Gold Discussion for Investors and Market Analysts

Kitco Inc. does not exercise any editorial control over the content of this discussion group and therefore does not necessarily endorse any statements that are made or assert the truthfulness or reliability of the information provided.

(Sat Jun 14 1997 00:06)
Earl: I'm four hours ahead of you and it's gettin late on the Atlantic coast so maybe tomorrow I'll e-mail you tomorrow about the fine art of wood splittin....I can hear the snickers "out there"...but there is alot to it...really...especially tryin to split SPRUCE...Wow, just because you live without electricity, you get accused of bein the Uni-bomber...Hasn't society gotten soft!

(Sat Jun 14 1997 00:09)
It's too late to think ( good excuse ) ....Goodnight all and may GOLD shine next week!

Louis Reuleyser
(Sat Jun 14 1997 00:12)
@ Wall Street Week
Alas, the gold-bugs weep once again. The bull market, as we have often mentioned, has many sources. The lean mean corporations that have downsized, globaly competitive American corporations, low inflation, a slow growing economy, expanding corporate profits, and a low interest rate environment. Gold-bugs, eat your heart out.

Louis Reukeyser
(Sat Jun 14 1997 00:16)
@ Wall Street Week
See my big smile. Gold-bugs, eat your heart out.

(Sat Jun 14 1997 01:18)
TED.... Me too....If I had a brain it would be completely blank about now....Tomorrow will generate deep thought on KITCO which will no doubt prove to be the saviour of the world !!!!!!

(Sat Jun 14 1997 01:19)
Steve Puetz - I don't know what came over me, non compos mentis. I'm all better now.

(Sat Jun 14 1997 01:19)
Well, Tiger Woods - match that and then you can play golf with MJ next week.

John Disney
(Sat Jun 14 1997 02:34)
For Bernie
Mistakenly read your posting since you addressed it
to me. I wont make that mistake again. You said that
you would NEVER advise others not to read MY postings
( as I had done yours ) .
Gee, was that a liberal guilt trip effort ? Go ahead,
mate, advise them not to. As Groucho said, "I wouldn't
join any club that would have me for a member"
Sorry but my review of the "Bernie and Weenie" show
in unfavorable. Weenie is cute in his cheerleader
outfit chanting "Go Bernie" but his statement that
"conservatives only enjoy their meals if thay know
someone is starving" was a tasteless cheap shot. For
me to counter with "They are starving because of liberal
policies", would be a waste of time.
Your desire to take away the wealthy one per cent's
money is really funny and I imagine you in village idiot
dress as you say it. You think that is moral. I think
it is theft. I suggest you try breaking and entering
and take it away from them yourself rather than trying
to get the government to do it for you ( they never
will - since that one percent RUNS the government
anyway- particularly the left ) .
Sorry the costumes were cute but I enjoyed as much
of your show as I can stand.

(Sat Jun 14 1997 02:47)
@in the woods
Ted and Earl,if you want to talk about splitting wood I could talk along for the ride.I was brought up on it and I still do it to keep in shape.Tomorrow is another day for it.Hope to finish it for this year.Then I can spend more time again on the 'musings' of the enlightend on kitco.

John Disney
(Sat Jun 14 1997 02:51)
To Anyone
On the subject pf CB gold. I can understand the
argument that gold should be replaced presumably by
interest bearing currency deposits. I assume these
would be short term government notes??
But I have problens. Suppose there is a war.
The form in which you hold reserves is crucial. Say
you fight with China. Would the Chinese want to be
holding US Tbills? At maturity in 90 days for example,
does the US give them the dollars after they have
just nuked Washington ( a hopeful example ) ???
If you have weakish allies, do you hold their
notes, if you fear they may be overun by Chinese.
Might not gold be an essential part of a country's
reserves in wartime or any time of major disaster??
What happened in World War two -
I know nothing about this area - I dont think many
people do. I would appreciate any comments - or any
guidance to appropriate reading.

(Sat Jun 14 1997 03:01)
Date: Fri Jun 13 1997 22:44
Steve Shobin of Lehman Bros. putting out a buy on gold stocks.
Maybe I'm dreaming, but check out;
( The above corrects URL of previous post )

all what is about to happen. Ni

(Sat Jun 14 1997 03:07)

To anyone interested: Cover story in the June 7 to
June 13 issue of The Economist on the EMU.

Bernatz de Venterdorm
(Sat Jun 14 1997 04:50)
For Monsiour D'Isgny
Mah fren, please be zo careful not to be offending
zoze marvellous jesters _ monsiour bernie and monsiour
wackair of varmint. Ah lov zat show - monsiour wackair
iss zo cute wiz hees leetle pom poms. And zat pointy
hat zat bernie wears - we lov heem in zee Pyranees.
Ah want to take zee rich peuples monay too - and chop
off zair heads - so zair monsiour zmartee pantz.

General Matsushita
(Sat Jun 14 1997 05:01)
Dear Disney-san
Prease do not be harsh honolable bernie-san and
wacker-san. Flankry speaking, show velly poprurah
in Japan. Content rousy, howevers costumes tellific.

(Sat Jun 14 1997 05:46)
Knowledge = Power

Haven't visited this site for some time because I was afraid to obtain more knowledge, and in the current market the more you know the less money you will make. This contention can actually be proved using basic laws of physics, as follows :

Most people would accept that -

Knowledge is Power

Time is Money

and, as every person knows:

Power = Work / Time

If Knowledge = Power, and Time = Money, then

Knowledge = Work / Money

Solving for Money, we get:

Money = Work / Knowledge

Thus, Money approaches infinity as Knowledge approaches zero,

regardless of the Work done. What this means is:

The Less you Know, the More you Make.

Those of you who are wondering why you cannot make money in the current gold market, it's because you know too much.

Regards, Milhouse

(Sat Jun 14 1997 06:14)
CB Gold Sales

To : John Disney

Any country involved in a war will generally see its currency and debt instruments weakened due to the additional debt taken on and money created to finance the war. If China went to war with the US then the value of US debt owned by China would plummet in value although it could still be sold to anyone except the US Govt.

Virtually every action which is taken these days be governments and their CBs is motivated by short term objectives. You are right in that gold is the only money worth holding in a time of war, but unless a country's political and economic officials expect a war to break out in the next few days this will not be a consideration. Everything which is being done in Europe at the moment is an attempt to meet the apparently conflicting short term goals of achieving EMU requirements and reducing those unemployment numbers. Holding gold does not provide the instant gratification they desire.

Actually, the situation in Europe will likely go from bad to worse. More welfare spending will be needed to "help" the unemployed, which will require increased government spending and increased taxation, which will reduce real economic output, which will lead to higher unemployment and the need for increased spending and increased taxation, etc etc. The socialist machine will eventually lead to the total collapse of the European economy and subsequently a new monetary system based at least partly on gold.

Regards, Milhouse

George S. Cole
(Sat Jun 14 1997 06:35)
gold bottom
NAILZ: Thanks for the info on gold bottoms! As you know I feel this gold bear probably will end with a final brief spike down to the $330-$335 area. Glad to know that history supports this expectation.

Earl: Remember, WW's dictum that news follows price. When the market falls out of bed big time, the reasons will not become obvious for some time after prices have declined sharply. One thing for sure though. At current rarified levels, a tremendous cash inflow will be required just to support the current price structure, much less keep it moving higher.

The key will be the level of selling. Obviously very little of that over the past two months. But once the smart money starts to exit, I doubt that even $10 billion a week of mutual fund buying will be able to prop up this house of cards.

