can anyone offer some comments on this...experts have been saying that over the
last few years we have been exporting our infation to Japan in the way of
selling them our treasuries... if this is true, if they give us back our
treasuries.. won't this be inflationary to us? am I confused? Earl, where are you
when I need you?

Panda -- I would say that the demand for more new loans has been slackening off. No demand and no interest rate hikes on that account. They should be lowering them if they want to even have a chance of maintaining this Bull-s__t. But even at that, those who are at the limit of their borrowing power will not, even then, be able to help them borrow/spend more currency into circulation. The government will have to pick up the slack. No, if we see rates rise, it'll be because those who buy the paper will be wanting/demanding higher rates of return.

kkkkkk... Where do you get your sentiment numbers?

Re: COT Commitment of Traders... This has been bullish all year with only one rally. The numbers are getting extreme but will the commercials reverse and short quickly into any rally. Given current sentiment why wouldnt they? The producers I have talked to are down beat and only see a recovery in gold in 1998. The one I spoke to admitted the producers may be shooting themselves in the foot but they need to make money and option and forward selling are a way to do it. Is this pessimism and downbeat Gold Conference in Prague a mega contrary indicator or not...comments.?

I believe what is happening is being hidden. I do believe there is some sort of rift in the G-7 but not sure what or how it will play out. It makes sense to argue that Japan and China wont sell bonds and buy Gold as doing so would hurt themselves. Unless... They know the US party ( debt driven growth and buying ) is about to end and want to start leaving before the music stops. Or change the world currency reserve status before the crisis they know is going to happen.

ALL...I have just seen on the Discovery Channel a program on the "Great Books" series concerning symbolism and it reminded me of another Sir Winston story....I will try to use symbolism to equate to the gold/debits situation currently at hand....

Sir Winston was at a cocktail party ( as he liked to attend ) and he became slightly inebriated ( as he liked to do ) ...He became a little loud and began to embarass certain people around him ( GOLD ) ....

Lady Astor ( debits ) came to him and rather sternly said "Sir Winston, you have become a shame to our country. You are drunk".

And to that Sir Winston replied " Yes, Your Lady, I am drunk. And you are ugly. Tomorrow I will be sober, and you will still be ugly"

I wonder about gold and debits.

I'm surprised that there are so many Indianans ( current & former ) represented here at Kitco. Maybe we should hold a banquet in Indy. APH: did you say you were a Hoosier? Auric, Puetz, who else?

I love the gold predictions from everyone, but you're never right for more than 5 days even gc ( who is the most interesting to read! ) . But i'll tell y'all, i still enjoy reading the comments.

Holyfield's first prediction! Gold will go up Monday &! it will go up a minimum of 3 out of the 3 or 4 business days this week. I've learned how to predict gold from watching this group.

Savage: APH said his oldest daughter went to Purdue University, but he never said he was a hoosier himself. Bill in oregon said he used to live in Terre Haute and still had relatives. Auric lives in Indy, Puetz went to Purdue. I was born and raised in Indy and graduated from Purdue, but live in Vegas now. I think that covers it for now. If we ever do have a Kitco convention/party after gold makes its historic rally, Indy could be a possible location.

HOLIFIELD and OTHERS....The coming week should be a non-event for gold and silver, if the past holds...If anything big, it should be down...Shorts are in control for now..Lots of floor people take the week off for holiday....The actions of Friday were predictable..Still a bear market in metals and floor traders going to be off for holiday...They Did not want to be long because they know markets can be manipulated when market is thin.....Those thinking about longs for next week...BE CAUTIOUS...Thin markets are manipulated easier.....Watch the east....The markets can also be manipulated in the opposite direction....Flat futures for me...Options only in a thin market....FF prevails, that is the fear factor...STILL, ALL PARTS IN PLACE FOR BREAK UPWARDS BIG TIME !!!!! DAYS?? WEEKS ????? MONTHS ???? Be sure to put your physical position in place !!!!!! Paper coming soon !!!! Maybe real soon !!!

Sorry Mike Sheller

Astronomy = Astrology

I get carried...AWAY??

EB

Savage: You can add another to the list. I was a professor of biology at Purdue University and now live in Lousiana.

To All: Does anyone know how to get gold market quotes from Israeli or Moslem market sources that are trading on Saturday and Sunday?

Ted Butler: Very thought provoking post!

I have no idea what gold will do next week, but with sentiment and fund short-sales at truly extreme levels, the next major move will be up. But we need investor demand in addition to short-covering for the rally to last. Otherwise, the price will collapse again after the shorts have been skinned.

WW: I regard the current very depressed sentiment as highly bullish longer-term. As for the Financial Times Gold Conference, this as a contrary indicator. The tone was much more bullish a few years ago, and look what gold has done since then.

From Don McIlvany's Report on Gold Eagle:
As Proverbs 27:12 says: "The prudent see danger and take refuge, but the simple keep going and suffer for it."
Why I am a contrarian adviser & investor. But it is hard being a bear in a bull market! By the way, has anyone noticed that the "Gold Eagle" iste is downloading very very slowly lately, or is it just me? This site loads fast enough. Can't work it out.

A word to the wise:


Vanguard Publishes New "Plain Talk" Booklet On
Bear Markets

The Vanguard Group has issued a timely new educational booklet that examines past market declines. The new booklet, entitled
Bear Markets: A Historical Perspective On Market Downturns, is the most recent addition to Vanguard's widely acclaimed "Plain
Talk" series of investor-friendly brochures.

"The spectacular rise in the U.S. stock market in recent years has prompted many Americans to invest in stock mutual funds for
the first time, and encouraged existing shareholders to commit additional assets to the stock market," said Vanguard President
John J. Brennan. "Many investors, however, may not fully realize the risks of stock investing, especially the risk of a prolonged
period of declining prices."

Mr. Brennan noted that since the last severe downturn in stocks ( a 21% decline in mid-1990 ) , assets invested in stock funds have
grown seven-fold ( from $245 billion to $1.75 trillion ) and the number of stock fund accounts has increased nearly four-fold
( from 23 million to 85 million ) . "While we are not trying to predict the advent of the next bear market, we believe it is a sensible
time to provide investors with some perspective on past bear markets and offer some guidelines on prudent investing," he said.

The 24-page booklet features six primary sections:

Bear Markets Defined -- offers generally accepted definitions of bear markets for stocks and bonds, accompanied by
charts depicting the severity and duration of past bear markets.
Divining The Bear -- discusses the difficulty of predicting market downturns and examines the underlying causes of past
bear markets.
Past Bear Markets In Perspective -- provides a frank discussion on the nature of market downturns and subsequent
recovery periods.
Are You Prepared For The Next Bear Market?-- reviews four factors ( investment objective, time horizon, risk tolerance,
and personal financial circumstances ) that investors should consider when assembling a well-diversified, balanced
portfolio.
Bear Markets: Three Hypothetical Case Studies -- demonstrates the impact of a bear market on the portfolios of three
hypothetical investors who are in different stages of the investment life cycle.
Bear Market Survival Tips -- features six guidelines to help investors manage their investments during market
downturns.

Bear Markets: A Historical Perspective on Market Downturns

To order a free copy of the booklet, please visit our Literature Library, contact Vanguard by e-mail or by calling toll-free
1-800-860-8394.


[ What's New | Fund Prices | Contact Vanguard | Using Our Site | Home Page ]

 1997 Vanguard Marketing Corporation, Distributor

June 29, 1997


New Jersey Is Betting the Future on Wall Street

By FLOYD NORRIS

EW YORK -- In the summer of 1982, with the stock market 22 percent below where it
had been in 1966, stocks were understandably unpopular. In the 15 years since, the
Dow Jones industrial average has risen 895 percent. Now, stocks are so popular that a
state government has opened a margin account.

New Jersey last week sold $2.8 billion in state bonds -- the largest single long-term municipal
financing in history. The money will not go to build roads, schools or even sports stadiums. It
will buy stocks.

And, Gov. Christine Todd Whitman is sure, those stocks will go up so fast that the state will
come out ahead.

To be fair, this is not really a margin account. In such an account the loan is secured by the
stocks themselves and by the borrower's credit. This borrowing is not secured by the stocks.
Nor has New Jersey pledged any revenues or even its general obligation.

This borrowing is secured by nothing. It is what is known as an "appropriation bond." That
means interest will be paid if, and only if, the state government decides to pay it.

"It does sound a little alarming, initially," conceded Sam Corliss, the chief muni bond official
at Merrill Lynch, which was the lead underwriter for the bonds. But he quickly added that
investors should have no fear. The bonds are insured by MBIA, Ambac and Financial Security
Assurance, which share $27 million in premiums. They will have to pay if the state doesn't.

New Jersey's new bonds are not exempt from federal income taxes, so it is paying rates as
high as 7.6 percent, about two-thirds of a percentage point higher than Treasuries.

