And so, it comes to an end - This glorious day and this vainglorious man
they called Hepcat. I am reminded at this moment of a frugal carpenter,
an outcast among his own people for how he lived and what he said.
His message was clear, and still resonates to this day. "When all you have is a hammer, everything looks like a nail." I had a hammer, $325, and
I seriously nailed all of you.

I must admit, I truly covet that coin..............

Steve Puetz - I submit World leaders want our present monitary system to fail. Then they can impliment the long awaited "Cashless Society".

What place does gold have in a world using electronic money? It will
loose it's luster when it's every move can be tracked by computer.


Omni magazine, June 1991, ( p.59 ) made this surprising statement, "CASH AND CREDIT CARDS WILL SOON BE OBSOLETE." InformationWeek, Oct. 11, 1993, boldly trumpeted on it's cover, The Cashless Society, It's in the Cards, The article dogmatically stated, ( p.4 ) "Bet your bottom dollar: The United States IS BECOMING A CASHLESS SOCIETY . . ."

The fastest growing movement in the financial world is "smart cards". Smart cards, which resemble ordinary credit cards, contain tiny computer chips, capable of storing data, such as bank accounts, medical information, etc. Already widely used in Japan and Europe, according to InformationWeek, ( p.4 ) "BY NEXT YEAR, cards will be used to pay for health care and insurance, to receive government benefits, and to buy items in vending machines . . ."

Newsweek magazine, July 31, 1989, ( p.54 ) said smart cards, "may make the old science-fiction notion of a CASHLESS SOCIETY REAL." A pilot program is already being tested at the Marine Corp's Parris Island training base in South Carolina. According to Newsweek, "On payday, recruits receive
smart cards rather than cash. When a marine makes a purchase on base, he plugs the card into a small terminal and the sum is automatically deducted from his pay." Newsweek says, "THE BASE IS, IN FACT, A CASHLESS ECONOMY -- even the telephones take smart cards."

The Birmingham News, August, 24, 1993, ( p.1B ) report on smart cards, said, "Before long, you'll use this electronic check to pay for groceries, gasoline, taxes, stamps, fast food -- in virtually any business where you now use checks or cash." Robert Mckinley, president of RAM Research Corp. says, "You've heard about the cashless society . . . IT MAY FINALLY BE ON ITS WAY."

Infosecurity News, Sept/Oct 93 ( p.27 ) , writes, "An extraordinary effort is now underway to build an INFRASTRUCTURE FOR LARGE-SCALE USE of smart cards in electronic data interchange, national health- care systems, financial-transaction systems and interactive home services . . ."

Pilot programs, utilizing smart cards, are already being tested in Minnesota, New Jersey, Iowa, Oklahoma, South Carolina and Dayton, Ohio. And according to Lawrence Rudmann, USDA Director of Public Affairs, "It's only a matter of time before ALL FEDERAL PROGRAMS -- are brought into compliance,. . ."

Hey, yo. We are not done yet dudes. My Fibonacci
wave analysis predicts further drops. Yes my friends,
we will see $100/oz by year 2000. The great John has
spoken!

Give him a break guys! It must really be tough working in a lab with all the constant pressure of knowing that any moment one of the test tubes might fall to the floor and you are instantly infected with one of the deadliest diseases known to man.

"I would say the reasons you continue to hold gold are
cognitive dissonance coupled with a stubborn streak."


That assumes the reason one holds gold is to make money.
Making money is what printing presses do. Another reason,
and I do mean reason, to hold gold is that fiat currency
is wrong. Some are plumb fed up. I do mean plumb, and also
Fed up. Then some are torched clear through. As in torched
and in clear. What hurts is not the price of gold. It's
that in these sorts one finds the best, and of late and
later, rare and rarer.

In the far east tonight the Hang Seng index is down sharply currently -253 pts and gold is up. Does anyone see a connection or is it just happen stance?

Kid-silver: The cash-less society is based on confidence. As long as real money is not demanded, a cash-less society is possible. Once confidence is broken, gold and silver will be demanded!!!!!

Even a blind pig can find a few acorns.
I trust we can mark this day to history and know that we
are one day closer. Not a very good correlation of gold stocks
to bullion. The shorts will cover. Didn't the government
change the rules on the Hunt brother's silver corner? Just
a thought all you short guys. I'd be nervous, if one
thinks he can get an even break. Better get your money
while you can. Was it Ringer that wrote the book about
looking out for number one? Yep, he said you got to have
a have and have not pile. Just about the time you go to
pick up your chips somebody whacks your knuckles. Now,
if the phones are busy, the net jammed, and you can't walk
next door to your broker how are you going to cover? What
if gold spikes to the upside? Heavens. Have a pleasant
weekend!!!

RJ: What methods, indices, etc. do you use to determine which way things are likely to go for any particular metal. You've been predicting a dip to the 330 level for a long while. Some strong indications must have convinced you that it would happen. Would you mind sharing that with us so we can look in the right direction? ( I hope this is a generic enough question for you to answer. I no longer own any gold, short or long - having been forced to unload that, as well. So any comments you might make are for the benefit of the group as a whole. ) I do still have some silver ( still hedged ) . Would it be improper of me to wonder what your feelings about silver are for the short and medium term?

I'm not the brightest kid on the block but I can't let
this FIBONACCI random number stuff go without a comment.
Wasn't it James Gleick author of "Chaos" that said that
reading Fibonacci
numbers is like reading a computer print out of outer space
static. Maybe not but he could have. Life is too short for
that stuff.

Earl - Just read your July 3 21:57 - Fantabulous!

George - As I have said previously, we are practically ALWAYS on the same waveLENGTH. ( Scott - please also adjust your waveLENGTH ) .

There I go again, getting as picky as that fun-loving, voluptuous, Mike Sheller. Next thing you know I'll be talking about that Braveheart movie again.
BTW - D.A. deserves EXTREME credit for his warnings of yesterday that there were NO buyers of Gold at his company. Anybody heavy on the long side who took head of that warning should now send D.A. an ounze or two.

Tonight a professional geologist and expert gold investor came over for dinner and he was explaining some of the fundamentals of the gold leasing market. He said that $350/oz. is a "line in the sand" for many high cost producers like Royal Oak, Pegasus, Echo Bay, etc. However, apparently it is quite costly to close down production on a mine, so that it is in the interests of many gold companies to forward sell/hedge production below $350, instead of closing down, because this is roughly the point where these companies are profitable. This holds true to around the $330 level. At this point, apparently the boards of the gold companies decided that it did not make sense to cannibalize their market anymore, and production would have to be terminated. Now that this point has been breached, Royal Oak, Pegasus and Echo Bay will soon shut down, and Getchell is not too far behind. Even Munkey, the king of the forward sellers, has begun to realize the folly of hedging production 2 years foward in an environment when demand outstrips supply by a significant margin.

This fellow is extremely bullish on Newmont Mining, which is giving me more confidence in the fundamentals ... I'm not going to cover my longs just yet. If those mines close down, and the shorts cover, and Munkey slows down the future production hedging ... WOW!

Told to me by a friend: "In order for gold to get to $400/oz by December, Alan Greenspan would have to die! He's got a legacy to protect, and there is nothing he wouldn't do to prevent gold from going that high."

"If that's true, wouldn't Alice Rivlin and others on the Fed step up and continue bashing gold if AG weren't around? Why do you think it would it end with Greenie," I asked.

"Oh, Alice Rivlin and the others! She's there to protect Clinton's legacy, not Greenie's, and doesn't give two hoots for gold."

Comments?

RJ: I'm sure you realize by now that I did not write the physics lecture. But yours was masterful! ROFL. Thanks!
%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%
I am not young enough to know everything.
--Oscar Wilde ( 1854-1900 )

The closing years of life are like the end of a masquerade party when the masks are dropped.
--Arthur Schopenhauer ( 1788-1860 )

Statistics show that we lose more fools on this day than on all other days of the year put together. This proves, by the numbers left in stock, that one Fourth of July per year is now inadequate, the country has grown so.
--Mark Twain ( 1835-1920 )

Jacques Cousteau just died. I guess now he sleeps with the fishes.
--unknown
%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%*%

My reasons for being bearish on gold near term are less technical than psychological. I have detailed these reasons in previous posts. I no longer trust the charts on gold, likewise palladium. If one had purchased gold at any one of the numerous recent buy signals, their gold would be worth a lot less than what they paid for it. Strategically, I still expect gold to go lower, CB sales and flying equities have killed gold for the next few months. Short term, I look for a small rally before another drop. Asians and Indians have demonstrated time an again they will buy dips in the market. A "dip" can happen at any price level. The last dip was 350 to 340. When gold twice failed at 348, 335 was in the cards. Much of the feeling for this type of market comes from watching real time price changes and recognizing patterns. When you see a metal knock up against resistance two or three times in ten minutes and fail, look for a drop. There always seems to be a lag when Chicago goes to lunch ( interestingly New York never seems to go to lunch ) between 9:30 and 10:30 California time, I can usually take a breather. You can tell exactly how many martinis the traders have had by the tone of their trading between 10:30 and 11:30 PST

It is also important to be aware of open interest and whether the commercials or the speculators are driving the market. Always read open interest with a keen eye toward volume as this will tell you which way the market is likely to go short term. Delivery dates and option expiration dates are freebies to anyone who knows how to read them. The reason most options expire worthless, is that the writers of the options own the metal that can move the market. They will invariably count their puts and calls and park the price where the will make the most cash. This tactic is usually very successful and only fails in a runaway market. First delivery notice on near month contracts can often give the same heads up as to direction.

You must always be aware of what the rest of the world is doing. The CNN Bridge links on Kitco can be very helpful in this regard. In the recent run up in palladium, I often found the CNN stories to be more accurate than Reuters although far less timely.

The next key ingredient is a brokers personal contacts. You need information on who is buying and why. Information is useless unless you know the source. The more experience a broker has, the more contacts he is likely to have, although I have known some brokers who have never cultivated contacts on the trading floors in the US and abroad.

When all these ingredients are added together, then, and only then, look to the charts for technical analysis. If the charts told the whole story, everyone would make a fortune in these markets. Sadly, charts have probably been responsible for more losses than any other factor. Trading by charts is like a system for roulette, looks good on paper, but you will loose in the long run.

Lastly, is the willingness to take losses as well as profits. If you are on the wrong side of the trade, dont close your eyes, clench your little fists, and wish it wasnt so. Get out and get on the right side of the market. Decide if you are a long term trader of a short term trader and trade accordingly. When you have profits, take them! Dont do all or nothing trades, layer you buys and sells, leave yourself an out. Place a limit to buy at a reasonable level below the market but recognize a breakout and buy higher if you must.

The most important advise I can give anyone is to never buck the trend. The trend is your friend. If a market in trending down, dont buy. Look to place shorts with tight stops until the market turns, then buy the breakout. No one can pick a bottom or a top. Those that think they can may get lucky occasionally but they will always loose in the long run. Never chase the market. Sadly, most American investors love to chase the market. When silver was 4.50 in 1979 no one wanted it, when it was $45 ten months later, people were mortgaging houses to buy some. That is why I am content to sit out palladium, the market has turned irrational and a single day can wipe someone out.

This has been a rather oversimplified description of what I look at and look for in these markets. Always remember, metals are self teaching. It is painfully obvious when you are wrong. I hope this helps.

If those mines can shutter without doing major damage to themselves and their work force, then they should close down.
I owned Pegasus a long while back, but now have little confidence in them or ECO. It seems obvious that all three need much higher gold prices to make a go of it. RYO's new prospects seem to have more problems than just the gold price. As for ABX????

No one told me Mike Sheller was "voluptuous". Maybe thats why he likes that nubile buxom stuff.

RJ: Your comments are VERY helpful and are already printed out to be saved in perpetuity. I really appreciate them as I suspect many others here at Kitco do too. While learning to play the violin may be extraordinarily difficult, at least you can't go broke doing it. Also it is important to have a skilled mentor to oversee the process both for the violin as well as metals. I always have appreciated those willing to share their expertise, so my hat's off to you, sir. You are a gentleman and a scholar!

I bought some silver today as I believe it will benefit from the gold rally next week. The downside looks to be no further than 4.40, which is a real possibility. We should se another run at 5.00 soon, look for a failure above 4.80 to bail. If 5.00 is breached, 5.25 - 5.30 will happen quick. Silver is showing us a perfect opportunity to layer some trades. Buy at 4.50, if it dips to 4.40 buy some more. Layer out the same way on the way up. Silver may suffer under the weight of gold, buy silver is like a champion horse, it has a hard time standing still. Silver likes to run. Let it and follow its lead. Nobody knows silver. At the same time, silver may be the most purely manipulated of all the metals. Learn its patterns, buy its strengths, sell the weaknesses. I like silver at this price, Im happy to own some. The risk seems small here. The same can be said for gold, but gold doesnt have the short term upside potential silver has.