One interesting point re: 401k plans. Remember this is retirement money, and holders DO NOT HAVE TO PAY TAXES ON THEIR ACCRUED GAINS WHEN THEY Sell. People who have to pay capital gains taxes often thinks twice about taking profits; 401k money has no such inhibitions. So much of this "long-term" retirement money may come out of the market much faster than many think when priced head south and do not quickly rebound to new highs.

And with Congress and the Administration about to retroactively cut capital gains taxes, long-term money non-retirement money also will exit this market rapidly at the first sign of serious trouble.

Essentially we have a situation where frenzied greed is the only thing preventing a mass exodus from the market. And when greed turns to fear .....

George S. Cole
(Sat Jun 14 1997 07:11)
Sign of Desperation?
Wonder if the Fed proposal for CB gold dumping reflects a sense of desperation on their part. Perhaps they are finding it ever more difficult to keep the yellow stuff suppressed via the gold loan and modest gold sales route. Fearing that gold will soon experience a huge move up unless the war is escalated, they now are throwing in their last reserves so to speak. Comments?

(Sat Jun 14 1997 07:40)
Days of Whine and Moses
These are frustrating days for me. All around me people who know nothing about the market are experts as the prices are bid up and up. The voices on this forum are voices of reason, but the voices of reason are not making any money. The waiting is exceedingly frustrating especially with long term gold calls that are becoming not so long term now. How does one tell persons in his office that they are going to get burned when the Challenger explodes and returns to earth. I think it was yesterday that the government announced that consumer prices had dropped for the fifth straight month. That's simply amazing given the white hot government presses which continue to spew forth frothy green bilge. Truly we live in an Alice in Wonderland economy where nothing is as it appears. Then to top it all off the Jazz can't seem to play in the fourth quarter and we have to endure more Jordan, Pippen, Rottenman interviews and drowing--just more than a man can take. I will say again as I have before its nice to come to this formum where there are kindred spirits with reasonable thoughts.

(Sat Jun 14 1997 08:00)
Mornin Tort! You'd think for five or ten million a year the Mailman could shoot a foul shot....RE- the stock market: As Panda said at 4.5% a week, why stox....

(Sat Jun 14 1997 08:09)
Ali ( 2:47 ) Mornin Ali...E-mail me about yer life as a wood-splitter...I've been at it fer 30 years and will be back fer more today...Beats playin

(Sat Jun 14 1997 08:13)
To George S. Cole,
Re your "desperation" post. Why would Central Banks make such an announcement ahead of time? Are they attempting to drive down the price of gold so that they can sell at a lower price? The announcement itself is illogical. I am also wondering if perhaps the Central Banks have less gold in reserve than is generally believed. Also, the Clinton Administration announced the future sale of the Strategic Oil reserve only after it had already been sold. Could the same be happening with gold?

(Sat Jun 14 1997 08:28)
Good morning TED!

Milhouse -- Regarding your 05:46, So that's my problem! I shall set out to correct it as soon as I can buy options on the Dow! :- ) ) I will also seek to 'turn off' cognititve processes in the brain regarding 'investing' :- ) ) Clearly, to win in a climate of absurdity, I need to be 'cognitively dissonant'. Translation, the lunatics are in charge of the assylum ( stock market ) , and I'm attempting to be rational! You're right, that can't work. :- ) )

(Sat Jun 14 1997 08:36)
Some good stuff on stox market in Barrons, especially for those who think things are gettin a little out of hand...Barton Biggs thinks something soon will come out of the blue with the violence of a punch in the mouth ( ouch ) to derail the stox mania....He also quoted an old Japanese proverb that was popular in the bull market of the late 80's..."The fools are dancing but the bigger fools are watching"...

(Sat Jun 14 1997 09:07)
USA Today article on gold

(Sat Jun 14 1997 10:21)
Milhouse: There's a flaw in your logic somewhere in your 5:46 posting. Just haven't figured it out yet. Too early in the morning. I got a good laugh though. It's good that you can keep your sense of humor in these times. Ted, I'm off to get Barron's. Will read Biggs.

Bob M
(Sat Jun 14 1997 10:21)
Dont underestimate the resilience of the baby boom investors. Everyone unanimously agrees that a 20% correction will send them off running with their tail between their legs. But those who have been in the market since the early 90's would still be well ahead of the game even under those cicumstances. It will take a major sentiment shift to change them, a lot more then a 20% drop. Besides, every time the market has dropped during their investment time, it has rebounded, until something occurs to change that, why should their thinking and strategies change? I have learned over the years that gold and silver are not long hold investments, if you make a profit get out, if you sit their and wait for the big move your probably going to lose your tail. When a big move starts, there will be plenty of time to get in and take a large chunk of the profit. Suply and demand is not favorable to gold, the supply is ever increasing with new mines and technology. Kind of just like oil, even though the price is higher now then it was in the 70s, it is still cheaper to drive because cars are more efficient. Technology at work!

(Sat Jun 14 1997 10:22)
FED Comments
GEORGE COLE: Has the FED made any gold loans. Has the FED sold any gold. Has the FED endorsed the research report. The Wire Release stated that although it was issued by the FED bank, it was a discussion paper, authored by a Fed economist and three other analysts, one an MIT graduate student, but is the sole responsibility of the authors and should not be seen as reflecting the views of the Fed's board. Would not the FED's endorsement of the report have a greater effect on gold, if that is the FED's intent. Or is this not perhaps merely a trial balloon to obtain the feedback from the financial community for further discussion on the subject in view of the notoriety of CB selling in other countries.
Contra as to gold influencing FED policy, Professor Blinder, the former Vice Chairman of the FED and also member of the Council of Economic Advisers in 93 and 94, recently, in answer to a specific question as to how important gold is in setting economic policy at the FOMC meetings stated "Gold, I would say, has about as close to a zero weight as is humanly possible to give it". Yes, I know this is at odds with news reports that Greenspan uses gold as a key indicator.

George S. Cole
(Sat Jun 14 1997 10:23)
Gene: You implicitly assume the prime objective of the anti-gold CBs ( not all CBs by any means ) is to maximize the proceeds from gold sales. I have a different take. Their main objective is to prevent or at least delay a big rise in gold prices. Their motto is -- "keep the paper bull alive as long as humanly possible." If that means selling or loaning gold cheaply, so be it.

They probably would rather not sell much gold, but probably will try to keep the price depressed via psychological warfare' -- the threat of big sales in the future. If they sold all their bullion, they would not longer be able to manipulate the market. Remember the on again off again threat of IMF sales. Last I heard, the IMF has not actually sold any gold. But the threat of such sales did help put the kibosh on bullion.

I suspect the markets are getting wise to the CB games. They are going to have put up or shut up.

And when gold is ready to make its move, the CBs will not be able to prevent it even if they dump all their reserves. After all a few hundred billion dollars of CB bullion really is chicken feed in a world where stock and foreign exchange transactions total trillions of dollars each day.

When investor demand snaps out of its current doldrums, it really won't matter much what the CBs do. But this demand will not appear until the stock market goes down big time and fear replaces greed as the dominant investor emotion.

George s. Cole
(Sat Jun 14 1997 10:41)
gold war
VIESERRE: The Treasury has not sold any gold for a long time. No data that I am aware of on gold loans, but I suspect they have a lot outstanding.