This deal reflects the state of both public finance and the financial markets in 1997. The state
needed to do something to shore up an underfinanced state pension plan, but it could have
borrowed far less had it not decided that it would also forgo making its regular contribution to
the fund this year and next. That alone added $590 million to the borrowing, and freed up the
same amount to be spent on other things.

The financial market story is familiar. What once would have seemed rank speculation now
seems wise. Insurers see no problem in bonds unsecured by anything, and with no recourse if
they are not paid. More and more investors believe stocks are a sure thing.

A commission thinks the Social Security system should join New Jersey in betting its future on
the corner of Wall and Broad Streets.

Monday, New Jersey will get a check for $2.75 billion ( what is left after fees ) and will put the
money into its pension system. That buying power will help push up share prices a bit more,
as will purchases by stock mutual funds, which now bring in that much money every four
days.

There is no particular sign that this great bull market will end soon. But there is a real question
whether it will keep churning out big profits over the life of the New Jersey bonds. A future
New Jersey governor may curse the day Governor Whitman found this clever way to balance
the state budget.

But perhaps that governor will decide that since the speculation didn't work out, the pain
should be shared with those who financed it. After all, the bonds carry only the promise that
the legislature will consider paying them.

So the state might decide to meet its obligations by distributing depreciated shares of stock. It
could tell the insurers to make up the difference.

Unthinkable? Of course. But that's also what people would have said in 1982 about a state
borrowing to take a plunge in stocks.


Home | Sections | Contents | Search | Forums | Help

Copyright 1997 The New York Times Company

Winston Churchill :

Your 18:02 - Great joke ; ) ) )

TED BUTLER ( 23:20 ) - A post that infuses optimism. Dealers do rarely lose, and I agree with you that the funds WILL discover that. Especially since it has been many a year that gold has impressed anyone, so the current crop of money managers are paper tigers and likely see gold as a less than barbaric relic, suitable only for Christmas stockings ( another barbaric relic? ) and fuddy-duddies. EB: A wise quote from Chuang-tzu. I am enlightened ( seriously!!! ) .

GEORGE S. COLE: I maintained when the word came out that the Social Security "fund" was being considered for investment in stocks that this must be a sure sign of the top. Fortunately for all of us, there are no funds in that fund, so the feds couldn't buy stox when they so clearly wanted to. I'm glad to see Big Brother has seen his place and the States are taking back the powers they were guaranteed under the Constitution. As usual, all those toxic fumes swirling in the atmosphere have emboldened New Jerseyites to take steps into territory none have gone before. Someday, I presume, Jerseyites will drive by some waste-dump landfill outside of Carteret or Bayonne, where they can stop to see their investments blowing in the wind. If this isn't THE contrarian of all contrarian, get the hell out of the water sell signals, I don't know what is.

Paul @ 00:01 -- Yes, it will be inflationary. Import prices will rise as the Dollar falls. Interest rates will also rise. Question is, what will the spin boyz do? ( RR, AG, BC??? )

Paul @ 00:01 -- I think you meant 'sell' and not 'give'. Clearly, if they GAVE us back our notes, we would be most happy. :- ) ) :- ) )

In the words of Mike Tyson, he that hath ears to hear, or extra ears from earless oafs with which to hear, gold is going to take a bite out of the market this next week; maybe two bites. It'll be a disqualification for the paper junk.

ALL: Do you need a bigger "Sign of the Top" than the news a few weeks ago about the Gingrich-Clinton budget deal. It is based upon the Congressional Budget Office estimates that project current tax revenues, based upon the Bull Market, to the year 2002! If any of you have access to a book titled "The Great Wave", by David Hackett Fischer, I recommend that you read the section, starting on page 65, about Florence, Italy, in 1491. Mr. Fischer writes about the greatness of Florence in that year, and then, with the benefit of hindsight, says: "But beneath the surface things were not as they appeared. Once again, at the very moment when it was least expected, a deep change was silently stirring in Florence itself and throughout the Western world. After a century of equilibrium, new trends were begining to develop in Italy and other parts of Europe."
Hope I am not in copyright trouble. This book is a very instructive read for all gold traders who recognize the value of long term trend recognition.

George: Do you know where the 21% bullish on gold came from? Is there a website where this information can be found?

Tort: Do you get that feeling that we are hoping gold goes up but we know in our deepest recesses that it just aint time. A bear mkt falls down a mountain of hope into the valley of despair before it becomes a bull and starts to climb the wall of worry to the pinnacle of euphoria and expectation which creates the hope which allows the bear to begin again.

Paul: With regard to Japan selling us back out debt: This is especially inflationary to us if the debt is purchased by the fed. This is what is known as monetizing the debt, or purchase of it with newly created fiat money.

I would attend a gathering of kitcoites in Indy. I have found my fellow kitcoites to be rather nice gentlemen ( even those who aren't hoosiers )

Are there any kitcoites in Hilo? Will be there Tues. I will be taking my laptop so I can continue lurking.

What a blessing this site is. You guys make my day with your knowledge, comments & Jokes.

Tort, I will be in your area next year, would like to meet you ( coffee,lunch? ) .

Any kitcoites who visit southern Oregon ( Medford ) would be welcomed. The E-Mail address is for real.

White House appointing ANOTHER Dracula to the Blood Bank
http://biz.yahoo.com/finance/97/06/27/z0000_z00_14.html

Is the blindingly obvious slowly starting to set in???
http://www.yahoo.com/headlines/970629/business/stories/stocksweek_1.html

STEVE-PERTH: Can you teach me how to do that? How do you plug in the site you want us to read? That is really neat.

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

Donald: You can type the URL ( Universal Resource Locator ) directly into your comments or your can copy and paste them in. Left click your mouse on the location field while at the site of choice. Then hold down the control key and press the "C" key. That's copy. Go to the comments field here at kitco and press Control-V, That's paste. The location syntax is important if you type it in. The colon and forward slashes must be correct. Go for it!

WW: I believe the 21% bullish reading refers to the weekly Market Vane survey of gold traders. I do not know if they have a web site. I do recall that 30% used to be considered a very depressed reading for this indicator. At 21%, it probably is as low as it has ever been.

ALL: The bear market in gold and especially gold shares has been as extreme as the 1973-75 bear in stocks. Those inclined to despair here should remeber that the worse the bear, the stronger the subsequent bull.

SCOTTIE & ALL CHURCHILL FANS: Churchillian traditions which made Britain Great will be fought for an maintaind. This tradition can be summed up in the words of the great man himself - When Churchill was told over lunch that his guest, the king of Saudi Arabia, was forbidden by his religion from smoking or drinking alcohol, he said: "I must point out that my rule of life perscribed as an absolutely sacred rite smoking cigars and also the drinking of alcohol before, after, and if need be during all meals and in the intervals between them."

WW, I think you have a point on gold. Sometimes our hearts are not in rhythm with our brains.

REB, re Japan debt. A few months ago I read in Pointcast News that the Japanese had failed to pay back a 600 billion loan from Washington. I also read that Rubin and Co. had put aside an emergency fund of 400 billion to buy back any US Treasuries that the Japanese might sell. I think the world will find that the US printing presses can print faster than anyone can sell debt.

Inflation will remain low because nobody will ever see the real numbers. The government will publish those numbers necessary to keep everything NICE.

SPEED: Thanks. I am trying it with the gold coin story.

http://www.ft.com/hippocampus/72506.htm

Monsoons, gold shortages in India, what next?

http://biz.yahoo.com/finance/97/06/29/z0009_137.html

Scandals everywhere! Even in Japan!

http://biz.yahoo.com/finance/97/06/29/z0009_141.html

Gold shortages, banking scandals, the Germans deciding not to sell gold, what next? A market crash? Never! To top it all off ( snicker, snicker ) they're going topless in Ontario! So this is why gold is going down........ :- ) ) :- ) )

SPEED: Great! It even gets you access under my password.

GENE: Did you know that the US CPI numbers do NOT include State, Local or Federal tax increases?

An article in the London Financial Times suggests that some large US corporations may have cooked their books.

Panda:

Sure, blame me for the situation. I noted in the "topless" story that there were only a few "confirmed sitings" noted by police. Perhaps that's because it's still against the law to be a "peeping tom" or it was so damn cold at the beach every thing shrunk and "confirmation" was extremely difficult or .... you get the idea . Apparently, the tourist bureau is thinking of advertising the fact of topless beaches. Hasn't happened in my "cottage country" yet, however, we did have a LOVELY YOUNG neighbour who did allow the fresh air to settle on her skin last summer. Never went out fishin' so much in my life! However, even though legal, I've yet to see her this year and the fish ain't bittin' either! Could there be a link? Maybe the fish like the views also? AHOY MATE, can I borrow your wife? I've got to catch supper!

