Steve Puetz - If we are truely going to have a deflationary period; how low, in your opinion can Gold and Silver go?

Better to buy now or wait for much lower prices?

Panda: You haven't put me to sleep. I thought I'd check in one last time before calling it a night. You said it better than I could have. Congratulations. Keep on posting!!!!

RJ -- Nice little ride down in the gold today, Heh? Felt 'good' to have some halfway decent movement in it for a change. And as for silver, I'm not a bit surprised that it hasn't followed gold down. That metal is looking 'GOOD'! BUT, there might be one more quick spike down due for it also. But not quite yet.

RJ -- Nice little ride down in the gold today, Heh? Felt 'good' to have some halfway decent movement in it for a change. And as for silver, I'm not a bit surprised that it hasn't followed gold down. That metal is looking 'GOOD'! BUT, there might be one more quick spike down due for it also. But not quite yet.

Panda -- It's not that you are putting anyone to sleep, it is simply a huge posting problem going on at this time.

Everyone...Some interesting insights on this URL http://www.geocities.com/WallStreet/4915/index.html
Have a great weekend!

Panda: So many questions so little time.. Personally I do not see anything
catastrophic in gold. I was and am still looking at XAU 85... Dow will go
higher, I have resistance at 8800 after a brief correction.. Interest rates will go up
to 7.25% but not much higher with fed following. The economy is moderating after
a spectacular run and will continue growing at a nice clip.. I do not see inflation
mostly because of greed.. When something gets expensive there is always
someone willing to produce more of it cheaper to bring prices down.. Interesting
part about gold is that weather, natural disasters, shortages, don't seem to
have an effect on production.. It continues to be produced cheaper with no
apparent increase in demand.. Even jewelry is moving to other precious metals.. I just purchased a 1/2 gold 1/2 platinum ring for my wife.. Very beautiful.. Asians
love platinum and my jeweler said the shift to these exotic metals is dramatic..
I do hedge my investments. I enjoy stock options purchasing both puts and calls.
ABX being one of my favorites, currently puts and downside could be US$16.00..
I enjoy the techs.. Puts on TXN, DELL, INTC, UAL.. Calls on AVEI, HBOC, BAANF,
GP.. And others...
Many of these I've held for a while others I'm rotating as I speak.. I usually
purchase deep "in the money" options because of lack of premium paid..
I purchase the farthest out before the leaps to help me if my timing is off.. This
is where the smart option money usually resides.. Hmmm ran out of answers...

Puetz ( Jun 27 22:33 ) Thank's Steve. I enjoyed putting that letter together. BTW, can I start sending it to you via e-mail now. You would have got it last weekend.

Earl ( Jun 27 23:11 ) Japanese have to raise their rates to try and keep investment capital in the country. Right now, it's all flowing out, mostly to the U.S., to take advantage of higher rates, not to mention a higher market.

Many on Kitco point out the "bath" that Japan would take if U.S. rates went up. Heck, the Japanese have been taking a bath on U.S. debt holdings for ten years now! If they could stand an 80 Yen Dollar in 1996, they can stand higher interest rates in 1997. But the bottom line is that Japan has to get it's own rates up and it doesn't want to be the first to raise. The Japanese don't want to be blamed for a swan dive on Wall Street, thank you very much

. . . . After years in which the Middle East seemed to be the world's greatest trouble spot, China now presents itself at the center of the world's stage with a whole series of near-crises: the coming takeover of Hong Kong; the brutal repression of Christianity; the suppression of the ethnic identity of Tibet; and a host of other human rights violations. It is the estimation of Richard Bernstein and Ross Munro -- both former China correspondents, writing in their recent book, "The Coming Conflict with China" -- that America and China are on a collision course. Despite occasional gestures of warmth and harmony, the "strategic partnership" between the two countries recently promoted with such fervor, they say, is now only a memory. And Chinese-American relations are at their lowest point since Richard Nixon's historic trip to Beijing 25 years ago.

. . . . It will come as a surprise to the multitudes of Americans who don't read Chinese that for some years now the Chinese press has described America as China's enemy -- I repeat,"enemy." A Chinese foreign affairs specialist said last year in an interview with a Western correspondent, "In present circumstances, it's very politically correct [in China] to describe the U.S. as a sinister superpower, a dangerous enemy, a superpower bully."

. . . . Five young Chinese intellectuals -- paradoxically most of them veterans of anti-government democracy movements -- shortly after the 1996 face-off between China and the U.S. in the Taiwan Strait wrote a book called "China Can Say No." Angrily denouncing the United States, it quickly became one of the biggest bestsellers of recent Chinese history. One of the authors said in an interview in Beijing, "When we were students, we yearned for American novels and movies. But today, we find that country rather disgusting."

. . . . And the anti-American movement in China has continued to gain strength. The word used most frequently in Beijing to describe U.S. policy toward China is "containment," by which the Chinese mean a policy aimed at keeping China weak, without influence, and poor. Now an American scholar has pointed out that the two Mandarin characters we'd been translating as "containment" would be more accurately rendered as "throttling." And "throttling" is now in constant, everyday use. Anytime the U.S. resists Beijing on anything, anywhere, we're trying to throttle" China. In the mid-1990s an extraordinary closed meeting of China's top military and foreign-policy experts representing the Chinese Communist Party, the People's Liberation Army and the Party's Central Committee, met in Beijing. The final report leaked. It began: "Whom does the Communist Party of China regard as its international archenemy? It is the United States."

Hong Kong markets closed next week 'til Wednesday for "holiday." http://biz.yahoo.com/finance/97/06/27/ec_y0023_3.html

I must say that I am extremely discouraged at the recent gold and xau action. A few weeks ago ,gold ended up taking out the april weekly close low of 341.50 from April 18. I definately thought that wouldn't happen. I will be very interested to see how it closes out the month on monday. The possibility exists ( although looking mighty slim at this point ) that we could rally to close above the low monthly close of April of 341.20. Should this actually happen, then my somewhat faulty TA tells me to expect July to be one of the strongest months for the metals since Jan '96. But, if you really want to make money, just fade whatever I say. :- )

To create the perception of a positive outlook, gold must be be seen as the villan, a relic with no purpose.

Merill Lynch uses Ted Arnold to stomp the metal and keep the stock bull alive; while Union Bank ( of the world ) employes Andy Smith to perform that duty and keep UBS's currency operations and interest rate derivatives alive and well.

I see the vapors of a heavy sweat rising from the canyons of Wall Street and the streets of ancient Zurich and
freezing in the upper atmosphere to come crashing down on the evil deeds of both.

Bonnie: Clyde did you bury those coins we traded for the new fifties. The trip was real nice, we should do it again.
Clyde: They are well hidden in the back 40, by the old elm.
Bonnie: I'm getting bored, nutin to do in this one horse town; what'ya say we do another job?
Clyde: Good idea pumpkin, paper seems to be in.
Bonnie: I'm poop'd, nite Clyde.
Clyde: Nite Bonnie.