You're correct -- this probably is a trial balloon and undoubtedly would have a bigger market impact if endorsed by the Fed and/or the Treasury. If this nation ever did decide to sell its gold reserves, the Treasury would make that decision with Congressional approval.

There are differences of opinion on the Fed Board of Governors -- most are not as fanatical on the subject of gold as ex-Governor Wayne Angell. Even so, I suspect that all would sit up and take notice if the price broke through the "unofficial" $400 ceiling.

My take on all this -- Rubin and Greenspan know that a big break in the markets is not far off. Such a debacle would be intensified if it were accompanied by surging gold prices. Greenspan and Rubin are maneuvering to keep gold under control when the market breaks by stepping up the psychological war against the noble metal.

Crystal Ball
(Sat Jun 14 1997 10:41)
@nervous goldbug
The long term gold P&F chart is VERY scary looking ( see at Privateer site ) It looks like a roadmap to the bearish daily and weekly bar chart scenario playing out, with an indicated downside target of *at least* 300 in the longer term.

(Sat Jun 14 1997 10:46)
A Dichotomy
STEVE PUETZ: Would appreciate your views on the apparent dichotomy between the wealth generated by 43% of American consumers who now own stock and presumably have substantially increased their wealth in view of the rising stock market ( this of course excludes gold investors ) together with the almost fully-employed labor market with rising incomes and the record high consumer sentiment on one hand; and modest consumer buying and remarkable continuing decrease in PPI and CPI numbers on the other hand.

(Sat Jun 14 1997 10:59)
: )
GEORGE COLE: And if it is a trial ballon, would it not be appropriate for those spirited among us who post disapproval of such sales to contact their governmental representatives and voice their disapproval, which will certainly not have any less affect than being posted hereon.

(Sat Jun 14 1997 10:59)
: )
GEORGE COLE: And if it is a trial ballon, would it not be appropriate for those spirited among us who post disapproval of such sales to contact their governmental representatives and voice their disapproval, which will certainly not have any less affect than being posted hereon.

(Sat Jun 14 1997 11:07)
Joke of the morn
Howdy Ted, I though you would be out on the water on a nice morning like this or doing your Moses thing on those logs ( parting them ) . With all the whining we often do about the USA at least we are not living in Russia as the following story illustrates.

A Russian man saves his rubles for twenty years to buy a new car. After choosing the model and options he wants, he's not the least bit surprised or even concerned to learn that it will take two years for the new car to be delivered. He thanks the sale sman and starts to leave, but as he
reaches the door he pauses and turns back to the salesman "Do you know which week two years from now the new car will arrive?" he asks.

The salesman checks his notes and tells the man that it will be two years to the exact week. The man thanks the salesman and starts out again, but upon reaching the door, he turns back again.

"Could you possibly tell me what day of the week two years from now the car will arrive?" The salesman, mildly annoyed, checks his notes again and says that it will be exactly two years from this week, on Thursday. The man thanks the salesman and once again starts to leave.

Halfway though the door, he hesitates, turns back, and walks up to the salesman.

"I'm sorry to be so much trouble, but do you know if that will be two years from now on Thursday in the morning, or in the afternoon?" Visibly irritated, the salesman flips through his papers yet another time and says sharply that it will be in the afte rnoon, two years from now
on Thursday.

"That's a relief!" says the man. "The plumber is coming in the morning!"

(Sat Jun 14 1997 11:11)
Canadian Precious Metals Mining Stocks Expert reviews most promising PURE SILVER PLAYS & others. See Goldbugs Weekly Comment - Click RELOAD at Gold Digest page:

(Sat Jun 14 1997 11:33)
Tort: Saturday is me day to go to Sydney and get The Globe+Mail which on Saturdays has a good business section...Was raining earlier but now with the sun peakin out I'm thinkin thoughts of splittin more wood...helps me brain stay barely alive....GOOD JOKE...hahahaha...reminds me of Cape Breton...

(Sat Jun 14 1997 11:50)
Time fer some wood spliitin with the "Monster Maul".....right before I swing I envision Bubba Clinton's face and then....WACK...SPLAT...

(Sat Jun 14 1997 11:55)
Further on the Trial Ballon
GEORGE COLE: Considering further your suspicion that the FED is leasing gold, but you cannot confirm it. I would think that this financial statistic would be obtainable either in public records or through the Freedom of Information Act. And if so, the information would be published in the financial media. But I have not seen it. If the information cannot be obtained because it is deemed sensitive and against the public interest, one has to consider whether the FED has the authority to lease gold. I am not aware of any such authority. If gold cannot be sold without congressional approval, would not the FED be taking an enormous risk of violating this mandate by a lease underwhich the gold itself may not be returned. Assuming such lease information is not publically available and the FED has no authority to lease gold, then the presumption follows that the FED is not leasing gold nor selling it. Arguably, with this in mind, the research grant and trial ballon may be the first step in an evaluation process being undertaken by the FED to determine whether it is advisable to "lease" or sell gold reserves for the public good. And, on this premise, it is something to consider that the major holder of reserves has neither been leasing nor selling gold in the market - as well as the impact of such sales or leases. If anyone has any evidence that the FED has authority to or is leasing gold, please make it known.

(Sat Jun 14 1997 12:00)
Barton Biggs
Today's Barrons carries the following comment by Barton Biggs of morgan Stanley in their Market Watch section.

"I see capitulation and complacency. You never thought what is enough until you know what is more than enough. I have the feeling we are setting up for something out of the blue soon. Something with the stunning violence of a punch in the mouth when you are not expecting it. The dog days of summer have often been the times for brutal mmuggings of investors by the market."

George S. Cole: Seems he has been reading your posts.

(Sat Jun 14 1997 12:08)
Vieserre: Would leasing arrangements necessarily involve the acutal movement of gold from its governmental vaults?

Steve Puetz
(Sat Jun 14 1997 12:08)
Regarding your comment, "The more you know, the less money you make."
ITEM 1: In today's Barron's, Jim Grant ran an ad saying: "So who's crazy -- the market or me? The more intense the craze, to quote a Wall Street adage, the higher the order of intellect that succumbs to it... This [is] perhaps the craziest market since the tulips."

(Sat Jun 14 1997 12:12)
Had trouble. This is a test

Steve Puetz
(Sat Jun 14 1997 12:14)
"The more you know, the less you make."
Milhouse: ITEM 2 from today's Barron's by Alan Abelson, "In a bear market, so runs the old street adage, money returns to its rightful owners. If, we might add, they live long enough.... What the utterance originally meant to convey, we suppose, was extreme contempt for the extravagances invariably created by bull markets. Not so much excesses in the market itself .... but the wanton behavior induced by the potent combination of too much money [read: credit] and too few brains."

(Sat Jun 14 1997 12:15)
GLENN.....We at this site have heard of large sell orders in the $350-355 range which have been sitting in the pit awaiting execution for some time. Can you tell us if there is any truth to that rumor ?????? If so can you get a feel for the size of the waiting sell orders ???? Can you tell who they are from ????? You have mentioned, as I recall, just a touch over $350 as your point to turn bullish. Is that right ???? If so, then the rumors of the large sell orders must be false or you are unaware of their existance. I think it would be interesting to most of us here to know the facts.

(Sat Jun 14 1997 12:19)
TED: Morning Ted, as you can see I am on a roll, having posted more this morning then for the entire past two months. ELY: Used to frequent the boundary waters with ELY as my start point in September of each year going in for a week or more at a time. Remarkable memories. As I paddled in remote areas along massive stone walls fronting the water with paintings portrayed on them by my Indian predecessors as they passed by and changed only by forces of weather, at moments like that, with only the wilderness about me, time seemed to stand still, and I would not have been surprised see the originators in their canoe ahead of me.

