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.

(Tue Jun 24 1997 00:18)
Larry: Mr Hashimoto may have provided a necessary alert to the rest of the world that the US position is not all that it's cracked up to be. If so the demand for US debt will drop off and ease the dollar value some. But then: Who will buy the bonds? ..... and where will the former bond dollars be spent? The fed will handle the former and gold the latter?

Additional thought: If the trade dollars are spent for gold; won't that also be supportive of the dollar?

(Tue Jun 24 1997 00:19)
Well, I did call the Dow drop last week. Chalk one up for the
line psychic. Also, my golden butterfly is fluttering its
wings. Things are warming up. This talk re Japan; maybe
my butterfly vision was a Japan symbol. They are more into
symbols in writing/thinking than we are here in the west.
When this gold market moves it will be out of the control
of the politicians of any nation. Now, I have to think about
when to sell. After I make a double? Such problems.

(Tue Jun 24 1997 00:23)
ALL: What interest can large countries have in gold? They could enter the gold market as large speculators. If they do this without overpowering all other market participants they can, at best, make a little ( ridiculuosly little ) money ( i.e. garner foreing currency reserves ) in relation to their GDP.

Let's say a country becomes a large speculator with intent to corner the market. In this ( unlikely ) case you, the gold bugs, will be the big winners, IF you do not hang on to your gains for religous reasons but sell out at the right time.

The large speculator loses: he drives up the price and buys most of his holdings at high prices. He buys high and is himself responsible for buying high. He buys a lot. He will have to prove to us that he can also sell high, sell a lot very high. His strategy works against him even if he does not use leverage, although leverage compounds his problems. Time and the high price work against him: THE SUPPLY EXPLODES. There is a lot of gold out there nor is it unknown where it is or how to get it. Since economists are not that silly, we can safely rule out this ambition for large countries.

The only way to be really serious about it, would be to put the national currency on a gold standard. What would that do? It would certainly inspire enormous confidence in that currency and increase the demand for that currency. The currency will rise in relation to other currencies.

Short term effect: Every holder of that currency ( mostly the citizens ) becomes instantly wealthier. That could raise the standard of living in the short term.

Long term effects: The money supply can only be expanded in proportion to an expansion in the gold holdings. This is controlled by domestic mining and purchase from foreign mines. However the funds for purchase from foreign mines must come from running a trade surplus ( they cannot come from printing and not from borrowing money ( for any length of time ) ) . The strong national currency makes it harder to run a trade surplus. Thus the money supply will expand very slowly. This will put constraints on economic growth. To have price stability, you want to expand the money supply to the same degree to which the economy grows. A money supply which shrinks in relation to the economy is deflationary ( far more so than high interest rates ) .

In addition a gold standard severly crimps the flexibility of the monetary authorities to manipulate the national currency for example in the game of international trade ( against their "opponent countries" ) . Thus I don't see a gold standard anywhere on the horizon.

What other intrinsic value might gold have for a large country? None at all is my belief. The prosperity of large nations depends on their knowledge, economic skills, social organization, military power, access to natural resources. for a country it can be quite rational to devalue its currency, thereby impoverishing its citizens, to gain greater economic competiveness and better economic development resulting in higher standards of living at some point in the future.

INDIVIDUALS are in a somewhat different position. For example they might object to such policies of impoverishment ( and others such as inflating the debt away ) and need to prepare themselves for such contingencies. You will have to admit that gold has only very limited use for you other than either as a means of speculation or a ( hopefully nondepreciating ) store of value. The hope of its nondepreciating nature can always be entertained ( but was vain in the last 15 years ) . Thus we are mostly speculators. There is no compelling reason to speculate in gold. In fact there are many reasons to do this in platinum, palladium or silver. Given the CB overhang, gold strikes me as the worst choice. Its value is derived from psychological factors and social convention.

This does not mean that there could not be a huge runup in the price of gold. There could be. But in such case get out at the right time. It won't last forever.

Bill Buckler
(Tue Jun 24 1997 00:33)
Japan and higher US rates
Larry ( 23:43 June 23 ) Mr Hashimoto wants the U.S. to raise rates FIRST - before

the Japanese do. One of Mr Hashimoto's major problems is how to stem the

avalanche of capital which is being borrowed in Japan ( at 0.5% ) and stuffed

into the U.S.. Japan can do that by raising rates, but if they do that on their

own, they indeed risk, amongst other problems, an appreciating Yen.

The U.S. has done absolutely nothing to promote "stable exchange rates".

Just the opposite. They have relied on foreign support for their Treasury

debt to the extent that it has financed almost their entire deficit.

Mr Hashimoto's comment about selling debt for Gold is an indication

that he and his advisors are starting to think that there will NEVER

be a way to promote "stable exchange rates" under the current system

Oh, and by the way, I am sure that Mr Hashimoto's comments

were not made "off the cuff", as the U.S. media characterises them.

(Tue Jun 24 1997 00:56)
Blind Man's Bluff
Hashimoto's comments sound like a high-stakes bluff. Selling off
the U.S. debt will have disasterous effects for Japanese
businesses. The U.S. stock and bond markets will crash, which
will strongly reduce American demand for Japanese exports. Also,
the higher T-bill rates can cause an increased flight of capital
from Japanese private investors, exacerbating their recession.
Mr. Buckler's hypothesis that the comments were merely a ploy to goad
Greenspan into raising rates looks credible right now, as I don't
believe that the Japanese are stupid enough to start an economic
nuclear war that they cannot possibly win.

(Tue Jun 24 1997 00:57)
lots of ways to imagine how the up-coming equities
diaspora will be set-off. the setting-sun could
indeed make another historic run at the american

if history repeats itself, what can we expect? we were at
the mercy of the japanese navy in wwII, and there was divine
intervention. will the divine, intervene in this next attack?
we have sold our-selves down the river! this is a perfect
example of riding on the back of a tiger, you eventually
end-up inside-her. would it be accurate to say that OUR
vehicle that drives the markets, has been cornered?

in the interest of logic...and excessive imaginative juices....


cut off the head of the snake, and the body dies.

bonds are the head of the snake. foreign powers have
snared, and positioned the snake for the fell blow.
were it that the snake, should not have expected it,
he almost welcomes it. could the rush of the lemmings
be any more predictable?

bonds feed the snake.

the snake feeds the bear.

this leaves the bear, where?

"the farther backward you can look, the farther forward you can see."
winston churchill

copper is fixing to do a 50% re-tracement. it's a good short with a favorable risk/reward ratio.
silver has broken-out of its' narrow channel to the upside. well...
that's favorable....

cherokee!; ) inhaler of cosmic debris, and star gazer.

Another Lurker
(Tue Jun 24 1997 01:17)

Now, now! Now, now! lets not get carried away by such
bullish utterances, as were spoken today. They still
have to be backed by fact.
What follows is pure speculation:
When the gold stocks tanked in 1987 with the general
market, the gold metal was relatively higher than today.

Thus I speculate, that if the market tanks; the gold
shares will rise; but 'gold the metal' must rise.

history student
(Tue Jun 24 1997 01:27)
JAPANESE history
Organ: With all due respect, you are totally ignorant of Japanese history and its culture - which has never lent itself to bluff. The Japanese are painfully discreet, and only very rarily will expose their real intentions to the outside. Were you to know the Nippon culture in more depth, you most certainly would alter your opinion of what Minsiter Hashimoto really meant.

(Tue Jun 24 1997 01:39)
Organ : Bluffs are made by junior officials, not by heads of state. Today's remarks were made by Prime Minister Hashimoto of Japan, the world's second largest economy. The remarks were so forthright and blunt the financial press has yet to react to them in a coherent manner. It is folly to treat them in any other way except with utmost seriousness. And yes, I agree with Capt Buckler. From now on, the numbers coming out of the government are not going to be as market friendly and, at the very least, Rubinspan are going to start making statements designed to prepare the markets for a rate increase.

John Disney
(Tue Jun 24 1997 01:41)
To All
I believe GFD's Statement that gold serves as a
"politically neutral" reserve currency and provides
"dissident Governments/CBs alternatives to US currency
bondage in current or future policy conflicts" should
be nailed to everyone wall. I think we have all been
groping at this idea for a long time. GFD got it right.
The fact that you get no interest on it is what you
have to pay to keep dorkos cliton/gore from jamming a
cowboy hat on your head in front of a TV camera.

(Tue Jun 24 1997 01:52)
@Jake Bernstein
It's That time again...