TTFN

I wonder how many cops volunteered to do extra duty to be on the lookout for the dastardly perpetrators.

Scotty and Nailz: Those were great Churchill stories!!!!

Gene @ 11:23 -- The book-cooking story is interesting. Do you have any other info about it?????

If the 21% gold-bulls is the same poll as Ian McAvity uses in Deliberations, 23% was the lowest in the past 6 years. That occurred before the $35 January 1997 rally began. 21% would be an excellent indicator of capitulation in gold.

Do we have the potential of a one or two
thousand point meltdown in a day once the Dorian Grey economy and mkt are truly revealed by some outside source like Japan and China?

Donald,

"the US CPI numbers do NOT include State, Local or Federal tax increases"

Naturally, but don't worry all tax cuts will be calculated into these numbers in advance to make up for the discrepancy. Slick Willie is a fair dude and he will make sure that the public keeps getting nothing but good news. That's what they want - that's why they elected him and his economy handling approval ratings are very high from both sides. Ain't it great??? In a democracy you get the government you deserve. I think it's WONDERFUL!! Sell your gold. SELL - SELL - SELL - SELL ( I want to finish accumulating at about $320!!!! )

WW@New England re Meltdown.
My hastily thought answer would be no. A 250 point drop is supposed to shut down the market for 1 hour according to the rules. A second drop of 250 would trigger another 1 hour etc. You will get your 1000 or 2000 drop over time, slowly pulling the band-aid off so to speak. The Fed will come into the market secretly, buy some options or whatever to try and fix it. They will be unsuccessful in the long run of several days or so. I have noticed that the big guys may be exiting last week. Conciously or unconciously, they deliberately control themselves to prevent the 250 number. They don't want that to trigger until the public is selling and they are all out.

my prediction for next week:
Gold price will make no big change on Monday. Go north a little to bring
some enthusiasm after Monday, then come back to current level at the
end of next week.

WW: I think you have it backwards re: hearts and minds. It is our hearts ( emotions ) that are screaming sell. After all the bear is 18 months old and still is alive and kicking. Gold has been taking a beating while most financial assets have soared. But our minds tell us that gold and gold stocks are CHEAP and the overall stock market is VERY EXPENSIVE.

STEVE and ALL......Glad you all enjoyed the Churchill stories...He is one of my favorite characters in history. Think of him in contrarian terms also...England had no use for a plain talking tough nut politician before the war...Then he proceeded to save the nation...My what cycles we pass through....

GEORGE.....How old is the bear ?????

WW and others. Hopefully you will not mind if I interject. I have observed your negative comments recently on the market, and I have a counter-view for you to consider.

Unlike what is projected here and unlike what is the common consensus, I consider the gold market to be exceptionally strong as it has shown considerable strength, rather than weakness, in the last few months to have absorbed all the gold rising from sellling attributed to the recent plethora of continuous negative news and attendant extreme negative sentiment, massive short selling, CB sellling, and historic selling from an active gold carry trade and producer hedging. It is hard to imagine a worse set of conditions. One should consider that the only reason that producer hedging and gold loan transactions have been successful is because the gold market has been able to absorb the selling. And although gold recently broke, it is not unusual for a commodity to break to the downside before making a reversal and the XAU with its performance on Friday is the best positive performance I have seen for many months. Further, it would seem to be that more than just the fabrication market has been supporting the gold market as the fabrication demand would not seem to be sufficient to absorb all the gold that presumably has been sold. And these investors who have been purchasing gold may be the smart money that we will eventually read about.

In addition, if one believes that equities look toward a longer time horizon than the futures, the XAU is demonstrating by its recent relative performance , and by its higher price, relative to gold when gold was previously at this level, that gold will be higher in the long, if not intermediate, term.

Importantly, there is plenty technical fuel to contribute to a rally, notwithstanding any positive surprises. And if a rally does occur, the necessity of cover of so much short and derivative hedging can propel gold significantly higher than what one can currently conceive. And if such a rally does take place it will give confidence to investors to enter the market,as the media will fasten on reasons for the rise. Moreover, it would not be unusual to see one or more of the many material numerous risks in the financial markets manifest itself at the same time, as the DOW is giving signs it is topping for at least a major correction.

But even if gold does go to 325 or lower, as it goes lower, there will be increasing counter-forces to reverse the move. Gold fabrication demand from Asia should increase, producer supply should lessen, Western CB selling should lessen, Asian CB demand should increase, short-selling should lessen, and an incentive to enter short hedges, which measure the possibility of gold moving lower, should lessen. And most importantly, investor buying interest should increase as the further gold falls, as the risk of it going lower increasingly diminishes. Eventually, there will be a rally owing to technical forces as these short positions eventually unwind, which should return gold to at least near present levels

Therefore, I know of no other asset that has better risk/reward characteristics.

WW, GEORGE S. COLE: Gold is cheap compared to the Dow. Ask yourself, would you rather have thirty single shares of the Dow or 23 ounces of gold. The answer is so obvious its a shame that the question has to be asked. Talk about inflation...last week Compaq said they are going to buy Tandem Computer...how are they going to pay for it? Turn on the printing presses in the basement of Compaq and print the damn shares, 29 million of them at 100 bucks apiece. Those guy are no better than the Fed. But the public can't wait to get their hands on it. In 1720 people were lined up in the Place Vendome all night, days on end, begging John Law to print shares in the bubble for them. What jerks. It took sixty years for the French to recover from that one.

George S. Cole: Do you mean 18 year old bear. I like your position if you do.

To WW

I got the number 21% from a mrkt guru ( Don Wolanchuck ) and he gets it from Market Vane.

Here's something interesting, I saw a post on Compuserve where the poster
asks wheather or not the hong Kong hand over will automatically give a billion + Chinese access to western Markets. I know GReenline Securities has an office in Hong Kong

Donald: You're welcome! But..your password is required for all of the rest of us, so post to the home page and let us apply if we want.

Vieserre: Great piece. You and Kaplan present an articulate argument for hanging on. Puetz and Mclvany are my kind of gold bulls. I want to buy more! June is almost over and with it the most dismal month for gold. July promises to be hotter in many ways.

Panda: Notice that Stillwater stood like a stone wall during the sell off Thursday and Friday. The russkies haven't delivered yet on their platinum/palladium deals. We shall see..

Investment Managers must be ethical: by Ron Chalmers, Southam, Edmonton.
Investment management is "a business that depends on trust" but Bill
Avera ( Association for Investment Management and Research ) warns that
it also is "an ethical challenging business" where people can go bad.

One obvious problem is simple temptation, Avera says Investment managers
handle large amounts of other people's money. And they may rationalize
that those clients are no better, no smarter, no more needy and no more
deserving than they are themselves.

Investment managers may not be larcenous by nature, but, "we are pushy,
forceful people", he says, and such personalities sometimes may push
beyond ethical limits.

He also warns against the abuse of insider information--that is, buying
or selling securities on the basis of information that has not been
publicly released.

Avera emphasizes, however, that an honest mistake--such as recommending
that a cliant buy Bre-X would not be unethical as long as the analyst
backed the advice with research and fully disclosed the risk.

"Our members have the understanding and the clout to protect shareholders
rights," Avera says, suggesting that professional investment managers,
working for large institutions, also may benefit smaller investors.

Gold is but a Barbaric relic, all these outstanding, concerned
individual power brokers, are honest, forthright, and dedicated, to the
vested interests of our respective communities. Trust but Verify EH !
( buyer beware, works for me ! )
This news item, suggests additional ( Modern Artificial Controls, )

note: Avera founder of FINCAP consulting, Austin Tex. speaking to
Canadian Society of Financial Analysts, in Edmonton Alberta.
( June 26 1997 )

FUNDY and NAILZ: This cyclical gold bear began in February 1996; it is now entering its 17th month. Not quite 18, but still rather substantial.

From a longer-term perspective, the secular gold bear commenced in 1980; it is now in its 17th year. This secular gold bear has encompassed several shorter bulls and bears, but I think most will agree the long-run trend has been down.

Bullion bottomed in 1985, but measured in constant dollars it now is well under its 1985 trough. And bullion is far lower today versus stocks than it was in 1985.

Viesserre: I aso found your latest post most persuasive.

Front -- ROTFL! Too Cold?! :- ) ) I should tell you the story of the damsel in distress I encountered by the ocean. It seems, well, she was enjoying the sun, :- ) when a large wave came along and swept her off the rocks that she was laying on. I heard this scream for help. By the time I got over there, she had pulled herself out of the water. The water was COLD. Well, she really wanted to get out of the water..... Needless to say, she was embarrassed... But, my oh my, she was cute. :- )

Front -- You're gonna kill me here! Still LOL!