Gold making further new lows in Hong Kong at the moment. Here's a gold bug quiz. ( easy for true bugs ) What is the colour of molten Gold? First correct answer wins a prize. ( Becoming the first person to post the correct answer on kitco is the prize! :- ) )

Earl ( Jul 3 21:57 ) and RJ ( Jul 4 1:30 ) Two CHOICE posts! Thank you both.

RJ: Wow your 1:30 and 1:47! I've read whole chapters and gotten less information. So I second Strad's thanks. Scares the bejesus out of me though that there are folks out there who can tell how many martinis traders have had for lunch just based on the tape! Maybe I _should_ be on the sidelines, afterall. Incidentally, I think you mentioned something once about toning down your rhetoric. You've done a great job of it. Makes your material much more digestible and appreciated. My hat's off to you, because I think many people are incapable of making such an adjustment. Keep posting, please -- I have much to learn.

Mark Twain died in 1910. 1920 was a typo.

I'm looking for spot gold to fall below $320 since Bart's Spot Gold Prices chart at http://www.kitco.com/gold.graph.html never allows enough room at the bottom of the chart!

Hey, doesn't anyone on the West Coast stay up past midnight anymore? Where're all my rowdy friends? . . . Such good port and no one to share it with! . . . All right, then. I'm off to the wild and woolly reaches of usenet. G'night, all. And sweet golden dreams, to 'ya.

Ron - My initial posts were designed to be noticed. I have read this sight for a year, and had a good idea of just what would jerk a few chains. That is not to say that I didn't believe what I said, just that the delivery was designed to be a bit in the face. As for toning things down, I always knew what impression I was making, once my introduction was made, people would look for substance. I hope I have supplied some. As for my sometimes maniacal ramblings, I guess when I'm done with the metals in a decade or so, and my future is secure, I may finally turn to my true love, words. They are delightful little playthings to be recombined at will on the palette of the mind. Only in the written word does one communicate directly with the mind of another. I appreciate the tolerance of some of my more off-subject meandering but, as Strad will confirm, true music comes from the heart, bypassing the brain entirely. That is the difference between a technician and an artist. I have thoroughly enjoyed the talented and humorous writings of many here. The Earl of prose, Mike Sheller's inspired portraits in absurdities, the effervescent blurts of EB, the patient sniping of Bernatz de ventadorm, the ?? of Cherokee, the earnest posts of Auric and Gunrunner, The clear thinking of John Disney, Glenn, George, and D.A. , The directness of Front, even the oft grumpy rumblings of Eldorado. Im starting to feel a bit at home, and thanks for allowing me into your world. Oh, and another thing, I have never, nor will never post under any nom de plume. I doubt I could get away with it anyway, my bombastic nature would give me away after the first few hundred words.

Mooney - Silver

Mooney - OK, instead of silver, platinum.

RJ, I predict when you turn to words you will have great success. You also have a good feel obviously for markets. I always felt John D. McDonald ( fiction writer ) had a great way with words and you far surpass him. Good luck, and I also add my thanks for your lucid 01:30 post.

Anyone notice the dollar tonight? Down against virtually everything.

RJ: My hat also is off to you. Both with regard to your eloquence and to your good will shown to all.

Nikkei close 19, 968 down 153. Dollar buys 113.52 yen. Can't find any gold news on the Nikkei net. You are welcome to try. It is running very slow tonight.

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

Mooney, I refuse to name the color on this thread so you can keep your prize. But it does turn to a golden color later and we are obviously all waiting, patiently???? Cycles are still with us, let us pray.

For those of us who trade ( or invest ) in the stocks but not the physical, I submit that the question now arises of how to react. An interesting aspect of the current situation is that the rest of the world is putting in a full day of trading before most in the USA are able to react.

Gold up 1.35 and rising per EBN. Keep praying. Gold stocks off 3.85% in SA on open.Pray harder!

DA: Your post http://165.247.202.114/comments/gold/thread/970703.225120.d.a.eeeee.htm
says yesterdays drop was the work of a single seller. Glenn: is that what you saw? As Bill Buckler said, someone wanted to see a lower gold price. RJ, what are your thoughts about that?

Seems to me this is important. If someone has been succssful in "painting the tape" to this degree, what is going on? The most obvious answer is that a lower price is wanted by someone who wants to buy ( or cover a short postion ) . Or maybe it was someone who had bought puts. Or sold in the money calls at a higher level.

It doesn't seem reasonable to me that the CB's are engineering this drop. Isn't gold already low enough to protect the reputation of paper.
Sorry this stuff is so random. No answers, only questions.

At 9:15 BST

FTSE100 4842
DAX 3932
CAC 2922

TO ALL AMERICANS: Let me be the first on this July 4th to wish all of us who celebrate the birth of the United States - this great and potentially even greater nation - a meaningful and happy holiday.

REB - I defer to D.A. as to the numbers. I have had an opportunity to follow up on a few bits of D.A.'s info from the floor. I have found him to be very accurate and I have heard some things from him that I have heard nowhere else. He is a valuable source of info. As for the action in the market this morning, gold was fast and furious, some prices lasting for fraction of a second. When I kept seeing red numbers come up - red signifies a new low - I know the market would close on the downside. Gold closed at 1:10 today and up until 30 minutes prior the ticks were all over the place. Any one who spends a lot of time with real time prices ( I use the Future Source ) , its fairly obvious when a big order goes in. Gold dropped $3 in a blink with silver keeping pace. This happened right before the close and left many in NY reeling with no chance to respond. This was definitely an engineered last minute slam, but by who, I know not. The sell was so late there was no chance to hit sell stops, nor for shorts to cover. My guess is that the play is in Hong Kong or Tokyo who I expect to buy it up quick. Mostly short covering but if significant new longs are placed gold could close $334 - $335 today. Remember, they get another shot at it Sunday night before NY opens. I was looking for a buying bounce, we could see some short covering in NY. If that is the case, I agree with D.A. that the bottom is in. This one at least. I dearly hope we get up to $345 next week, I wont be the only one laying in new shorts.

SPIKE AHEAD!! SPIKE AHEAD!!

Mooney - OK! Im on my third maple leaf, got the propane but its flame was no match for the Canadian Mint. There is a high performance fuel station down the road, Ill use bolt cutters, to make quick work of their security. I know they have acetylene there, if I mixed it with 123 octane racing fuel, Yes.. Thats the heat I need I will melt these coins into a ceramic cast of Richard Nixons face I made years ago from a Halloween mask. Im still not sure I will have enough heat.. hmmmmmmm.. I got it! I will superheat the acetylene in the microwave for 30 - 40 minutes and then add the high octane, In a half an hour Ill have these suckers MOLTEN! I will poor this ??? color molten metal into the ceramic casting and will then be the owner of the only 24 Karat mask of Tricky Dick. Ill let you guys know how it works. No sleep tonight! This is science, and I feel a breakthrough will be made before dawn. We can collaborate later on the paper we will publish for Nobel consideration and squabble about whose name is on top later. I must be off.wait. there is a fireworks stand close by, if the acetylene and high octane dont do it, Ill grab some heavy ordinance from that rickety stand No bolt cutters needed here. Do they still use black powder in this safe and sane crap? I must not forget the sparklers - for effect - I think they will show up nicely on the film. We should be able to wrap this up before July is old and Im sure we can work out some sort of award rotation so that all who were part of this cutting edge experiment may feel their proper due. This is Hard Science!

Tokyo--July 4--Spot gold prices fell below support of US $323.00 per ounce in late Asian trading on active selling by European dealers, market participants said. Long liquidation continued in Asia following a sharp price fall in the US after the Reserve Bank of Australia's announcement of gold sales late Thursday. The central bank said it had sold part of its gold reserves to reduce its holdings to 80 tonnes from the previous 247 tonnes. * * * However, light short-covering and physical buying demand helped stabilize spot gold prices in Asia, the dealers said. Some Japanese traders were buying spot gold for arbitrage with positions on the Tokyo commodity Exchange, where futures prices also plunged to close limit-down across the board, the dealers said. The dealers said spot gold's support is now seen at $318.00, with resistance seen at $328.00.

Stradmaster Right On!!!Happy Birthday America

RJ: Thanks for the posts discussing your market methodology! Much wisdom therein. I have a question though. What would it take to turn you long-term bullish on gold? Unlike some, you seem to believe that a new gold bull will come, albeit from lower levels. And why are you so confident the next rally will fail?

RJ: Don't wait until tonight...start now!. I have it from reliable sources that the shorts have the same idea, they want to add the solid gold bust of Nixon to the Mt. Rushmore collection.

Japanese bank problem.

http://www.nikkei.co.jp/enews/SPECIAL/page/nomura18.html#gen77

Steve Puetz and KidSilver - My essay on CyberCash. For what it is worth. IMO people will not have a choice between CyberCash and 'REAL MONEY'.

Cybercash

Cyber Cash is not one of Johnny's many cousins. Cybercash is a move from paper money to electronic bits, completing the shift from the gold standard to a symbolic paper standard to, as Alvin Toffler coined it in PowerShift, the super symbolic standard where money is merely a representation in computer memory of a government's standing in the world economy.

Rather than carry coins and bills, we'll carry cards--like credit cards or bank cards--and we'll use these cards to pay for everything and anything. Many proponents claim that it will end crime: there won't be any cash to steal, and hot items will still have to be fenced, at which point cybercash comes into play and computers can trace the transaction.

As a panacea, cybercash is shortsighted. Even on the surface, it won't stop rape and other forms of violence. It can only affect crimes in which cash is involved and is irreplaceable. But there is no such thing. What is cash? Is cash a changing word? For cybercash to work on a universal scale, it must be easily used. Any individual needs to be able to accept cybercash from another individual as easily as transferring dollar bills from one wallet to another. If merchants and individuals can accept cybercash, criminals can force merchants ( and individuals ) to give up cybercash.

The biggest burglar--and the strongest proponent of cybercash--is the Internal Revenue Service. The IRS foresees a day when you never file a tax return. They'll just collect all the data about what you earned and automatically deduct from your cybercash cache what they think you owe. Sales taxes will also be transformed: state and local governments do not tax money that they don't see. When you buy a stereo from your brother-in-law, or pick up some junk at any of the numerous yard sales on a given weekend, you don't pay any taxes. It's not because they don't want to tax these sales, it's that they can't. Some states even expect you to voluntarily tell them what you bought and how much you paid for it.

In a central system of electronic cash, you have no choice. Whenever money traverses the cash net, Uncle Sam or his nieces and nephews in the states will automatically take their cut. The United Nations also sees an opportunity: the bureaucrats there hope to be able to impose a tax on international electronic currency transactions.

Some forms of cybercash are already here. Banks and financial institutions deal directly with digital transactions. No paper money gets transported anymore. I rarely use cash. I have a credit card and an ATM card that looks like a credit card, and I can use them just about anywhere. My paycheck is deposited automatically into my checking account.

Credit cards are credit. The money in them doesn't really exist, at least for me. Bank cards are different. They're really cash--they represent the cash that I've got in my banking account. These forms of electronic cash have major drawbacks, however. They're easily traced and easily faked, and they have my entire balance. If someone steals my ATM card ( and somehow gains my PIN number, say, by watching over my shoulder when I make a transaction, using binoculars or mirrors, or by pointing a knife at my throat and just asking me ) , they've got my checking account. Now, most state laws limit the amount that you can lose from stealing, so that I might only lose $50 if a thief spends the $1,000 in my checking account. But that just means that the bank loses it instead. The bank would probably prefer that I lose it, just as if the thief had stolen $1,000 from my wallet.

If the thief just gets your number, and not your signature, you aren't liable for anything: any credit card transactions that occur without a signature, and that turn out to be fraudulent, you are not liable for. This includes on-line transactions. This is one of the reasons credit card companies and businesses are pushing for encryption. It isn't there to protect the consumer, it's to protect the credit card company.

There are other problems with these cards. If I found out that my bank had hired a private detective to watch my every move, I would be furious. But they don't have to: I tell them my every move every time I use the card. And given the security of most computer systems, I've also told anyone who really wants to know. There is no privacy with credit cards and bank cards. Why do you think they're giving the card to me for free? They expect to make money off of the information I'm giving them.

In essence, there are four ways that electronic cash could be implemented. The electronic cash can be centralized or distributed, and it can be private or public. My credit cards and bank cards are centralized and public. The 'real' cash is all held at the bank, and the transactions I make with the cards are not private: the bank knows about them, and anybody who can access the bank knows about them, including the IRS.