Bernatz de Ventadorm
(Tue Jun 24 1997 02:09)
le fou@Japan
For Monsiour Mike@
Mah fran - ah hav nevair seen you zo exCITE before.
An you write zo much about ow bad is zee gold - and
ow close is zee tie between zee japanese and zee US and
ow eet ees zo much closair zen zee ties between China
and zee Japanese.
Zen you say zee Chinese have zee long memoRIES
and do not forgive zee JapaNESE.
Frankly ma fren, perhaps you forget zat zee japanese
mayBE have zee memories TOO and zey mayBE remembair zee
beeg BOMBS zat zee US drop on zem by gar. Also ma fren
Ah can tell you zat zee tie between zem and zee Chinese
ees strongair zen you zink. Zey can read zee same
crazee language by gar and zey believe in zee traditions
. Also zey would both regard much of zee culture of zee
US as a leetle barbaric.
Ah wondair about you monsiour Mike@. Why are you at
zees site eef you hate zee gold zo much. Do you work
for Sir Rubin zee Bondsman??

(Tue Jun 24 1997 02:16)

No EBN update on Tokyo stocks. Are they closed?

(Tue Jun 24 1997 02:24)
Nippon History
Tis true, my main contact with Japanese culture has been through
dating their fine women. However, I am not completely ignorant of
Japanese history -- in fact I have always found it fascinating, and
it will always be bewildering to me. If you read my comments care-
fully, I never suggested that the comments are not serious. My jaw
hit the floor when I read them today. I remarked to a friend that
the comment was tantamount to "economic nuclear war" -- especially
coming from a Japanese man, where diplomacy and discretion are the
rule. But NUCLEAR WARS CANNOT BE WON, by the initiators or the
initial victims. The Japanese are screwed, and their only trump card
will destroy their own economy as well as the Americans', making it
as ineffective as a real nuclear weapon in combat. That is why I
believe that the Hashimoto comments are a bluff -- economic nuclear
war is just a dumb idea for all sides. This is a move to keep the
dollar nice and high so that the Japanese economy can finally be
revived out of its slump. I believe that this ploy will be successful.

- Organ

(Tue Jun 24 1997 02:31)
Japanese Still Hold Many US $

The Japanese still hold many US $ that are not in short
dated US Treasury Bonds. It can also be said, that the
Yen is much stronger in Dollar terms than it was in 1987.

More important gold is now cheaper than it was in 1987,
at the market crash; and that is, in either of the two

(Tue Jun 24 1997 02:31)
STEVE PUETZ- In answer to your question, no , I decided against the S&P option as i thought it was pricey. Wanted it as a hedge while I'm away for three weeks this summer, in a remote part of the world where the power is shut off at midnight. So I'll probably sell the remaining shares i have instead. I learned long ago at the age of 17 , to disregard anything my broker says. That lesson cost me 5,000.00 dollars but well worth the price.

I dont post very often, but constantly lurking. I want to tell you that i look forward to your posts and work on the Gold Eagle site. Time will prove you to be correct . Not because of the laws of probabilities, but the logical and historical approach you take. Keep up the great work.


(Tue Jun 24 1997 02:46)
I still can't believe that Hashimoto used the "G" word: Gold. I
think that this is the most "offensive" part of his speech ( to the Yanks, anyway ) . My mantra on this site for a while ( based on the writings of the inestimable
Soros ) has always been to watch Japan closely for any sign of an
impending decline in the amount of speculative inflows into the
U.S. economy/markets. Well, no microscope was required here! This
is the sign I have been waiting for. Tomorrow I am shorting the
Nasdaq and I'm going to sell many in-the-money XAU put contracts
( probably at the December 140 strike ) . I expect to collect all of
this premium while sleeping very comfortably at night.

(Tue Jun 24 1997 03:10)
DEAR BERNATZ: I am excited and hoping for a serious selloff in the bond market.

Japanese resentments for the A-bomb? Could be, but would not be entirely rational. Conventional bombing can and has wreaked similar havoc. Do you really care if you are killed or crippled in a nuclear or in a conventional way? Of course the masses are not rational and the topic will be brought up as soon as it is politically expedient. We might even take that as a leading indicator of Japanese retreat from alliance with the US. It would be interesting to hear from Japanese lurkers how they feel about the topic.

Count me as a semi gold-bug ( platinum, silver ) . The Kitco-forum is interesting mainly through the presence of free thinking spirits, which refuse to bow to the "conventional wisdom" of the herd.

Strad Master
(Tue Jun 24 1997 03:24)
Perhaps it isn't fully thought through!
MIKE: I don't know all that much about this subject so maybe I'm all wet, but it seems to me that the bombing of Pearl Harbor wasn't a fully rational act either.

Bernatz de Ventadorm
(Tue Jun 24 1997 04:15)
le_fou@is logical
For Monsiour Mike@
Ma fren - your question as to whezair ah care eef ah
am kill-ed by a conventional bomb or an atomic bomb
does not speak to zee pwoint. Ah prefair neizair by
Zee pwoint ees ow zee ozair japanese people who were
NOT kill-ed by eizair kinds of explosive devices see
zee mattair. Ah believe zey feel zat zee use of zee
nuclear bomb against zem while eet was nevair us-ed
against zee germans was ra-ceest.
Zee US nevair us-ed any bombs against zee Pyranees
and we zank you for zat ( except for a few you drop on
us and Switzerland by mistake of course ) .
So mah fren Mike@, eet mattairs leetle about what you
zink ees logical about zee bomb drop-pings and what you
zink about zis an zat. Ahm telling you mah fren zat zee
japanese ( an ah speek of zee young ones ) do not love
zee US so much as you zink zey do, and zey-zee young
ones speak of zee a-bomb even zho eet was drop before
zey were born. ( even zho you would not zink zat was
logical ) .
Also mah fren ah do not zink eet ees logical for
any poor fool to buy your US bonds - Especially when
pyraneean bonds are available - backed by zee good name
of Bernatz.

Bernatz de Ventadorm
(Tue Jun 24 1997 04:15)
le_fou@is logical
For Monsiour Mike@
Ma fren - your question as to whezair ah care eef ah
am kill-ed by

(Tue Jun 24 1997 04:18)
GUNRUNNER ( 16:00 ) try and
ESTE ( 17:26-Hashimoto ) usual.
BERNATZ- you kill me! ha
RJ...where is RJ?...something IS happening...besides DUPLICITUOS FORNICATION...Hmmmmmmmm...
ALL - you're all mean all!

To add - As I was sitting outside, tonight, enjoying a fine glass of central Cal. coast Merlot, watching a beautiful cloudless sunset, a small rocket ( relatively speaking of course ) went streaking up through the sky. ( I currently live very close to VAFB ) . I have seen countless rockets shoot through the sky and NONE were as beautiful and apropos as this. It was reminiscent to a time back in late April when all the HEADS ( rubinspan, G-7, Japanese ) were talking of trade gaps and currency discrepancies etc...Hmmmmm...look at charts early May-JYM7...It doesn't take a rocket scientist to figure this out...I'm glad I saw it.




(Tue Jun 24 1997 04:23)
I mean... you kill me, by gar!

Bernatz de ventadorm
(Tue Jun 24 1997 04:25)
le fou@plays detective
For Mike@
You nevair answer zee question eef you work for Sir Rubin zee Bondsman.
Ah notice you up vairy late een zee night. Arre you on zee night sheeft
at zee treasury building ??

(Tue Jun 24 1997 04:28)

Good post. It's also true that all "weapons" are eventually used, sooner or later. Might this be the case here too with the threat to sell US treasuries and buy gold? Just finished discussing this with my Japanese wife, and she had some interesting points:

It would have been one thing if Hashimotosan said they would be inclined to no longer buy U.S. Treasury bills.

But it's a much stronger statement to say that Japan would actually be sellers

AND EVEN BETTER, THAT THEY WOULD ACTUALLY BE FORCED TO BUY GOLD!!!!!!!! Ah that four-letter word that politicians hate to hear-that dreaded archaic "stuff" that they can't create out of thin air.

From Cnnfn:

"Dow tumbles 192 points--Retreat from record highs pummels stocks; bonds pull back "

I find it rather humorous that CNNfn failed to even mention this in their explanation of why the DOW had its second biggest drop of all time. Not really surprising, just the usual pathetic groupthink journalism.

My wife said she'd swing buy the newsstand tonight to buy the latest Japanese newspaper, and I'll post anything relevant that we find.

