems ultimately the Chinese currency has to be revalued.

Q: What's your outlook for gold once the election is behind us?

A: My expectation is that gold will surpass $430 an ounce before the end of the year or by the beginning of next year. Taking out $430 is significant because that represents a resistance line going back to 1988 — gold has not been above that level since then. Once we cross $430, we'll see $500 an ounce very quickly. That would be a normal reaction on breaking through that major long-term resistance level.

Q: What would drive another big run in gold?

A: There are a number of things but oil is at the top of the list. Oil is going a lot higher. If you look at the price of oil in terms of gold, which is the way I measure it, the historical average is about 2.27 grams of gold per barrel of crude oil. At present, it takes 3.54 gold grams to buy a barrel of crude oil. In the 704 months since January 1946, we've only been above that level six different times. What that means is that either crude oil is very, very expensive or gold is very, very cheap. I think it is the latter. We're consuming about 30 billion barrels of crude oil a year and that's not being replaced in current reserves and as a consequence crude oil is being re-evaluated by the market. The trigger for the revaluation was when Royal Dutch/Shell restated its reserves earlier this year. That shocked the market and the repercussions of that shock wave are still being felt and will be felt for years to come. Not only did other companies start revaluing their reserves, but it gave rise to a lot of skepticism about the kind of reserves countries have and whether they are recoverable and, if they are, at what price? Where we see crude oil today is probably a natural reaction to the market coming to understand there is not an infinite amount of oil in the world.

Q: What's the relationship between oil and gold?

A: There's always been a strong relationship between crude oil and gold. There's a chart of crude oil and gold going back to 1946 in which crude oil is basically unchanged. The oil price, in gold terms, has fluctuated but it is not significantly different from where it was in 1946. In dollar terms, the chart shows the price of crude oil has been going quite high. Although crude oil is a little bit expensive in gold terms at the moment — it is at the high end of the historical range — it is not completely out of line with the historical relationship. What the climbing dollar price of crude oil reflects is inflation in the dollar over the last five or six decades.

Going back to the oil shock of the early 1970s, the reasons why oil prices shot up were as much economic as political. The price of crude oil had been fixed and that was fine when the dollar was still tied to $35 per ounce of gold. But when the dollar was taken off the gold standard in 1971, the price of crude oil remained the same in dollar terms. The oil exporting countries were getting less in real purchasing power so they made a big adjustment to recover what they were losing as a result of the dollar losing value. Oil is cheap at $50 a barrel by any kind of historical analysis. Any supply problem that arises, whether it's a disruption in Venezuela or labor strikes in Nigeria or political fallout in Russia, is bullish for oil. We should be focusing on $60 or more a barrel.

Q: More people seem willing to focus on oil than gold.

A: People are still skeptical about gold even though gold has been in a bull market for three years. That is probably an indication that we are still early in the move and people aren't recognizing the value that gold represents and not recognizing that it represents a potential safe harbor for people who are fleeing the dollar.

Q: Yet gold stocks haven't done well this year.

A: There have been some exceptions but in the main they've gone nowhere. The gold price hasn't done anything either. It got up to $430 at the end of last year and came all the way back into the $380s. What we have done in the past six months is built a nice base under $400 an ounce. Gold has gotten rid of some of the froth it showed at the end of last year and is ready for another move up from here. The gold stocks are leading the metal in the sense that while they are off in the past year or so they are up about 20% from the lows, whereas gold itself is only up about 7% from the lows. That suggests to me money is coming back into the sector. When money goes into the gold stocks, they tend to react more quickly because their market is thinner. When the gold stocks are leading like this, it is a good indication that gold itself is going to continue to move higher. A key level for the XAU Gold Index was 96. With the index breaking above 96 to close at 99 last week, a new leg up has started. My expectation is that as the gold market continues to climb, just as we saw in the 1970s, people are going to come to understand that the credit expansion and the debt bubble that has been created has so debased the dollar they will look to other alternatives, tangible assets of all sorts, but particularly gold and, in a broader sense, commodities.

Q: How does the Dow Jones Industrial Average stack up in terms of gold?

A: It takes about 785 grams of gold to purchase the Dow. The Dow won't be attractively priced until it's priced at less than 100 grams of gold. Obviously, there will be special situations in the market, such as oil stocks and gold-mining stocks. But the Dow and the S&P 500 and the Nasdaq all look very, very expensive when you measure them in terms of gold. That's another way of saying the dollar is very overvalued relative to not only goods and services but also to financial assets.

Q: What developments with regard to gold should we focus on?