When we move into 'true' virtual cash--electronic cash that doesn't represent a piece of non-existent paper--it looks as though it will be distributed. In most of the cases where virtual cash is implemented now, the card itself holds the money. The telephone companies sell phone cards, which are good for a specific amount of money. If the cards are stolen, you only lose the amount of money 'left' on the card. Likewise, you can give the cards to someone--a son or daughter at college, for example--and be assured that they'll only spend what exists on the card. Some of the companies that sell these phone cards commission art and photographs for them. When empty, these cards have actually become collector's items!

Vending cards, cards with a specific amount of money to be used in the company's vending machines, are also distributed electronic cash. The card itself is the money. When emptied, the card is worthless, although they can be 'rejuvenated' for a fee. Vending cards and phone cards are semi-private. The person who originally purchased the card is known, but there isn't any way of telling who actually used the card if the card is passed from person to person, except with standard gumshoe detective work. The information isn't automatic.

In other forms of distributed cash, the information is automatic. With most forms of 'smart' cards, you are the only person who is authorized to use the card. If you want to give someone else some money, you 'download' cash from your card to their card, and this information may or may not be tracked. This type of card is available as a Visa card from NationsBank, Wachovia, and First Union, and they expect it to be readily accepted at the 1996 Summer Olympics in Atlanta.

David Chaum, founder of the Dutch company DigiCash b.v., has been an advocate of virtual money for over a decade. He's also an idealist; his biggest contribution to the debate has been the question, How can we do this and still maintain individual privacy? As a result of answering that question, he holds the important patents for what's called anonymous cash and many forms of virtual cash transactions. He's developed techniques, as an outgrowth of public key cryptography, that allow banks to authorize digital cash transactions without knowing who is taking part in the transaction, and has mathematically proven that those transactions are reliable and secure.

He stands to become very rich when virtual cash is implemented world-wide, but he's been holding out selling his patents until a deal comes along that protects the individual liberties that he feels are important. DigiCash made its name creating a 'toll card' for motor vehicles. The smart card slips into a device on the vehicle's windshield. As cars pass the toll booth, a scanner automatically checks the card and debits the toll. The system is also anonymous: the Dutch government isn't able to use it to keep track of where its citizens travel.

That's the kind of thing that's important to David Chaum. As part of an interview with Steven Levy of Wired magazine, he pointed out a place where Nazis rounded up Jews to be sent to concentration camps, as an example of what happens when you give government too much power. In places like Thailand, for example, "smart cards" are used to keep track of everything from an individual's ancestry to their voting records.

There's no reason that we'll have only one form of electronic cash. Right now, there are all sorts of it: vending cards, credit cards, bank cards, phone cards. There's no reason that private industry can't continue to market multiple means of using virtual cash. So we'll be able to continue using public, centralized cash when we need credit ( credit cards ) . We'll also use it, in the form of bank cards or automatic deductions, when we want the cash flow to be traceable, for example, when paying a telephone bill. When buying lunch, or buying a newspaper at the newsstand, we'll use a private, distributed 'smart' card.

Two things have to be sorted out before we move to a completely digital economy: who is going to back the digital cash, and who is going to pay for it? Backing is a very touchy subject. Even paper money isn't backed by anything tangible anymore. It's backed by the good name of the government that prints it. It may end up that governments will back digital cash just like they back paper cash. Digital cash can also, however, be backed by the private company that makes the card. The latter is not unlikely; it's what happens now, although we expect that the phone card or vending card is backed by the company because the company 'still has' the cash that we gave them in exchange for the card. That's an element of trust, however, and if the company you bought your phone card from goes out of business you may well be out of luck.

Digital cash may evolve out of this. As less and less paper exchanges hands, you'll be buying that phone card with money from a smart card that you bought from a bank, who got their money in digital form from the federal government, and you'll have paid for it with money that was deposited directly into your account by your employer.

How will digital cash be paid for? Someone has to pay for the smart card, and someone also has to pay for the computer networks that transmit the bits and bytes of digital cash. It will probably be a combination of the ways that electronic cash is paid for today. When you buy a money order, you pay a fee to get the money order. There may be a fee for getting your smart card refilled. With your credit card, you may or may not ( really, you shouldn't, anymore ) be paying an annual fee. Merchants also pay, for the privilege of being able to accept your credit card. Companies that make smart cards may charge a 'royalty' to merchants, depending on how often their card is used, and how much it's used for. Digital cash might even be paid for in the way that checking is paid for: while your money is sitting in the bank, it's making money, as interest, for the bank. Your digital cash, until it gets used for a purchase, is also just sitting somewhere. The smart card transactors can gain interest on this idle money.

Selling Yourself

Cybercash can also be paid for by selling information. Every time you use cybercash, some kind of information is also trading hands. For the more private forms of cybercash, it may not be much more, if any more, than what changes hands with paper cash purchases. But with bank cards, credit cards, and check cards, you are giving away, for free, information worth a lot of money. Merchants, distributors, manufacturers, and banks are fighting over this information today. They all want a piece of it. Hell, they each want all of it. And it ain't even their information. It's yours. This is information about your spending habits, your payment habits, and your interests that they're selling. You're giving it away for free, especially if you're paying a fee for your credit card on top of it all.

In Florida and California, retail chains have fought blistering legal battles with banks over this issue. The central question their lawyers are asking one another is: "Who owns the customer data?"

The legal answers are not yet in. But one thing is certain: No one is asking the customer.

When it finally happens, there isn't going to be any choice. You'll have to take part, and you'll have to pay whatever the fee is, whether cash or information. As Pascal Zachary said about Bill Gates getting into the Cybercash industry, "He gets rich, 'cause you exist", like bankers today. You have to have their service to survive in the modern world.

There's so much information passing between you and the computers on the "other side" that some of it still gets lost. There's really so much information that the stores and banks, like the system administrators on computer networks, just don't know what to do with it all. I'd hazard that most of the information you 'give' is routinely ignored. Things like time of day, which checkout lane you're in, who your cashier is, the total weight of your purchases, how your purchases compare to those of the person in front of you and behind you... stuff that seems so inanely trivial, who would want it? Given time, someone will want all of that and more. Some of it you desperately want to get lost. Many bank cards require passwords--usually called 'PIN' numbers--in order to 'use' your ATM card, whether at a merchant or a magic wall. When you give an incorrect password, you're handing out very valuable information: you're telling a complete stranger what you think your password is.

I've got quite a few passwords: a bank card, two credit cards, at least four computer accounts, and a voice mail account, just offhand. Since I see the dangers in having the same password for each purpose, I use a different password for each. But that gets hard to juggle as well: just this morning I tried to get my voice mail using my bank card password. It's not the first time I've used the right password in the wrong place, and it probably won't be the last. I doubt very much that AT&T, in this case, kept track of my incorrect password, and I don't know what they'd do with it if they did. I don't see AT&T sneaking around in the middle of the night emptying out the checking account of a hack writer.

Today.

But who knows what AT&T is going to be doing tomorrow? They still won't be stealing from my checking account, but that doesn't mean they won't want the information. Do I commonly use the wrong password? The same wrong password? Why do I keep doing that? Is it for another voice mail account that I use more often than AT&T's? That's something they'd like to know.

And if I do the same thing at an ATM machine? Sure, I don't expect Mission Federal Credit Union to keep track of my 'invalid passwords'. But Mission Federal has nothing to do with the ATM machine. Just because I trust my bank, doesn't mean I should trust some odd-named machine in the middle of Horton Plaza. The bank doesn't own this ATM. They probably don't even know who does.

Even our mistakes are valuable in the information age. Everything is information, and everything we do tells someone else something about ourself. Everything that can be recorded can be sold. If there are no fees, no interest, and no merchant charges, there is still a lot of money to be made by cybercash providers.

How it will actually happen is anyone's guess. Cybercash may be private or public, centralized or distributed ( although probably distributed, because it limits the liability of financial institutions ) , but we will get digital money. Paper money is already outdated and it is getting worse every day. As Alvin Toffler says in the highly recommended PowerShift, "Except for economically backward countries and quite secondary uses, paper money will go the way of the coral shell and copper bracelet currency."

Paper money has to go simply because current technology--high resolution computers and printers--can forge normal paper money too easily, and tomorrow's technology is only going to get better. It has to go because it is simply to slow to transact using paper cash in a world of computer networks. The important question from the customer's and individual's standpoint is whether digital cash will improve our privacy, degrade it, or remove it.

RJ - First I tell you to take a few days off, and then right away I come back and ask you to work. Its not far - is it? AAR - I agree with the wisdom of your 1:30 last night wherein you said, ..."The most important advise I can give anyone is to never buck the
trend. The trend is your friend. If a market in trending down, dont
buy. Look to place shorts with tight stops until the market turns,
then buy the breakout. No one can pick a bottom or a top. Those
that think they can may get lucky occasionally but they will always
loose in the long run." This is sound advice that most of us have heard countless times before and yet scant moments later you fly in the face of this wisdom by trying to pick the temporary bottom in Silver with the comment that ..."Buy at 4.50, if it dips to 4.40 buy some more. Layer out the same way on the way up." I'm not saying that Silver at these levels would not be a great buy, only that you seem to going against the gist of your comments at 1:30.

BTW - Goldbug23 - WHY would you ever refuse to post the colour of molten gold on this channel when practically every other topic under the sun is discussed here? AAR Goldbug23, RJ, and ALL, molten gold is GREEN. I know Bart would have answered eventually But I think he's getting a little well deserved R+R this weekend.

Re: RYO I have talked with the co, they are short many calls from high prices and have sold all of 1997 production ( earlier ) at $395,. I asked the investor relations person about shutdowns and he said that could occur with one or two mines if the price stayed in the 260-330 rang for two years. They are along way from any shutdowns now, especially because of their obviously successful forward hedging. 395 is not a bad price for this year isit??

When Ted Arnold speaks of 250 gold is that his estimate or is he speaking from knowledge. 250 probably is a limit given what it might do to production. The late day selling everyday definitely smells of agenda selling. They have been successful who can say it will not continue until 250. Who and what can stop this powerful force which intends to obviously create panic in this mkt. GSC WHY WILL THEY FAIL if they want to drive the price of gold to 250.?

http://www.yahoo.com/headlines/970704/business/stories/stocks_52.html

Este ( July 3 18:19 ) Re: Silver and more comments - Yes. Silver does look like it's going down. I went short thursday and took my shorts home over the weekend. Silver is down $0.01 in london right now. As far as more comments I have two statements to make. 1 ) My time frame is much different than yours and I do not have access to a computer/internet connection on the floor. 2 ) I DID tell the group I went short at 350 and I did state the day I covered at $339. ( What a mistake that was ) Oh well. I'ver been mostly day trading since then. have not made any more posts since, but if I go long I may do so that night, maybe? 3 ) I've come to find that there are many many more traders reading this group that do not make ANY post EVER and resent that all my hard work goes to them for free. I've meat a couple people on the floor who read this group, but obviously you do not hear from them.

Anyway I'll still make comments here but not everday. - The free fall in gold scared even me. I sold gold about a half hour before the close and then went to the silver pit to trade there. When silver closed I went back to gold and covered my shorts near the close. It was more of a "Gift" than anything else. I never expect gold down $7 in one day. The trading was so hectic with $0.50 moves between trades. Ealy last night as I was thinking about the day it reminded me of the friday before "Black Monday" in oct 87. Prices just dropped in a free fall yet at the close we were technically oversold. I'm not going to predict that we open down $3 on monday only to close down $12 but there is atleast a 15% chance of it. I mean we opened up higher on thursday and that was the high of the day. So if we open up higher on monday people will just sell. If we open lower longs will get scared and sell with "Stop Losses" being hit. There is talk of 313 so if that is where we are headed for the shorts to cover and the longs to enter than we "May" get there rather quickly. Again I think that there is only a 15% chance of this. I'm happy to be flat in gold and simply enjoy the weekend without worry. I'm happy I was not long at any point his week. There were traders who had gone long for a day trade. You could tell. some people lost alot and I feel for them. Tempers were real "HOT" on the floor around the close. O

RJ - Sorry, my first post seems to have been lost in cyberspace. I merely said that I think that this fireworks thing has gotten the better of you and that you should perhaps RELAX for a few days, enjoy your holidays and catch a jazz in the park concert. Also that your Nixon mask, if you bury it in the backyard and leave it there, should provide quite a puzzle to a far distant future generation of archeologists!

Mooney: I see little has changed here. The idiot refuses to take his medicine, D.A. is till humoring and protecting him, and gold is down.:- )

and till=still....: )

Just so long as they do NOT have any DEAD Presidents on it... or for that matter, ANY lawyers...