(Tue Jun 24 1997 04:33)
BERNATZ: Simply sleepless. Not a US citizen thus probably not qualified to work for the treasury.

(Tue Jun 24 1997 04:39)
Japan is still an island nation as it was in 1941. It must have raw materials, just as then. It manufactures and sells products so it still needs customers. The point is that whatever it does with bonds and gold it must not upset its suppliers and customers. The US is a large part of both those categories. Japan will act in a way that respects that fact.

George S. Cole
(Tue Jun 24 1997 05:33)
S&P futures up $6.00, dollar index up, gold down 30 cents. Looks like the market will rebound some this morning. But if players start to reassess the odds of a rate increase next week, the rebound may not last long.

Mike Sheller
(Tue Jun 24 1997 06:24)
goldbugs had again
Well, Kitcoites teased and tossed aside again. When will the gang learn that the only sure bet is to copper whatever a government official says. For a group that is generally highly critical of state functionaries ( and for good reason ) , methinks too much stock has been put in recent public remarks. Everyone seems to know just how the Japanese think. For such an "inscrutable" people, so difficult to know what their intentions are, everyone appears to have a direct insight into their national soul. I too have been involved in business dealings with the Japanese, albeit of major corporations rather than government agencies. Nevertheless, even in 1989 when the Nikkei was riding high and everyone was just discovering corporate Japan, many Japanese evidenced attitudes and characteristics more consistent with American behavior than the stereotype held up for them. Japanese, as people of any culture, eventually take on many of the cultural characteristics of the people with whom they closely deal. The key phrase here is closely deal. These people ( Hashimoto, Rubin, Greenspan, etc ) are closer to each other than they are to YOU my goldbug compatriots. Don't ever forget that. Their goals and plans are shared and they always know what each other is thinking about economic tides and unfolding events. They don't have to make threats in public to indicate what they are going to do. Hashimoto's intentions were to rub Clinton's nose in his own cultural crassness. His statement was a sting back at the US in response to a cultural affront and embarrassment. Nothing more. Nothing less. He put on the "cowboy boots" after all. These are our world leaders. We should all be embarrassed.

Mike Sheller
(Tue Jun 24 1997 06:46)
I just want to make it clear that I was not being curmudgeonly to the gang at Kitco. I really don't like to see goldbugs yanked around. I know everyone here can take good care of themselves. And I know that there isn't a sharper, more congenial and constructively combative group anywhere when it comes to the serious issues that affect our bread and butter reality. I was not trying to come off sanctimoniously. Nevertheless, our day will come, and when it does no beaurocrat will see it coming in advance. Only someone at Kitco.

(Tue Jun 24 1997 06:52)
@the scene
We ARE all one big happy family after all! My goodness, but 'they' certainly do act quickly these days! Must have had to spend some bucks last night! And we know that there is a never ending supply of those available!

(Tue Jun 24 1997 07:15)
Globex as the day rolls on:
SP500 +2.55 +540 +830 +855 +755 +815 +745
Nasdaq -9.0 +6.5 +12.0 +16.0 +8.0
If nothing else it should be a volatile night as everyone tries to pre-emt the future direction. If I only knew.

(Tue Jun 24 1997 07:27)
Joke of the morning
Hashimoto's threat to use gold reminds me of the following story:

The other day I was sitting in the doctor's office when a nun came
running out of the exam room screaming and yelling. She was so
upset, she didn't even pay her bill, just slammed the door and left.

About a minute later the doctor came out and the nurse asked him,
"Doctor, what on earth happened in there?"

The doctor replied, "Well, I examined her. Then I told her she
was pregnant."

"Pregnant? A nun? That's impossible!", said the nurse.

"I know. But it sure cured her hiccups."

Crystal Ball
(Tue Jun 24 1997 07:45)
@Just Curious
Is the U.S. using up some of its gold supply to mint the "American Eagles"?

George S. Cole
(Tue Jun 24 1997 08:00)
As I said yesterday, I would hasve been much happier if the markets had moved on no news. As expected Hashimoto has retracted his threat for the time being, gold is down a bit and S&P futures are up strongly. Still feel that Hashimoto's comments do mark the BEGINNING of a major shift in the governing investment paradigm. But this will take time to play itself out.

WW: I must side with APH on the gold stock/gold bullion debate. The fact that the stocks do not rise with bullion indeed signals how bearish gold investors are today. Such an extreme means that risk/reward is very favorable. But sentiment can become even more bearish before the bottom is in. Buying gold stocks when bullion is leading on the upside, or when gold stocks refuse to follow bullion higher can be dangerous to your short-term financial health.

(Tue Jun 24 1997 08:05)
Mike Seller: Good balance. By the way, what's wrong with cowboy boots?

EB, Eldorado - Thanks for the tips! ( Didn't get the #s I was hoping for, but maybe in time.... )

(Tue Jun 24 1997 08:10)
Tortfeasor -- I trade index options on stock. I got burned by Schwab yesterday. Once on their lousy commision schedual, and again on EXTREMLY poor execution on both directions. I got a lousy fill compounded with a FOUR minute delay in executing a market sell to close. The fill took less than thirty seconds to complete! It's things like this that make me think that brokers sometimes trade against their clients. Of course, how does one prove this? To put this simply, my loss was 2.5 times larger than it should have been, not because I didn't know when to get out, it's that they wouldn't let me out. Fortunately, the sum was not that large, BUT, this has been happening repeatedly for the last four to five months on a consistant basis. A nasty cut won't cause you to bleed to death, but if you have enough of them in a short period of time.... I've been trying to close out positions that could cause me angst during the transition from one broker to another. Hence my grief, I still have to deal with these *fine* people.

(Tue Jun 24 1997 08:10)
Crystal Ball: I'm not possitive about gold, but silver and platinum
are taked from U.S. stock piles to be paid back at a
later date.

Yah, you betsah.

(Tue Jun 24 1997 08:20)
Could the Hayshittymoto comments have been staged? Only a couple of days after the G - 7.3+ meeting and he pipes up. Maybe Rubinspan & the boyz got together for drinks ( without their bosses ) and said "Heh, heh, heh, wanna have some fun? This is gonna be cool... Uh, huh, huh"

Since Klintoris, along with the rest of the financial prostitutes, have been ignoring all the "irrational exuberance" comments for months. Perhaps this is their way of gotting some attention... without the pressure getting focused on Greenspan. Greenspan could justify rate increases as a posturing move and not be labeled the guy who "took the punchbowl away from the party"...

(Tue Jun 24 1997 08:33)
Here's how the Hashimoto comments are being reported in Japan. Not much different really. It did make the front page of the evening newspaper, as a side article. The interesting thing about the article here in the Japanese newspaper I saw is that it mentions nothing of the gold comment!! Hey, maybe that's just a given........

Dow falls on Hashimoto's remark


Asahi Evening News

NEW YORK--Prime Minister Ryutaro Hashimoto said in a speech here Monday that Japanese investors could be lured into selling U.S. Treasury bills if the yen-dollar exchange rate keeps fluctuating--a comment that led to a decline in bond prices and subsequently sent New York stock prices plunging.

After Hashimoto's comments were reported, the Dow Jones Industrial Average plummeted by 192.25 points to close at 7,604.26 for the day. It was the second worst daily loss since a decline of 508 points on Oct. 19, 1987, the so-called Black Monday.

When bond prices decline, their yields, or interest rates, rise, which depresses stock prices. When interest rates rise, stocks become relatively less attractive to investors.

The 30-year Treasury bond fell about!, or $5 per $1,000 bond; its yield rose 3 basis points to 6.69 percent. The two-year note yield rose 3 basis points to 6.01 percent.

Hashimoto made the remarks while taking part in a question-and-answer session at Columbia University, after he delivered a speech on Japan-U.S. relations.

His comments were later taken as a threat to sell off U.S. Treasury bills--short-term debt papers-- in the bond market.

He was responding to a question of whether Japanese buyers of U.S. government bonds would continue to put up with exchange losses resulting from market gyrations.

"I hope there is no one here who is with the Federal Reserve Board or the New York Fed," replied Hashimoto. "To tell the truth, there were times when Japan felt tempted to sell off U.S. Treasury bills in large quantities in the past, such as when I was in trade negotiations with ( former U.S. Trade Representative ) Mickey Kantor or when it was clear that the U.S. was not interested in maintaining the value of the dollar, which is the key international currency."

He then called for efforts by U.S. monetary authorities to keep exchange rates from gyrating.