Back to whatever I was trying to say before.....
For anyone who cares, this is the official 'limit down' page;
http://www.cboe.com/market/procedure.html

Got to regain my composure here! LOL

SPEED: It was too good to be true? Here is is. After you register search for Israeli Gold

http://www.ft.com/

Speed -- Yes, we will. Who would you believe? The Russian's blaming a paper work SNAFU, or, as D.A. pointed out, The Tiger Fund?

I guess the hook is pretty well set; here I am at Kitco on
a Sunday afternoon.
I'm thinking about shifting some of my gold mutual funds into
a fund primarily invested in South African mines per the
Kaplan "Gold Mining Outlook". However, I'm worried about
the labor market/strikes and the political situation. In
view that they have been depressed for so many years...what
is your read. Some exposure seems prudent at this time.

Reasoned responce will be welcome by all I'm sure.

Here on a quiet Sunday afternoon, and look what I find on the Yahoo! site. Yup, going to get interesting... Those poor EMUs that got clubed to death... Well, I guess we now know what happens to EMUs. :- ) )

Kohl under pressure as debate over euro rages
http://biz.yahoo.com/finance/97/06/29/z0009_145.html

French Communists hit at Jospin over Renault plant
http://biz.yahoo.com/finance/97/06/29/z0009_146.html

George S. Cole: Thanks George, in the main, I am in accord with your views on the market.

DONALD.......Glad you posted the FT site....It is a good one. I just spent some time looking at it. Lots of interesting stuff... Have not found anything on Isreali Gold... Where is it or briefly summarize it so I will know if I want to spend more time looking.....

NAILZ: You are spelling Israeli wrong. It should also come up on "Vanilla Services"

Why does the XAU lead bullion up? Are the same people who are buying and selling the bullion also buying stocks, and having advanced knowledge of what the spot price will do they make some side money in stocks?

Front: Maybe your worm is too small.

IDT....XAU does not lead nor follow in any consistent pattern to the physicals...It may do one for a while and then the other...For the last few months, there has been more volitility in the XAU than in the gold physicals....Sometimes a trend develops where one leads the other for a while. Traders love to find the leading indicator....It may be bonds, PGMs, silver or currencies, WHATEVER !!!!! Just as long as I figure what the leading indicator is, ( when there is one ) that is all I need to know.
I have even seen the grains act as the leading indicator. Crude is common. .....DONALD....I went to FT with auto load images turned off, so I may have missed some of the pictures. Didn't see a search engine. ISRAELI...SP...Yes a finger twitched too soon....

Internationally acclaimed Market Analyst asserts over-valuation, irrational exuberance, expanded risk-exposure & technical hyper over-extension will cause horrendous losses when bubble bursts. See Editorials:
http://www.gold-eagle.com/editorials.html

DONALD...Turned auto load images on and found search engine....Story on pyramid scheme on gold coin sales.......

Scotty: My argument about buying gold and silver for the right reason was made, because it's very likely that a person buying the precious metals as an inflation hedge will bail out as deflationary intensify. For the person holding onto the metals regardless of circumstances, then you are correct -- it won't really matter. One final thought: A person preparing for deflation will very likely adjust his finances very differently that someone preparing for inflation. The deflationist will try to get out of debt, and avoid leverage in his investments. The inflationist may feel comfortable with heavy debt loads and the use of leverage. Thus, in a deflationary environment, an inflationist may be forced out of his positions even though he wants to hold them. That's why I believe it's important to know and understand the forces of inflation and deflation.

Paul: Monetization of debt by the Federal Reserve does not necessarily imply inflation -- although it always has during the past 50 years. The most recent exception was the 1930s, when fear overcame all efforts by the Fed to halt the deflation. CONFIDENCE is more important to credit-market health than Fed action. If the Fed buys Treasuries in a collapsing market, the deflation of existing Treasuries does not helped current holders of debt securities. My argument for deflation is based on over-indebtedness by all sectors of the US economy, rising bankruptcies, a declining economy, and loss of confidence. These are things that govenment action and Federal Reserve action cannot change. Once confidence is broken, it is extremely hard to restore.

STEVE PUETZ: Did you see my post on the 4 Billion drop in the Monetary Base over the past two weeks? I am confused about it. Can anyone offer an insight?

Donald: The Monetary Base has been in a deflationary contraction for several months. I believe it peaked at $486 billion. Now it's down to $473 billion. This is just one more deflationary signal.

Supposedly, MCM - Trading has live quotes for a limited time at:
HTTP://WEB2.AIRMAIL.NET/MCM1/
Does the quote software automatically download? I didn't see any way to download it or get the quotes?

Then you don't suspect the old "Seasonal Adjustment" trick?

Donald: Of course, you are quite correct about not being misled into believing that the postings of Chinese computer users are in any way representative. One of the things that struck me was that all of them were uniformly critical of the USA while none criticized the PRC in any way. It was almost as if they all had a gun pointed to their heads. Oh yeah, that's right . . . they do!

Mike Sheller: Don't pay any attention to me. I do tend to be stuck in the cold war. If your loved ones are in any danger, we're no better off here. I'm thinking more of a limited skirmish, perhaps over Taiwan.

%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%
Isn't there any other part of the matzo you can eat?
Marilyn Monroe ( 1926-1962 ) on being served matzo ball soup three meals in a row
%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%

ted butler--

your analysis of the current situation in gold
due to the positioning of the funds is right-on!
the recent cot report shows which way "they" think
it is going. i'm on-board with dec options.

there is too much flux and chaos flying for prices to
remain depressed or in a tight channel. the accumulation
phase is over. gold has been over-sold and is due for a
considerable rebound. ALL indicators are pointing in the
right direction. the only thing lacking is the price itself.
patience is one of the most important qualities needed to
trade commodities successfully. patience with gold in silver
will make many very wealthy. in the meantime, we await bald
headed al to raise rates and jump-start the cyclical paper-tiger
on its' way down the mountain that paper built.

time is on our side. the lower prices go, the stronger our position
becomes. "if you can keep your head about you, when all others are
losing theirs....." let's be able to hand them heads when the time
comes!! i'll be there, in the rockets red glare, gold bombs bursting
in air, gave truth to the sight, that gold rules starting tonight!!

cherokee!; ) believer of truth, and seeker of the keeper for the
holy grail.

RON: If I were the head Chinese guy I would do just what the Americans do with voice of America. Set up a group of people on the Web to get my point across as a propaganda effort, try to make it seem as though it were the postings of "ordinary outraged Chinese citizens"

Another thought on who won the Cold War. West Germany bought East Germany from the Russians. Who knows the final price of that deal. Although if I were the head West German I would have done exactly the same thing, the hell with the price.

Inflation/Deflation, I suggest we are in for a deflation, and it will be
no greater a strain on our country, then the last 1930's depression.
example:
At first, nobody expected the Depression to take the form it did. The
year 1930 seemed like a downturn, but it was a gentle downturn, sliding
by degrees toward the abyss. Unemployment was up, and with it relief.

Manitoba could no longer afford to pay its share of old-age pensions.
Would Ottawa assume the whole cost?

Prime Minister Bennett, announced on Radio, a plain message:
The economic system must be brought under control in order to create
employment and end relief. The Dole must go, the Prime Minister said,
for it "was a condemnation, final and complete, of our economic system.
If we cannot abolish the dole, we should abolish the system."

The financial community in Montreal and Toronto was greatly disturbed.

The Old Age Pension Act of 1927 was not a particularly generous measure.
The basic pension was fixed at $240.00 per year, and the pensioner could
enjoy a total income of $365.00 per year including the pension; any
excess income produced an equal reduction in pension. The first steps had
been taken along the road towards the WELFARE STATE.

For some Canadians, therefore, the Depression decade meant a continuation
of the modernization of the 1920's. In spite of the slump, white-collar
jobs proliferated, especially in wholesale and retail trade and in the
professions. Rural doctors might get their fees in chickens; urban
doctors still got money. So did members of the civil service, who were
paid less, it is true, but in dollars that were worth more.

Professors and most teachers also had a steady income. Even at the
University of Manitoba, where the bursar absconded with the endowment,
the government kept the doors open.

The 1930's were a decade of depression, but also a decade of invention
and modernization.

A quarter ( 25% ) of the population might be out of work, but ( 75% )
three-quarters of the population could still subsist by its own efforts.

There was dissatisfaction and, even more, there was uneasiness. But there
was not, and would not be, revolt. Creaking and groaning, the system
held together.

Steve Puetz: I am eating tomatoes from my garden and pondering this inflation/deflation thread. If the government commits early on to supporting the bonds, at any cost, then bonds won't collapse. Confidence will be maintained. Rubin and Greenspan will pick a price and dig in. Hundreds of billions of new money will be created instantly to purchase all bonds tendered for sale. They understand the confidence game and will play it to the hilt. Lots of money will chase away all debt and everybody will be congratulating the heros. Everybody except the creditors. I understand that hyperinflation just moves the day of reckoning back one or two clicks but it is the choice du jour for failed paper systems. The government will curry favor with the masses by forgiving debt through hyperinflation. Remember that power is at issue here as well as economics. Either way I'm expanding my garden, I love to eat.