(Sat Jun 14 1997 12:23)
ALL: What if all this talk about the CB's gold selling, etc
to talk the price of gold down is just a smoke screen?
Purpose? Common sense tells me that the Euro will not fly
since it is based on a paper house of financial sticks easily
collapsed by an ill wind of confidence. Their only
recourse is a gold backed monetary base. I think the CB
or their beards will be the ones loading up when the price
is low enough.

Or am I giving them too much credit for smarts?

ted butler
(Sat Jun 14 1997 12:26)
trial balloon
Vieserre ( also Bernie from a few days ago ) ,

To the best of my knowledge, the Fed doesn't lease gold, nor do the big CB's, although I have read reports that Switzerland was considering it. It seems that only second and third tier CBs are involved, but are involved up to their eyeballs. It makes the lease game that much more dangerous. The best info I've come across on the subject is free and easy to get. Call the World Gold Council in NY at 212 688 0005 ( during business hours ) for a copy of their Research Report #14, The Gold-Borrowing Market: Recent Developments by Ian Cox.

Dax - all metal loans involve actual physical release or movement of metal.

(Sat Jun 14 1997 12:26)
GLENN....On the other side of the same question, can you tell if there are significant buy orders waiting in the pit ???? If so at what levels ?? If there are, can you tell if they are short stops or new longs ????

(Sat Jun 14 1997 12:27)
Here is Yauger's comment of June 12.

The action for the past couple of weeks confirms we are in a consolidation that will eventually be followed by another leg up towards 120-130 with more bullish potential thereafter. Since 108.74
we have a clear 3 waves down followed by a choppy rise so far. This structure suggests this consolidation is probably taking the shape of a flat. If I am right, expect prices to move towards
108.74 before pulling back one more time towards 98 before the fun begins. A strong move below 96 will change the picture and call for more weakness while a push above 112 will indicate the
next leg up has already begun. This ideal scenario I've outlined seems to be in synch with Gold & Silver. Both are now struggling in a contracting triangle and as of tonight, I cannot rule out
slightly more gain before we see a short but sharp reversal for one more time. Hopefully it would be the last and Gold will not move below 325. This is the critical level for the bullish case.

(Sat Jun 14 1997 12:29)
To Lease or Not to Lease
DAX: Good point, I do not know, but presumably by the nature of a lease there is a transfer of possession or a right to possession, and in any event, is this relevant if the FED does not have authority.

(Sat Jun 14 1997 12:31)
Sorry about that. Here is the reformatted comment.

The action for the past couple of weeks confirms we are in a consolidation that will eventually be followed by another leg up towards 120-130 with more bullish potential thereafter. Since 108.74 we have a clear 3 waves down followed by a choppy rise so far. This structure suggests this consolidation is probably taking the shape of a flat. If I am right, expect prices to move towards 108.74 before pulling back one more time towards 98 before the fun begins. A strong move below 96 will change the picture and call for more weakness while a push above 112 will indicate the next leg up has already begun. This ideal scenario I've outlined seems to be in synch with Gold & Silver. Both are now struggling in a contracting triangle and as of tonight, I cannot rule out slightly more gain before we see a short but sharp reversal for one more time. Hopefully it would be the last and Gold will not move below 325. This is the critical level for the bullish case.

(Sat Jun 14 1997 12:34)
TED BUTLER: Thanks, that is what I suspected.

Steve Puetz
(Sat Jun 14 1997 12:40)
@ Vieserre
Regarding your question about wealth effect from rising stock market co-existing with decline PPI. At the risk of Milhouse's Law being true ( "The more you know, the less money you make" -- that really made an impression on me!! ) , and the consequences the knowledge may cost you, here goes. The rising stock market is a mania. It is not a rising market based on value. It is speculative -- that is, the funds for making stock purchases are almost exclusively borrowed ( either directly or indirectly ) . At this point, the mania is feeding on itself. It sucks in more players and more borrowed funds with each passing day -- thus sending the DJIA to more absurd levels as time passes. This mania is co-existing with a detiorating financial condition. People and businesses have so much debt that the can't repay it -- even the job growth has been expanding for 6 year, and even though unemployment is at a 25 year low. Bankruptcies and delinquencies are rising with each month. The heavy and unpayable debt loaded are deflationary. In fact, they are extremely deflationary.

The decline in the PPI for 5 months in a row ( the longest stretch of declines since the 1950s ) is strong evidence that deflationary forces are over-taking the economy. The decline in retail sales ( for 3 months in a row -- normally a sign that a recession has started ) , is additional evidence of the deflationary forces at work.

The credit that is still being borrowed is going mostly into stocks. There aren't enough good credit risks in the consumer sector to make additional loans there. So we have a collapsing economy on the one hand, and a highly speculative stock market on the other hand. My guess is that speculators will wake up and notice the collapsing economy during the next month or two. Then, the long-awaited stock market crash will be history.

Use this information at your own risk.

(Sat Jun 14 1997 12:42)
Milhouse Your equation this AM reminds me of Justin Mamis book "The Nature of Risk and Stock Market Survival". One his axioms is that you do not need to know why, because the big boys know first, you just need to know /believe what is happening ( and the market doing ) . Read the tape, believe the chart, News is either late or misleading. Narrow for commodities, yet excellent when time to sell/ perhaps buy.

(Sat Jun 14 1997 12:43)
TED BUTLER: Ted, on your comment to DAX, this may be of interest. I read somewhere on the subject of gold leases, that in some cases, gold is not actually transferred. A right to the gold is apparently transferred and this is sold or exchanged or pledged or whatever in the transaction process as if the gold was actually delivered. Interesting!

George S. Cole
(Sat Jun 14 1997 12:47)
gold leasing

I will accept Ted Butler's assetion that the Fed is not now leasing any gold. It seemed so logical that I just assumed it. Of course this could change in the future.

Glenn: Would be interested in your take on this Fed study advocating that the CBs sell all their bullion.

Glad that somebody on Wall Street ( Barton Biggs ) agrees with me on the market. The Dow stocks almost certainly will lose momentum after last week's run even if they haven't quite peaked yet. But the small caps, which lagged badly last week, still may have another 10% or more on the upside before the game ends.

(Sat Jun 14 1997 12:49)
@Shek-usa article.
Shek: Re the USA TODAY bearish gold article, If I recall , when gold started to receive headlines and articles in this national publication at the end of its rally in early '96, it marked the top. Hopefully, the appearance of this bearish article yesterday will mark the bottom.

(Sat Jun 14 1997 13:08)
To know or not to know

MILHOUSE: In my view it is absurd to forgo knowledge because it will lead to unsuccessful investing. The problem is with the use of the knowledge. The tyro believes that with the knowledge he possesses, he can predict what the market will do. The professional uses the knowledge to recognize how much he does not know.

George s. Cole
(Sat Jun 14 1997 13:10)
economic outlook
Steve Puetz: Actually the ecconomy's OVERALL balance sheet is in pretty good shape. Stock market and real estate values have risen much more than debt in recent years.

The problem is that those at the top own almost all of stocks, but owe very little of the consumer debt. The bottom 80%, by contrast, owe most of the debt, but own very little stock. Many people in this group also face dclining real incomes; hence the surge in personal bankruptcies.