In the late 1980s, Japanese institutional investors such as life insurance companies sustained huge losses in their investment in U.S. government bonds as the dollar plunged against the yen. However, they could not dump their bonds because that would have lowered the dollar's value further.

Vice Finance Minister for International Affairs Takatoshi Kato, who accompanied Hashimoto to New York, told reporters later that his comment was misinterpreted.

Hashimoto's intention was to keep Japan's policy toward the United States consistent, bearing in mind the good relations between the two nations, he said. -end-

(Tue Jun 24 1997 08:50)
George S. Cole : I cannot find any hard news reporting a retraction by Hashimoto. Media is citing various, unnamed, Japanese economists and officials who reportedly have said that Hashimoto's remarks were misinterpreted, including one by Bloomberg that the remarks were made in jest. I find it hard to believe. If you have reliable news story will you please post the url.

(Tue Jun 24 1997 08:51)
Now that Japan has made it clear to the world that they know they can do damage to the US economy by helpinbg their own what will be the expected US response ie in terms of interest rate changes or similiar matters?

(Tue Jun 24 1997 08:57)
US markets see Hashimoto remarks as veiled threats

By Isabelle Clary

NEW YORK, June 23 ( Reuter ) - U.S. financial markets perceived Japanese Prime Minister Ryutaro Hashimoto's latest call for U.S.-Japan foreign exchange cooperation as ``a veiled threat,'' analysts said on Monday.

``It's a veiled threat, a reminder that Japan cannot carry the burden alone, that the United States cannot wash its hands of its responsibility toward the dollar,'' said Chris Turner, director of research at the advisory firm I.D.E.A.

Some confusion surrounded Hashimoto's remarks, delivered in Japanese in a question-and-answer session in New York.

``In the past, we were tempted to sell U.S. Treasuries and buy gold when I was involved in car negotiations with ( then U.S. Trade Representative ) Mickey Kantor and when the U.S. was not interested in the dollar, a world key currency, when it was fluctuating wildly,'' Hashimoto, a former trade minister, said.

``So please cooperate with us to stablize exchange rates in order to prevent us from being tempted to sell U.S. Treasuries and buy gold,'' Hashimoto added.

The comments forced the Dow Jones industrial average down 192.25 points for its second-largest point decline in history.

Dollar/yen extended its losses on the comments, testing support at 114.45 late on Monday in New York, where it had opened at 115.30/40.

Also, the 30-year Treasury bond fell 17/32 to 98 31/32, yielding 6.70 percent, while the COMEX August gold contract gained $1.70 to $341.00 an ounce.

Traders said Hashimoto's comments caught U.S. markets by surprise since they came right after the just-ended Denver, Colo., summit that offered no fresh insight about an eventual foreign exchange cooperation among the Group of Seven leading industrial nations.

``Hashimoto's comments were seen as a response to last week's rumors, coming from a variety of sources, that the dollar/yen policy will be a Japanese story if the U.S.-Japan trade surplus becomes a problem,'' Turner said.

In the past, foreign exchange markets have been prompt to sell dollar/yen on the view the United States would let its currency drift lower to help cap the trade gap with Japan.

``If anything, Hashimoto's comments show there was no new ( foreign exchange ) agreement at the G7,'' Turned stressed.

``Hashimoto's story today is basically your response to Washington,'' Turner added.

If Japan, a huge holder of U.S. government securities, were to start selling Treasuries, this would pressure the dollar. It would also force U.S. market rates higher, making it more costly for the United States to finance its large current account deficit.

``Japan does not want the yen to break below 110.00. It's a warning to Washington as Hashimoto drew a close parallel with the 1994-95 trade talks,'' Turner also noted.

Dollar/yen set a cycle high at 127.47 on May 1 only to weaken anew, setting a recent low of 110.62 on June 11.

MMS International senior analyst John Krey agreed with Turner's assessment.

``I don't think there was any special agreement on foreign exchange at the G7, except to reaffirm their intention regarding relatively stable foreign exchange,'' Krey said.

``This is more political posturing. It can be interpreted as a veiled threat in the event we could not come to some deal about trade,'' added Krey who stressed that Japan ``essentially is a mercantilist economy'' and that the dollar's upside against the yen is limited unless U.S. imports to Japan increase.

Carol Stone, deputy chief economist at Nomura Securities International, pointed out that Japan's threat to sell U.S. Treasuries was not new and that Hashimoto's remarks should not be taken too literally.

``Mr. Hashimoto said what would happen if foreign exchange moves where substantial. There is nothing new there, it's not imminent,'' Stone said. ``Mr. Hashimoto seems quite independent in some of the financial and monetary policies that he wants to pursue. That's not necessarily the view of the other G7.''

Meanwhile, in a statement issued to clarify Hashimoto's remarks Japan's Vice Finance Minister for International Affairs Takatoshi Kato said Japan will continue to cooperate with the United States to stabilize foreign exchange rates.

George S. Cole
(Tue Jun 24 1997 09:23)
NJ: You are correct. Hashimoto did not retract his statement. But senior aides said that his remarks had been "misinterpreted."

(Tue Jun 24 1997 09:30)
A few months ago , I stated that Japan could bring the U.S to their knee's. D.A and others didn't believe this was possible because of the all mighty "US DOLLAR". But when you look at how much worthless U.S paper
Japan holds , compared to other countries , this certainly can influence
the situation.
Now what will probably happen, is that the U.S will threaten Japan and other countries. "YOU MUST HOLD OUR DEBT!!!" or else.
Who is the Dictator??? Billy?????

(Tue Jun 24 1997 09:44)

To actually hear the spin on CNBC htis morning from the "analysists" is beyond debatable points.

"It's only 250 billion of bonds and not that important"
"The market swing was not unusual"
"It was only a 2+% drop"
"Market action was orderly and not unusual" .....
"Hashimoto was just saber rattling"

It goes on and on.... Sounds like whistling past the graveyard to me....

This was the first crack in the dam. One of the principle people in this world actually said outloud, "Be nice or else". The major question in my mind is : "How long will it now take for the other conspirators to leave the sinking ship. Someone just yelled "Get your life jackets" ... women and children first? Not in this world!

They don't have to sell .... just not buy anymore. It will have the same effect. Rates will have to rise and that will kill this market in stocks. Earnings are coming out lower than expectations and everyone has profits to guard. Where will the money ( inflation ) then go? New cars? Boats? I see inflation here! BONDS? Not with the Japanese ready to sell off if someone isn't nice to him! Where?

The statements that selling the bonds will hurt Japan more than the USA is streaching it. To say that the buying of Gold would hurt more than the continuance of receiving even more worthless paper is strange.

Does anyone really think the Japanese will be the last ones to leave the ship? Human nature dictates otherwise. From this point on, Gold has value, bonds are cooperative efforts BUT the crack cannot be plastered over with rhetoric. Japan and China, with a lot of Gold, must worry the hell out of those who think they have "control" at the moment!

July 2 will be more than interesting !

(Tue Jun 24 1997 10:24)


What with Panda haveing broker problems etc., it brings to mind that you were going to talk to your broker about the excess charges you had to pay that you mentioned here. Did you get any resolution to that situation to your benefit?


(Tue Jun 24 1997 12:25)
I bet Hashmeister plays a little stick...probably a sandbaggin' 10 handicap.



(Tue Jun 24 1997 12:49)
@the market
Looks like time for next leg up. We'll see how it gets treated.

(Tue Jun 24 1997 12:53)
Famous Historic Paradigm Shift Denials
To All:

The following Paradigm Shifts were greeted with these denials or expectancies.

"Computers in the future may weigh no more than 1.5 tons." --Popular
Mechanics, forecasting the relentless march of science, 1949

"I think there is a world market for maybe five computers." --Thomas Watson, chairman of IBM, 1943.

"I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won't last out the year." --The editor in charge of business books for Prentice Hall, 1957.

"But what ... is it good for?" --Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip.

"There is no reason anyone would want a computer in their home." --Ken
Olson, president, chairman and founder of Digital Equipment Corp., 1977.

"This 'telephone' has too many shortcomings to be seriously considered as
a means of communication. The device is inherently of no value to us."
--Western Union internal memo, 1876.

"The wireless music box has no imaginable commercial value. Who would
pay for a message sent to nobody in particular?" --David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s.