Thank you Panda for posting the bond chart.That,so far,does appear to be
a triangle of some power developing wuth the suggestion that a breakout
above the flat at 7% could be explosive.I'm wondering if the triangle
on the gold chart is quite the same thing.The power of these formations
usually is related to how far the formation has moved towards the apex.
In the case of gold I'm doubting the validity of the breakout to the downside,as in false;it generally being the case that breakouts at
approximately two-thirds to three-quarters of the length of the triangle
are the most powerful.
Thanks all who contribute to this discussion;its excellent.

ARK: I have the greatest respect for Steve Kaplan, but he has been wrong on the SA golds. Kaplan has been arguing that the SA golds are much more attractive than the North Americans for some time, but the SA shares have underperformed nonetheless. The SA shares have more political risk than the North Americans and also are higher cost. So their underperformance is not surprising.

That said, the highly leveraged SA shares almost certainly will outperform when the next gold bull market begins. The SA shares always do worse in gold bear markets and better in gold bull markets.

My Canadian cousin who is active in the NDP and her husband who is active in the unions have invited me free of charge to one week at a Cuban resort. They told me to come up to Toronoto and fly out with them and that the Cubans would not stamp my passport so that I could avoid prosecution by the US govt for traveling to Cuba ( do they prosecute Connie Chung or Tom Brokaw ) . My Cousin and Cousin in law are going to Cuba then France.,Britain, Sweden and Russia to meet and conference with people of a like mind especially Yeltsin.s party in Russia who they join in opposing Communism but in support of a Socialist mkt economy. The perks these people get are unbelieveable. If I were not a Lawyer I would be at Veradero Beach near Habana in Two weeks. God Bless Canada for its freedom of travel!!

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

I believe inflation will come before deflation....Our government would much prefer inflation to deflation, when we are talking extremes. A little bit of deflation would probably be tolerated, but let a serious deflation begin and the party in power that does nothing about it will be out on the streets at the next election. Americans vote their pocketbooks. On the other hand, if as Steve says the greenback becomes unacceptable as a medium of exchange in world-wide trade, it would be very hard for the US to inflate its way out of a world-wide deflation.

That however will take some time. I have never known of a world powers' currency to become worthless overnight. It would take time for other countries to lose faith in that currency, most probably during an inflationary period. Either way I see inflation coming first.

I think the most dastardly thing "they" could do is to let gold prices go up a buck or two ( or even three ) on Monday, then....smash us the rest of the week! So, that is my prediction.

ALL...Has anybody else thought that Rubin and Greenspan have worked very hard to gain respect and admiration....They will not stay around and see the US monetary system suffer serious damage while they are at the wheel....Rubin is already hinting that he is ready to go back to NY private life. AG has a new wife and may want more "family time". If both leave, I believe that would be a clear signal of rough roads ahead...Any thoughts ??? This is not to start any rumors, etc., but just to question if anybody else had thought of the possibilities.

NAILZ: I think you should hold off on your gold coin purchases from Vanilla Services until after it has been approved by the Albanian Investors Institute.

Japan is on the mend.

http://www.nikkei.co.jp/enews/TNKS/page/ecoset.html

Article on the British Custodian of the Enemy Property breaking into safes after WWII and taking the property of Holocaust victims...

http://www.globes.co.il/cgi-bin/Serve_Arena/pages/English/1.2.1.6

DONALD....HEH....HEH....No need to worry....I won't be buying from them even if they are approved.....

George S. Cole remarked a couple weeks ago that my short-term perspective
was hurting novice traders. Others have blasted the "short-term traders" as if we lack committment, and are not true goldbugs. Well,
being in a long, long-term bear market with still no signs of a recovery, if anyone had jumped out they could now buy back a lot
cheaper. Now I ask...who has been hurting whom? I have made money
trading the XAU from the long side and I am again out of the XAU with
intentions to buy Tuesday again. I expect to again make a short-term
profit. Comments?
continues and anyone who I have traded a couple

http://www.usatoday.com/news/washdc/ncs32.htm

Savage -- If gold goes up over $340, I'm gonna throw that golden triangle off my chart! rhyme, you are correct in observing that the breakout has taken toooooo long, and is probably invalid. The alternative is a continuation pattern. Psychologically, this would be downer, but better than the alternative. Of course, the palladium scenario could happen. Who knows, how many mines have to go on 'care and maintenance' before this would happen?

....when there is an extreme low made, and later when we finally
start to break long-term downtrend lines...I will become a BIG
GOLBUG, a committed long-term player....but until then...I trade,
in and out, keeping my powder dry. Mr. Cole says I will miss the
big move...on the contrary, I will be uniquely able to take advantage
of the big move, as I am not carrying carnage from losing long contracts. Comments? I have to go now...have to plot my strategy
to make money over the next two weeks, from the long side of the
stock market, a bull market that keeps going higher for at least
2 more weeks hopefully, when it should top and gold should finally
bottom.

Lan Man -- I know one thing, somebody wants the gold, all the gold. That somebody is turning out to be the Central Bankers. I've posted this story before, so I'm beating a dead horse here, but it is interesting to follow the money.

http://biz.yahoo.com/finance/97/06/24/z0009_1413.html

All:
Re: inflation or deflation of real estate, and it's subsequent effect on mortgagees......
Federal debt default inevitable

I don't think deflation will be a medium term real estate scenario.
Short term, deflation is coming about due to excessive supply, partially caused by large defaults, with much more to come.
But this temporary situation should change, as the feds MUST print mountains of paper to stem the tide of debt default very soon.....
........and this will be very inflationary in absolute numbers.

As in all hyperinflation societies, those who were HEAVILY leveraged or loaded with real estate debt.....came out like bandits. ( Providing of course that they had the economic capacity to service their mortgages in the lean times ) . As the feds MUST eventually print ( this time around ) , logic would dictate the opposite of what most gold bugs are saying as to the necessity of debt reduction. Debt reduction is only worthwhile in a deflationary environ, but deflation will be just a fleeting moment, compared to what the feds MUST do eventually.

Hi Short Bull: Do you have a price target in mind for a low in gold? Two weeks, eh? I can live with that!

I see that particular story has expired! Well, it still lives in some dark recesses. If anyone is interested, I will attempt to find it.

WW: Tell your cousins that there is no such thing as a socialist "market" economy. There is either a market economy ( as in free ) or there ain't.
A Socialist market economy is as much an oxymoron as la bebida "Cuba Libre." If you ever get to Havana, have one on me.

...Counter-trend TRADE...with trade being the operative word. Now, with further weakness there will be a point where we could get so
oversold...with bearishness so pervasive, with short positions so
great, with gold bulls so discouraged, that we might, no, we will
yes WILL make a short-term bottom...and rally back to current levels,
and maybe another $10 or even $20 above current levels. But we are
not quite there yet and for anyone to advise long positions in Comex
metal for anything but a scalp trade, has been and continues to be..
pure heresy.

Platinum recently approached $500 and has corrected substantially. I
expect to buy Platinum under $400 and will continue to buy Platinum
down to the $370 level if we get that cheap. Then when gold bottoms
and goes to $370 or so, Platinum should be at $450 or $500 or higher.

Silver can be bought on dips and money is there to be made with 10 to
20 cent rallies. Selling silver puts is also a possibility.

Panda.....2 comments ....1 ) I would like to see the story on CB purchases of gold....and.....2 ) You reprobate !!!!! How dare you look at the sweet young morsels who choose to receive fresh air on their skin. You are a poor influence on the rest of us !!!!! And try to rescue one !!!! I bet you are practiced up on CPR just in case ????

Let time decay work for you, not against you. Only the gold price
is manipulated. I stay away from that as long as central banks control
gold prices. But selling Silver puts should be a very good trade which
I plan to start agressively doing next week. I expect silver to bottom
within the next 20 to 30 cents and will look to sell 4.50 and lower
strike silver puts and will collect the premiums of time decay.

I am gone! Busy getting ready for next week...bye bye!!

I'm through posting for now...I hope I did not come across as a
pompous ass but I just wanted to be a help. Well, gotta go. Will
post occasionally next week when I see something interesting...

While I dont like Clinton I do support his this week proposal to have private media provide free access to candidates to take "money" and influence out of the equation.. One cheer for Clinton finally standing up against money for freedom!!

Should I take the chance and the free trip to Havanna via Toronto with my cuz or stay put/ what say yee citizens of this site? Rum, cigars, beaches, impeccable sun and private gambling at Veradero Beach or take no risk and sweat it out up here. What is the vote?