So while deflationary forces are mounting for those busineeses serving the middle and lower classes, things have never been better for the upscale firms catering to the "swells' as they were called in the 1920s. Luxury good prices are surging.

In this "dual economy", economic forecasting based on traditional numbers such as consumer bankruptcies has become increasing hazardous.

The stock market itself has a better record of forecasting recessions than any economist. And right now it is saying "no recession". Of course all this could change overnight if the market crashes.

(Sat Jun 14 1997 13:17)
Venerable veteran analyst sees bullish signals on Gold Indicators. Also, his charts paint positive platinum picture. He likes Stillwater, N.A. Palladium & Franco-Nevada. RELOAD at Editorials page:

(Sat Jun 14 1997 13:27)
Wealth and Debt
STEVE PUETZ: Steve, thanks for your comments. Your view of debt defaults is supported in Barrons today by an apparent increase in housing delinguencies. However, even if there is high debt and margin supports the market, still the investor has to have made money and presumably accumulated wealth. And as long as he can drag this out of the market before it collapses, it should flow into the economy. Moreover there is wealth being accumulated by job growth and wage increases presumably even by those who have not invested in the market - which should also have this effect. To have recessionary forces in view of this is a non-sequitur ( sp ) . Interesting times. You may find an article on the subject of how wealth created by the stock market will affect the economy in the Morgan Stanly Global Economic Forum at their web site interesting. It is full of statistics that economists thrive on and which escape me one second after they are read, but the bottom line is it seems to be dependent on how long the market is at this level, whether is goes higher and whether it sharply corrects.

(Sat Jun 14 1997 13:43)
Would someone please provide me with the open, high, low and close of the June S&P? My data service somehow forgot to include this info.

ted butler
(Sat Jun 14 1997 13:45)
Vieserre and George Cole,

V -I've read about those, so I stand corrected, but those aren't the plain vanilla typical loan.

George- I didn't assert that the Fed wasn't doing it, so you may be right. The very nature of who's doing these loans ( CBs and metal dealers ) makes the info super hard to come by, that's why they have been able to go on for so many years and with such a market impact, right under our noses. The guy I subsequently talked to at the Fed said he mailed away for the report I mentioned earlier at my suggestion. It is amazing how little is known about these metal loans.

(Sat Jun 14 1997 13:49)
MILHOUSE: As a futher reflection on my post to you it was a stupid thing to say, said on the spur of the moment, and I would like to apologize for the flippant remark. But I think you got my drift. I often refrain from reading posts as well because of the influence they have. And I have also found at times, the simplist the approach, the more successful the outcome. And knowledge itself does not make for successful investing as witnessed by the plethora of unsuccessful money managers, economists, and company officers who invest in their own industry or company for that matter. So I know where you are coming from.

Steve Puetz
(Sat Jun 14 1997 13:50)
@ Roebear
Roebear: Yes, trend-following is investing without knowledge of the factors that are making a market move. In the present case, stock market trend-followers are making money. Informed investors -- who realize that we are in a mania and stocks are grossly over-valued -- stay out of stocks. That's why I've been chicken to be in stocks, I'm informed. But I still believe that the un-informed bulls will be slaughtered. The trend-followers will wonder: Sell to whom? when the trend reverses course. I guess I will remain chicken and stay out of stocks.

(Sat Jun 14 1997 13:51)
Vieserre: For obvious reasons am glad to see you posting so much and hope it continues as you have much to offer to the forum!..Ely,Minnesota..ah yes,such fond memories and I too used Ely as a starting point heading North into one Canadian lake after another...Nothin like a long portage with blackflies in yer face...ah, the good old days...Once went on a three week canoe trip from Ely into Canada and on the second night out a GIANT bear climbed the tree and got our napsack with half the food for the trip...While the rest compensated by eating fish,I practically starved as even at age 15 did not eat fish or meat...I had to scroung fer berries ...During the entire three week trip we saw no sign of the human race!....Yes,fond memmories........

(Sat Jun 14 1997 13:53)
Our wealth:
In 1963 the us treasury had to clean out a vault ( they needed the space to store currency ) of morgan silver dollars, thousands of bags each with one thousand morgan silver dollars inside. Even back then these coins had good numismatic value. Each of the bags had a mint seal over one hundred years old. What do you think they sold em for? A buck apiece! Some of the coins in those bags were very rare. Did they open the bags and look for the winners? You can probably guess. It was first come first served, cash only, one sack per customer ( but if you had a strong wife you could get two ) . You hand the man ten crisp hundreds and get a fifty pound sack of bu silver dollars. To this day the image is burned in my brain. Hundreds of people lined up on the steps of the treasury, opening their wallets extracting a few pieces of paper and walking away with as much silver as they could carry. Armed guards kept the peace as you dumped the coins on the ground, left your wife to guard em and got the car. What a country! Alas, it was one day only, in a few hours the coins were gone and the vault was filled with paper.

Steve Puetz
(Sat Jun 14 1997 13:55)
@ for your information
I just noticed while pouring over the Stat Section of Barron's today, that volume in the 30 DJIA stocks was the 2nd highest on record this week as the DJIA did its melt-up. Highest volume was in the 3rd week of October 1987. Also, NYSE volume was 3rd highest on record, only exceeded twice earlier this year during January as secondary stocks were making their peak. Could this be the signal we were wating for? The buying panic has occurred??? Blue-chips have made their peak????

Steve Puetz
(Sat Jun 14 1997 14:08)
@ George Cole
George: The idea that debts are not high in relation to the size of either the stock market and/or the economy is a seriously flawed agruement. I explain this in detail in my book "Total Collapse." Nevertheless, this arguement has been widely used. Essentially, debt has been the air that has been inflating the stock market balloon. To argue that a fully inflated balloon can hold more air because the ratio of surface area to inside-air is not much different than when air was first pumped into the balloon -- is an equally insane arguement ( and very much like the one being used by stock market bulls ) .

Steve Puetz
(Sat Jun 14 1997 14:13)
@ Vieserre
Similar to my comments to Roebear, the "wealth effect" is a "feeling" only. There is no substance to it. It is imagined wealth. As soon as investors try to get out of the market and realize their paper gains by selling, they will suddenly be hit by the shocking question: SELL TO WHOM?

(Sat Jun 14 1997 14:13)
A Note of Thanks
GEORGE COLE: Before I leave for the day, I wish to acknowledge my thanks and appreciation for your comments directed to my posts and for your ongoing significant contributions to this forum.

Steve Puetz
(Sat Jun 14 1997 14:18)
All of this about the stock market is significant, because when people suddenly realize that their financial-paper is no good, they will scramble to get liquid by getting into real money -- gold and silver. Then an equally difficult question will arise: BUY GOLD AND SILVER FROM WHOM???? SOMEBODY, SOMEBODY, FIND ME SOME GOLD AND SILVER!!!

(Sat Jun 14 1997 14:27)
TED...Man your battlestation...You have incoming !!!

(Sat Jun 14 1997 14:43)
ALL..There was a lot of caution expressed in the Market Watch section of Barron's. Saw several of you mention specific articles. I thought there were more expressing caution than usual......STEVE...I too am out of stocks right now....except for a few SSC that I plan to add to...Will add some golds sometime....

(Sat Jun 14 1997 14:45)
@taken from

COMEX METALS -- Aug ( GCQ7 ) and spot ( KRCGL ) gold have both moved to the bottom of their respective triangle patterns as seen on daily charts. Bollinger Bands have tightened but not to historically narrow levels. Because the patterns each is in have nearly reached their apexes ( right side points ) , they are likely to be negated by further sideways action. At that point, Bollinger Bands will have tightened further and a breakout should be imminent. The direction is still unclear.