As to the confiscation debate, I could see it happening in Australia, Canada or England, after all, they already took away your right to bear arms... But not here in the U.S - 200 million guns say it won't happen.

Mooney: I see little has changed here. The idiot refuses to take his medicine, D.A. is till humoring and protecting him, and gold is down.:- )

NotaGoldbug ( Oregon.com ) : your comment July 3, 17:53 - "Many of the holders of bullion I consider "weak longs" in this market.. They are scared to death that gold will go lower and want their money out. Now!"

The weak longs have already capitulated. Just go talk to a pm dealer and ask how the business is doing. Last week I was at CNI and they told me that the May/June period was the strongest 2 months since 1989. Granted, they said they had booming sales year ago January, but those buyers were not the collector or value investors that are now buying.

Try again...

Lan Man: Your ethnocentrtic view has you making incorrect statements. The English and Canadfaian never had the right to bear arms. Goes way back to when the King own everything and was the only one allowed to raise an army--100's of years. As for the confiscation of gold it only happened in the US not in England or Canada.

Can someone here tell me which of these three producers -- TVX,PDG,ABX --
is LEAST hedged, and has the most to gain from a turnaround in the gold price? It'd be much appreciated. Thanks

WW: I think Ted Arnold was talking about gold going to $250 within 2 years, not in the near future. I believe he also said that gold mine closures sufficient to remove 300 tons of production annually might change his bearish stance.

Could gold be driven to $250? Certainly! Will it. Not likely. I can't believe the would be stupid enough to drive gold down to a level that would shut down most global production. That would virtually guarantee a huge rebound to thousands of dollars an ounce within the next few years. But if driving the stock market to Dow 10,000 plus in the near future is their key objective, then they may indeed want to push gold down to $250.

Interesting to superimpose charts of gold and Dow Jones. Almost mirror images of each other. SOMEBODY obviously feels that higher stock prices REQUIRES lower gold quotations. My August Dow target of 8500 implies a gold price of around $315 by that time. Dow 10,000 would almost certainly be accompanied by sub-$300 gold. But Dow 6000 probably would see the yellow stuff pushing $400 again as the shorts are massacred.

E...EA...EAR...EARN...EARNI...EARNIN...EARNING...EARNINGS! Voila

'The time has come ( 'my friends' )
To talk of many things:
Of shoes - and ships - and sealing-wax
Of cabbages - and kings -
And why the sea is boiling hot -
And whether pigs have wings.'

"Perhaps you will permit me, "Franklin said, "to relate a little story.
A man was sitting on the Pont-Neuf a short time ago offering gold
coins for sale, Louis d'Or both old and new, for which he asked two
livres a piece, in other words a tenth of their value. Many of the
passers-by stopped to listen, they examined the coins, which had the
authentic ring, yet the man did not succeed in selling a solitary one of his Louis d'Or. Not a single purchaser could be found who was willing a risk a couple of livres in order to acquire a whole Louis."
"Well," asked Ralph Izard in a depreciating tone, "what about it?"
"The Louis d'Or were genuine," replied Franklin. "It was all part of
a bet. The man won his wager, for he had asserted that people are so
suspicious by nature that they will not even accept real gold if it is offered them cheaply."

If the long term chart is to have any meaning at all then we are now in the process of forming a major double bottom. The severity of the spike aside $325 should form a base in the near term and then upwards from here on. If $325 does not form a base in the next 2-10 days then the lows are anybody's guess. ( And I do mean Guess! )

George S Cole: I don't know about Ted Arnold but I did use $250 as my price for gold when it was about 380 - 370 last fall. My rational was that it is slightly below the average cost of production of about 275. I recall you saying the same thing then as you just have: coiuld happen but you doubted it. Once the search function operates we can see the correct details rather than relying on memory.
I wonder why you see a desire to push the price down. I see no one interested in buying and the price therefore falling.

At least there has been some improvement. He now uses his e-mail address and only one handle ( I think ) . Perhaps we are helping in his eventual recovery. Eventually all the sane, heartfelt advice must have some beneficial effect.
AAR - What is your long-term chart prognosis for gold?

Gold stocks under heavy pressure in Canada today. PDG off about 7%, ABX down almost 5%.

Thx for your reply. Your comments are always very valuable. Have a nice weekend.

GSC: Further to my post about CDN gold sales and Auzzie gold dumps...
http://biz.yahoo.com/finance/97/07/04/y0023_z00_27.html
The Canadian "govt" had used a gradual sale approach and now holds about $1 Billion worth ( 3.1 m.ozs. ) . The Auzzies hold about 80 tonnes ( I unerstand from recent reports ) or about ( 80*2400*16 ) the same as the Canadian govt - about 3.1 m.ozs. or about $1 Billion worth.

In the past Kitcoites were keen on physical counts. It would be appreciated if someone posts a guesstimate of current CB gold holdings and the LME / NY gold stocks and flows.

We may derive better unerstanding of the determinants of gold price from the players positions and physical flows. I think we all gained by RJ's ideas on gold market psychology and yesterdays informed post on lease rates and physical movements that focused on the dynamics between speculators and investors and impending market results.

A continuation of this learned series of posts would enhance the benefits of the Kitco thread and provide valuable informed opinions during this difficult Gold Bear market for those of us who have vested interests...
... beyond right-brian machinations of keyboard machismos caught-up in a fit of youthful exerburance.

Cheers

Cheers.

Mooney: am I to assume that your most recent post was directed at me?
this is only my third post ever, so I don't quite understand. George Cole: do YOU know which of the Canadian gold stocks is least hedged?

SELBY: I do recall that you were talking about $250 some time ago. But this talk about nobody wanting the yellow?. Doesn't demand exceed new production in the physical market with the deficit being made up by CB sales and gold loans?

I must go along with Captain Bill on this. Powerful forces have been and are pushing the price lower. What their ultimate price objectives may be, what if any countervailing forces may come into play, and the reasons for their relentless attack are matters of conjecture. But not the fact of the attack

DARCY: I do not know which Canadian producers are least hedged, but believe that ABX is the most hedged. One way to find the least hedged producers is to see which stocks go down the most today.

GSC: Interesting correlation between the Dow and Gold. It's also interesting that most stock analysts are bullish on stocks and bearish on Gold. They have a vested interest in promoting the flow of capital into securities.
They will try to keep a good thing going AS LONG AS POSSIBLE.
I agree that it seems likely the inverse movements of the Dow and Gold will continue.
If Gold holds at this level or lower, mine closures are inevitable.
Gold stock earnings will be hit hard also - and hence prices.
S.A. layoffs and social problems may ensue.
This could be the start of a good shakeout in the Gold market. First the BULLS, and later the BEARS.

Mooney 0015: He is infected by a deadly disease---Foot and mouth disease.

George S Cole: My view is that the CB's are as much a part of the market and the miners. It can be seen that there is a major conspiracy at work or it can be seen that a bunch of banks using the same info see the same thing--gold is going down. Either way it won't go much below the cost of production but can go there with no more trouble than it experienced getting to 325. I agree once it gets near the cost of production high cost mines will shut down. TVX has already closed a Quebec mine. At this point in the process I expect to hear that news about Sept - Oct. The most valuable info then will be which mine ( s ) are closed but are doing sufficient maintainence to ensure a fast return to production when the price starts to rise. There will be few better investments than these mines ( which ever they may be at the time ) .

You just said: "I must go along with Captain Bill on this. Powerful forces have been and are pushing the price lower. What their ultimate price objectives may be, what if any countervailing forces may come into play, and the reasons for their relentless attack are matters of conjecture. But not the fact of the attack".

I think that the most important contribution of this Forum to the understanding of the gold market has been the exposure of these powerful forces who are determined to push the price of gold to levels that only few thought possible a year ago.
Who is buying the gold that CBs are selling? Why not the producers? They turn the yellow stuff into trinkets and don't seem to care to buy in a declining market.

Este: You said"the most important contribution of this Forum to the
understanding of the gold market has been the exposure of these powerful forces who are determined to push the price of gold to levels that only few thought possible a year ago. " Who got exposed? I keep hearing the idea but who are we talking about. To say central bankers or powerful interests exposes nothing and no one. Are talking France or China or Singapore or the Hunt cousins --Who?

Barrick is hedged for 2 years @ US$420. The average world cost of production is US$317. One third of world production is uneconomic at current prices. We must be close to the point of maximum pessimism!

Do you expect the written proof of the manipulation of the gold market to be produced anytime soon? Just look at the evidence around and you will be hard pressed to deny what is going on.

Este: I not looking for written proof just some names. People who believe that unknown unnamed all powerful forces are affecting the events of the world often come around on their own tow line trying to search out strawberry thieves.

George S. Cole: Dow & Gold. We need to examine the relationship more closely. The all time high was 1966 at Dow 1000, Gold 35, roughly 29 ounces to buy one share of each of the 30 Dow stocks. The problem with that figure is that gold was artificially fixed by the US Govt. Who knows what the true price would have been. In 1932 we could buy the Dow for a half ounce. That was an absolute bottom. There was a short time in January, 1980, that the Dow was 1 ounce. It didn't last long but it was a free market event. Today we have a free market event at 24.67 ounces for the Dow. That may not be a top but I have convinced myself that it is close enough to act agressively. Short the Dow and buy gold long still seems like a good strategy that will pay off in the next few years. The psychology is real tough to handle, no question, but it just seems right. America and much of the rest of the world have NO NET WORTH. They have mortgaged EVERYTHING. Everything is on the table and it has to end badly for them. That is just common sense. Doesn't common sense still count in the long run?

D'Arcy: My understanding is that the stocks included in the HUI Index are not hedged. They are: AEM, ASA, BMG, CDE, ECO, FCX, GLG, HL, HM, KGC, NEM, WMC. Two stocks that took a big hit today are ECO and TVX. I do not know how much TVX is hedged.

Donald: I agree with your last to GSC. Let's hope that common sense prevails. What are the odds that George Soros or others of his caliber are moving the gold market now? To what end? I talked to a rep from one of the big coin retailers and he is convinced that a few big players are trying to corner the market. I don't understand the futures and options markets very well. How much money would it take to own enough gold either physical or paper, to control the market? Has anybody done the math?

GSC: More on Dow and Gold. Using your projected top of 8500, and assuming something magic about the 29 ounce number; we get a cycle high of 8500 for the Dow at a time when gold hits a cycle low of 293. Do you thing that the today price of each is within striking distance to achieve that at the same time?

Donald: You have made some excellent comments in the past... But your
suggestion to short the Dow ( which by the way is not something you can
do ) and go long gold is a, short term, ticket to disaster... Gold "is" going
lower and the Dow "is" going higher. The individuals who are shorting the
averages like the S&P are getting slaughtered.. Manias, like the recent
move of the S&P ( and the next move ) are very hard to short. The pain will
be so great you will "cover" and the result will be continued highs.. Also,
in great moves of pessimism, like the move in gold, to find the bottom is
equally hard.. The lows seem to just go lower.

I'm not a intellectual like so many on this site but I do recognize when to stand
aside.. A fun read by a professional at this is "The Education of a Speculator"
by Niederhoffer..

One of his quotes:
"A master knows when to do nothing.."

SPEED: The Hunt brothers tried it with silver and failed miserably. No, I don't know the math.

NOTAGOLDBUG: I have been using the Rydex Ursa since September. Added several times to my position, as I had planned to, as I know that only luck will get you the top. During mid April I was looking good but...you know the rest. My average price is around $7.00. How do you decide to change from doing "nothing" to doing "something"? No one can ever be certain, that is what we are all groping for now. I am glad I am not one of the millions of fools who are piling into stocks knowing only the "call letters" the way the lady on that Frontline show on PBS is doing. Do you realize that the impending disaster can be so great that the country comes completely unglued ala Germany in 1923-1933. Instead of Greenspan trying to talk it down he should have changed margin requirements ages ago. Now the Clinton administration AND the Republicans need the mania for the tax revenue, they have cranked it into their revenue projections through the year 2005. That is a disgraceful fact. I repeat, ad nauseum, it can only end badly for democracy.

Donald: I'm not sure there is anything magic about the 29 multiple. But there is little doubt that gold will be lower than 325 my Dow 8500 objective is reached. My $315 gold target under these circumstances was a guesstimate, but I think a realistic one.

Selby and Este: Richard Pomboy ran ad add a few weeks ago accusing the CBs ( well some CBs anyway ) of doing all they can to wreck the gold market. Obviously we have no smoking gun here. But the willingness of some CBs to lend huge amounts of gold at dirt cheap rates for forward sales and short sales tells us something about who is writing the script. Not to mention periodic sales and rumors of additional sales in the wings.