"The concept is interesting and well-formed, but in order to earn better
than a 'C,' the idea must be feasible." --A Yale University management
professor in response to Fred Smith's paper proposing reliable overnight
delivery service. ( Smith went on to found Federal Express Corp. )

"Who the hell wants to *hear* actors talk?" --H.M. Warner, Warner Brothers, 1927.

"I'm just glad it'll be Clark Gable who's falling on his face and not Gary Cooper." --Gary Cooper on his decision not to take the leading role in "Gone With The Wind."

"A cookie store is a bad idea. Besides, the market research reports say
America likes crispy cookies, not soft and chewy cookies like you make."
--Response to Debbi Fields' idea of starting Mrs. Fields' Cookies.

"We don't like their sound, and guitar music is on the way out." --Decca
Recording Co. rejecting the Beatles, 1962.

"Heavier-than-air flying machines are impossible." --Lord Kelvin, president, Royal Society, 1895.

"If I had thought about it, I wouldn't have done the experiment. The
literature was full of examples that said you can't do this." --Spencer
Silver on the work that led to the unique adhesives for 3-M "Post-It"

"So we went to Atari and said, 'Hey, we've got this amazing thing, even built with some of your parts, and what do you think about funding us? Or we'll give it to you. We just want to do it. Pay our salary, we'll come work for you.' And they said, 'No.' So then we went to Hewlett-Packard, and they said, 'Hey, we don't need you. You haven't got through college yet.'" --Apple Computer Inc. founder Steve Jobs on attempts to get Atari and H-P interested in his and Steve Wozniak's personal computer.

"Professor Goddard does not know the relation between action and reaction
and the need to have something better than a vacuum against which to react. He seems to lack the basic knowledge ladled out daily in high schools."--1921 New York Times editorial about Robert Goddard's revolutionary rocket work.

"You want to have consistent and uniform muscle development across all of
your muscles? It can't be done. It's just a fact of life. You just have to accept inconsistent muscle development as an unalterable condition of
weight training." --Response to Arthur Jones, who solved the "unsolvable"
problem by inventing Nautilus.

"Drill for oil? You mean drill into the ground to try and find oil? You're crazy." --Drillers who Edwin L. Drake tried to enlist to his project to drill for oil in 1859.

"Stocks have reached what looks like a permanently high plateau." --Irving Fisher, Professor of Economics, Yale University, 1929.

"Airplanes are interesting toys but of no military value." --Marechal
Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre.

"Everything that can be invented has been invented." --Charles H. Duell,
Commissioner, U.S. Office of Patents, 1899.

"Louis Pasteur's theory of germs is ridiculous fiction". --Pierre Pachet,
Professor of Physiology at Toulouse, 1872

"The abdomen, the chest, and the brain will forever be shut from the
intrusion of the wise and humane surgeon". --Sir John Eric Ericksen, British surgeon, appointed Surgeon-Extraordinary to Queen Victoria 1873.

"640K ought to be enough for anybody." -- Bill Gates, 1981

(Tue Jun 24 1997 13:15)
Panda!: Do brokers trade against their clients?! In OPTIONS?? LOL!!! This reminds me of a story from a friend who was a big trader in the early 80's. It turns out that years later he ran into an ex floor trader who knew him by name!!! So much for chinese walls, confidentiality etc.

I always assume that unless I am dealing with a very lean and efficient discount broker who simply does not have the time to screw his customers that when I trade that: a. ) I will be bucketed; b. ) by my broker; c. ) by my brokers trading desk ( ahem - *matching* customer orders - much more efficient for the customers that way you know.. ) d. ) by my brokers floor traders and e. ) most importantly of all by the market makers - if they ever get their hands on my raped and bleeding order....

I have taken the view that taking positional plays in long dated options is the only way to play the option game. Maybe someone else may wish to comment about really positive experiences to balance things... ( or at least provide a story more amazing that crashed UFO's... )

Richard Burke
(Tue Jun 24 1997 13:19)
gcq7 Shoulders
GCQ7 just completed second set of slightly higher shoulders and is on upturn again. What is the TA for this pattern - more bullish than one set?

(Tue Jun 24 1997 13:39)
Arch Crawford was just on the local tube, he's looking for an explosive move up in the metals into a top date, the middle of next month.

Richard Burke
(Tue Jun 24 1997 13:42)
Gone Fishing?
It looks like everyone has gone fishing this morning.

(Tue Jun 24 1997 13:45)
@the market
So far, this 'leg' up isn't much of that. Now currently testing 340 ( Aug ) area once again. Not particularly good, since it couldn't even test previous close! Breakdown below 339.8 probably will not bode well for it IMHO.

Steve (Perth - Western Australia)
(Tue Jun 24 1997 13:45)
Australia "survived" Hashimoto better than the US.

A thunderstorm is brewing, so time to turn the PC off & hit the sack.
Remember, go back & look at Panda's bond charts. Also, have a look at
the article on Bonds in Business Week ( now out ) "Are Bonds ready to
pick up steam?". I may post URL in a few minutes....

Steve (Perth - Western Australia)
(Tue Jun 24 1997 13:58)
I wonder if "Business Week" is a propaganda outfit for you know who??
"Are Bonds ready to pick up steam?" Maybe Ian A. MacKinnon from Vanguard's Bond Fund ( $93 million ) has been reading Panda's charts??
Clever bloke...

Steve (Perth - Western Australia)
(Tue Jun 24 1997 14:00)
APOLOGIES: It IS time I hit the sack...
I wonder if "Business Week" is a propaganda outfit for you know who??
"Are Bonds ready to pick up steam?" Maybe Ian A. MacKinnon from Vanguard's Bond Fund ( $93 BILLION ) has been reading Panda's charts??
Clever bloke... ( Whats a few billion anyway?? )

(Tue Jun 24 1997 14:10)
@ The Public Library

If there truely is a group in the Far East attempting to corner the gold market, their major concern is possible selling by the central banks. Could Mr. Hashimoto's comments eased that concern of central bank selling. Maybe the comments were than about currency stability.

(Tue Jun 24 1997 14:19)
In the light of golds sickly performance for many months, Gold Seer Aurophile examines the noble metals history, symptoms & prognosis. See Analysis section:

(Tue Jun 24 1997 14:36)
the ill winds of confusion are blowing across
the vast paper tundra. the ptarmagin is even exposed!
the many giants ( DA, peutz ) who proffer their accurate
prognostications help to create buffers against the
whip-sawing knee-jerk reaction that seems to drive
markets of late. thanks------for "seeing."

for steve peutz and DA---

"if i have seen farther than others, it is because i have stood on
the shoulders of giants." ------ isaac newton-------

cherokee!; ) climber-of-the-green-bean-vine.

(Tue Jun 24 1997 21:15)
@keep on knocking!
Where is everybody?

(Tue Jun 24 1997 21:17)

Where has everyone been? Did gold go to 0 today?

(Tue Jun 24 1997 21:18)
Bart: Terrorists? Feds? Floods? What happened?

(Tue Jun 24 1997 21:28)
@kitco alone
EBN Gold up .30 and rising. The following is a public service announcement:
An ONZA is any silver coin ( Mexican ) that weighs 31.103 grams regardless of its alloy. The modern so-called Libertads are onzas of pure silver.
The 1996 changed design is also issued in both mint ( Bullion ) and Proof
versions in 1/20, 1/10, 1/4, 1/2, 1, 2 and 5 ounces.

(Tue Jun 24 1997 21:29)
@ In The Void:
Does anyone know where I can pick up a " I survived 5 hours without Kitco tee shirt."?

(Tue Jun 24 1997 21:29)
All especially Bart,

All seems ok again, had trouble the last 24 hrs or so accessing, don't know where the trouble was.

anyway the charts are looking good to me, and today we should see some happy faces, by next week more smiles, etc. etc.

Was that a short term prediction? Careful y'all, I'm not always right short term. Where's Glenn, or RJ? HELP

(Tue Jun 24 1997 21:33)
@silver rocket launch countdown?
Silver is setting itself up for a nice move, IMHO. Looking at the relative strength chart can sometime clear up some things in periods of congestion like we have had the last few weeks. I have a 14 day relative strength index chart dating back several months. Yesterday the metal broke out above a downtrend line connecting tops from mid Feb, early March, and late May. Today's action was a typical pullback to the original downtrend line. BTW, I have revised my July target price from 5.90 to 6.30 by the 22nd. Happy trading to all!