A: At the International Monetary Fund meeting coming up this week, European central banks are due to announce their new Washington agreement. Five years ago, in what was called the Washington Agreement on Gold, they limited the amount of gold they were going to sell from their coffers to 2000 tons, or 400 tons per year over five years. Earlier this year, these central banks said they were going to increase that amount and sell 2500 tons up from the 2000 tons previously, or 500 tons per year instead of 400 tons per year. But as we've approached the IMF meeting, it is becoming increasingly clear that not all of the governments that lined up earlier in the year are now willing to cooperate. As a consequence, it looks like a lot less than 500 tons per year is going to be sold even if they still announce the 2500 tons target in this new Washington agreement. There's a recognition that European central banks may be less willing to part with gold because they need to protect themselves against weakness in the U.S. dollar.

The Argentines also have been accumulating gold and there have been increases announced by the Chinese. So some central banks globally are taking a different view of gold.

Q: You've been comparing this period to the 'Seventies but were we as indebted then as we are now?

A: No, we weren't and we didn't have the levels of derivatives that we have today. We are carrying a much higher level of debt today relative to national income and that's a little bit scary. What it suggests is that cash flow is strained and, at the end of the day, cash flow is what counts. We are not in as strong a position today as we were back then to service the debt. We've been consuming well beyond our ability to produce and create wealth, which is why we've accumulated these huge imbalances and why we've gone from a creditor nation to a huge debtor nation today.

Q: Another big difference is inflation.

A: Because we've been able to import cheap goods from the rest of the world, prices have been subdued. That hasn't necessarily helped our overall economy. And it hasn't necessarily helped our overall debt situation, because these dollars are accumulating overseas. The consumer price index is probably a bit misleading in terms of the underlying potential for inflation, which I think is huge. Keep in mind $50 oil is not just a U.S. phenomenon. The Chinese and Japanese also are going to be paying higher oil prices. They are also paying higher prices for commodities, and that comes back to us in the form of automobiles and refrigerators and what not. Those prices are going to start rising probably in the not-to-distant future.

Q: Expand on why you think the potential for inflation is huge.

A: For the simple reason that we are creating so many dollars. We have been controlling this huge creation of dollars so far by having them end up in central banks around the world. Ultimately, that process expands the opportunity for foreign central banks to expand their monetary base as well. By creating this huge amount of dollars by building a mountain of debt, we are reducing the purchasing power of the dollar. We are seeing it day in and day out. We talk today about 2% or 2½% inflation being tame today, but back in the early 1970s Nixon imposed wage controls when the inflation rate got to 3%. Inflation is much higher today than what the government numbers show, because of the impact of housing. The rental equivalent measure used by the government in calculating the consumer price index understates the cost of housing, which is the largest component of the CPI.

Nixon's price controls weren't a one-year or two-year event. It signaled a major macro shift that lasted for a decade. That's the basic point I'm making here. We're at the beginning of a major macro shift that is going to last for many, many more years. The best way to address that is to look back at the early 'Seventies because in terms of recent history that's the closest example of where we are today.

Q: Does the election play any role in your outlook?

A: Everything has been baked into the cake so that it matters little who assumes the office of the president in November. From a big picture point of view we've been living far beyond our means and as a consequence eventually the piper has to be paid. The recent actions of the Federal Reserve suggest they believe the economy can handle higher oil prices more easily than it can handle higher interest rates.

Q: How is that?

A: The Fed is raising interest rates slowly. If they wanted to defend the dollar and keep commodity prices from going through the roof they have to protect the dollar's purchasing power. They would do that by raising interest rates more rapidly. That's what former Fed Chairman Paul Volcker did in the late 1970s.

The Fed recognizes they can't raise interest rates because of the mountain of debt that confronts us. The economy wouldn't be able to handle the additional constraints placed on it that would result from higher rates. The Fed is allowing the dollar to go lower and as a consequence we are seeing higher oil prices and other higher commodity prices. The Fed has made that determination and that probably doesn't bode well for the dollar because the only way you save the dollar is through higher rates.

Otherwise, it's necessary to clamp down on the markets through capital controls. It's possible we might ultimately try that. I don't know what form the capital controls would take. There could be limits on how much foreign currency Americans can buy either in terms of investing abroad or buying foreign assets. There might be some kind of barriers imposed by the government to prevent free flow of capital both in and out of the U.S. As the federal budget finances worsen, there maybe some kind of imposition on tax-deferred plans in which X-percentage of assets must be invested in specially denominated long-term Treasury bonds to finance the growing federal deficit.