Earlier today someone here said that an informed source had said that Alan Greenspan would rather die than see gold break $400 on his watch. That sums it up nicely. Higher gold prices are seen as a direct challenge to the paper bull and U.S. financial dominance. And the more the paeper bull inflates, the lower gold must go to help keep it airborne.

i strongly supect that counterveiling forces ( BT, some Asian CBs, George Soros, ? ) are building up their reserves for a decisive counterattack. But when and at what price level? That is the 64 billion dollar question.

Some Thai citizens rushed to buy gold this week as their government devalued the baht. Unfortunately, their gold fell more than the baht! Thailand is probably the first of several in that region who will soon float their currencies -- and the lesson the citizens of these countries have learned from Thailand is NOT to buy gold. The YEN will be their solution...

Related story: "Thai savers caught in falling gold, baht dilemma" ( Reuter )
http://biz.yahoo.com/finance/97/07/04/y0023_z00_30.html

Teaser: Australia sold 167 tonnes, official sector holdings are more than 34,000 tonnes. My math suggests that one will soon need to pay a disposal fee to rid one's self of their gold.

George S. Cole @10:26: Much has been said about the 'gold/bond' carry. After viewing gold vs the Dow, did it ocurr to you that perhaps some of the gold carry has been diverted to general equities rather than bonds?

I don't recall, that anyone here has publicly commented on the possibility. It would seem to me that the attraction of shorting gold and buying the general equities market would be too delicious to resist. For only the past 3 months alone, +25% in the SP500 coupled with another 10% gain in a gold short position, would make for a nice piece of change.

Of course, if that is substantially the case, it would carry interesting implications for a sharp market break. It would make your view of a general market decline all the more significant.

Donald:

They Rydex Ursa is the inverse of the S&P 500.. Must be painful if your averaged
in at $7.00 and now 5.79.. I believe the S&P could go to 1150.. Now its 890 a
30% increase.. That would put your Rydes at approx. 4.00... How much money
do you have and when do you stop averaging in? The Nova fund seems the
better play here.. Differences of opinion!!!

The fascination with Gold in all it's aspect is something hard to grasp
by anyone not involved with the subject. Why should the average person
be concerned what the gold price is?
The Dollar ( paper money ) is legal tender and is and must be accepted
in settlement of any debt and in any trade transaction. That is the law!
If one want to pay for anything or settle debts by offereing X many
ounces of gold it may not be accepted, It has to be converted into
actual paper money first. The government has made the law that gold
is legal tender. Gold is not as important as it used to be before.
Unless someone wants to operate outside the law, then that is a different
question.

I was born July 4, 1776, and the Declaration of Independence was my
birth certificate. The blood lines of the world run in my vens because I
offered freedom to the oppresssed. I am many things to many people. I am
the nation, with 265 million living souls - and the ghosts of millions who lived and died for me.
I am Nathan Hale and Paul Revere and Crispus Attaucks. I stood
at Levington and fired the shot heard around the world... I am Washington, Jefferson and Patrick Henry. I am John Paul Jones and Davy Crockett. My adopted sons include Lafayette and Casimer Pulaski. I remember the Alamo,
the Maine, and Pearl Harbor.
When freedom called, I answered and stayed until it was over,
over there. I left my heroic dead on Flanders Field, the rock of
Corregidor,
on the bleak slopes of Korea and the steaming jungles of Vietnam.
I am the Brooklyn Bridge, the wheatlands of Kansas and the granite
hills of Vermont. I am the coal fields of the Virginias and Pennsylvania,
the
oil fields of Texas, the Golden Gate and the Grand Canyon. I am
Independence Hall, the Monitor and the Merrimac.
I am big. I sprawl from the Atlantic to the Pacific, with my arms
reaching out to embrace Hawaii and Alaska. I am forest and field and
mountains and desert. I am quiet villages and cities that never sleep. You
can
look at me and see Benjamin Franklin on the streets of Philadelphia with a
loaf of bread under his arm, and you can see Betsy Ross with her needle.
You can see the lights of Christmas and hear the strains of "Auld Lang
Syne"
as the calender turns.
I am Babe Ruth, Hank Aaron and Jack Dempsey and Muhammad
Ali. I am more than 250 churches, where my people worship as they think
best. I am a ballot dropped into a box, the roar of the crowd at the Super
Bowl or World Series. I am an editorial and a letter to your congressman.
Yes, I am the nation and these are the things I am. I was conceived
in liberty and, God willing, in freedom I will spend the rest of my days to
remain a citadel of freedom and beacon of hope. This is my wish on July
4th, 1997, 221 years after I was born.

Pardon,a correction!
The sentence should read, "the government has made the law that the
DOLLAR is legal tender...

NotaGoldbug @12:36: Your comments should be appended to RJ's post from last nite. As a fellow Oregonian and pursuer of the Spring Chinook, fishing the bottom can be productive but you lose many rigs that way. Also tries the patience as well. .... Crummy analogy but still germane.

George S Cole: Actually George the only thing for sure about the CB's selling gold is that they think its a good idea to sell it. The question is WHY are they selling. Is it because of the conspiracy to wreck the gold market so they can flood the globe with paper or is it becase they see it as a good business deal? I don't think it matters too much to most of us and the implication remains the same --they think the price is going down. I agree with them about direction and have for many months. They are neither stupid nor crazy.

The whole 34,000 tons could be bought for cash at $325/oz for 322 billion dollars. The U.S. pays that much every year in debt service. Seems to me that some really smart people using margin, press manipulation etc. could achieve control of the physical market for a lot less.

Elli. The argument for gold is that as a currency ( method of payment ) it has been accepted throughout history. The reason you can make your statement is that you accept the faith of the governments and your neighbours who will take your dollar today. Other currencies that have folded in the past in pre-war Germany, Italy, many South American countries were also declared to be legal tender ( fiat money ) . Eventually other nations would not accept those currencies because they were losing too much value too quickly. If you were not able to buy a Japanese car or Chilean fruits and vegetables because they would not take your dollars, what method of payment would you choose? I don't wish to say that this is the case but that that is the argument. Is this far-fetched. I think we are still a long way from there. But when I hear that the Japanese may no longer buy treasuries, I worry and hope that the people will be able to buy back all those securities and not have to sacrifice there way of life. In today's global economy the interdependence that exists usually helps but it can destroy as well. More later maybe. Happy Fourth.

TO USA: We all know when we were born, but thank heavens, we don't know when we are going to die. So USA, if you want to celebrate many more birthdays, and I hope you do you had better stop driving by looking in your rear view mirror. Keep your eyes on the road ahead, fasten your seatbelt and for heavens sake...stop chug-a-lugging that that 6-pack when you are driving. You are completely out of control with your Visa card, your home equity loan and your failure to save for a rainy day. Ben Franklin? Boy would he be ashamed if he could see you now. Thomas Jefferson? Ditto!, Ditto!, Ditto! all the rest. You have squandered your inheritance from that entire family with your wasteful ways. Kids your age think they are immortal. Its time you settled down and made something of yourself. You come from good family, you can do it if you set your mind to it.

I am not a frequent poster, nor do I claim to be to be an expert
on market be it a stocks or metals. I am a lurker on this site
because I want to have a better understanding of gold market as
I believe that the gold will play its role in coming years.

Without listing names let me just say that I appreciate the information
and opinions I can find here. As far as some extreme posts and childish
bickering between John and the rest of the Kitco gang - I just ignore
it as a noise. John, you would be much better accepted if you just grew
up a little - your posts, even if they have some substance here and
there, have a flavor of fifteen years old wanabe I see on many other
Internet forums. Your 3-2-5 call does not have any importance to me as
I dont trade in short market and you are not able to provide any useful
information or analysis how things relate.

No, I dont take any predictions about "when will we reach the bottom
and when the stock will turn around and head south" for granted. I use
the information to form my own opinion and to put my money where I think
it should be. It is my loss or my gain. I am looking for long trends
so it does not bother me so much if I miss additional 10% growth in Dow
or if I jump in too soon and take additional 10% slide in gold market.
I set up my target for the year and I already made my 15% in stocks even
after loosing 7% in gold stocks and I dont try to guess the exact date
when the things will turn around ( and the will ) so I can make a few more
bucks.

As far as the sentiment "new technology era is here to change our lives
including all economic laws" I have to say "sorry folks". This is
exactly the reason why I believe that gold will play its role again in
coming years and I am trying to move some money into it. I was
developing this new technology marvel for the last 25 years, know its
limitation, know how it can fail, and know that it will fail and loose
a lot of its glamour. With our increasing dependence on the technology
I dont see a pretty picture. So dont bet on "silicon becoming new currency standard".

Back to lurking ..

There has been abundant speculation at Kitco lately regarding the motivation of and the players involved in this relentless gold bear market.
I'd like to posit my theory with the following caveat: As an amateur commodities trader, I do not know what I am doing; as a gold mining stock investor I'm a sucker for a good story. I am a gold bull with blinders, but lately the blinders have started to slip loose.

Here is my theory [always open for comment and revision]:

Physical gold is the antithesis of this credit based world. As systemic cracks develop in this credit based system of Western design, the real fear for the proponents of the credit system is a rush to something tangible that will continue to be relied upon to preserve wealth through time. As such, gold represents a "truth serum", the report card for our credit based system.

For some time, when the credit bubble was in its infancy, the Central Banks of Western governments employed gold sales of physical reserves to engineer the price of gold into "target" ranges. But the banks learned a dear lesson. The demand for gold could outstrip their resources in time. A better way had to be found. Enter the forward sale. If the price of gold could be brought low enough, then marginal mining concerns could be forced to yell "Uncle' and promise on paper to sell what they've got in the ground to meet demand. Even healthier mining concerns, with lower production costs fell victim to this device in an attempt to garner more profits. Another tool developed, along with the forward sale, was the gold lease. Again, this device had the effect of blunting demand, although it does require parting with physical gold. The last important tool was the refinement of "perception engineering", wherein announcements of upcoming or past gold sales or purchases by various CBs were timed so as to impact the market in the desired direction. For three years these tools were successful in "managing" the price of gold in a relatively narrow channel of between $370 and $400 an ounce.

The foray 18 months ago above the $400 an ounce level sounded the alarm for the CBs that manage the credit based system. To allow gold to fall back into its channel would not be sufficient because the increasing systemic risk might bring an avalanche of interest into gold. Therefore, I believe that the Western banking system has conspired in the following plot:

1. Encourage the commodity funds to drive down the price of gold. Guarantee that all rallies will be capped by unseen hands if necessary.
2. Employ the best perception engineers to forcast maximum gloom.
3. As the price of gold declines below imagined areas of support, the prices of mining stocks, particularly those from South Africa, decline in sympathy. The juniors are even harder hit.
4. Proxies for CBs begin a careful accumulation of stocks of selected majors, juniors, and curiously, independent assay/monitoring companies. The purchasers are careful. Too much buying may tip their hand. But falling bullion prices provide good cover.
5. As bullion continues its downward descent, CB gold mining stock accumulation continues.
6. With time, the CB cartel controls enough interest in selected majors, juniors and monitors to take them private. CBs may also take other mining concerns into receivership and eventually gain control of those companies. Note that the assets and sales of private companies are not reportable to the public.
7. With private mining concerns now under contro of the CB cartel, there are announcements in the years to come of major "finds" ( there's gold in them thar sands ) . The perception engineers move into high gear. The "independent" monitor/assay companies ( now owned by the CB cartel ) vouch for the "finds".
8. Perceived new supplies of gold drive the metal down even further. Yet more interest in other mining companies is acquired by the CB cartel.
9. Ultimate weapon: One of the CB controlled mining companies announces a technique to extract gold from seawater at a cost of $50 an ounce. Of course, this is untrue, but not to worry. Those "independent" monitor/assay companies will vouch for anything.
10. The last holdout mining companies, their stock prices thrashed, capitulate. The CB cartel acquires controlling interest in all majors and juniors and take them private.

What's wrong with this thesis? Nothing, unless enough concerns "get physical" and demand physical gold. Steve Puetz, are you listening ?

Dear 'Donald ( @Home ) ', and 'USA ( @4th ) ',
Are you two, related? Maybe one-&-the-same ... "psyche" ?!
Regardless, your both ... hired.
However, must I pay you in 'specie' ? If so, would one of you prefer
gold, and the other, silver? ... Which one? ... Which you?

Junior; You're right that money ( paper ) is OK as long as it is accepted. The same is true for gold. Gold has a history of being accepted and as being a "store of value". The store of value idea is dead at the moment
It has been a monumental loss of value over the last 17 - 18 years. With regard to currency try going to the local supermarket and buying $320 worth of food with an oz of it. Gold may be a store of value again and it may be a currency for us again but it is neither at the moment.