Jly platinum ( PLN7 ) spent the week in a sharp correction consistent with its sharp run-up the week before. Friday's close brought the market below the 38.2% Fibonacci retracement level of the Feb-Jun rally so we may see further weakness to the 50% level near the $415 level.

George S. Cole
(Sat Jun 14 1997 14:53)
volume and price
Steve Puetz: Don't the technicians say that volume generally peaks before price?

(Sat Jun 14 1997 15:02)
With more than $5 billion pouring into the mutual fund reservoir weekly, the Dam will burst. See June 16, 1997 The Coming RUN on Mutual Funds.:

(Sat Jun 14 1997 15:06)
@Hershey Bears
Steve Puetz: Delayed reaction here, following thread between chores. I believe Mamis, who I only know from his books, would recommend being out of market at this point or mostly so. I am, having sold last stock Thursday except for a few metal stocks mostly silver. Anyone having any news of his ( Justins Mamis ) views current ( if he is still around ) I would find that interesting.

ted butler
(Sat Jun 14 1997 15:12)
bw - great silver story, first time I heard it.

I think ole D.A. is going to own the world with those silver calls he's been buying. You have my sincere wishes for success ( although I do hope you don't need all the time ) . A couple of recent observations;
1. bw pointed out the commercials were the lightest they've been on the short side in a while. With Fri's expiration of July options ( close to 30K calls ) . they are super light. This only matters of course if you believe the big guys move ( or let move ) the markets when it's convenient for them.
2. After a lull, there has been heavy physical movement ( in and out ) lately in Comex warehouses. Over the past few days almost 10 million ozs - 300+ tons of silver were removed. While this has happened before, it's a bit unusual two weeks before 1st delivery day, when stocks generally increase.
3. Based on panda's post the other AM on the PGMs yahoo story, there's talk of leases being cancelled that have been outstanding for a while. While lease rates in gold and silver have been coming down in the past few days, it's possible a movement to exit these leases may be starting. This, if true, would be wildly bullish.

(Sat Jun 14 1997 15:25)
To seek more, is to know more
Vieserre - Re: " ( To know or not to know ) ..... The professional uses knowledge to recognize how much he does not know." Therein lay the keys to the kingdom. Well said.

(Sat Jun 14 1997 15:28)
How much of US Gold reserves have been sold in the last 50 years??

(Sat Jun 14 1997 15:28)
White-Sided Dolphins sited 100 feet out from front yard...circling the lobster traps...Nailz: yer message just came in ....fer some reason it reads in 3 long lines...????...will decipher......Gotta run.......

(Sat Jun 14 1997 15:32)
What is the official per ounce valuation of US gold reserves?

(Sat Jun 14 1997 15:39)
RJ: Reserves have been static since the closing of the gold window. It has been said that gold sales are prohibited by law. Whatever that means in today's world. .......Present official valuation is $43.50/oz.

(Sat Jun 14 1997 15:54)
Zero gold sales correct. I had understood, however, that current official valuation is $42/oz. The difference is hardly worth talking about. I had just seen so much here recently on gold sales and revaluation. Expect neither from the US. EC members? Anything is possible.

(Sat Jun 14 1997 15:55)
ALL.. If you want to read some really bullish DOW stuff, go to this morning on AVID.....They had a guest who generated some strongly bullish stuff on there....WOW...some REALLY BIG numbers he says

(Sat Jun 14 1997 16:14)
IOUs won't work
The US mint had to borrow 81,000 ounces of platinum from US strategic reserves to mint the Platinum American Eagle. I bought one of those also @ $695. Took my change in wooden nickels. The treasury bill authorizing the minting of platinum coins, requires the mint to replace these borrowed metals. IOUs will not work here, only the physical metal will do. Admittedly the repayment doesnt have to be made until 2003, but as the platinum coin becomes a self supporting revenue generator, look for the largest mint on earth to be a buyer on world markets. This entirely new source of demand can have a profound effect. Demand for Platinum increases at approximately 4% - 5% per year, with last years increase nearing 7%. Production has barely kept up with demand. Any interruption in production, will cause the price to explode. I still believe in $500 and higher platinum this year, and, like the mid to late 1980s, were are entering into a new trading range. Still holding my platinum, most expensive of which is in the $340s. I will buy more on a breakout, or a consolidation at $410+.

(Sat Jun 14 1997 16:14)
IOUs won't work
The US mint had to borrow 81,000 ounces of platinum from US strategic reserves to mint the Platinum American Eagle. I bought one of those also @ $695. Took my change in wooden nickels. The treasury bill authorizing the minting of platinum coins, requires the mint to replace these borrowed metals. IOUs will not work here, only the physical metal will do. Admittedly the repayment doesnt have to be made until 2003, but as the platinum coin becomes a self supporting revenue generator, look for the largest mint on earth to be a buyer on world markets. This entirely new source of demand can have a profound effect. Demand for Platinum increases at approximately 4% - 5% per year, with last years increase nearing 7%. Production has barely kept up with demand. Any interruption in production, will cause the price to explode. I still believe in $500 and higher platinum this year, and, like the mid to late 1980s, were are entering into a new trading range. Still holding my platinum, most expensive of which is in the $340s. I will buy more on a breakout, or a consolidation at $410+.

(Sat Jun 14 1997 16:17)
I'm only supposed to press that butting once, right?

(Sat Jun 14 1997 16:19)
I give up, I'm going to the beach. Thongs await.

Steve Puetz
(Sat Jun 14 1997 16:33)
@ Roebear
Roebear: I know what you mean. I'm painting the house in between postings. That job isn't on my work-list. It's on the honey-do list.

George S. Cole
(Sat Jun 14 1997 16:39)
Justin Mamis
ROEBEAR: Justin Mamis was quite bearish a few months ago. Obviously prematurely so like many others. I do not know his current call, but suspect he is even more bearish

Steve Puetz
(Sat Jun 14 1997 16:40)
@ George Cole
George: Volume generally does precede price. The only exception to that rule is a market melt-down or a melt-up. For example, the low since 1987 was the heavy volume week in October 1987. If you call last weeks action qualifies as a melt-up ( or blow-off ) , then it could be the top. Selling panics usually happen about once every decade in stocks. Blow-offs, however, are extremely rare in the stock market. In fact, this may be the first one ever.

Steve Puetz
(Sat Jun 14 1997 16:44)
@ Nailz
Nailz: It just hit me while reading your posting that the way the stock market is soaring, Dow Jones should rename the DOW the WOW!

Steve Puetz
(Sat Jun 14 1997 16:46)
@ work
Back to house paintin'.

(Sat Jun 14 1997 17:59)
George S. Cole: In one of your posts you observed that if CB's sell their bullion stocks they won't be able to manipulate the market any more. That comment has stuck with me because I think it implies that most if not all discussion of CB's dumping gold is a bluff. If they
no longer own it, they can't control it.

(Sat Jun 14 1997 18:25)
@ But This Time It Is Different:
A Reminder: Previously posted this chart several weeks ago, but with the "upheveal" in the stock market I thought a "refresh" was in order. This chart is dated 4/4/97.

Notice the last time the market moved over the upper line was in 1929. Note also that this is a constant dollars chart for 1997.