Scotty: Received your E-Mail. Thanks.

RON: re Richard Grenier's column quoted: Chinese who say "today we find America rather disgusting " are referring to its political leadership. Many Americans feel the same way, myself included. In any nation, big or small, one can find people to interview and brains to pick, that will give you any range of answers you are looking for. Just look at this site where everyone is of the same interest. While doubtless there are many Chinese who feel as described, I seem to be in contact with some different Chinese characters than Mr Grenier. The takeover of Hong Kong will not be a crisis. The throttling by America , and China's reactions in the economic and political spheres are manifestations of old confrontational habits and the management and "control" freakishness of beaurocrats everywhere. The handwriting is on the great wall. China can no more be contained than an ocean can be drained. China will be a superpower and the US will have to respectfully, and CREATIVELY deal with this evolving fact or find itself in another bankrupting paranoid military buildup, resource wasting situation. Back to nuclear standoffs and mushrooming defense budgets? I think not. We have still not fully paid for the last "cold war" with the USSR, and most of our economic disasters to come will have been proven seeds sown inTHAT madness. The answer is to fight China with Freedom ( the principles underlying which the current administration in America knows little about ) . The young Chinese who are ambitious , intelligent, and aware ( the ones who will count for the future ) are still very enamored of the principles and the sense of life that they know has made America, and the "west," so appealing. Still. While party and political functionaries will do anything to hold on to the illegal and special power they think they have over the unthinking citizens of any nation, these thugs and looters will be brushed aside by the kids who have been born to a new, eclectic world. The smart, the open, the intelligent and unafraid will find each other, and make a better world. The rest of the population, unfortunately, will always be a drag on progress, and, in their ignorance and proclivity to be stirred by power-hungry despots, a danger to stability. All we have to do is be true to our Freedom-loving roots. The alternative is beyond rational contemplation.

PANDA: Great Bond Chart. But wouldn't 1=0, 2=1 etc & 5=4?, with 5 to come nearer the apex of the two merging lines? Then it breaks out like the furies in August/Sept???

CAPTAIN BILL: Thanks for your info re: Chart updates on "The Privateer". Could I ask a huge favour. Could you please update the DOW JONES Chart on the main page. ( The 10 year one showing the crash ) . A TOP chart.

ROEBEAR: The hard core Kitco-ites had a splurge recently on what they believed in. One of those potentially dead Sundays that could visit this site that turns out becoming highly philosophical, yet interesting. I enjoy the change of direction now & again. I trust that everyone else here has the grace to endure my point of view, as I do theirs. So yes, I do believe the Bible. It is interesting after compiling the full listing of "GOLD" in the Bible, we find that it is referred to so many times. It is virtually mentioned in every book of the Bible. And it has been around a lot longer than the US Dollar has!! ( at least 6000 years longer ) There is something in that. Success comes from Wisdom, & wisdom can be found in the Bible. The key issue is that we do NOT worship Gold, but appreciate its value in the overall scheme of things. You can have all the gold in the world, but it cannot buy you good health, either now or in eternity. Seek wisdom, because wisdom is of God. I find this hard as a 32 year old.

Should have posted this news item.
http://biz.yahoo.com/finance/97/06/27/z0000_z00_12.html

Gold is not dead, but seriously folks here is a story about the death that might bring some life to you all.

A man placed some flowers on the grave of his dearly departed mother and started back toward his car when his attention was diverted to another man kneeling at a grave. The man seemed to be praying with profound intensity and kept repeating, "Why did you have to die? Why did you have to die?" The first man approached him and said, "Sir, I don't wish to interfere with your private grief, but this demonstration of pain is more than I've ever seen before. For whom do you mourn so deeply? A child?
A parent? The mourner took a moment to collect himself, then replied, "My wife's first husband."

MIKE SHELLER: Your reference to the Cold War struck one of my pet peeves. During the 1992 Presidential Campaign President Bus was fond of saying "The Cold War is over and we won" My feelings were, and remain, there are were no "winners". Russia is broke and disintegrating, we are broke and could follow shortly. All the tribes of the world are fighting amongst themselves, re-igniting long stiffled, centuries old hatreds. In a way it reminds me of 476AD. With the Romans gone it took only a hundred years for the Dark Ages to begin. That was an economic event that could be easily repeated today. It will be two centuries before the world knows who really "won the Cold War".

Excellent story on the Louis d'Ors. When we were kids we had fun with this concept. Get a crisp five and ten dollar bill. Go door to door selling them. We would charge 2.50 for the five and 4.00 for the ten. Not a single person would bite. However today I am not so sure. Incidently on the subject of fake money. I am told you can not pay for anything in the Bahamas with usa $100 dollar bills. They will take 50s, 20s, anything but $100s. The banks must be stiffing them. If so this may spell the end of a world-wide growth industry, the exporting of usa 100 dollar bills.

Steve Kaplan's page is very encouraging. If you have taken a beating on gold this past week,read and be glad you are ahead of your peers. Find him at http://www.geocities.com/WallStreet/4915/index.html. Barron's is instructive today for one reason. No one, not even the most ardent bull can explain or support by argument the present stock market. They are all "amazed", or words to that effect. The stock market is now being compared with Japan's in the 80's. Scary thought.

STEVE ( PERTH ) : A 32 year old seeking wisdom! That in itself is a sign of great wisdom. Seek and you will find. Yes, the true gold is the spiritual gold. The ancient alchemists were reputed to have spent their lives seeking to turn base metal into gold. The true alchemy, of which these tales were allegorical, is the refining of the lower nature of man to conform to the promptings of the higher nature. Verily, Steve , you have chosen the better part.

Donald: Your "dark Ages" analogy is chilling and, I fear, appropriate. I seriously believe we are on the verge of a potential "mini" Dark Age that will breed chaos, degeneration, and disintegration of societies and institutions. The state of philosophy, art, and culture is usually an excellent "leading indicator," if you will, of what is in store for generations to come. These aspects of our civilization are in disintegration and limbo. Our technology is our only remaining god, and while commendable in its service and practicality, is not something human beings should worship. The next century will be profoundly problematic...but, then, aren't they all?!

Mike Sheller A few thoughts on China
After the Hundred Flowers campaign in 1957 came the Cultural Revolution of 1966 which was an attempt by Mao to destroy the middle class which lasted til 1977.The country has been involved in four wars Korea,Tibet,India,and Vietnam.With Uranus now in Aquarius full industrialisation should take place but with Neptune's underworld arrival trade wars will be a yearly event.China does not want to recognise copyright law and the Neptune transit will certainly not help.