LogicBank: As I read it the Thai baht declined 15% and gold only 4% +/-, so Thai holoders of gold are far ahead. Of course if they bought gold after the devaluation and before gold plunged they lost. Timing, or asset diversification, is all.

LogicBank -- Profound post ( regarding baht and gold ) . Perhaps, dear Brutis, the answers lie in past news stories.

Glenn -- Thanks for your input, I shall heed your advice.

In the, "For What It's Worth", department, I would suggest less concern with the spike down of recent days, and review the news of the last month or so regarding the Thai baht, Hashimoto's comments, and the reaction of the Dollar and treasuries to the initial baht shock. There is a lot going on here. Much more than we will ever know. Somebody is buying the gold, that is a fact. We may lose money betting on a rise in gold, but it seems that we are in a 'no man's land' in the middle of a battle field. There must be formidable forces at work here. Read LogicBank's post. People reacted correctly to a devaluation of their currency ( inflation ) and gold rose, then fell because of market conditions? Coincidence? The Australians announce they did a gold sale months ago and the markets react now? Somebody dumps a large lot of gold at the close on Thursday? All of this in a short time frame, but spaced far enough apart so that most won't make the connection, be it real or imagined. Check the time line out, it's interesting if nothing else. As I posted earlier about the timing of the price drop yesterday, I couldn't believe it. I looked at EBN spot at 1:00pm, then 1:15, and finally at 1:30pm EDT. This was done with great precision. This $3 rise overnight has been pretty much undone as we speak. No, something is going on here. Somebody is terribly afraid of something.

George S. Cole, Bill Buckler, many thanks for your inputs and ( Capt. Bill ) your Web site.

DAVID: No. We are two different posters...really! Just having some fun with USA on his birthday party. By the way, if you see USA tell him that that nice Mr. Hashimoto from the bank called while he was out partying. He just wanted him to know that his "credit card limit was under review" Said he would call back later. ( Oh yes...either gold or silver will be fine )

For panda and others following SWC.

I took advantage of the fact that we were spending the long week-end in Bozeman MT, and trekked down to visit Stillwater Mine, about 2-hours drive away in Nye MT. Imagine my surprise when I found it straddling one of the gateways to Custer National Forest, with the nearly 13,000 ft. snow-covered peaks of the Beartooth Wilderness Area behind it as a backdrop. The Stillwater River, swollen with the spring run-off flows right through the middle of the mine property. With the rugged cliffs surrounding the mine like an amphitheater, it is really an overwhelmingly beautiful location.

The mining property is clean and well maintained. Since all of the mining takes place underground, the impact of the mine on the environment is quite minimal.

As they were running with a skeletal administrative staff because of the long week-end, I didnt manage to get a guided tour, but did spend a pleasant half hour with the dispatcher. However, the underground operation was in full swing. They employ 630 people overall, with roughly 80 people underground at any given time. They will soon be operating almost 24-hours per day, and most of the new facilities are coming on-line. The lighted sign at the entrance to the building displayed the price of platinum/palladium at $264 and the cost at $205.

I cant say I learned a lot of value from an investment perspective, but if any of you are looking for a way to write off a vacation as a business trip, a visit to SWC certainly has potential. I would highly recommend you make this drive if you are even close to this area ( like Yellowstone ) . It is well worth it!

There have been four posters ( perhaps more in recent months when I have been away ) over the past year who asked the right questions ( and often provided the right answers ) , or who simply sold gold short and held. Two were run off the site, but many of us remain in contact with them. The four, in my humble opinion, are Selby, Searle, Oldman, and NotaGoldbug. Forgive if there are others about whom I do not know. APH was probably the best swing trader. I could name fifty excellent and thoughtful posters, some new and some veterans here. And I want to thank Bart for his generosity in keeping this site alive and well.

PANDA: You are thinking the right way. Something is up. In a post yesterday I suggested that a direct deal was struck between Japan and Australia. Gold for US Treasuries. Australia gets some income and keeps an important and nearby raw material customer happy. Japan gets rid of their worrisome treasuries and a secure flow of absolutely crucial raw material. I'm still waiting for someone to post a better scenario.

As tax freedom day, now somewhere in June inexorably edges
towards July, perhaps Independence Day will become something of a
double-entendre?

In the latest Wall Street Journal mutual fund quarterly roundup
reviewing the dismal performance of gold-oriented mutual funds,
Jean-Marie Eveillard, manager of SoGen Gold Fund has put 25% of the
funds assets, maximum alloawable under the funds mandate, in two
defensive gold related securities: the Swiss Bank for Int'l Settlements
shares denominated in Swiss gold francs and Freeport-McMoran Copper &
Gold's preferred shares. A visit to FCX C&G homepage for an e-mail
inquiry will get the detailed initial offering information on the gold and silver-denominated preferred shares sent to one's home in about
three days.

Panda: Good post at 15;22. The fact that Austrailia was able to sell all that gold and no one knew certainly supports my view that no one that is posting here or in any other public forum knows whats going on. Apparently the gold was sold sometime ago and no one noticed. Then when it becomes public gold drops $7 so far and like a rock. Even the gold traders were taken by surprise according to Glenn. Given this level of knowledge how do we know about demand/supply/cost of production figures.
Seems simple enough to me We Don't. Hence the conspiracy notions to account for the unexplained. CBs, unnamed powerful forces, all are used to explain the unknown. Sort of like spirits of the woods. Herne the Hunter and Jack Frost.

RJ: I just read your post of 01:30. It is a jewel of high
value. I saved in to disk and will print it out for my
private use to re-read from time to time. Thank you.

Donald:
Your suggestion of a Japanese/Australian bonds for gold swap is quite plausible given the timing so soon after G-7 ( 8 ) and the Hashimoto remarks. I ( and others too including James Turk ) have thought they ( BOJ ) were trying to do a similar deal with the IMF which has publically committed to selling some gold to do "good works".
After overnight reflection I am thinking that the timing may well have been a godsend. They released the info while markets were open in London and New York but before a long weekend to allow it all to react and then to rest.
Perhaps more interesting are the rumors regarding the Soros campaign against the Thai baht AND the Soros interviews with the Australian Reserve Bank this past week. Was Soros there to prop up the $AD ahead of the gold announcement? ( He is said to have bought $AD heavily. ) Is he somehow involved in the gold/bond swap? Is Soros THE or A buyer of the gold?

Donald:
Your suggestion of a Japanese/Australian bonds for gold swap is quite plausible given the timing so soon after G-7 ( 8 ) and the Hashimoto remarks. I ( and others too including James Turk ) have thought they ( BOJ ) were trying to do a similar deal with the IMF which has publically committed to selling some gold to do "good works".
After overnight reflection I am thinking that the timing may well have been a godsend. They released the info while markets were open in London and New York but before a long weekend to allow it all to react and then to rest.
Perhaps more interesting are the rumors regarding the Soros campaign against the Thai baht AND the Soros interviews with the Australian Reserve Bank this past week. Was Soros there to prop up the $AD ahead of the gold announcement? ( He is said to have bought $AD heavily. ) Is he somehow involved in the gold/bond swap? Is Soros THE or A buyer of the gold?

Jerry Stratton: You wrote a good article explaining Cyber Cash. But Cyber Cash is still a credit-market instrument. It will only work as long as confidence in credit remains strong.

sorry re double post. despite decreased net traffic today i am having a devil of a time with slow servers which seem to hang.

Donald: Good post at 12:57.

Miro: Good post at 14:35.

Puetz: James Turk is putting together a company to provide for a cybergold transaction medium. I have seen the prospectus. The idea is to provide for the convenience and privacy of internet transactions ( with security ) AND with the anchor of being gold-related from beginning to end.

AUROPHILE: Soros and the A$. I checked my yesterday postings. At 12:11 I asked if anyone knew what the AD had done. D.A. responded at 12:18 that it was up 10 ticks and the US$ was down .8% vs JY. I was shocked at the answer he gave about the AD. Now your Soros explanation sounds good to me.

Prediction: All of this conspiracy talk and anti-CB talk may soon change. Can you imagine the day when Kitcoites talk positively about Central Banks? During the 1930s, one method of countering the deflationary psychology at the time was to increase the gold price. The government did everything it could to stop inflation.

Governments around the world are under the impression that falling gold prices signal that investors are un-afraid of inflation. But, now, we are entering a deflationary period. Governments fear deflation more than inflation. Once again, don't be suprised to see Central Banks buying gold as the emerging deflation intensifies. This will be their symbolic attempt to counter the deflationary trend.

In that case, talk of Central Bank conspiracy and manipulation will disappear here at Kitco. Instead, Kitcoites around the globe will be asking the question: Did you hug you local Central Banker today?

Donald: My stuff re Soros being involved in the gold deal is supposition based upon rumor from an Aussie friend who is a very big trader and well connected to all the trading rooms. It is a fact, however, that he ( GS ) was there and talked to the RBA.

Bill Buckler was asking today why the Aussie CB decided to announce its gold sales at the close of the market ahead of a long weekend in the USA many weeks after the sale took place.
The Aussie CB is not an "unnamed powerful force" and what happened must have a very logical explanation.

Bema Gold no change on the day. High 8.15, low 7.65, 494,200 shares, 389 trades.

Glamis Gold down .25, high/low 9.50, 3000 shares, 4 trades
All Canadian funds.

Donald: The shock value of the Aussie sale is probably greater than the reality. After all, 167 tonnes is less than $2 billion US at $350 per ounce. Not really even a spit's worth compared to BOJ US bond holdings. But it is certainly within the Soros pocket change realm. If BOJ were to get serious they would be wanting 500 to 100 tonnes at least. Also it points up the poverty of a great nation like as Australia for whom 167 tonnes was a large part ( 2/3 ) of their gold holdings but a mere asset allocation for Soros's fund.

DJ: thanks for the tour of Stillwater. I follow it and will be buying some more soon. Thanks, Bart for this site.

Este; Australia was certainly an unknown powerful force in the gold area selling large quantities of gold before yesterday. I don't think there is a big secret behind why they sold. They think the price will go lower. If they sold near 350 they were right.

Dear 'Comrades',
Can anyone tell me what time, NY/US time, on July 3, 1997, the US Comex futures markets closed/settled; and what time the US NYSE & ASE stock markets closed/settled, also on July 3, 1997 ... ?
Thank-you.

AUROPHILE: When you look at assets of a CB, held as reserves in a fractional reserve system, shouldn't you think of them differently? As high powered money? I am thinking out loud...isn't their impact on the Australian economy greater? How were the Australians showing gold on the books? At free market value? Are they going to show their new securities at market value each reporting period? Does the RBA work like the Fed? The Germans just went through the same process and created an uproar.

If Australia already sold their gold prior to July, then has not the price of gold already reflected that fact? Could the case be made that the damage was done, and that yesterday's decline was not a true reflection of that event, but either an emotional reaction, or an opportunistic move by short sellers?

Aurophile: Glad you are back!

Fundy and Selby: Did the Australian Cb ( and other CBs as well ) sell because they think gold is going lower, or because they want to push it lower. I suspect the latter.

DJ: Do you know the reserves numbers at the Stillwater mine. Or better do you have their phone number or the address of their website if they have one ? Thanks.

David: I am showing a last trade ( with volume ) at 13:11 EDT with final settlement at 13:42 for Comex gold. Looks like 1300 for NYSE. Amex I don't know.

STEVE PUETZ: Just came back from a five mile bicycle ride along the beach. It helps to clear the thinking. Have you ever done any work on pension obligations? US law allows a company to withdraw cash from its pension plan as long as the market value of the securities meet actuarial obligations. With this market just short of the moon, how many companies are sucking funds out to pump up the quarterly reports? I bet a bunch are and they will end up being an obligation of the taxpayer some day theough the Pension Benefit Guaranty Insurance Corp. Also, I read ( or heard here ) about the rules for exec options. They apparently don't have to be shown fully diluted. As that is now a huge part of outrageous compensation the P/E stuff we read is all suspect. Just as bad as the Govt. counting on the bull market to 2005. It ain't going to happen. Just one screw has to come loose and the whole thing goes.

AURIC: Remember in a bear market all news is bad news. The Australian sale is inducing traders to wonder who will be next. Apparently some expect selling by Portugal soon to meet EMU requirements. Without strong investor demand the lethal combination of cheap CB gold loans and outright CB selling will have little trouble keeping the gold bulls on the ropes.