SHORT BULL: re your 19:40...You have a point about your ability to buy that may not have been there if you had been stubbornly long ( as I have ) . I'll admit that I've been hurt and am bleeding still ( my wife doesn't even want to hear the "G" word ) . Still..."it ain't over till it's over"... ( what famous baseball word wizard said that? )

GROUP: Have been a goldbug for many years...have become quite discouraged about gold's prospects over last several months...HAVE THE RULES CHANGED? Are we deluding ourselves? I've come to think ( heaven forbid! ) that the only way gold can ever really spike again is if war breaks out! Still believe an excellent long-term play is oil stocks...
I'm talking about outstanding potential retirement income. Any Comments?

Before the markets get going for the evening I wanted to post a little sometime to help avoid any of you jumping our your basement windows and attempting suicide if the metals markets continue in their sour vein.

A seaman meets a pirate in a bar, and they take turns telling of their
adventures on the seas. The seaman notes that the pirate has a peg-leg,
hook, and an eye patch. The seaman asks, "So, how did you end up with the peg-leg?" The pirate replies, "We were in a storm at sea, and I was swept overboard into a school of sharks. Just as my men were pulling me out, a shark bit my leg off. Shark went by the name of Mike Tyson" "Wow!" said the seaman. "What about your hook"? "Well...," replied the pirate, "We were boarding an enemy ship and were battling the other sailors with swords. One of the enemy cut my hand off." "Incredible!" remarked the seaman. "How did you get the eye patch"? "A seagull dropping fell into my eye," replied the pirate. "You lost your eye to a seagull dropping?" the sailor asked incredulously. "Well...," said the pirate, "..it was my first day with the hook."

The Canadian dollar was freely convertible into GOLD at the 1914 price
of $20.67 per Troy ounce from July 01 1926 until the winter of 1928-9.
Canada was thus, formally and for a short time, on the GOLD standard.
When Gold flowed into the Department of Finance, new Domminion notes
flowed out into vaults of the banks and, to a limited extent, into the
hands of the public. ( Bank of Canada created 1935 )

In the popular consciousness of North America, the great event of the
late 1920's is the boom and crash of Wall Street stock market. In Canada
too, there was a boom and a slump on the stock exchange. The same forces
were present in both countries -- buoyant profits in many firms, credit
that was easy and cheap in relation to expected capital gains, and a
feeling that things would go on getting better, indefinitely, perhaps at
a faster pace than before.

Business investment strode on upward, so that for many firms 1929 really
was a banner year. Hence, perhaps, the exuberance which gave rise to the
splendid stock market performance. When it is remembered that the prices
of ordinary goods and services were tending to fall, this performance
is even more extraordinary; in real terms, enormous gains were made by
those who bought stocks early in the game-- and who sold out in time.

Canada's businesses, found it comparatively easy to sell new common
stocks, whether to finance a new plant or buy some other company,
especially in 1928. They took advantage of the Great Bull Market to float
unprecedentedly large issues of new common stocks.

University of Toronto economist ( Gilbert Jackson ) pointed out that in
the Great Bull Market prices had become ridiculously high in relation to
dividends, prospective yields, or anything else. Calling the collapse a
"return to sanity" he foresaw that general business would emerge unscathed.

In most cases, those who went on relief in the cities had to prove that
the alternative was starvation. Most Canadians seemed to accept that the
destitute deserved no more than the basics, even though it had become
impossible to believe that the unemployed had chosen their own fate.

In Ontario, Mitch Hepburn's "Reformist" Liberal government threatened to
cut off all aid to cities which gave relief beyond the maximum which the
province had established.

Yes, 1997, will in fact establish another deflation, it is here at the
present time, considering, the attacks on welfare, and the unemployed.
Also, consider the fear factor, of job security, and levels of stress.

There must be TA charts, to calculate fear factor.???
This is my take, on Inflation/Deflation, as seen from the street level.

Early this year I decided I was not going to be a trader...but an
investor. I had a substantial long position in the Rydex Precious
Metals fund and for several weeks, was losing $15,000 to $20,000. When
I got back to a $5,000 loss I chucked the position, only to see a rally
in the XAU finally hit my 122 target where I would have made a few
thousand. From that experience I decided to be a trader and not an
investor. Getting out at the XAU 114.90 level, I was determined to
get back in the XAU at lower prices. One can take their loss on
strength, like I did at the XAU 114.90 level, as long as I get long
again under that level. Well, with the current weakness I will be
aggressively buying in the low 90's of the XAU because I still have
a couple thousand to get back of the $5,000 loss I took earlier in
the XAU trade I held on too long on...then did not hold on long enough
to get out at a profit...

nailz -- I've gone to confession and repented!

Here's the story. Let's see 336tons -5.5 tons = 330.5 tons, where did it go?

Tuesday June 24 6:56 PM EDT

Holocaust victims won't get last looted Nazi gold

By Michael Shields

GENEVA ( Reuter ) - European central banks, not individual Holocaust victims, will get the last of the Nazi gold still resting in Western vaults, officials said Tuesday.

But they said individual countries could use it compensate victims to show their concern that gold from the jewelry, even the teeth, of death camp prisoners may have been mixed in with the Nazis' World War II loot from central banks in occupied countries.

The Tripartite Gold Commission, set up in 1946 by Britain, France and the United States to return looted gold reserves to European central banks, still controls 5.5 metric tons of the 336 metric tons it started out with.

``The gold that remains will be paid to ( claimant ) states,'' French Under-Secretary of Economic and Financial Affairs Michel Filhol told a conference on restitution of Jewish property sponsored by the Los Angeles-based Simon Wiesenthal Center.

``It is up to these states to recover the gold and shoulder their responsibility .... They will have to decide what they are going to do with the remainder.''

But he suggested Holocaust victims would not be left empty-handed.

``One may guess that there will be something ( done ) within a national framework because we think we have to do something, but this is not excluding any other initiative on this point we could take,'' Filhol told reporters.

Ten countries -- Albania, Austria, Belgium, the former Czechoslvakia, Luxembourg, Greece, Italy, the Netherlands, Poland and former Yugoslavia -- have claims on the gold, which is being held by the Bank of England and the U.S. Federal Reserve.

U.S. officials would like to see the gold used to create a compensation fund for Holocaust survivors.

The three administering governments have agreed to freeze the gold while they review new evidence that some of it came from the wedding rings, watches and dental work of people sent to Nazi extermination camps.

Emrys Davies, a former British diplomat who now serves as secretary general of the Brussels-based Tripartite Commission, said the panel had been unjustly accused of ignoring Holocaust victims.

The commission's mandate expressly limited it to returning monetary gold, stocks held on the books of claimant countries as official gold reserves, to central banks in proportion of their claims to the total recovered.

He took his job in 1995 on the understanding the commission would wrap up its work within a few months.

``My guess now is that it is still going to be just a few months, one way or another,'' he said.

Filhol said the commission's archives should be opened, as some Jewish groups have urged, only after all the gold is returned. Partial publication now would disrupt the panel's work and could be counterproductive, he said.

Huh?

Sunday June 29 8:02 AM EDT

Dalai lama warns of Chinese aggression

HONG KONG, June 29 ( UPI ) _ The dalai lama has predicted Chinese human rights violations after Beijing gains control of Hong Kong on July 1.

In a 15-page statement, the office of Tibet's spiritual leader and Nobel Peace Prize winner predicts China will ``violate human rights and would trample democracy'' once it regains authority over Hong Kong.

The statement said, ``In Hong Kong, human rights and democracy will be the first casualty of reunification with China.''

The news of the statement was carried on the front page of Sunday's edition of the Hong Kong Standard.

Chinese rulers could not be trusted, the statement warned, to keep their promises to ensure a high degree of autonomy in Hong Kong. It says, ``One can't help wondering if China can be trusted to adhere to any agreement which does not serve its purpose.''

The dalai lama, long an opponent of China and its policies, accuses Beijing of violating a 1951 accord which promised the same one-country, two-system formula for Tibet as is being announced for Hong Kong.

He was only 14 when newly victorious Chinese Communist troops arrived in Tibet to reclaim control over the isolated region, which had enjoyed de facto independence since the fall of the Ching dynasty in 1911.

The dalai lama assumed full political power, but was unable to exercise it as the Chinese began trying to assimilate Tibet into China.

Push came to shove in March 1959 and Tibetan tribesmen staged an armed revolt that was crushed by the Chinese in three days. The dalai lama and 100,000 followers escaped through the Himalayas on horse, mule and foot. He eventually established his headquarters in Dharmsala, a northern Indian town 100 miles from the Chinese border and 900 miles from the Tibetan capital of Lhasa.

6pak: I wish you to know that I appreciate your thoughtful and informative posts. I have learned a lot about Canada through them. I hope you will continue.