(Sat Jun 14 1997 18:27)
To George S. Cole,
Thank you for your reply and anlysis. I've felt the same way since the summer of 1996 and since then I've been accumulating modest positions in the Canadian Juniors. I've not felt the gold bear because they are at or above their purchase price. I have plenty of time and I will wait patiently for the gold bull. Thanks again.

(Sat Jun 14 1997 18:55)
nailz ( 12:15 ) - Re: Large sell orders at $350. - First let me state that I trade my own account and it is against Echange rules and regulations for me to know where buy and sell orders are. If I was a broker or clerk who was holding large buy or sell orders it would be against exchange rules and regulations to tell anyone or for that matter state on the internet where they were, how many or how much. With that said I do believe that there were large sell orders between 350 and 355. I do not know how long they will be there. I mean at some point in time we will get through 355. Hell, someday we will get throught $400.00, but right now Gold looks awfull. Most of the action this week happened on the open and the close. During the middle of the day, especially during the second half of the week it was quite boring. I mean if someone tried to buy or sell 40 contract they could stop the market for an hour. But on th eclose friday I say a number of semi-large orders ( 150 - 250 contracts ) get crossed with no problems at all. One traders had 150 contracts to buy at 343.10 with one minute to go. I thought that was it, were going higher, but before I could even react another trader about 5 feet away just said "SOLD" and that was that. I'm not sure what it means. After all for every buyer there is a seller. It's just that come monday morning someone's going to be making alot and someone's going to be looseing alot. ( Obviously )

George Cole ( 12:47 ) Re: Central bank sales - Gold is unlike other commodities in that Supply and Demand do not determine if it is in a Bull or Bear market. Copper, supply and demand are everything, but not in Gold!! Supply and Demand WILL determine how low we shall go in a bear market or how high in a bull market but NOT if we are in one. The central banks can sell all they want, when the time is right this will do nothing more than provide the liquidity for some really big traders to enter the market. Plus government officals are the worst traders in the world. They have never been right. So for people in this group to get all worked up about this is nonsense. All this talk and sell can push Gold lower right now because we are in a bear market and would be no matter what, but I will continue to believe in Gold unless the U.S. 30 year government bond is yielding MORE than 9.5% and Gold is still under $400, then at that point I will give up. But right now with Oil crashing down, stocks and bonds souring I only wonder what is holding Gold up right now?

(Sat Jun 14 1997 20:15)
Thanks Glenn
GLENN....Your insights are respected and eagerly saught after. Thanks for sharing. I too wonder what is holding gold up right now....I also expect more of the same for the early part of next week....

(Sat Jun 14 1997 20:19)
WOOPS !!!!! saught=sought

(Sat Jun 14 1997 20:31)
Fidelity Select American Gold & Precious metals Charts
5 Years, 30 day comparison and hourly charts at:
Click on Gold Sectors

(Sat Jun 14 1997 20:56)
To All -Real-time Gold spot prices &Currency prices starting at 10 pm Sunday .You can trade with your mouse in real-time.It only takes seconds for your Gold Trade .Happy Trails.

(Sat Jun 14 1997 21:00)
To All -Real-time Gold spot prices ,Currency prices starting at 10 pm Sunday .You can trade with your mouse in real-time.It only takes seconds for your Gold Trade .Happy Trails.

(Sat Jun 14 1997 21:16)
spot gold
PoorBoys : The site carries forex quotes. Where does one find spot gold price.

(Sat Jun 14 1997 21:28)
Hi Ted!

(Sat Jun 14 1997 21:37)
To NJ-As far as I know these prices are as good or better than most delayed qotes.It is used for and by London based market makers but give me a month to give it a real checkout. Be back to you.See Ya.

(Sat Jun 14 1997 21:46)
Glenn : Government officials don't trade. They set policy, which is executed by skilled Merrill Lynch and Morgan Stanley traders. Besides, government is represented by Bob Rubin who is not to be underestimated as a trader. For gold it will be bad news if long bond yield goes up to 9.5% gradually. What will move gold is an event beyond Rubinspan's control. The reverse crash building up in the financial markets right now may well prove to be that.

(Sat Jun 14 1997 21:51)
Byron: Your 18:25. That's scary.

(Sat Jun 14 1997 21:52)
I got this email. Anybody know anything about this.

Here it is:

Team: I am part of an organization that purchases U.S. Gold Eagle coins
that were introduced by the US Government to help reduce the national

You may have heard of our organization, Family of Eagles. The advantage
is that you not only
- will help reduce the national debt, but
- will have Gold coins in your possession that is a long-term
investment, and
- will make money while doing so.

If any of the members would be interested, please inform me.

There is no catch to this. Yes, you will make money also, but it is not
a get-rich quick scheme. Family of eagles organization uses the network
marketing concepts to purchase Gold Eagle coins that reduces the
national debt.

Give me a chance to send you information and/or speak to you about it.
Of course, No obligations at all. Just a thanks that you listened.

Have a pleasant day.

713 656 1773/home
713 495-7821/home

7506 Las Flores
Houston, Texas 77083

(Sat Jun 14 1997 22:02)
Question: The appeal is to your sense of "obligation" not to anything related to your self interest. They can do nothing for you that you can not do for yourself at lower cost. ( they did not do the mailing because they have a sense of "obligation" ) . Run! Do not walk. ....Away from it.

(Sat Jun 14 1997 22:10)
@the bar
Hi ya Tarnished! Still out there breakin noses? He-HAW....spent the last couple nights in the Cow Bay institution fer shrunkin worked...ouch! I'd be commin out to Alberta but I don't think Iz can deal wit reality Willy! Come tell me a story!

(Sat Jun 14 1997 22:12)
A great accumulation period has arrived for juniors, IMHO. Here is the predictor's top ten picks for your viewing pleasure ( do your research before investing in any security ) : ALTA, BGO, CALVF, CCH, GOLDF, MAENF, REO, SSC, VENGF, and VGZ. If you disagree, you can always express your own opinions or short em'. Best wishes and healthy investing over the next three months ( very volatile, IMHO ) .

(Sat Jun 14 1997 22:13)
Buy Gold ?

To : Steve Puetz

You said in your 14:18 post that when people realise their financial paper is no good, they will want to buy gold and silver. BUT, buy gold and silver from whom ?

This, I believe, is a critical point. IMHO, all the noise about CBs and their gold sales is a red herring. The reason that the gold price is so low, and the only reason why CB sales/rumours of CB sales/CB loans etc have had such an impact, is because the monetary demand for gold ( outside of the Middle East and Asia ) remains very low. When this monetary demand increases, that is, when people start becoming fearful regarding the true value of their financial paper, the gold price will rise irrespective of what CBs do or say.

BTW, I've enjoyed reading your articles on the Gold Eagle website. They have given me another perspective ( I had previously only considered that the current financial situation would end in hyper inflation ) . You seem to be expecting massive deflation caused by a severe contraction of the money supply as the debt bubble implodes ( similar to what has happened in Japan since 1990 ? ) . Either way, gold will be the place to be. Silver - I'm not so sure.

Happy House Painting,

(Sat Jun 14 1997 22:14)
NJ -- Get with the program! The term is 'UPcrash' :- ) )

Let's face it, cash is trash because stox is cash now!

I looked over at the Avid chat, and their guest today was talking about SnP at 1500! The game plan is simple, we all buy and never sell. We kill the first person who even dreams of selling, that way the market can never go down! :- ) )

:- ) ) Remember, stock prices are NEVER set at the margin ( snicker, snicker ) . Everyone who bought MSFT will get $120/share when they sell, EVERY last one of'em. I don't know who will buy the stox, but that's something we can work out later.... much later.... As Lord Keynes said, "In the long run, we are all dead."