Deflationary debt contraction: The US government's outstanding debt has been contracting since March. That's right! Debt is contracting! During March 1997 the US Treasury debt stood at $5.379 trillion. Last week it was down to $5.336 trillion. That's only a drop of $43 billion, nonetheless it's a drop.

It seems that tax revenues are increasing because of capital gains from stock investors who are cashing in their chips. With consumers grossly over-extended, on top of government debt contraction, deflationary pressures mount.

Economic depression seems almost certain. Once the stock market turns lower, however, the capital-gains tax-flow will stop in its tracks. Then government debt will explode upward quicker than ever before. However, expected contractions in consumer, mortgage, and coprorate debt will offset increases in government debt -- thus, the deflation will persist.

Much of this debt will be settled through bankruptcies. This deflationary collapse of debt will send worried investors into gold and silver. It will be a "flight to quality."

elli: Legal tender laws have been used from time immemorial in an attempt to force the people to take a known worthless currency. They have never worked, here is why. Suppose I am a street vendor with five pots on my stand and you possess worthless currency. You ask how much my pots cost and I reply. "What color is your money ( this phrase may be familiar ) ". You go and get a kings man to enforce the law. Suddenly I remember that all my pots have been sold this morning and alas I have nothing left. This little dance will be repeated with every transaction and all the kings men in the world cannot police them. Thus the maxim,-the people decide what money is-. Currently the people think the dollar is fine and will accept it, when that changes ( possibly sooner than we think ) all the laws and bayonets in the world will be powerless to force us to accept a single dollar.

Donald: I am not terribly knowledgeable ( meaning I know nothing! ) about the multiplier used by the RBA in leveraging up its own or the commercial banks reserves. But I doubt if it is tremendously different from those available to large hedge funds. The large funds do not actually make their positions on a cash basis. They have enormous lines of credit with multiple bankers and work to a great extent on a credit basis. They do, of course, have paid-in capital and great net worth, but they are quite leveraged.///Hi George Cole! Terrible time to come back, but......

Donald: Most corporations are letting the bull market make monetary contributions instead of the corporation making actual cash deposits into pension funds. When the stock market reverses course, corporations will not only have to resume making pension contributions, but they will have to make up the losses inflicted on the funds by a bear market. These liabilities will be great enough to send most corporations with large pension obligations into bankruptcy.

Donald; If this bull market continues much longer at its present pace, an awful lot of the nation's most talented people ( and quite a few not so talented ) will be able to retire very early and live off the fat of the land. Those why think this bull can continue forever should think about this carefully. Why work when you can make lots of money each year just by holding mutual funds. To raise this question is to see clearly the absurd lenghts to which this bull has gone.

Foreign Central Banks continue to dispose of US Treasury debt. Since peaking at $653 billion on April 18, 1997, foreign Central Banks have liquidated $22 billion of US Treasuries. Last week, US Treasury holdings dropped another $4 billion.

Elli: There are two kinds of dollars. Only the one in your wallet is legal tender. That is a cash dollar and there are $374,000,000,000 of them at last count. Of that total $186,000,000,000 circulate outside the United States.

The second kind of dollar is a credit dollar. It is the kind the bank teller prints in your savings passbook when you deposit a cash dollar.
There are about $55 Trillion credit dollars. ( $55,000,000,000,000 ) . If everyone wanted to exchange his credit dollar for a cash dollar it couldn't be done.

Puetz: I have been an inflationist ( in the sense of expecting a ramping up of the economic growth rate to 5+% ) since 1992 when the money supply began to expand again. But your point about the shrinking fed debt ( no 30 year bond issued since February and none due until August ) plus the meltdown in the CRB and gold do indeed point to disinflation or worse. You know the Homestake story in the 1930's, but after June 1932 the Dow and the bond market outperformed even Homestake. Of course gold was the only hedge then, and Homestake was just about the only one available to most investors in the US. Now we have a zillion hedges. I am increasingly less comfortable with the idea that gold will outperform bonds or "generic" stocks as the recognition of disinflation spreads.

George S Cole- Thanks. That makes sense. It is always a question to what extent future negative events are already factored into the price. Aye, there's the rub, eh?

to BW: I believe the point is, that one can legaly discharge any debt, mortgage by paying in Dollars,- paper money. Paper money has to be accepted and will thereby wipe out such debts, whether the debtholder
or mortagee wants dislikes it or not. One pays in paper money and does not owe anything.
Your analogy regarding pots in the market is well taken but in the present circumstances not applicable.
The worlds ecomomies will never return to transacting or trading with or
in gold values. It is too cumbersome to handle.
Modern economies will use electronic transaction, recorded in bits and
bites on computer terminals.

Puetz: Lest I be misunderstood, let me hasten to add that I will always be a holder of gold and some gold stocks in a diversified portfolio of stocks, bonds, real estate, and Tickle-Me-Elmo Dolls....:- )

Does anyone have a URl that shows the TSE Gold Index?

Gold consensus now more bearish than ever. Andy Smith talking about drop to $300. Australian gold producers have criticized that nation's gold sales.

Friday July 4, 1997

For gold, at 12-year lows, a dented crown

LONDON ( Reuter ) - Gold, revered for centuries as the king of investments, woke up on Friday to find another big dent in its
tarnished crown.
 A plunge in the price to near 12-year lows underscored deepening speculator and institutional disillusion with the yellow metal
as a store of value, analysts said.
 Gold bullion was already trading at 41/2 year lows on Thursday when the Australian central bank announced it had sold 167
tons from its reserves over the past six months.
 Speculators, bearish after months of talk of European central bank sales, turned tail and sold gold down nearly $10 an ounce to
below $325 -- levels unseen since 1985.
 If nation states are going to sell, they ask, why hoard?
 "The perception among investors is that the short side is the right side to be, because there's a risk premium with central banks
aggressive, not passive," said bullion analyst Andy Smith of Union Bank of Switzerland.
 The Geneva-based World Gold Council described the Australian central bank's gold sales as "unnecessary" and lacking
"sensitivity."
 "For a leading gold producer to take unnecessary actions that prejudice the well-being of a key sector of its economy suggest a
lack of sensitivity to the factors impacting the market," the council said in a statement. It said the statement was made "at the
request of our members in Australia."
 A second attack on the price by speculative selling could not be ruled out, Smith said. That means a move to $300 an ounce or
lower is likely, several analysts and dealers added.
 "The ( Australian news ) was a confirmation that central banks are really tempted to sell gold reserves," said gold analyst Hans
Peter Hausherr of Zurich-based Swiss Bank Corporation. "Now the market is further convinced that this will go on, so prices
will go still lower."
 Gold has been trending lower since a recent peak at $418 an ounce in February last year, shunned by investors who preferred
to grow their money on booming Wall Street.
 The slide accelerated this year on a wave of real, proposed and imagined sales from European central banks and other
institutions such as the International Monetary Fund.
 Central banks and the institutions hold around 35,000 tons of gold reserves, but they are increasingly considering schemes to
revalue, lend or sell part of their large holdings.
 The new trend to view gold just like any other asset marks a sea change since it took the throne as the ultimate store of value
5,000 years ago when it was first used as money in Egypt.
 From Lydia's King Croesus, who minted pure gold coins around 550 BC, through the Roman Empire to the gold standard
earlier this century, gold was king.
 But as the new millennium approaches, hot stocks, treasury bonds and other financial instruments hold more appeal for
individual investors, hedge funds and central banks alike.
 "It's a cascade effect now, a looking over of shoulders. These things aren't done in isolation, other central banks take note, and
clearly not with a view to buy but with a view to sell," Smith said.
 The fact that Australia is the world's third-largest gold producer is particularly galling for gold bulls and domestic miners,
analysts said.
 "The sale broadens the sphere of central bank sellers away from Europe where European Monetary Union considerations have
at least provided an excuse ( albeit thinly veiled ) for gold sales," analyst Nick Moore of Flemings Global Mining Group said.
 The uncertainty will also make gold producers more willing to sell forward despite lower prices and less apt to buy back gold
sold previously at higher prices, Smith said.
 "If central banks are prowling around there's no given level at which gold will settle," one analyst said.





CANOE home | We welcome your feedback.
Copyright  1997, Canoe Limited Partnership.
All rights reserved. Please click here for full copyright terms and restrictions.

FYI... ( 416 ) 695-9811...code 4223...then 01

gone for dinner on the 18th green, symphony with cannons, fireworks, and happiness to be alive in my great fatherland. cheers all. bbml.

CC: Try this for Stillwater http://www.stockfind.newsalert.com/MGI/SNAP/A0933-CS.htm

GEORGE S. COLE: Try this. Courtesy of Selby yesterday.

http://www.canada-stockwatch.com/

Aurophile: Thank you for the kind words at 15:34. I do miss the "old days" at 380-370 when I took days to figure out what I wanted to do. Selling virtually all my precious metals stocks then was a real difficult job. I think things are getting down to important levels now.

Get to the cost of production less a few bucks and then buy the best looking marginal mine ( s ) you can find--with money you can afford to loose. That, I think, is the only thing I have posted here in the past year that looks like my plan for the future --so it may be the last such post as well.

ALL: A friend of mine, who is a small-time investor in teh stock market, asked me to ask y'all what would likely be the single strongest gold stock to buy options on in the event of a rise in gold prices. Even he ( a dyed-in-the-wool bull ) is amazed at the runup in the stock markets and the concurrent decline in gold and feels that something's gotta give soon. Since I'm not in the stock market at all, I don't follow gold stocks ( other than the XAU ) , so I couldn't answer. I'm sure someone here would have a good recommenmdation. Many thanks.

Gold was up after the Aussie announcement for three hours then plunged at the end of the day. In other words the mkt didnt react to the news. Now the news of the fall of gold is out it is stated that the Aussie announcement is the reason yet the price did not react until the end of the day. So really the Aussie announcement had nothing to do with it but the way the news is reported will affect how others act. Imagine if gold had closed up by the mkt closing at 11AM. Gold up in spite of Aussie announcement. Someone decided IT HAD TO BE DOWN. Now the Aussie announcement as reason for the fall will create additional fallout.
Are the financials getting out of control and they want to make dam sure gold is out of favor when the collapse starts so maybe US dollar and bonds will be safe haven. They are talking about how "galling it is that Aussie sold as it is the third largest producer". Why is this galling HOW ABOUT CANADA AND RUSSIA. The spin is unbelieveable.

The Markets....

Alan, mid -air refueling is ok with fighter jet but... what do we do with our hot air balloon ?

Well Rubin better to find a trick before it hits the fan...below.

STRAD MASTER: Bema Gold had US$5.50 in book value when gold was $350 ( as I recall ) better do a new review to be sure.

I wish to correct a misunderstanding concerning me that has appeared on Kitco. I myself am NOT "voluptuous." ( though it may be true the middle is spreading just a tad ) . I may be a voluptuary, however. But only on occasion. RJ: With you on silver. Hi Yo!

Close prices for TSE: ABX 28.20; ECO 7; PDG 20.40; TVX 6.75.

CC: More on Stillwater. http://www.sec.gov/Archives/edgar/data/931948/0001014909-97-000004.txt

The SEC database is really good for required filings. Backup the above link to EDGAR and search on any company. The 10-k is the annual statement and the 10-q is the quarterly. Enjoy.

WW: So what are we to believe? I'm turned around worse than a turkey in a tornado. If I get out with any feathers left, I won't know which way to fly! Gold is continuing to be worth less while promises made by the paper pushers are worth more. I'm going to fire up the bbq, it is a beautiful day.
P.S. The only investment I ever made that has gone up every year in value was in training and education and it's a good thing because my other investments are guaranteeing me at least 30 more years of hard labor! : )

WW: Now that I brush by you in the Kitco hall...so what's your answer on the class action suit against the Fed for taking the people's gold in '34? We need you! I'm in for half a K-Rand if you say yes! Think of the publicity, Man!!!

MIKE SHELLER: Glad you are here. I read your piece and now that I know your head better I want to recommend a book to you. "A World Lit Only by Fire" by William Manchester. There is very little reference work about the Dark Ages. This book covers it well. You have to hope that all of us are wrong about how bad, and how quickly, things can unwind.

WW: How about a cizizens arrest of the Governor of each state for violation of Article 1, Section 10 of the U.S. Constitution. Look it up.

I heard someone say the Aussie announcement was made before our opening. If it was made during the close than that means our Australian friends make major announcements at 1AM their time methinknot. When do they sleep. Someone please clarify.

CC: I don't have my files with me, so can't be of much help. You can find a great deal of info at:

http://biz.yahoo.com/p/s/swc.html

Mike S. Sorry Feds can do what they want with $. Mkt place is only real regulator. Further you probably have no standing and the feds provided comp for the taking.