Steve ( Perth - Western Australia ) Regarding 07:42 --

I figure my broker uses the 'new math' on occasion, so why shouldn't I? :- ) )

Donald -- Regarding the Dark Ages, entirely possible. One only has to look at the 'multicultural' fiasco to see the seeds of destruction. Let's face it, people like to live with their 'own'. By 'own', I mean similar backgrounds in education, religious belief systems, work ethics, economic status, etc. When you force 'diversity' in to a community, you usually wind up destroying the community that was and create something that no one wants. This leads to the upper classes fleeing to other 'nicer' neighborhoods. Meanwhile, the previous community sinks to the lowest common denominator, and it shows....

Ron -- Thanks for the URL on copper.

JAPAN BETWEEN A ROCK AND A HARD SPOT: Only Solution Is To Dump U.S. Treasuries and Buy GOLD! ( PART - II ) . Per global financial experts - Its Inevitable:
http://www.gold-eagle.com/gold_digest.html

RON: Thanks for the feedback!

Earl: My "changing definitions of a goldbug post" was meant to show how drastically sentiment has fallen. And depressed sentiment implies high risk/reward ratios. The gold bear is handing out a few final savage swipes, but I am more convinced than ever that a secular bottom is getting close. The more posts I see speculating about declines to $300 or lower, the more convinced I become that a bottom is much nearer than most think

From an opposite tack, the large number of Wall Street gurus now projecting Dow 10,000 or higher by next spring makes a steep dive this fall more likely than ever.

Mike: Many thanks for your insightful thoughts about what China is and will become. Also, kudos for your gift of expression - I am envious.

MIKE SHELLER, STEVE of PERTH: I looked up some Dark Ages coinage information. Not a single European gold coin was struck during a 400 year period between the fall of Rome and Charlemagne 814AD. Talk about hard times. Mike, regarding our technology: The Europeans forgot all the technology that the Greeks and Romans had learned. It wasn't until after the Moors were defeated in Spain in 1013?? that the Library of Cordoba revealed that technology to astonished Europeans of the day. If we have to spend all day hunting, fishing and looking over our shoulders there is not much time for the computer.

280+ pages of financial data, analysis, reports & studies - VIRTUAL ENCYCLOPEDIA OF PRECIOUS METALS. Use SEARCH GOLD-EAGLE button in HOT NEWS box to find what you seek - RAPIDLY:
http://www.gold-eagle.com

The South African Gold stocks are really in the tank.. Some yielding
over 10%. Any ideas if this is politcal or just because of price of
Gold?

Ain't dem dare coomputers wunerful? Ah gots all you goldbuggers
in one place. I done tole you uns I waz ganna slap youall
up side the head. But would you listen? No. So I just
had to blow through all your stops yesterdey, yas sir. Just
you wait til Monday. Been working on exterminatin you
goldbugs fir ah longest time. You must have missed that
the financial wire security code was broken about a week
and a half ago?? Now, my good-fer-nothing brother inlaw can
go to work. Won't even have to use those precious paper bank
notes neather. Just nulls/pluse. ( 0/1 ) . He's going to
buy all the CBS gold and put it in a dummy corp. Pay for it
with wire transferes. ( won't even be worth wire ) Since no one
will bidding to buy the price will go down and my dumb
brother in law will corner the gold market.

By that time most gold mines will have closed up and New York
will be grinding up gold bars to mix in with the winter
street salt supply as gold reflects nicely on the black streets
in the headlight beams. Soon the Asians, etc will be hungry
for gold at any price. No one will have any gold. Not even
the CIA or the politians. So, clean up Ameerika, get a haircut.
Rev. 13.13. Backsliders. you were warned.

Mike Sheller: We must be careful not to draw inferences about whole populations based on a sample such as our own small circle of friends and acquaintances. I, too, know many Chinese, even many who are studying here in the US, and are not "Americanized." But their opinions may not be very representative of views widely held in China.

Last year, during the crisis in the Formosa Strait, when we were engaged in another one of our outrageous "throttling" initiatives against China -- throttling, no doubt, in the same sense that we throttled Sadam when he made his murderous grab for Kuwait -- I spent a lot of time lurking in the soc.culture.china newsgroup because I wanted to understand how native Chinese viewed the events unfolding there. The flood of invective gushing forth from the mainland was breathtaking in its scope. With all due repect, Michael, it is *not* merely directed toward our politicians, but to _all_ things American. And it was as real and as genuine as shoe leather.

Only very, very bad statisticians approach the world attempting to confirm their preconceptions. I certainly haven't done that. I was quite complacent about China and she was the last thing on my mind as a threat to world peace until these recent developments.

We certainly shouldn't ignore China's behavior, nor swallow whole the livestock-management dreck issuing forth from our or China's established press. IMHO, China will again pose a military challenge for the West long before it poses an economic one.

Redneck: Thanks for reminding me to get a haircut. I get so busy I just don't make time for the important things.

ALL....Just back from nice trip down Florida Atlantic coast and then over to Gulf of Mexico....I have discovered a law of nature that should not be broken...There should be an age limit for those to wear speedos, bikinis and thongs...Around 40 max, I guess. See that you all have caused the metals to fall out of bed while I was gone....You can still expect to see lower prices for gold and silver before the bottom is in....With the increase in volitility and volume, it shouldn't be long now....Days,weeks, months....Who knows ??? Hope all the goldbugs have their physical positions in place, or are putting the finishing touches on them...Soon time to tackle the paper....Right now all it would take is a move from the east to sell treasuries and buy gold and paradigms would change overnight as would prices....Be vigilant !!!!! All the pieces are in place !!!!

Cycles in American Gold Prices shows evidence of a 22.11 year cycle between tops.The next top would be around 2002.The shorter cycle 5 year 5 month could be of use.1980 high.1985 low.1990 high.1996 low.2001-2002 high.Using a phase correction of 15% the bottom should arrive this year.Anyone sad about their Gold holdings should be adding to positions long term not speculating their assets down the drain with puts and calls.Now and in the next few months let your true greed show buy buy buy .Happy Trails

Here is a monthly chart of the thirty year bonds. It is somewhat courser than the weekly chart, but it does reveal some interesting things. I dont trade bonds, and this is not investment advice! Lines drawn on a chart are just that. I see what I want to see, and you see what you want to see. With that caveat aside.....

It looks like we are reaching a cross road here. Alternate scenarios appear to be these;

1] Arise above seven percent, and a bear market in bonds???

2] A failure of the triangle that could lead us in to a trading range of 6 to 7%???

3] A failure of the triangle and a bond market rally to ???