(Tue Jun 24 1997 21:33)
Oracle@japanese.SURVIVAL.Part - I (24 June 1997)
JAPAN BETWEEN A ROCK AND A HARD SPOT: Only Solution Is To Dump U.S. Treasuries and Buy GOLD! ( PART - I ) . See ORACLE in Gold Digest - MUST CLICK RELOAD:

(Tue Jun 24 1997 21:35)
@ Last Posting Before Blackout:
cherokee: your's was the last post before the blackout. Truly a powerful post. : )

Paul Smith
(Tue Jun 24 1997 21:38)
Re: Bill Buckler's comments..." Mr Hashimoto's remarks are a clear ultimatum to Mr Greenspan and the Fed: Raise U.S. rates at this FOMC meeting - OR ELSE!" I agree with you entirely but is Greenspan listening ? Can Greenspan raise rates - there is a lot of pressure on him not to. Does anyone really think there will be a rate hike next week ? I wonder. Nothing is going the way it should.

I'm a goldbug but when I see that purchasing Compaq shares 12 months ago would have TRIPLED my money, what am I doing chasing gold and buying puts on the S & P ??

Anyone any comments ?


(Tue Jun 24 1997 21:39)
Note this
Article for perusal:

LUCAN A.D. 39-68
(Tue Jun 24 1997 21:43)
@Newton better stop stealing my quotes
"Pigmies placed on the shoulders of giants see more than the giants themselves".

(Tue Jun 24 1997 21:48)
If Japan is involved in anything more than posturing then the buying of gold and the reduction of US debt held is probably underway. As has been mentioned elsewhere it is difficult to see why Japan with all its obvious wisdom would sell off the worlds current equivalent of gold and buy a commodity in multi year decline. Japan is one of the most dependent countries on the globe. It has more people than most of us can imagine stashed in a very small land mass and they have virtually no natural resources and must import almost everything including food. If they are hurting so much that they are willing to risk upsetting the financial status quo then it has been a very well kept secret and still is.

(Tue Jun 24 1997 21:48)
@ Wondering:
I recall that Mr. Greenspan's irrational exhuberance speech also had ( was it one day ) an effect on the markets. Buy how long did that last? Why should things be different for Mr. Hashimoto's comments of yesterday. Will the markets remember a week from now? No, I think I'll stay with the technicals and charts.

(Tue Jun 24 1997 21:49)
GOLFERS- have noticed from several comments, that we have some avid golfers out there. As we can only play on one course here, the country being small and all, I want to tell all, that it's a nice course, sandy rough of course, buit on dunes, and this year, as every four, ther's a Maccabia tournement. But if any out there have contacts with some world class Pros and could arrange something please contact me, and I'll see what I can do.

I'm not a sandbagin 10 handicapper!

(Tue Jun 24 1997 21:55)
Wild Euphoria, Expiration Pause, Quarter's End & Risk Loom (6/23/97)
CNBC Financial Celebrity believes market still not seen top - but its on tippy-toes. On Gold: ...this is what a bottom looks like. Gene Inger letter Forecast:

(Tue Jun 24 1997 21:58)
@ Whoa Nellie:
The overnight Globlex quotes shows Japanese Yen at +100.

(Tue Jun 24 1997 22:00)
looks like Kitco is working again
EB: thx for your nice comment.
Mooney: what happened to the enlightenment from our common friend Louis Seize? Did Marie Antoinette also have something to say? You must know that she was as good as her husband; a fine lady indeed. Official history has misrepresented and lied about her too, as it has in the case of other famous people. Remember Lucrezia Borgia? She turned out to be a saintly woman. Never poisoned anybody and was a wonderful wife, mother and pious woman.
What about the much maligned Ching Dowager Empress Tzu Hsi that British propaganda portrayed as evil and guilty, among other things, to have raided the Treasury to build the Summer Palace. She also turned out to be
quite decent and committed none of the alleged crimes.

(Tue Jun 24 1997 22:08)
EBN Gold up .40 and rising. EBN Yen to dollar at 113.56 and falling.

(Tue Jun 24 1997 22:19)
This should be better. It's that time again -

(Tue Jun 24 1997 22:21)
@ No Spell ckeck
Speed: Sorry about the letter "l". It's already been a "l" of a week.

(Tue Jun 24 1997 22:23)
Reminder: On stocks: I still stand by my prediction of Dow 8000 by month's end. July will be down month ( also for metals ... reaching the end of the bear market for metals ) . August Up. Followed by down period.
Metals begin their bull market August timeframe ( solid climb through next March ) . S&P should hit 900 by month's end ( obviously ) and Nasdaq has a decent shot at 1500. Remember, this is all the Predictor's opinion. White Metals will probably outperformed Gold ( gold may approach $460 by next March ... the only reason it will hit those levels is short covering ... fundamentals are better for the white metals.

(Tue Jun 24 1997 22:23)
Now that we're back and running here! I caught this interesting little story about Nazis gold. Guess what guys/ gals? You know who going to get it? That right! The CBs. What a surprise! NOT!

(Tue Jun 24 1997 22:24)

Things are getting wierder by the day. Just when one thought that the stock market couldn't get any more crazy we have the last two days. Coming as it does in the face of Steve Puetz's 20 reasons for decline, it looks like we may be in the very final stages of the blowoff. If we have another strong day tomorrow, we will venture in on Thursday from the short side. The last time we messed around on the shortside was at 750 on the SP. Its now 900. Since we are at the end of quarter, I assume that investment committees are begining their deliberations. How someone with discretionary authority over funds can have them invested in equities is beyond me.

In the gold market it is interesting to note that put option premiums have been climbing of late and are now greater that call option premiums. This is something which has not happened in many moons. It is suggestive of capitulation. This structural change, absent of any real change in price is compelling.

With only a few days to go before the Hong Kong turnover, it is worthwile to mention an article in the FT today about the explosion in the HK real estate market. With such a radical political change coming, I wonder just how safe the housing market and by association the HK stock market is.

Someone posted today that they thought that the reason for Hashimoto's statement was that they were trying to get the U.S. to raise rates so that they too could raise rates. I think this is probably quite close to the mark. The Tanken survey is released today in Japan ( probably out by now as the Yen is up 70 ticks on the Globex ) . The government obviously has a heads up and it would appear that the survey is going to come in on the strong side. This would push the BOJ to begin the process of reigning in their expansive monetary policy. This of course would lead to a strengthening of the Yen which is not something they are wild about. One way for them to keep the Yen down would be to crank up the presses ( or hit the computer keys ) and then go out and purchase physical assets with the printed Yen. Gold of course fits well in the physical asset framework.

Speaking of money supply, German M1 now growing at a rate of better than 12% per annum over the last 6 months. M1 usually has a tight correlation with GDP growth. This combined with jumps in industrial production point towards a rebound in core European growth. For those looking for a deflationary collapse, it ain't going to happen until rates get fired up due to excessive growth.

We still have not gotten a buy signal from our system on gold, but the indicators are improving. I've looked back, and this commodity has set the record for longest period of time without a buy signal over the last ten years.

With the end of quarter approaching I'll bet we start to get some news on mine closures. At $340 a lot of folks are bleeding.

Our lastest attempt at shorting the Italian bond market is meeting with failure. The spread we put on at DTB's 50 basis points over US treasuries is now down near 40 basis points. We will scale into this position as the spread narrows. Who knows, maybe Lira will become the worlds reserve currency.

On EMU, interesting sidebar in the FT on 'German intransigence' with regard to allowing Italy or Spain into EMU. The markets however do not seem to notice as the convergence trade keeps on rolling.

Looks like Cocoa could be on the way to being next on the list of commodities that experiences rational exuberance.

(Tue Jun 24 1997 22:25)
Sure sucks when you buy gold when its bottoming. But have faith, it will go up don't worry! Most get in the action once the shuttle leaves the launch pad, so just think countdown has started and you have a window seat. I think gold and XAU has corrected for its ABC bottom now, so expect gold to rise over the next few weeks after farting about abit this week. If you havn't bought your ticket, now is a good time!

(Tue Jun 24 1997 22:26)
@ Glad to see Kitco up and running again
ALL: There's quite a difference of opinion about what Hashimoto meant by his speech yesterday. After reading all of the Kitco comments and news releases, it seems that Hashimoto wants a stable US Dollar in the 110 area. Japan must think 127 is too high for the Dollar, 80 is too low.

If that's the case, an the Dollar does fall below 110, then there will be great pressure on the FOMC to raise interst rates next week.

How will the Dollar and the markets respond to a hike in interst rates?
I believe the US economy is already in a recession. If not, it's very close to one. Retail sales are fallin, inventories are rising.