That Dalai Lama. How in the hell does he do it? Making those incredibly sage predictions? WW: I vote you go to Havana. I know I give you a hard time now and then 'cause I'm just to the right of Barry Goldwater, and a little toward the left of Ayn Rand. But, seriously, life is too short, man - you're a person who is vitally interested in the world and the affairs of humanity. Don't waste the opportunity. Go and see for yourself what so many others merely chatter about. And DON'T worry how the trip will affect your public standing, etc. Take it from the ol' astrologer. You have my best wishes for a great trip, and I would be happy to hear ( or read ) your observations on Kitco. Bien Viaje!

WW...take the risk and take the trip. Please report back to us your findings.
My Mom grew up there before El Beardo took over.

WW: Just had a thought - how about some posts ( if at all possible, permissable, etc ) FROM Cuba! Don't you just love it?! Our man in Havana on the spot. I promise I will do the same from the PRC when I visit Shanghai next year or so.

SHORTBULL: Perhaps I have misinterpreted your trading strategy. I thought you are always a short-termer. But if that is just a function of the gold bear, and you are able to switch strategies when the gold bull begins, then my hat is off to you.

On the fear factor take this to heart. When average people are fearful re: their jobs, then capital will be confident and gold prices low relative to equities. But when average people grow confident capital will grow fearful and gold will do much better.

Average people still fearful today ( though less so ) and capital is as confident as it has ever been in this country. That ( not CB manipulation ) is the fundamental reason behind this devastating gold bear. It's all about to change though; so take heart gold investors.

WDL: A war will not be required to end this gold bear. A steep decline in the stock market will suffice quite nicely thank you. Not a 10% correction that is quickly reversed, but a crash or bear market that knocks prices down at least 20% with no quick recovery.. I expect such a decline to commence in August.

PANDA....Am glad to see that you have seen the error of your ways and repented. If ever you feel the need to ogle pretty young ladies again, call the support group at 555-4732. If you find yourself with more than you can watch at one time, call me at 555-1217......THANKS for the info on the bank action.....

Senor WW: If you do not take advantage of a visit to my ISLA ENCANTADA, you will regret it to your last day on earth.

Looks like a little gold and silver rally in the east. I was just curious if any of you wasted the time and money to watch the Tyson fight. Fortunately I did not. Was it as disgusting as the news reports would indicate? I'm thinking that instead of kick-boxing, they ought to form a new competition called bite-boxing.

Nailz: Wasn't Rubin talking about quiting the Treasury a while back. I think it was early in Clinton's 2nd term. He would have more to preserve than his reputation. I presume that his fortune is in some form of blind trust and he also has some commitment to his former company which I believe is Goldman and Sachs. On the other hand, some have argued here that Rubin hired Clinton and not the other way around. Perhaps it would Clinton that would go first and not Rubin and Greenspan.

WDL: I liked Australian producer Gutnick's comment last week that gold will rebound when gold bears get bored shorting the metal in the face of constant demand from Asia. Supposedly, the bears'll give up on it around $335 and move on to another commodity. Then gold will rebound very nicely. He didn't make it clear, however, why he thought bears will not come back to gold if it recovers. So I think goldbugs will have to be quick on their feet under this scenario and not try to be goldpigs -- unless other compelling reasons happen to coincide: a sharp correction in the Dow, inflation ( deflation? ) , war . . .

WW: I'm sure you're mistaken about that trip to Cuba. Since when would socialist defenders of the working man agree to accept "perks". Seriously, its interesting in that it has come full circle. The mob goes to Cuba for fun and gambling. Communists throw them out. Mob gets into unions. Unions go to Cuba for fun and gambling. The only thing that doesn't change is human nature.

PUETZ ( 17:39 ) : Fear predominated because the Fed did nothing to halt the deflation of the 30's. Indeed, the body set up to smooth out the bumps in the nation's monetary cycles precipitated the unchecked boom in stox that lead to inevitable collapse. Then they made things worse by allowing the money stock to contract by ONE THIRD. Milton Friedman wrote in "A Monetary History of the United States" that he thought the Fed did not understand the necessity of keeping the monetary aggregates from shrinking so severely. Either that or they were plain incompetent. I would have thought that Alan Greenspan was more sagacious than to be a party to the current paper asset inflation. Doubtless the political pressure on him is enormous, but I must believe of all these characters this man knows better. I do not wish to be unduly harsh with him, but perhaps he missed an opportunity to be a true hero in the manner of a character in an Ayn Rand novel, instead of exposing himself to the danger of being remembered as just another government functionary at best, or a tragic bungler at worst.

IDT.....It was either a week past today or two weeks past today there was an article in the papers in NY where he and his wife did an interview. She has never moved to DC and hates the place with a passion...She likes NY and both hinted that something to give him more time at home was going to happen....?????? I think it is obvious that he likes the power and has plenty of it in Slick Willie's cabinet. Who else can go head to head with AG and win on a financial matter??? He alone, so far as I can tell.

Which force will win ???? Power and Slick Willie or NY, home and wife ??? I think power until he sees smoke from the flames of the US economy. Then gone home with great fanfare. Hints are that he may even change posts...AGAIN !!!!

MIKE SHELLER: Reading from a reference book...During the 1931-1932 period the Fed added 195 million in reserves to the banking system. In spite of that effort reserves dropped by 302 million. People were pulling their money out faster than the Fed could ( or would ) inject it.

IDT: You forgot one thing that remains the same about the unions and CUBA trips for WW. We, the taxpayers of Canada are footing the freebie that WW night accept from his NDP cousins. Does he really believe that they will foot the bill for him. Ask TED about the NDP in Cape Breton. Ask them where they're getting the monies for the trips? From the NDP party means from the Canadian taxpayer since we give the political parties tax free travel allowances. More pigs to the trough? Won't be any room left for the Reformers pretty soon. Maybe we'd better write Mr. Manning and get him to bring it up in parliament that the NDP party faithful are hauling Americans free of charge to CUBA for vacations on taxpayer money. That should shake the tree a little eh!

PANDA: I think you did the honourable thing by going to help that poor lady! Of course, NailZ sounds like he would have held your jacket for you as you saved her. What a saint!

IDT: Don't use worms. Could use a better pair of binoculars though!

MIKE SHELLER..........Unless a problem arises in the East ( which it could in a minute ) that could casue an immediate problem, AG still has the chance to go home a hero....The tight fisted individual who fought for and gained the most power of any FED chairman in history....One who stood up and was counted to help solve monetary problems of the world ( not just US ) . I think he wants to preserve that image and just might choose to go home rather than be accused of helping cause a crisis.... He is getting older, he has a new wife, and he disagrees with the politics of Slick Willie. He may want to retire. Who could blame him ????

6PAK: You piqued my interest by your comments on the Gold Standard and
deflation/inflation issues. Here is something to consider in return.

In the United States, the 28% year over year increase in bankruptcy is attributed to that until recently, despite the expanding economy, wage increases have not kept up and people are over-extended in debt. I do not know whether this is due to a prolific promotion of credit cards, because of greater confidence in the economy or otherwise.

``What has been particular about this recovery is that it has been accompanied by almost no increase in wages on average,'' said James Galbraith, economics professor at the LBJ School of Public Affairs. ``Only in the last year or so has there been any growth in wages. As a result, a disproportionate amount of the increase in spending in the consumer sector has been financed by increasing debt.''

But the flip side of this, other economists contend, " this spending is not necessary bad since consumer spending is two-thirds of gross domestic product. If people stop spending money there is the danger that the economy will stall out.''

Certainly, as evidenced by the CPI, there has been deflation in prices. But a lot of this is attributed to the low costs of imported goods. Domestic goods, in comparison, have a much higher relative inflation rate. With the current employment rate being the highest since summer of 89, this encourages inflation and not deflation. The most pressing
concern of the IMF and BIS, as well as many domestic economists, is that inflationary pressure in the US may soon prove more difficult to tame and the expansion may end abruptly.

And I think this is where the rub is. Because if inflation surfaces and the FED over-applies the brakes, then there is indeed a danger of a recession which will not only affect this country but a global economy on which by credit and market interest it so importantly depends upon. But until these inflationary pressures manifest themselves and the FED takes such action, I would not expect any serious deflationary consequences to this economy which continues to respond to favorable global markets. In addition, unfortunately, we as a nation since the separation from the gold standard, rather than save, have tended to overspend in view of the declining and unstable irredeemable currency. And I would expect this spending trend, by continued expansion of credit or otherwise, to continue to drive the economy.

Eventually this expansion of debt in the US both as a consequence of a dollar based on a promise to pay and its surrogate bond may have to be accounted for. And although sound arguments may be raised by you, Steve and others that this means a drastic deflation with dire consequences, absent any run on the dollar, I am not willing to concede that this is imminent or will take place in the foreseeable future. Americans are a resourceful people. But what I am willing to concede is that the longer it continues without steps to counteract it, the greater the risk.