Given the news of late, Hashimoto and U.S. Bonds, the Chinese take over of Hong Kong, and never ending prosperity, I think that option #1 is the most likely. Time wise, it seems to be pointing to some problem occurring late in Q3 or during Q4. What this is, I have no idea. Quit frankly, Im surprised that the chart has been as accurate as it has. I could not have envisioned the rates on the Long Bond coming down as they have. If you have a booming economy, I would expect the demand for credit to be higher. This should cause interest rates to rise as more people compete for the available pool of capitol. The assumption here is that, like any resource, capitol is scarce and would be allocated by need. This need would be reflected in the interest rate, ( the price ) , people would be willing to pay for the capitol.

As to the FED controlling interest rates, that is a laugh. They follow the long end of the market. They cant afford to lose credibility. Actions by the Federal Reserve in this year are amazing. The FED has been doing coupon passes left, right, and center. These coupon passes are monetizing the debt. It is the creation of money out of nothing, so what else is new. The Treasury sells some Bonds, Notes, Bills and the Fed buys the leftovers that the market cant absorb. The government gets, cash, and goes on its spendthrift ways.

Think about this, the Treasury creates a book entry T-Bond, the Fed buys the T-Bond as a book entry. The Fed now has assets on its books ( T-Bond ) , and gives the government cash ( a book entry ) . Nobody has to print money anymore, its all a book entry.

This is what makes Hashimotos mention of selling T-Bonds/Notes so interesting. Not only that, but he used a four letter word that scares the paper peddlers more than a sunrise scares a vampire, GOLD. That barbarous relic that is a conclusion of payment in and of it self. Could this be why Rubin came out and said that our markets are so deep and liquid that they could handle the Japanese selling our debt? Is this why the European Central bankers are getting the Holocaust gold, and not the survivors? If gold is so worthless, why are the Central Bankers so terrified of its mention? Why did Pharo speak Mosess name before he died? ( I know, it was only a movie, but... ) Speaking of Pharo, I wonder what Greenspan thought of Hashimotos comments? Something like, Damn that Hashimoto! Now we have to buy MORE of that paper!

Ask yourself the question, Why do I have to invest my money? The standard answer is, Inflation will destroy your savings. So you accept a debt instrument as payment, but its not a final payment. You need to invest it so the stored value of your labors will not suffer putrefaction because you hold a depreciating debt instrument. What a game....

Sorry about the length of this post. I know long posts are a bore to read, but I didnt realize that I was going to be so long winded. :- ) )

Redneck: "So, clean up Ameerika, get a haircut. Rev. 13.13. Backsliders. you were warned."........... Redemption is to be found in a haircut. Eh? With regulation "side walls" I suppose?

Maybe it's time for an ancillary support group: "Backsliders Anonymous".

I am suffering from gold fatigue. No matter the logic or the arguments it is becoming painful to think about gold. Does everyone on Kitco ( including GSC ) have to give up all hope. Does anyone remember the stk mkt low of 1974 was the desperation the same as gold now/how about sentiment at other gold lows. Of interest was the down beat tone of the gold producers conference in London. These people are perennial cheerleaders for gold/ could this be a contrary indicator. If gold were to go to 290 and stay there a awhile I believe that would clean the slate for the secular bull. Is my pessimism a contrary indicator. In my heart the situation for gold looks hopeless and for financials it lloks great. Is this contrary indicator?

WW -- How do you think the stock bulls will feel when this shoe is on the other foot? A ten percent decline in a month, and they call that a BEAR? Then the rally to new highs... Imagine a real bear of eighteen months to two years in duration. OH BOY! :- ) )

I wonder if the MF people will hold up as well as we have???
Bear markets are psychologically debilitating, they usually cause you to sell at or near the bottom, thus the selling climax...

BBL

The more that are in the greater the bear. 90% of monry in stks since 1991. If mkt went down ten percent and did not rebound for 3 or 4 months that would be too much pain and the incoming money would slow and outgo would increase voila the bear. As this process continued the cycle would become more vicious. This is why I believe there is a fund used by the big firms in the S&P futures to make sure the declines are brief and limited and that after their rescue the money naturally starts to flow in thus allowing the bull to continue. Of course they are creating a bigger bubble by doing this. Just ask Japanese, Taiwanese and Koreans whose mkt were artificially supported. There is no tolerance for pain in this mkt too much expectations and too important too the current feel good mentality espoused by the press and politicians. Consumer confidence is high because of this constant dispensation of sugar/ however, the bankruptcies and high debt levels tell the real story. As the French newspaper stated "the US economy is booming on all US business pages and US television screens". The US economy is like "a Picture of Dorian Grey" the stk mkt bear will reveal the true face.

And..there you have it!!!

PANDA: Sorry for putting you to all that trouble! But it looks more Elliot-Wave-like now, don't you think?? Go 5, Go 5!!! In addition, my spellcheck ( both US & Australian edition ) tells me that you spell yeilds as YIELDS. Keep up the good work!

Japanese Big Bang in Business Week
http://www.businessweek.com/1997/27/b3534163.htm

US Economy running at 90 miles an hour without overheating the engine?
http://www.businessweek.com/1997/27/b3534112.htm

From the Winspear thread: http://talk.techstocks.com/~wsapi/investor/s-9996/reply-2092

The reason the economy isnt overheating is that it is really weak and the growth is fueled by debt. The stk mkt wealth effect is muted because the benefits of the stk mkt advance are skewed. In fact the reasons the stk mkt is going up relates to downsizing and thus earnings growth. This has hurt the std of living of many versus the relatively few stk mkt investors.

RE Strength in economy: THE BIGGER THE LIE THE MORE THEY WILL BELIEVE IT..... J. Goebbels.

J. Goebbels name for Nazi Germany in the 1930s "the land of the smile".
Somebody on CNBC should use this one again for the US. Then again the way they spin things I guess they have.

nuf said

RON: Sack-O. With due respect, the Mainland Chinese you see on the Internet must have access to computers and can not be considered "average". Someone described the current political leaders of China as gangsters. They are thinking about their own enrichment at the expense of the rest of the population. Their comments would not seem to be representative of the majority. Most, I hope all, Americans, are interested in their personal enrichment also, but we are not willing to tolerate virtual slavery, a police state, a controlled media and the rest of that garbage to get it. Ask George III about 1776, he remembers.