Ironically, in today's world of global fiat currencies, when an economy weakens, currency traders usually respond initially by selling the currency of that country. Currency traders will probably be shocked if the Fed raises interest rates next week. Fears of recession will likely be increased. Instead of helping the Dollar, a hike in interest rates will likely intensify a Dollar sell-off. Such a move will back-fire.

It will be interesting to see how this all plays out. I agree with those who say that Hashimoto lit the fuse to a bomb. While most say, "Look, nothing has exploded!" Others are likely to notice that the fuse is still burning, and they will likely run for cover.

Hashimoto's comments are very likely one of those comments that exert a very powerful force on the markets -- but, they only do so with a delayed reaction. They next few days and weeks should show just how powerful the reaction is. Is still believe the massive short position in gold has to be extremely nervous. I still look for gold and silver to rally sharply during the next few weeks.

(Tue Jun 24 1997 22:28)
Byron: Where do you get Globex quotes? I have EBN and DBC and CNNFN. I agree, it's been one L of a week already. Am taking delivery on some coins this week. The prices are right!

(Tue Jun 24 1997 22:35)
@ Hear ye, hear ye:
Speed: Globex overnight quotes at

You need to scroll down to the bottom and click on Globex Flash Page.

(Tue Jun 24 1997 22:39)
@ On A Roll:
Yesterday following the Prime Minister's remarks, the Dow went dow ( n ) 195. Today it was up 150+. I quess you can call that "in-your-face" diplomacy. ; )

(Tue Jun 24 1997 22:39)
Puetz -- The dam has a crack in it. The water flowing throught the crack is erroding more of the dam. Now more water at higher volume is flowing through a bigger fissure, thus futher enlarging the fissure. At some some point the dam succombs to structural weakness and collapses, releasing a flood.

Funny how the Central Bankers wound up with the Nazis gold isn't it? They keep the gold and set up a fund for the survivors. What a way to get your hands on more gold. The reason? Maybe to dump it on the market or, they need it because they're not going to get their loaned out gold back! What a world! :- (

Predictor(to DA)
(Tue Jun 24 1997 22:40)
DA: Money in equities comment. It is all about window dressing and peer pressure ( what people want to hear ) . July will be a dangerous month for the markets IMO.

(Tue Jun 24 1997 22:44)
Cherokee-you see things...
Your vision astonishes me. Your call on Copper was fanTASTIC! Thanks. We made a pretty to speak.

I look forward to your savory posts and I drink them down like nectar from the gods.




(Tue Jun 24 1997 22:44)
Tanken survey, things are good.

(Tue Jun 24 1997 22:47)
Byron -- Can you say, MANIC? Is this indicative of topping action? ( hint; maybe! ) Is there fear? NO. This bubble will end like all other bubbles have in the past. The only problem is the timing!

(Tue Jun 24 1997 22:53)

This would be the oddest recession ever. Consumer confidence is at an all time high. Inventory to sales ratio at an all time low. Stock market going balistic, money growth accelerating and unemployment at 20 year low. Europe and Japan finally having accelerating growth which means more exports for US. Classically, recessions have occured after large inventory buildups and subsequent rate hikes. I could see a recession induced by Fed tightening, but their 25 basis point tweak of a few months back ain't going to do the job. Economies generally do not roll over of their own accord. They have to be pushed. Since the politicians have their hands around the throats of the Central bankers this expansion is going to blow up.

Las Cristinas Update
(Tue Jun 24 1997 22:55)
interesting stuff
Caracas: Saturday, June 21, 1997 -- News from a VHeadline/VENews source in London says that
( Canadian ) Crystallex International Corporation shares could soar to anything between $50-$63
during the next week ahead of an Annual General Meeting of the company to be held in Vancouver
next Friday ( June 27 ) .

Reserve estimates at Crystallex's Las Cristinas 4 & 6 concessions at KM88 in Venezuela are "under
revision" and an expected announcement paralleling -- if not exceeding -- Gold Reserve's
reassessment is seen as "imminent".

Crystallex International's president Marc Oppenheimer and Vip Richard Marshall have gone to
ground ( supposedly in New Jersey ) as details leak that "a major international hedgefund" has been
buying Crystallex ( KRY ) stock like there's no tomorrow. It's said to be approaching a critical 9.95%
of the company's stock purchased on the open market, but it's known that the buyers have been
trying to work a behind-the-scenes deal to get their hands on some $20 million-worth more shares
without running foul of mandatory disclosure regulations.

Meanwhile, here in Venezuela there's "concealed activity" as Economic Coordination and Planning
( Cordiplan ) Minister Teodoro Petkoff mulls over the past week's meeting with Crystallex lawyers in
which it was made patently clear that the Canadian company holds all the cards. Sources close to the
Minister say he's working out the best way to get rid of Venezuelan Guyana Corporation ( CVG )
president Elias Nadim Ynaty without upsetting an applecart implied in the upcoming privatization
sell-off of state-owned Siderurigca de Orinoco ( SIDOR ) .

Ynaty's been a fly-in-the-soup to all concerned recently and has caused "discontent" at the Accion
Democratica ( AD ) Central Executive Committee over unabashed statements that appear to place
him as an official spokesman for AD ... a major faux pas which AD leaders have not been tardy to
very publicly point out.

Behind the scenes, Minister Petkoff has promoted the possibility of pulling CVG out of Las Cristinas
where it holds a 30% joint venture partnership with ( Canadian ) Placer Dome. But the reality is that
former-guerrilla Petkoff -- who is on a personal crusade to clean up Venezuela's corruption-ridden
bureaucracy -- would rather see Placer Dome take a hike after the Supreme Court of Justice ( CSJ )
hands down its rubber-stamp ruling projected for early next week.

Placer Dome ( despite its protests of innocence ) is said to have been very much aware of Crystallex's
unequivocal rights to the Las Cristinas 4 & 6 concessions at a very early stage of the proceedings.
They'd been made patently aware of the situation by their Venezuelan head of operations Brooke
MacDonald, who was pulled out to Costa Rica when the going began to get rough. Although the
pull-out may have been "mutual" MacDonald decided himself to jump ship completely after only a
few days in San Jose whereupon he returned to Vancouver.

CVG Ynaty's been frantically "pushing bells" in Vancouver recently too, but his credibility has been
going through Canadian topsoil just as quickly as it already has on home base.

Energy & Mines Minister Erwin Arrieta is increasingly seeing Ynaty as an embarrassment and Placer
Dome has distanced itself with the speed of light from Ynaty's OTT claim that CVG's going to sue

Nevertheless, the next six days to Vancouver should be pretty exciting. Drilling results and assay
reports are under lock and key but according to VHeadline/VENews usually reliable source in the
City, we're probably talking in excess of $1.5 billion...

(Tue Jun 24 1997 22:55)
Hi again everyone!! Whew! What was that 5 hour gap all about? You would think the DJIA had a 300 point swing in two days or sumthin.... Maybe that was just a dress rehersal for what it will be like when we sell out at $600 and all go on vacation at once!

Better late than's the backpeddling the Japanese are doing:

(Tue Jun 24 1997 22:55)
You know, it's a funny thing. Ever since Hashimoto's comment on the T-Bond/gold thing, all that I hear on talk radio is discussion about the slow depreciation of the Dollar over the decades. I think Hashimoto's comment has got many people thinking, that is those who heard it! Indeed, the dike/dam does have a few leaks in it! Now, where is the little boy to stick his fingers in the holes? AG? RR? BC? :- ) )

(Tue Jun 24 1997 22:56)
It was said in this group that the Japanese are not impetuos. This seemed a bit rash for the Hashmeister. Did the Hashman say what he said to see what kind of response he would get?

( not to beat this horse, again! )



(Tue Jun 24 1997 22:57)
@ the Yen rallies, the Dollar falls
In light of recent developments, it will be interesting to see how the traders and the markets react to the persistant strength in the Japanese Yen. In tonights trading, the Yen has continued to push higher. The 110 Yen-to-Dollar level seems certain to be tested.

If the Dollar falls below 110 Yen: Will Hashimoto back down and say he really doesn't care if the Dollar stabilizes? How will Greenspan and the Fed Board react on July 2nd? Will currency traders jump on the trend ( as they so often do ) , and sell more dollars against the Yen? How will Wall Street react? Could a negative reaction on Wall Street snow-ball into the currency markets -- thus creating a chain-reaction of panics?