WW: If things don't work out in Havana you can swim back to Key West, only 90 miles, and fewer sharks than Wall Street. You should be safe.

Mike Sheller: You no like the Dalai Lama? Nobel Peace Prize winner and all? If anyone should know Beijing's soul, it's the Lama man.

I love it. Four thousand elite storm troopers moving into Hong Kong tomorrow with heavy weapons and the West's liberal press think it's a big wonderful party! Did 'ya catch the piece about the "sensitivity" training that was given to the troops? -- "Can you show me your papers?" and "What you doing here?" etc.

Saw recently that that Liberal mouthpiece Anthony Lewis predicted Pol Pot would be a wonderful change for Cambodia back when that horrible man, traditional Cambodian Prince Norodom Sihounok ( sp? ) , sat on the throne . . . Another case of liberal foot bone connected to the mouth bone . . . AFAIK, the man has never apologized for it, nor in any way retracted his support for the Devil himself. And apologize he should, given his high profile and influence. Guess he thinks it was a good thing to depopulate half of the country, afterall.

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Laziness is nothing more than the habit of resting before you get tired.
Jules Renard ( 1864-1910 )

I don't want to wrap myself in the flag, because I'm afraid I'll get burned.
former Chief Justice Warren Burger

I grew up to have my father's looks - my fathers speech patterns -
my father's posture - my father's walk - my father's opinions and
my mother's contempt for my father.
Jules Feiffer

"You can convince anyone of anything if you just push it at them 100%
of the time. They may not believe it completely, but they will still use
it to form opinions, especially if they have nothing else to draw on."
- Charles Manson
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Just thinking out loud here. When gold gets to, say, $450 to $500, I Think a party is in order. Perhaps 2 or 3 regional gatherings. Indianapolis could host a gathering. Maybe Toronto and Denver or Albequerque also. During the party a big screen TV could be hooked into this forum, with a keyboard for everyone to post. Might be fun. What do ya think?

All:

Tomorrow begins New Jersey's entrance into stock market investing on margin. The proceeds of their 2.75 billion dollar unsecured bond offering will be transfered into the pension system and 'invested' appropriately. This stroke of genius will probably end the presidential hopes of Governor Whitman. If the stock market goes higher over the next two years the Dems will be hard to beat. If the market goes to hell and with it the economy she will have a tough time answering the questions relating to prudent financial stewardship as her speculation gets hammered.

Tort: Tyson-Holifieid were trying to compete and gain back lost popularity taken over by the World Wrestling Federation!!!

AURIC and ALL.....Haven't commented, but have watched the buzz about a bash....I think it would be a great idea...When we are sure there is a bull, all try to meet in ONE central location.....I would really enjoy meeting some of you....

Anyone know the currrent gold spot price, kitco is not updating as usual. You think they might try and fix it some year.

D.A. Like any other gambling arena, the more participants that enter the market and the more they contribute, the greater the inherent volitility of the market and the greater the risk. This volitility is currently being evidenced in the DOW.

With this in mind, it has always been my understanding that, particularly when investing pension funds, that a fiduciary handling the account must abide by the "prudent man" rule.

Therefore, can you explain how the Government of New Jersey can enter the stock market at this stage on margin without having liability for any loss resulting therefrom.

Nailz-Hell yes. Let's have the bash in Cape Breton!

Vieserre -- I was taught to save money by my parents. I never understood why people invested money. Then I grew up. I still didn't understand why people invested money. Then little things came along, like cars, houses, women who want your money ( girlfriends, wives, ex-wives, etc. ) , and then I understood inflation! A great light shone from above, and it told me the Dollar I earned today would buy me less in the future ( not withstanding girlfriends, wives, ex-wives, etc. ) ! Then it became clear to me! I must invest! For no other reason than to preserve what I have! Now, I'm being a little silly/humorous, but the analogy holds.

People in the main, don't fully comprehend why they are investing. The stock mania, the real estate mania of the '80s, and everything back to the tulip mania lend credence to this. It is part greed and part fear. Everybody wants to be comfortable in retirement, if not rich. We all can't be rich. So the question becomes why are they investing? The answer is, INFLATION. Just look at the IRA or 401K ads. "If you want to have a blah blah blah retirement you need to grow your money at blah blah rate." Implied in this reasoning is the acceptance of chronic inflation. Once the government numbers finally show some inflation, the current inflation hedge of choice, stocks, will not look so good. I have to admit, one hell of a good sales job is being done here.

If there were no chronic low level of inflation, then why couldn't I put aside some small amount of money on a regular basis in a relatively low risk investment and achieve the same results? Wow, now there's a concept! Honest money! :- ) )

Mike Sheller: Donald's assessment accurately portrays the 1930s. Excess reserves in the banking system continually grew throughout the 1930s. In fact, excess reserves nearly DOUBLED each year ( from the previous year ) from 1931 though 1935 -- a phenominal growth rate. The Fed pumped and pumped, but nothing happened. It is a serious mistake to assume the Fed and the federal government control monetary affairs in their entirety. The fact is, banks refused to lend the funds provided by the Fed because they could not find qualified borrowers. The case for a deflation in the late 1990s hinges on the same type of situation. The rising bankruptcy rate suggests their are fewer qualified new borrowers. The first significant business downturn ( which will occur, and possibly has already started as declining retail sales suggest ) will accelerate these deflationary pressures. )

Deflation can only occur after inflation has occurred. Deflation is the unwinding of credit. Deflation begins when the most credit-worthy borrowers reach their credit limits.

Is our central bank central enough for Kitco? You all could join us at the Federal Reserve FOMC August meeting.

Vieserre -- I made one small mistake in my previous post. I have not grown up. This is evidenced by 'speculation' in precious metals. :- ) )

D.A. -- Margin is a good thing! Or was it, "Greed is good!" I like that part about the bonds being floated without a guarantee of repayment! The bond insurers guarantee it! :- ) )

GVC - This site has Gann and E-Wave analysis along with charts.
http://www.astroecon.com/open.html
I live in a suburb of Chicago.

Ted Butler: Your Sat 23:20 post is VERY interesting. It would seem that there has been limitless resources for the shorts both on and off market and yet, as you point out, a doubling of short positions on the comex is only good for another 7 dollars on the downside. Short of auctioning off fort knox I can't think of much more that this market could throw at gold. Long dated slightly out of the money gold options will look brilliant by the end of the year.

SPX and NDX being run up tonight on the Globex. Hmmmm...

Good night all, and don't do anything silly, like short this bull, yet..

PANDA: I generally agree, I have been taught the same way, and I still act accordingly. But I believe, most people, although they may not think about it in these terms, spend on goods and are investing in the stock market, rather than save regardless of a savings rate, because they have been conditioned to not trust the dollar to retain its value for their retirement years. And they are concerned about this. And they are willing to take risks to preserve a sought after retirement.

Can't wait for the mkts to open tomorrow. Still, the anticipation has been much better than the event lately. Good thing we don't have five day weekends -- I'd be in a lather by Monday morning. Been eyeing Lind's round turn price of seven bucks per option on 100 or more options if they have two or more months 'til expiry and have premiums that are less than $26. Tempting. But the number 100 sure gives me pause. Nevertheless, if you were willing to sustain the losses for several years . . .

We must remember that goldbugs are not counting on a meteor striking the earth or anything like it. The probability of things like that happening is way too small. Instead, we are dealing with the conditional probability that something untoward will happen within the next year or two GIVEN THAT the Dow is absurdly overvalued, AND that a weighty Sword of Debt hangs over our heads by the barest of threads, AND that a number of the USAs potential adversaries seem to have cranked up the rhetoric to alarming levels in the last year or so. THAT probability is not so small; and if your risk tolerance is moderate to great, then I think gold isn't at all an unreasonable gamble at this point. But we should be alert, and if the conditions change, so should our thinking on gold.

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I was never ruined but twice: once when I lost a lawsuit, and once when I won one.
Voltaire ( 1694-1778 )

Insanity: a perfectly rational adjustment to the insane world.
R.D. Laing

I don't really trust a sane person.
Pro football lineman Lyle Alzado
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Thanks for posting the Dalai Lama's comments on the Chinese take over of Hong Kong ( Dalai lama warns of Chinese aggression ) . His opinion on this matter should be given careful consideration. The wisdom of this man is quite remarkable. His acceptance speech for the Nobel Prize is probably the most extraordinary speech of this century and is indeed timeless.

G.S. Cole: Thanks for the help and insight re South African
gold stocks. I'm now tending to think it would be wise to
wait until a clear gold up trend has started to establish
a small percentage exposure in SA golds.

N.J. Bonds = Speculative Extortion Futures