Greetings, Just to let you know of another forum for discussion exist at the our website.Go to the classified section to see our posting.Email us
direct at my address to receieve our a free Newsletter primarily on Resource Stocks.If you would like to receieve same,please email us. Look forward to hearing from you
regards

don

Venerable Jim Dines Does It Again: He found 2 gold stocks defying the big bad bear in precious metals: EURO-NEVADA & FRANCO-NEVADA. A Unique gold concept ( 6/28/97 ) . SEE Editorials:
http://www.gold-eagle.com/editorials.html

WW: Keep the faith, man! POORBOYS has it right-on when he says to buy, buy, buy. He's talking about bullion. Let's get physical. ( The 70's aphorisms are to get you back in the groovy gold mood ) The Astrological Investor, my other identity on the 'net, was warning since June of '96 ( my goodness, how time flies! It's a year already. ) for visitors to watch for stress on gold in the spring of '97. The rec was to dollar cost average bullion coins as tho you were "making the payment on your 4x4." This way, over 18 months ( my assessment then, & still in place ) one could amass a reasonable hoard of gold over some nice prices. Actually, within reason of course, the lower gold goes once such a program has begun, the better off one is. I think we are still very much within reason, and would continue to be even if some of the more bearish Kitcoites were proven correct ( I don't accept things like $200 gold, no way ) . Day-traders and short-term in and outers are ALWAYS living in a state of angst. They love it. Ignore them. Last chance, last dance, will be winter of '97/'98. Then, I would have to definitely side with Poorboys about the turn of the century being hot for gold. The next leg of the 5 wave bull begun in 1934 will commence. It will be the THIRD wave. Usually the longest, but with gold the fifth is often the most spectacular. Unfortunately we'll be dead when that one spikes. Reincarnation anyone?

The big news today: Margin debt on the NYSE increased by a record $7.1 billion during May!!!! Outstanding margin debt is now $106.01 billion. Investors may not be buying, but speculators sure are. Wait until the first big stock downturn -- when the margin calls start flying. In one form or another, most stocks are being purchased on margin these days. Corporations sell bonds to buy back shares and merge, consumers refinance their homes to buy stocks, speculators use options, futures, and margin debt. Borrow, borrow, borrow to buy stocks. The big news is: It won't take much of a downturn to wipe out the equity these speculators now have. Once, that happens, they will have lost their net-worth in stocks, but they'll still have the debt to repay. That's a very bleak situation.

RON: re your 11:32 on China - Very wise comments. Thanks, I needed the perspective. I just worry sometimes 'cause I have loved ones living in the PRC. I want to see the bright side of what I do acknowledge to be a highly problematic situation.

DONALD: No Euro gold coin struck during the Dark Ages eh? Is that anything like no nation backing its citizen's currency with gold since 1930's? Great insight about how easy it is to lose technology and knowledge of all kinds. I have 4 computers in my life, and if I'm away from any one of them long enuf I've forgotten what button to push or icon to click on.

Kid Silver: It's possible that gold could decline to under $300 in the first big deflationary collapse. However, gold and silver coins are still the safest place to have your assets because a lot of financial-paper will be defaulted on or become nearly worthless. So it will be better to risk a 10% loss in real money ( gold and silver ) than risk a 100% loss by holding onto paper.

But, at some point, the movement out of paper and into gold will overwhelm deflationary pressures. It could happen tomorrow if foreign central banks keep dumping US Treasuries as they have during the past two weeks. Or gold may not respond for a few more months. The risks are so great, however, that in either case it's urgent to get into gold and silver coins immediately.

ALL: Make sure you buy gold and silver coins for the right reason -- to guard against a violent deflationary collapse. If you're buying to protect against inflation, you're buying for the wrong reason and you may become confused as recession turns into depression and prices spiral down-ward. You must understand how gold and silver protect you against a deflationary collapse.

WW: In 1974, pessimism toward stocks was so great, that 1 year later, during the Fall of 1975, I remember individual investors that I talked to were still talking doom-and-gloom -- even though the Dow had recovered 60%. I wasn't until 1983 that investors started becoming positive again on the stock market.

Mr. Puetz: If we deflate, per your prediction, then isn't it possible that my mortgage and car note holders would default or go into bankruptcy? My paper debt could be purchased at a big discount by anyone with real money! : ) On the other hand, if we hyperinflate, I will pursue my creditors and pay them back without mercy.

Lefty: The SA golds are high-cost producers. If prices go below $330 for a few months, expect a wave of mine closures and dividend cuts. Unions also pushing for sharp wage increases. I don't think this will happen, but it cannot be ruled out entirely.

There is no telling how bullion may go on this spike, but it is not likely to STAY under $330 for long ( if indeed it gets there ) . A significant stay under $330 will force the closure of many mines, primarily but not entirely in South Africa. I don't think the anti-gold warriors want to see this happen. It would make the inevitable rebound much more violent.

Still seeing more posts talking about bullion declining to $300 or lower. Very encouraging! I can't remember the last time anybody mentioned the possibility that bullion would ever go over $400 again. Very very positive from a contrarian perspective

I just finished reading the late Andrew Sarlos' book, "Fear, Greed & the End of the Rainbow". Pretty good read about the supposed coming stock market debacle. He was no gold bug though.....

This is a true story: This past week, a fellow from Brookston, Indiana ( just North of West Lafayette where I live ) was driving along I-65 when he noticed a limo pulled off to the side of the road with a flat tire. It was the hottest day of the year -- about 95 degrees with high humidity.

The fellow from Brookston offered to change the tire and the chauffeur agreed. After the tire was fixed, the chauffeur offered the guy $100 for his friendliness and help. The kind man refused the money and said it was too hot of a day for anyone to worry about fixing a flat tire. He then smiled, went to his truck, and drove away.

A few day later, the local bank informed the Brookston native that his mortgage had been paid off. It seems that as he was driving away, the limo driver took down the license plate of the truck. In the back seat of the limo throughout the ordeal was none other than Donald Trump -- who was traveling from his Hammond, IN casino to his Evansville, IN casino. Trump was so pleased with the jesture, that he paid off the mortgage for the Brookston fellow.

Puetz - My oldest daughter is a student a Purdue University, she told me that same story 2 or 3 months ago.

NotaGoldBug - We seem to have the same approach to trading some of these markets. If you want to exchange some ideas send me your e-mail address.

Hey I think I remember changing one of the Donald's flat tires a few years back, though he probably forgets. By the way I bought some gold calls a while back with spot above $360, Don. Ahem....

Steve ( Jun 28 7:42 ) I did update the ten year Dow chart, yesterday.
Problem is that the server is down at the moment. Working on it.

Re: Gold pessimism. I concur with George Cole. Haven't seen it
this bad in a loooooong time. Another thing I haven't seen for
a long time, if ever, is the size of the "shear" between the
Aussie market as a whole and Aussie Gold stocks. Aussie market
up about 11.5% this year. Aussie Gold stocks down 20% plus.

Something will have to give. Most likely scenario is falling
Aussie market. But I don't think that present situation can
be compared with 1987. Back then, Aussie gold stocks best performing
on the market. Now, there is every chance, especially if the Dow does
not "crash" but simply keels over, that Gold stocks will perform
counter to the rest of the market. Of course, for that to happen,
we need a higher Gold price.