The next few days and weeks will tell. Just by the technical action in the charts themselves, I suspect the Dollar will break below 110 Yen. That could be just about the time Greenspan and Co. meet to discuss monetary policy.

(Tue Jun 24 1997 23:00)
ANYONE: What happened to ABX? What is the bad news?

I can't find a personnel department anywhere. Suddendly,
the department dissappeared and was replaced by something
called "human resources". I always thought one dug resourses
out of the ground or cut from a forest. What mysterious
cabal changed the name and accomplished it all at once. And,
right afterwards downsizing began in earnest. A mystery yet]
to be solved. Forces are lurking about that only a few can
fanthom := }}

(Tue Jun 24 1997 23:01)
The URL is correct for the Japanese Spin Doctors. And, they even go on to talk about gold being neutral.......

(Tue Jun 24 1997 23:06)
@ Recession
D.A.: The developing economic down-turn is all about finances. It has nothing to do with excessive inventories. In the past, the Fed had to withhold credit from the banking system to keep the economy from over-heating.

This time around, the banks themselves have been the bad guys. The rising bankruptcy rate has forced banks to be a lot tougher in giving credit than they have been used to. An easy Fed does not necessarily imply easy bank lending. True, banks have been easy in commercial lending and in making mortgage loans, but they have gotten much tougher on credit-card loans. Because of this, the weakest 1/3 of consumers are already in recession. This can be a fairly powerful counterweight against the upper 2/3.

(Tue Jun 24 1997 23:08)
@ clarification
The bottom 1/3 are in a spending recession ( they still have jobs ) , but retailers aren't making sales.

(Tue Jun 24 1997 23:16)

I realize this is a fairly unscientific survey, but being an ex-systems wacker I sometimes glance through the help wanted section of the Sunday New York Times. The number of columns of positions for 'programmers' was at an all time high a few weeks back. The number of job listing is something on the order of 4x what it was at the bottom of the last recession. With the enormous growth in real income, consumers are in fine shape.

The rise in bankruptcies I believe is more closely linked to the easy way out mentality and people actively pursuing it as a strategy. I know of people who were marginally in debt but figured what the hell and racked up big credit card numbers knowing that they would just fold their tent. People ultimately learn how to exploit the rules and do so. Monetary conditions are going to have to get a lot tighter before this economy caves in. With the real likelyhood of a declining dollar because of relatively accelerating growth by our trading partners this will just add a little more fuel to the fire.

David Blair Macrory
(Tue Jun 24 1997 23:20)
An increasing number of this market-student's "pieces of the puzzle", suggest that gold & silver are very likely completing their bottoming-formation. A major, or primary trend-reversal, with potentially explosive upside potential -- both for the precious metals, and for gold & silver mining stocks -- may be imminent, in this holiday period.
#1. Commitment of Traders patterns.
#2. Numerous divergences/technical indicators: oscillators, price and volume relationships.
#3. Gold currently hitting new lows, for this trading period; while
silver is giving increasing clues that it will likely not confirm.
In other words, silver prices will likely not hit new lows, versus gold's
recent/current new lows. And, in the recent/current trading period, silver prices will very likely not drop below silver's own recent-past lows of early January, and late April, ( - while gold has/is ) .
#4. Increasing volatility, and uncertainty, in other investment markets.

There is no guarantee or 'promise', stated, or suggested, in these
comments; they are only my personal opinions. As such, these
observations are for the sake of joining-in, for mutual sharing, and/or for educational purposes. They are not to be construed as a recommendation or solicitation, to buy or sell any particular investments.

David Blair Macrory

(Tue Jun 24 1997 23:24)

Because its past my bedtime I'll take the last shot. Hope you don't mind that its a cheap one.

Might I point out that your recession hypothesis is supported by none other than Business Week ( who are bullish on bonds ) and my alltime favorite reverse indicator Allan Sinai.

Bon Soir,

(Tue Jun 24 1997 23:25)
Joke of the evening
Since this site often digresses to discuss bureaucracy and government I submit the following pithy offering before I seek the comfort of my bed and the dream of better markets tomorrow. Panda, I hope that we can get better brokers. It sounds like you are aflicted like I have been with marginal low lives who masquerade as mild mannered brokers.

The LAPD, The FBI, and the CIA are all trying to prove that they are the best at apprehending criminals. The President decides to give them a test. He releases rabbit into a forest and has each of them try to catch it.

The CIA goes in. They place animal informants throughout the forest. They
question all plant and mineral witnesses. After three months of extensive
investigations they conclude that rabbits do not exist.

Then the FBI goes in. After two weeks with no leads they burn the forest,
killing everything in it, including the rabbit, and they make no apologies. The rabbit had it coming.

Then the LAPD goes in. They come out two hours later with a badly beaten
raccoon. The raccoon is yelling: "Okay! Okay! I'm a rabbit! I'm a rabbit!"

Bart Kitner (Kitco)
(Tue Jun 24 1997 23:30)
I was informed that a major dataline carrier in Phoenix was down and brought all the ISPs with them.

If you took note of the URL our mirrored site is immune to the local disasters in Phoenix. You can go there when the door here gets jammed.

Strad Master
(Tue Jun 24 1997 23:38)
Reflective site
BART: I bookmarked the mirror site URL the last time you posted it and went directly to it today when I couldn't get in via the front door. Alas, it didn't work either. Either I've got it wrong or it doesn't work as you expect. In fact, I just tried it now to see if I could post it for your review, and it still doesn't work. Perhaps you might post it one more time. Thanks.

(Tue Jun 24 1997 23:38)
Ersatz - Pseudo - Semi - Demi-Gods

Reading recent posts: I must admit to some amusement at the Hashimoto remarks which, when first heard, I posited a misstatement or retraction to follow hard on the heels by. There seemed a almost desperate grab at these remarks as if Hashimoto had suddenly assumed donut shape, and thus filled with air, tossed to those foundering in the briny morass that wears the unrecognizable face of gold today.

Those that love gold, sometimes are willing to overlook her shortcomings and occasional infidelities as long as she comes home the next morning, unwilling to look a whore in the eye and call her what she is, unfaithful, unreliable, and definitely unfit introduce to mom and dad. But, she is what she is and, like the scorpion who stung the frog, just acting according to her nature. She is a duplicitous fornicator, albeit a lazy lass who, lacking innate spirit or gumption, will only rise to dress when the broken mattress beneath her goes, spprrooooiiiiiinnnnngg.

It seems as some view gold with the same eyes that are seeing Virgin Marys everywhere; in windows, water stains, and street signs; it might only be a water stain, but if we believe, we might be blessed. Some have a higher threshold, requiring more than mere apparitions in which to place their dreams.

Gold will go down before it goes up. This is not the bottom, nor are we near the bottom. $320 - 300 is possible, and possibly likely this year. Silver will suffer under the weight but will make valiant and modestly profitable quests to the higher grounds. Platinum will rise to above $500 this year, by August end or not at all. If those that have massaged this market so well recently would have their way, a quick spike to $600 is not out of the question. The ride on palladium is not over but only fit for those who poke both bears and bulls with sharp sticks, and will accept the consequences of their own actions. Palladium is for stalwart souls with a touch of lunacy, the light sleeper or faint of heart are better advised to stand down.

Eldorado once asked me how I knew that gold would be dead this year, to which I resounded, "I kicked it, and it didnt move." Please bear my former response and bid, achieve me, and then sell my bones. Good God, why should it mock poor fellows thus?

(Tue Jun 24 1997 23:46)
Panda, re: your 08:10. You may enjoy an article by Bob Buran where he discusses a lawsuit over a bad fill that he won.

(Tue Jun 24 1997 23:53)
@ The Public Library
As they say in the car commericial: "Perception is not always reality."

What is real is that the library is closing very shortly. Good night! : )

Strad Master
(Tue Jun 24 1997 23:54)
D.A.: Regarding your point about the rise in bankruptsies being attributable to the "easy way out mentality" I recall a lengthy article in the Los Angeles Times a few months back about the big trouble facing many AIDS sufferers. It seems that a lot of them had decided that since there was no hope for them anyway, they may as well get a bunch of credit cards and max them all out on the assumption that they'd be dead and the creditors couldn't collect anyhow. Suddenly, the treatment with protease inhibitors gave them a new lease on life and now they are faced with massive debt that they have no intention of paying back. So they are filing for bankruptsy. IMO regardless of the sad physical predicament they are in, willfully stiffing those who extend credit is reprehensible behavior.