The key is that capital controls are a realistic possibility and the way you protect yourself against that possibility is to diversify now. Get out of the dollar now while you can still get out of the dollar. Buy foreign assets now while you can still buy foreign assets. Take advantage of the fact the dollar is still overvalued even though it is down from its peak. It has a lot more purchasing power today than it will a year or two or three down the road.

Q: What's a Barron's reader to do?

A: Americans have to start positioning themselves by starting to think globally. People have to start thinking about opening brokerage accounts overseas, opening bank accounts overseas, owning foreign currencies that they are comfortable with and generally expanding their horizons beyond the U.S. and diversify their assets outside the U.S.

Q: What are your favorite gold stocks?

A: On the top of my list remains Newmont Mining (NEM) — they continue to execute despite the low gold price. They are the world's largest gold company and the only gold company in the S&P 500 and they don't hedge. So they've got a good upside leverage to the gold price. They've got great management, great properties and a pretty good balance sheet.

I've been early in thinking the South African gold companies represented good value because the South African rand has remained relatively strong and that's put a lot of pressure on the South African producers. Now it appears some of the strength in the rand is dissipating because the Reserve Bank of South Africa has made a couple of surprise interest-rate reductions and therefore the carry trade that has kept the rand strong is probably going to be slowly unwound. Two premier names there would be Gold Fields (GFI) and Harmony Gold (HMY).

Q: And pans?

A: When we first talked a few years ago, I predicted Sons of Gwalia was at risk for bankruptcy and it recently filed for bankruptcy. Another pan from then was Newcrest Mining. Newcrest has risen but I still don't think they are out of the woods with their hedge-book problems. I would avoid Newcrest and, for that matter, any other company that hedges because these companies are foregoing revenue as the gold price rises. Another one that I would avoid is Lihir (LIHRY) in Papua, New Guinea. They have $200 million in marked-to-market losses on their hedge book and they've got 50% of their production hedged.

Q: Thanks, James.
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Old 07.10.2004, 21:13   #2
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All the systems are functioning within frames of the permitted fluctuations.
The system security level is elevated to Orange.
Reliability testing is processing.
Introduction of new equation is imperative.


Report is received from the Imperial Diagnostic Center.
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Old 07.10.2004, 21:22   #3
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The Imperial Navy is ready for the leap.
The activation module is approaching to the Solar System.
The Earth beacons will be armed when the module will activate beacons on Mars.


CC of Empire.
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Old 07.10.2004, 21:32   #4
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Exclamation

There is a very high probability that you will need a a hard reboot of System.
I give you some advices. Some DLLs are very unstable. Delete the christ.dll, upgrade or delete the mason.dll, upgrade the sion.dll, try to rely on scientologue.dll.
Don't rely on Imperial-Army.dll it is very unstable
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Old 07.10.2004, 21:44   #5
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The ALL OUTCOMES are known.
No Probability.
Just reliability testing.
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Old 07.10.2004, 21:56   #6
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Have not you thought that deleting the Trinity 777.pif will be much more preferable?
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Old 07.10.2004, 22:08   #7
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Do not worry I am joking.
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Old 07.10.2004, 22:16   #8
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You humans are so antropocentric ..
Hay-Araru OS is a very stable OS, my kernel is very stable and doesn't need much ressources. If you delete the Hay-Araru.dll you will got a blue screen. You will not be able even to reboot. Because all DLLs and EXEs are calling my functions in stealth mode.

Trinity 777.pif is not a important file. You can delete it if you want. It is just a my preferred interface.
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Old 07.10.2004, 22:23   #9
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You have intrigued me.
I think someone will make
bi-stability test over your kernel.
Maybe it is some new fluctuation.
I think it will be checked right NOW.
Within comming 5 minuets.
Check your e-mail after 5 minutes,
so the test will begin. If you are so sure in your stability.
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Old 07.10.2004, 22:31   #10
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I am Enjoy Trinity 777 to sleep evaluated, you will Testing be tested by going Department And .

Last edited by Mono; 07.10.2004 at 22:47.
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Old 07.10.2004, 22:45   #11
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you humans are so comic ... you have a virus
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Old 07.10.2004, 22:54   #12
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It is equal to declaration of war Trinity 777.
Get prepared.
You will face the most dangerous form of Hacking.
And it is not a joke. You dared to cross the red line.

There are not firewalls against that.
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Old 07.10.2004, 22:56   #13
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You already show bi-stability.
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Old 07.10.2004, 23:03   #14
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You will experience the influence within 7 days starting from this night.
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Old 07.10.2004, 23:07   #15
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Please consider the following very carefully:

swell
door, archer,
cat, sound,
hand, ordniver,
hole
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