Eureka! Server's back up again: http://www.the-privateer.com

Steve: Agree with you that much of todays buying of stocks is on the cuff. An example of this that will be a factor in the coming stock market debacle is the price holding operation the mutual funds have been performing every time we get the almost 10% correction. The mutual funds borrow money from the banks using their long stock position as collateral, this money they use to buy more stocks, thus aborting the correction ( contrary to popular belief the fed may not be too heavly into this YET ) . They should sell the borrowed stock into the rise and repay the loans but I suspect they do not in full. Thus the 6.1% cash to assets they show if it were adjusted for loans and margined stocks would be a deeply negative number. I believe the truth is that the mutual funds have no cash, what they have is piles of stocks and loans to repay. Loans that will be called as the price of the stocks falls below the former price keeping points. And tons of stocks which must be sold as the loans are called. Of course all this is well known the both the large spec shorts to be and to the fed.

Picture this, the market falls below a former price keeping point. The public has been in full panic and has been selling every day for weeks. The banks panic and call the loans. The funds must sell both the stock required to cash out the public and the stock required to pay the loans. Meanwhile the large spec shorts are selling margined to the hilt. The fed is of course the only possible buyer. Steve since I beat you with my call of a dow below 250, I'll give you another chance. This one is the maximum intraday loss on the dow for a single week. It has to be intraday because of the fed, spoil sports, without them we could get a fantastic number on a closing basis. I'll start off the bidding with a snap 1500 dow points, but I reserve the right to adjust.

GCQ7 - I bailed out of my gold futures friday and took the loss, about $350 a contract, more out of discipline than the belief the market is going down further. I originally figured front month Gold would go to 336 or a little under ( June was the front month at the time ) with a 50/50 chance that Aug would become the front month before 336 was hit. When June hit 336.5 and rebounded I figured the low was in and Aug would continue up. That's water under the bridge now. There are huge divergences between the monthly, weekly, daily momentum charts and the price charts. The XAU looks like it may have successfully tested its lows ( a $4 drop in gold should have done more damage ) and is ready to start back up. I'll be looking to reenter GCQ7 Monday morning on the long side.

SPEED: Re your mortgage. More than likely the bank you dealt with sold your mortgage to Fanny Mae the same day you made the deal. They get a service fee for handling your payments. The U.S. Govt. ( assumed you are U.S. ) owns your house and most of the houses in America. Hard times and they take possession, throw you out then demand that SPEED, the taxpayer, send more money to cover the loss. Thats another reason why I posed the question earlier about the Cold War. In this crazy world Russia becomes capitalist and the U.S. becomes Socialist. The Cold War is not over yet.

STEVE PUETZ: Re Barrons. Did you notice that the Monetary Base has declined 4 Billion in the past two weeks? Any thoughts?

Just an update to an earlier posting I made today,Our website is located
at www.globalminerals.com We will be recommending an excellent gold stock
this week.Has all the fundamentals,strong Boards of Directors,and money in the Bank for exploation in Bolivia.Get your free Newsletter by email
at gmr97@usa.net Good luck and Happy Investing.

My daughter went to Purdue, met her husband their, he is now a professor at Ohio State in Oxford Ohio.

Sure like West layfette.

( Hello Reify )

APH: your daughter couldn't have picked a finer university to go to. I remember my time there with great fondness. If only they could put a decent football team on the field again! :- )

My Purdue daughter shocked us this year when she decided to go to work for the Southwestern Company selling books for the summer door to door in Austin, Texas. She will be a Junior and was tried of life guarding. We thought she was nuts but gave in and let her use one of our cars. She's been down there for 5 weeks with other Purdue and U of Indiana students. So far she has made $7,000 for herself. Maybe she will be able to pay her own Purdue bill and gold can stay put.

EARL: I saw your post regarding ALTA. It seems like one of the better juniors. I own a little now. I may add some more over time if things work out for me with KRY and BGO. I don't think ALTA will moved that much in a short time frame ( I think it is one that an investor has to be patient with ) .

All this talk about options reminds me of one of my favorite Sir Winston Churchill stories.....

Seems Sir Winston was at a cocktail party ( one of his favorite activities ) . He was standing with and talking to the local Vicar when the beautiful young hostess came to him with a tray of cocktails.

"Would you care for a drink, Sir Winston" she asked.

He responded by taking two drinks from the tray and turned to the Vicar and asked him "Would you care for a drink, Vicar".

The response was quick and very judgemental. " I will have you know that alcohol does not pass through these lips. I consider it to be one of the great sins of the world. "In fact, I would rather participate in the sins of the flesh and participate in all kinds of carnal activities than to ever take a drink" the Vicar stated forcefully.

Sir Winston looked at the scantily clad beautiful young lady and said to her "Young lady, take these drinks back immediately !!! I didn't understand all my options !!"

Puetz, APH, GVC, BillinOregon- Well, how about that. A Hoosier connection here at Kitco. I am presently sitting comfortably in front of my computer screen in Indianapolis. I had seriously considered going to Purdue for engineering, but alas ended up attending that great Satan, Indiana University. Small world eh?

APH and any other EWavers: found a site that does extensive ewave analysis if your interested:
http://www.marketprojections.com/samplecom.htm

Auric: Sorry to hear you went to that other school ; I am originally from Indianapolis, born and raised. Lived their for 36 years before moving westward. Nice to have other hoosiers around even if they went to the wrong university. :- ) )

panda: The right angle triangle in your bond chart suggests, isolated from all other influences, that rates could rise eventually to 8%. This right-angle triangle with the horizontal line at the top is the upside-down inverse of the gold triangle you posted last week. That right-triangle pattern in gold had its horizontal-line side at the bottom, foreshadowing a significant drop in gold below that line. :- (

GVC: You didn't attend Pike High School by chance did ya? Nah, that would be way too coincidental!

A mysterious gentlemen residing in a remote village in the Alps will cause gold prices to collapse. Archibald Rumpelstilskin shocked the financial world when he announced that he will reveal his secret of spinning straw into gold. On Monday the straw commodities will skyrocket and gold prices will collapse.

When this correspondent was asked if he believed this rumor would impact the gold market he replied, "Yes, gold will plummet. The gullible ones believe every other rumor. Why shouldn't they believe this one?

Peutz, I enjoyed your Donald Trump story. It sounds like he has bad tires but an all season radial heart. Maybe he is promoting these stories himself. I just read his letter to the editor in People where he was listed among those discussed in Men Behaving Badly. He indicated in the letter that he is in favor of good and lasting marriages but doesn't seem to be doing well in the lady department. I guess when you have all that money its hard to land a stable marriage. We goldbugs ought to be settling in for years and years of rock solid marriages based on the Trump factor.

WW, I wanted to thank you for the info that you gave me on my problems with the commodity broker. I have now written to both agencies which you recommended. I have not yet received any response from either of them but I am definitely holding my breath in hopes of relief. I share your thoughts about the gold market. This is very depressing. I come to this site to bolster myself up. I keep trying to think back to the last time gold wallowed like me in self-pity before it went on a solid move north and my mind is hazy at best. I seem to recall that it was darkest just before the dawn and I was about ready to sell everything yellow colored which I owned. This time I've resigned myself to ride it out. As soon as I sold I know for a fact that gold would steam ahead. Proving that a fool and his gold are hard to part.