OK, OK, it was a bad attempt at humor. In my defense, it's a slow night here.

(Sat Jun 14 1997 22:15)
Byron: Just revisited your chart. ..... Didn't you have similar one for the DOW as well, in the original post? .... What is equally scary is that the chart does not reflect recent action. It is truncated at 4/4/97. .... Who knows, maybe some 120+ years of market action will suddenly be tossed upon the ash heap of history. This is, after all, a marvelous new age.

(Sat Jun 14 1997 22:20)
Knowledge vs No Knowledge

Vieserre - No apologies necessary, but I did think that my post which attempted to prove that the more you know the less money you make was clearly tongue in cheek ( even though it seems to ring true in the current market ) . Actually, what I have found is that the more I learn, the less I realise I know and the more I want to learn.

Best regards, Milhouse

(Sat Jun 14 1997 22:39)
Can the Trader know? Can people wait?

Are the CBs serious about selling all of the gold ?
You bet they are! Except for Germany and the
Dutch. You see, some did not accept that the
physical market is cornered. Many only
read official statistics but others have eyes
and ears that receive thru walls! All new
supply is covered times 4 . And it is the small
existing stocks held by a few , who have
written contracts , that are a problem!
If the governments sell many will wait to be
filled. If they do not the trouble in London
will expand to the currencies!
Time has been purchased.

Steve Puetz
(Sat Jun 14 1997 22:39)
@Alias: Stat-man
There's been a lot of postings about Central Bank gold sales. This really is a non-factor in the gold market. The following table will demonstrate this. It shows gold holdings by all central banks ( including US gold reserves ) , US gold reserves, total gold supply ( private plus public ) , and annual gold production. All are shown in millions of ounces.
Central U.S. total annual
YEAR banks gold supply prod.
---- ------- ---- ------ ------
1957 1077 651 1830 33
1966 1178 392 2159 47
1980 950 264 2782 39
1990 940 262 3298 70
1991 939 262 3370 71
1992 929 262 3442 74
1993 922 262 3514 74
1994 916 262 3586 74
1995 907 262 3658 73
1996 905 262 3730 73

Central Bank sales are a relatively small portion of the supply-demand picture.

For 1996:

Annual gold production is the greatest depressent: -73 million oz.
Central Bank gold sales: -2 million oz.
I'm not sure of this number?? Gold loans: -20 million oz.

Central banks presently hold 24% of above-ground world gold.
Private concerns now hold 76% of above-ground world gold.

The U.S. held 36% of all gold in 1957, now U.S. only holds 7% of gold.
Private concerns are already, by far, the top holders of gold. That's why changes in monetary demand are more important that Central Bank buy-sell decisions.

Steve Puetz
(Sat Jun 14 1997 22:44)
@ Milhouse
Milhouse: I was a mathematics major in college. My that's why I thought your earlier posting was so humorous. I don't believe its true either. It was just funny.

Steve Puetz
(Sat Jun 14 1997 22:54)
@ Question
Question: The only reason to buy gold is because the credit-based financial system of the U.S. is collapsing. As far as reducing the federal debt, at $350, gold does virtually nothing in debt reduction. At its true theoretical monetary value ( something around $35,000/ounce ) it begins to affect debt reduction.

Steve Puetz
(Sat Jun 14 1997 22:57)
@ Central Bank gold sales
Some central banks, such as Canada and Belgium, have already liquidated virtually all of their gold. At this point, those banks are already non-factors in the gold market unless they decide to begin buying again.

irving berlin
(Sat Jun 14 1997 23:02)
Byron, Earl, George Cole & vronsky: You guys make the perfect BARBER-SHOP QUARTET: OK BOYS, let's take it from the top -
........................STANZA I

.........Blue skies smilin' at me
.........Nothin' but blue skies do I see
.........Bluebirds singin' a song
.........Nothin' but bluebirds all day long

(Sat Jun 14 1997 23:07)
Millhouse: You're on a useful track, IMO. For a long time I have been concerned about how the course of events will display itself. Will it be a slow increase in inflation that brings about a general increase in the price of gold, with a lazy rise in gold stocks that allows all hands to take advantage of the traditional 'leverage' or will it be a violent debt implosion and all that portends for currencies as well. ie, stores of value. If the latter case is operative, then some serious thought needs to be done on fundamental issues that most of us hold near and dear.

Yesterday, BW got me thinking about the business again a bit more seriously. If the movement in gold is accompanied by a sudden discontinuous increase in demand, who indeed will the metal be purchased from. The implications of such a scene are that it will be caused by events that are of such a nature that few willing sellers are likely to be found.

Given the narrow scope of our, informational, field of view and the frustrations associated with being involved with this miserable topic to begin with, additional thoughts about the final denoument would seem to be as cogent as "how many angels can dance on the head of a pin". I don't think so. If one is heavily engaged in equities and suddenly it becomes apparent that bullion is the place to be; there will, likely, be no time allowed to correct the error. Witness the recent action in PL and PA and the spreads that developed very quickly. ..... Merely musing on a Saturday.

(Sat Jun 14 1997 23:09)
Oiving: Who in the **** are you? Please place the most egregiously offensive 4 letter anglo saxon expletive you can think of under the stars.

(Sat Jun 14 1997 23:09)
If it gets any quieter around here...... I'll put up some-tech wreck charts with unbelievable bear candles on them! I mean it! While gold and gold derivatives may have sunk slowly, how about $20 weekly bear candles on them tech-wrecks.
:- ) )

Well, if the company stox options pay winds up being worthless at the exercise date...... Just lower the exercise price! Voila! Instant pay and gratification! Why is counterfeiting 'money' illegal and creating it with stox options OK? Why are people accepting this 'new' form of 'money' as pay? What ( giggle, laugh, snicker ) backs this new 'currency'? Why there's not even a promise to pay through extortion, er, I mean, taxation behind it. Go figure!

(Sat Jun 14 1997 23:18)
Steve Puetz: Your numbers on gold volumes are very important, but the way they appear run together is confusing. Please just explain one line, which will clearify the rest. Please ID the following --- thanks:
1996 905 262 3730 73

(Sat Jun 14 1997 23:30)
Panda: Do me with an Intel. I'm especially fond of the way it looks right now. Looks like a dippers delight. No? ....... ( :- ) )

Steve Puetz
(Sat Jun 14 1997 23:31)
@ student
Student: The table did not appear as I typed it. The computer must be using some type of automatic compress. 1996 is the year. 905 million ounces is the amount of gold all central banks hold. 262 is the amount of the US gold stock. 3730 is the total above-ground gold supply ( most of it in private hands ) . 73 is the annual mined-gold production.

(Sat Jun 14 1997 23:50)
EARL: Good advice to Question. I couldn't have said it better.
When a "Good ole boy" says, "I just want to hep you son 'cause
it is the right thing to do" Button up all your pockets
and head for the nearest exit. Come to think about it,
that sounds like the beginnings of a campaign speech.

I wonder if intelligence can be measured by how much paper
loss a goldbug currently has? I sold my blue chips about
a year ago to move into gold. How smart does that make me?

(Sat Jun 14 1997 23:57)
This is a disclaimer....Ted ( 22:10 ) ain't it...Tarnished!...I don't go to bars.....