Gene, I understand it is a two-prong thrust to destroy the gold market. I have it on good authority that this guy named Jack climbed some very fierce vegetation in his back yard to find at the top a goose that lays gold eggs every day. I understand Jack has put the goose out at stud and the ramifications are truly frightening. I'd like to take a gander at that goose.

That is a false story. What really happened was I asked the young lady if she would go to bed with me for 1000 gold Sovereigns ( Gold angle to keep Kitco happy ) . She giggled a little bit ( thought I was kidding ) and playfully said "yes". I said how about for half a crown? She got angry and said "What do you think I am". I replied, "Madam, we have already determined what you are, now we are merely negotiating the price"

Steve-Perth: ( 12:59 ) Only our well developed engine technology can keep an engine running at 90 MPH without overheating. As for Business Week........Nuf said

Fidelity Select American Gold & Precious Metals Charts
5 Years, 30 day comparison and hourly charts at:
http://www.geocities.com/WallStreet/5969
Click on Gold Sectors

Donald: I hadn't thought of the govt. buying the loan. Mine is currently held by Fleet mortgage. Most lenders including Fleet, require PMI in case of default. I wonder what would happen to the insurance companies if enough defaults occurred? They probably hold bonds to meet reserve regulations. So the government would be hit with bond sales to meet claims on defaulted home loans. The fed would print paper to cover the sales and we would get inflation. The fannie mae loans would allow the government to possess massive numbers of properties. It would be like Egypt under Pharoah and Joseph during the seven lean years. The government would end up owning the whole country and retaining the people as "employees".

Aph: I sold books for Southwestern in 1974, in Georgia. That was character building! We sold door to door for 75 hours per week. The temperature was 90-95 every day. You will hear some great stories when your daughter gets home. People are funny.

ALL: Financial Times story for 25 June 1997 regarding charges that a Netherland firm called "Vanilla Services" is a gold coin fraud. British Dept. of Trade and Industry ( DTI ) is bringing charges. I don't know how to post it for you all. Can someone who does get it for us all?

Go here-- http://www.nando.net/newsroom/ntn/nation/062897/nation22_28066.html

Donald: The web site for the Financial Times http://www.ft.com. Lots of good articles in todays weekend edition. They are OK, even though they were the sponsor's of that negative gold conference in Prague. I still get free access, but use it sparingly.

SPEED: Whats a PMI? Another wrinkle on the mortgage packages...Your pension plan, if you have one, probably has Fannie Mae in its portfolio. the whole thing is a house of cards. Everything connects to everything. The butterfly flapping its wings on the African West Coast starts the breeze that is the seed to the US East Coast hurricane. And when we wanted to use silver iodide to break up the hurricanes the Scandanavians were worried that they wouldn't get enough water for their hydro systems. Everything connects to everything.

So alls I do is change this tire for the gennemin', next thing I knows he pays off my mortgage an I can take out a home equity loan to choke a horse. Tune in to Kitco and find out all these folk's buying n' sellin' gold and all this other hard stuff, so's I think, well this here gold is so valuable to these learned dudes, mebbe I should git me some. So's I buy 's much as I can, but then I figures what with the internet, 9 million channel cable TV an all, there's no hope for music halls n' such, so I sell this here Palladium, a theatre I suppose, real short. Get my a-s kickecd n' the wife leaves, n' now I'm home alone on the Kitco jes' lurkin....Jes lurkin... never asked that Helmsley feller to pay me nothin' nohow.

Auric: went to Brebeuf just down the street ( 86th ) from Pike. close enough? :- )

Donald: PMI is mortage insurance. Lenders are permitted by law to charge borrowers an insurance premium to cover possible default. The laws are arcane and the premium can be avoided if the downpayment is 20% or more. Also, once I have paid in enough or experienced enough inflation to where my principal owed is 80% or less of the appraised value of the house, I can petition to be released from this onerous little "fee". Big business in bed with big govenment costs us little guys big money.

Steve - Perth -- I couldn't be bothered with the spelling, I was to busy drawing lines! :- ) )

NAILZ-17:01 nice anecdote! So, let's all talk about OPTIONS.

I have some stats that I hang on my wall and read every day:
60% of the time, MARKETS HAVE NO TREND!
MOST OPTIONS DO EXPIRE WORTHLESS ( let's call it 90+% )
100% of options lose ALL of their time value.

What does this mean?... Do your homework. And DON'T enter any arena of investment that you aren't familiar with. "A fool and his money WILL part".

That being said... Options are a great way to play LEVERAGE the futures market. Some leverage bullion, some stox, I leverage futures. Do not ridicule the other if you have not done your homework. But, DO YOUR HOMEWORK.

APH made a post 16:07 it was a good post AND a brave one too. He lost and fessed up. Not many people will admit they got their ASSES kicked. Bravo APH. Options would have been a very good move there. I have LEVERAGED myself with options in GCQ7. And unlike losing $350.00/contract my WHOLE positions cost ONLY $350.00US. And I HAD ( mind you, HAD ) the opportunity to make a GREAT DEAL OF MONEY ( relatively speaking of course ) . You can limit your risk and maximize your profits if you DO YOUR HOMEWORK. Please do not berate things without proper study. Much like our Astronomy friend has been experiencing.

I must admit with all the talk on this post about buying far out-of-the-money calls and puts it doesn't make me wonder why 90+% of options expire worthless. That could be considered a fool and his money...

However, if one MUST purchase out-of-the-money, LOOK AT PLV7 & SIZ7. This is not a recommendation - merely a ponderance.

All GOLD should be watched and waited... and then BACKSPREAD ( GCZ7 when GCQ7 expires - WORTHLESS! ) . Another ponderance...

AWAY

EB

For all men strive to grasp what they do not know, while none strive to grasp what they already know; and all strive to discredit what they do not excel in, while none strive to discredit what they do excel in. This is why there is chaos.
Chuang-tzu

auroelf -- I looked at 'that' ( gold ) chart with it's triangle. I thought it would be more merciful not to post it. Although, seeing that I am speculating in the yellow metal, ( that is the right word, speculating? ) this means that I must be a masochist. So it follows that I will try to post the chart this evening.

Auric, Puetz, Aph, GVC. Hello fellow hoosiers, I lived on a farm outside of Farmersburg ( outside of Terre Haute ) when I was a lad. I still have family in Terre Haute and visit there often. It is a long story how I ended up in Oregon but having lived here over 20 years, I love it and will not leave.

It will be interesting to see what happens to the markets next week. With these wild swings, the market up or down 100 points, things are going on that we can only guess at. IMHO it is not a good time to be in the markets but to sit on the sideline and wait to see what happens. The whole world runs on debt and some where this debt has to be repaid. It will be very interesting to see what happens when this debt bubble collapses. The person who has no debt or very low debt will be the winner.

Weekly Comex gold going back to 1993 or so...

Daily line on close chart for Comex gold...

Puetz and APH : That Trump gesture of returning a favor was last winter and duly reported in NY Times. It happened on Rte 24 in NJ, where else ?

God said to Adam, "I have good news and bad news, which do you want first?" Adam replied, "Let's have the good news first." God, "I gave you a brain to think with, and a penis to have fun with. The bad news is I only gave you enough blood to do one at a time."

McAlvany says its Katie-bar-the-door: GET OUT OF HARM'S WAY! SELL ALL COMMON STOCKS ( DOMESTIC AND FOREIGN ) AND ALL EQUITY MUTUAL FUNDS -- and more to avoid financial disaster:
http://www.gold-eagle.com/gold_digest.html

Venerable Jim Dines Does It Again: He found 2 gold stocks defying the big bad bear in precious metals: EURO-NEVADA & FRANCO-NEVADA. A Unique gold concept ( 6/28/97 ) . SEE Editorials:
http://www.gold-eagle.com/editorials.html

This is a weekly chart comparing the Long Bond to gold. Gold didn't collapse when interest rates were at 8%, but gold did go up when interest rates where around 6%. I don't believe that one can honestly say that interest rates are driving gold now. I think it's a case of a complete lack of interest in gold. Could it be this simple?

Panda, Yes...

Front -- What is going on up there! Topless stores? Is it that hot? :- ) )

http://biz.yahoo.com/finance/97/06/28/z0009_661.html

Donald......excellent recap of the cold war and the fact that we won't know the winner for another couple hundred years! Here's what really happened: we countered every Russian threat ( real or perceived ) with some sort of new technology. And our technology was real that worked. Upon which the Russians were forced to counter with their own technology ( some of which didn't work ) . Welp, their system broke down first. They could only produce so much new technology. And since they had a "closed" financial system, it was only a matter of time before it fell apart. Perhaps Reagan knew what he was doing all along.......

However, the question is this: will all the spending the US did come to roost months or days from now? Or will we skate by and look back 50 years from now and say: "whew!! That was a close one!"

Puetz......I did not realize that the NYSE margins were now $106B. Yikes! Reminds me of 1928 and 29. Remember the stories that even the postmen started buying stocks as they got all jazzed up delivering those dividend and profit checks.

The same thing is about to happen: the market had a significant downturn, followed by a disasterous downturn when all those margin calls came in. Of course, the gummit didn't help by not providing any liquidity as they did in 1987.

Who knows.......

Puetz......regarding your post about those that are buying gold to guard against inflation should be, instead, buying gold to guard against deflation. Who cares? [G] As long as they are buying! I'm buying to protect against inflation. But if deflation hits, then I'm covered as well.

Of course, if nothing happens in the next 40-50 years, then my son will be covered. After selling out at Dow 23,500! :- ) )

Chruchill story: I'm a big fan of Sir Winston. As a matter of fact, I have a signed first edition of his 6 volume recollection ( memoirs? ) of WWII.

Annnnnnyway......the story goes that he did not get along at all with a certain female member of parliment ( Lady Astor?? ) . During one heated discussion when they were having it out with each other, she remarked that "if you were my husband, I would certainly poison your tea." To which he remarked: "If I were your husband, I would certainly drink that tea!" I got a million of 'em...... :- ) )

SPEED @ 08:28 Just wanted to thank you for the URL of Steven Jon
Kaplan's "Gold Mining Outlook". I was really feeling pretty
low Friday. His analysis was excellent. I can't remember
reading such a well thought out, reason approach. It cheered
me up and I'm sure it will others.

This site is great!

This succession of contract lows in gold over the past two weeks has generated an avalanche of emotion, self-doubt, gloating and extremes in sentiment. We all seemed to be obsessed with trying to interpret just when the collective mood is so extreme so as to suggest the final capitulation. I'm not so sure that's really important. I say that because we, collectively, aka the public, don't comprise a significant portion of either the cash or paper markets in PMs. It's the dealers, the CBs, the mining cos and the funds that determine price. I think it might be more instructive to look to them for possible clues. And I think they just gave us a good one for future price direction. It's the one Steven Kaplan refers to in his latest letter - the immense buildup in speculative fund short positions to record levels in the past two weeks.

He doesn't put a number on it, so I will - it looks like 70,000 net short contracts in the large spec category counting fri's action. If this is correct, it would represent the largest or second largest net short position in years, matching the extreme seen in Feb this year just before the $25 rally ( see gold-eagle analysis page for a graphic look - COT and large spec box ) . I know it will sound crazy, but this means these shorts are trapped. These are purely technical funds who never make or take delivery, so all they can do is buy back their positions. Sure, they might have a bit more to short ( maybe ) and that might translate into a bit more price pressure, but I doubt it. This move down looks a little too professional, a little too planned. By that I mean these shorts look like they were suckered into these sales by the dealers who have been the buyers the whole way down. And the whole way down has been $7 dollars in two weeks, about 2%. Think about it - the dealers got the funds to double their net short position for a measely 7 bucks down. Now what?

The only guess is what's the dealers' plan? Are they going to let the shorts off easy like they did in Feb and we see a $25 rally? Or are they really going to put it to them and we're looking at 100+? While this is not a timing indicator, it feels like the time is near. All I know is the dealers rarely lose, as the funds are about to discover. Who knows, maybe this is the trigger that sets off the whole CB leasing scam, wouldn't that be a shame?

Panda: As I stated to Earl in regards to gold's triangle patterns, the normal breakout is to the flat side of the triangle which in this case would be to the downside, BUT, gold has been notorious for false breakouts one way or the other. Since we seem to have broken out to the downside, I will be looking for the possibility of a sharp reversal back up through the triangle and the resulting short covering that will occur. A short trading week would be an ideal time to try to run the shorts. Also, this particular short week has generally been reasonably kind to the XAU also , at least in the past.

As of Fridays close there were 21 % bulls down 4 % from Thursdays 25 %

BillInOregon - My sister-in-law lives just out side of Portland.

ARK: You are welcome. George Cole posted first about Kaplan but did not include the site URL. Gold-Eagle has some great stuff too. Vronsky provides the links constantly here. Mclvaney on Gold-Eagle will scare the daylights out of you. He scared me! I am waiting on some coins ordered a couple of weeks ago and was wondering if I goofed. Now I may buy some more. This site functions like an underground or counter-culture cell group. It would be nice to be right once in a while, though. I keep leading with my chin. Night all.

For a limited time you can get free quotes and charts on all markets including Globex and Project x with your choice of TA. You must download their program. http://web2.airmail.net/mcm1/