CC -- Proven and probable reserves are about 34 million ounces of platinum and palladium. With that much, why bother to measure it all? :- ) )

The Top Ten 325 anagrams. 10. The oft viewer 9.Voter with fee. 8. Ore view theft. 7. Where vote fit. 6. Voter thief we. 5. With free vote. 4.Free with veto. 3. Overt thief we. 2.Feet over with. And the Number One 325 anagram-- THREE FIVE TWO.

I know it is slightly late, but what if the drop in gold was really what Big Trader was predicting after all?

WW: that is also how I saw the earlier report unfolding. I was encouraged when the report first came out that the XAU was handling the news so well. It reinforced a hope that a rally was forthcoming. I left the market before the close and was surprised to see the drop at the end, and more so, the explanation for it. But the trade knows this, and a question I have is why has not gold recovered today more than it has.

The second question I have is why did the ACB make the announcement when it did. Since they waited so long from the time of the sale, why not wait until all the gold has been delivered or make the announcement in a year end report or at a more favorable time when gold is recovering in price. To suggest that they did it to cause the price of gold to fall makes no sense as this would contribute to further harming their gold mining industry. Some earlier news comments suggested that the news may be considered bullish as the sale was already in the market, and the ACB raised its hands in the air. Perhaps, this may have been what the ACB mistakenly counted on.

Donald: Thanks for the URL!

WW: I too have noticed that every time something happens that could be positive for gold, massive selling quickly develops to smash the price. I think this latest smash has a lot to do with Hashimoto's comments which briefly sent bullion a few bucks higher. There obviously are powerful financial forces extent today who consider it their duty to smash gold every time it raises its head an inch or two. Probably Greenspan and Rubin together with some pliant foreign CBs and key elements of the Wall Street and international banking establishments. When Andy Smith speaks about gold being demonetarized, he is telling us the objectives of this group.

Thanks Vieserre. However, what was the percise time the announcement FIRST came over the wire or was otherwise generally knowable by the market place. Thanks!

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

VIESSERE: The health of the Aussie gold mining industry seems to be the least of the ACB concerns. Doing Alan and Bob's bidding is much more important. The ACB sales were criticized today by the World Gold Council at the behest of its Australian memebers. The OZ miners must be mad as hell.

The fact that gold didn't recover today is quite bearish short-term. The shorts are confident their already considerable profits can only grow larger.

WW I thought of that. But the news item lead: "Thursday July 3 11:12 AM EDT.... Ldn gold fixes barely up on Australian sales news" means it was in the London Gold market before it closed and price was up. There was a lot of time for market participants in the US to digest it before the close. And if the story is why the market sold off, they all must have collectively arrived at the same opinion at the same time.

G.S. Cole: You can find TSE indices on dbc.com. Use $tt-tc for composite; $gl-tc for gold; $og-tc for oil; gcm7 for Chicago gold futures; $xau for xau; $tnx for 10 yr t-bills ( US ) ; crq7 for Chicago futures. You can list up to ten at one time and get them back as a table. Add table to bookmarks to update later.

George S. Cole: I have a conundrum for you. Assuming both stock market performance and gold are reasonably reliable economic indicators, the US and other global rising stock markets suggest strong economic growth in the future which should be supportive for gold. And gold's price performance suggests otherwise. Why the divergence, unless there will be economic growth with continued disinflation. Is this in your mind a non-sequitur or are we in a new economic paradigm.

GSC With Gold's low price and no investor demand really it has been de facto demonetized. Perhaps what they are trying to prevent is de facto remonetization. Fact is that Gold monetary value relates to investor perceptions and the CBs can only try to direct capital to control that. At the end of the day they can never eliminate gold as a monetary asset.
What more can they do but eliminate investor demand as they have through psychological warfare.

I agree HASHIS comments could have started a perceived new floor under gold/ the Aussie story, its timing AND MOST IMPORTANTLY its spin are to suppress gold. The hashi statement and the strongly bullish commitment of Traders made them feel that gold needed to be broken more than a paltry 10 dollars from the line in the sand falling 100 day moving average. In sum the Aussie story and its aftermath are to stem any capital flow into the market that might have been developing. Maybe Soros who was rumored to purchase from Aussies. Remember what he did in 93/ Punish George and no 93 repeat in this environment if we can help it.

George S. Cole: Thanks, I will be compelled to agree with your bearish viewpoint if we do not get an Asian rally Sunday evening. I was hoping the XAU was forming a bottom, but if it breaks down, it will just be another resistance layer to overcome on the way up.

WW, George S. Cole: with due respect for your views, I am not one to believe that all events contributing to the fall of gold are due to governmental conspiracy or devious action. To do so would completely discredit Gold's role as an economic indicator. There are presently no wars or any visible serious crisis to deal with. Significant global inflation is not found anywhere, and prices are continuing to decline, even in Argentina, Italy and Brazil. Thus, is this not what gold is responding to. If there were wars or significant danger of inflation, would there not be more investor demand and would there be as much CB selling. CB gold selling may merely be masking the real reason for the decline of gold.

Vieserre: The 11:12 Am EDT London dissemination means it was known hours before as I doubt the Aussies made the annoucement in London at 3 am their time. It could have been done by surrogates in London but that would be unusual Somebody definitely knew this info well before us open. Further mkt participants must have been aware because of the selling over the last few months. The financial communities continual bashing and ambushing of gold raises very interesting questions. The intensity of the ambushing of late perhaps portends crisis. If the financials are really so strong and stable why not layoff gold and let it rally 30-40 bucks. Or do they know if they did that now the cat would be out of the bag. Remember the debt/leverage and expectations in the economy and mkts are at a feverish pitch compared to 1993. Over a trillion in stks since that time. Further, when the crisi occurs they want bonds to be the safe haven.

Strad Master: I would go with the blue chip of Gold producers, Barrick ABX. Not the time to buy yet though. I think it will follow bullion down, and stabilize only when some hope is restored to the Gold market.
As i've said many times before, the CB's seem to want to replace mines as suppliers of Gold, for now.
IMHO, Gold will continue to decline until producers begin announcing mine closures, which will send a signal to shorts that their party may be neering the end.
We're going to have some strange times ahead.

Thank-you: Donald, for your earlier reply, & Aurophile, for your more recent one. And, taking a cue & a pun, off of "spin", from WW :

Here's another spin, reportedly from one U.S. 'Founding Father', to another ( -from John Adams, in a letter to Thomas Jefferson ) :
"All the perplexities, confusions, and distresses, in America, arise not from defects in the Constitution or confederation, not from want of honor or virtue, as much as from downright ignorance of the nature of coin, credit and circulation."

And one of the Founding Fathers ( Happy 4th of July to everyone ) ) is also reported to have said some thing like this: "If the American people, ever allow their nation's banking system, to control money and credit, first by inflation, then by deflation; one day, their children will wake-up homeless, on the continent their fathers conquered."

"spin" ( a poem: )

spin, spinning weaver
spin
just to begin again

Question: If money makes the world go 'round....what makes it stand still?
Answer: It is in the question.

I've been prompted, by the discussions/dialogue herein, to look for old 'notes & quotes', from my old files, of 20 to 25 years ago. Neither the above quotes, nor the following ones, are to be read/accepted, as literal/verbatim; nor otherwise accepted as if from verifiable sources.

Shakespeare: "We at the heighth, are ready to decline. There is a tide ( time ) , in the affairs of men, which taken at the flood, leads on to victory. Omitted, all the balance of their lives, may be lost, in shallows, and in miseries. On such a full sea, are we now a-float. We must take the current when it serves, or lose our ventures."

from a newsletter, by one T.J. Holt, from Feb. 2nd, 1990: "Again, it will appear as though things are tumbling all at once, suddenly and without warning. In reality, however, the crash has already ocurred -- not on the surface, where it's visible to all; but rather deep in the balance sheets of large corporations, local governments, banks, insurance companies and individual households. All that remains to happen is
a relatively rapid transition from the hidden world of ratios and statistics, to the real world of people and markets."

Henry S. Reuss ( - late '60s/early 70's, Demo. from Wis., & past chrm. of the House Banking & Currency Committee ) : "With gold no longer playing
a major role in the international monetary system, its price will sink
to its value in the arts -- something much closer to $6.00 an ounce, rather than the current $35.00."

Federal Reserve Bank of Chicago, 'International Letter', 13 June 1975:
"Future Treasury sales are contemplated. The Government's offer to sell it's gold to private users, underscores the progress toward reducing the monetary role of gold."

Reginald McKenna, 19th century pres. of the 'Midlands' Bank of England: "Those who create and issue the money and credit; direct the policies of government, and hold in their hands, the destiny of the people."

Cicero, of 'Rome', 2,000 yrs. ago, more or less: "The budget should be balanced. The treasury should be refilled. Public debt should be reduced. The arrogance of officials should be tempered and controlled, and assistance to foreign lands should be curtailed, lest we become bankrupt."

Luwig von Mises: "Government is the only agency, that can take a useful commodity like paper, slap some ink on it, and make it totally worthless."

Pogo: "We have met the enemy, and he is us."

If we applied this amount of bearish sentiment to stocks, the DOW
would be at 2000.

Friday, July 4, 1997
Gold crashes to 12-year low

News that Australia has been unloading bullion in a big way sparks market rout; analysts predict the price collapse still has some way to run

By PAUL BAGNELL
Mining Reporter The Financial Post
The market for gold turned from dismal to ugly yesterday, as the price of bullion hit a 12-year low and experts predicted more declines are on the way.
Traders and analysts blamed yesterday's startling price drop on the unexpected news that Australia has sold 167 tonnes of gold over the past six months.
In New York, the cash price of an ounce of gold for July delivery fell US$7.10 to US$324.20 after a half day of trading on the Comex exchange. At one point, the price slid as low as US$323.65.
That was the lowest price since Feb. 25, 1985, when it dipped to US$284.25.
Traders said yesterday's abbreviated trading day may have contributed to gold's demise. U.S. exchanges closed about 1 p.m. eastern time yesterday, in advance of today's Independence Day holiday.
The gold price has been crumbling steadily in recent months. On June 4, the metal was selling for US$341.25 an ounce, while on Feb. 28 it traded at a six-month high of US$363.45.
Yesterday, traders and analysts couldn't point to a single positive sign in the gold market.
The Australian announcement, they said, came as a big surprise.
The Reserve Bank of Australia said it saw "negligible benefits from holding a significant proportion of its international reserves in the form of gold," given the country's status as a major gold producer.
Although the market has been facing the prospect of more European central banks selling some of their gold -- following sales by the Netherlands in January and Belgium in March 1996 -- Australia had not been expected to join the group.
"No one imagined we were going to get this news out of the Australians," said Victor Flores, a Texas-based gold analyst for Marleau, Lemire Inc. of Montreal.
"It's pretty shocking that even a big gold producer doesn't care about protecting the gold price."
Aside from the selling pressure spawned by the fear of further central bank sales, the bright outlook for competing investments such as equities and the US$ are also dampening gold's prospects.
"The overall atmosphere for gold is not good," said Walter Baici, a gold trader at Bank of Nova Scotia in Toronto, citing recent gains in bonds and a declining oil price as even more bad news for gold.
Central bank sales have spooked the market because the banks had traditionally been among the long-term holders of bullion, Baici said.
Martin Murenbeeld, a gold analyst in Victoria, B.C., said stepped up short selling of gold by speculators is another likely factor behind the recent price collapse.
"The latest data I have is that the large specs are heavily short, and it's almost certain that they have increased their short position in recent days," Murenbeeld said.
"And there is enough fundamental evidence to suggest that is not a bad position."
The share prices of gold producers on the Toronto Stock Exchange were also down sharply. The TSE's gold and precious minerals subindex dropped 207.11 points, or 2.49%, to 8126.53.
Among the biggest losers were Royal Oak Mines Inc. ( RYO/TSE ) , which fell 20 to $2.95, a decline of 6.3%, and Bema Gold Corp. ( BGO/TSE ) , which suffered a 6.5% decline, falling 55 to $7.90.
Flagship stocks Barrick Gold Corp. and Placer Dome Inc. were also down. Shares of Barrick ( ABX/TSE ) eased 65 to $29.45, while Placer Dome ( PDG/TSE ) fell 60 to $21. 80.
The selloff of gold stocks could have been worse, said John Ing, president of Maison Placements Inc. of Toronto.
"I think we reached the capitulation stage earlier," Ing said. "Most portfolio managers I've talked to have already lowered their [gold-related] weightings."

Vieserre: My friend news follows price so the reason there appears to be no reason for gold to rally is that the news relating to gold is negative b/c of its price action. The converse is true of financials/ if they are rising it "good economy " no inflation" etc. If they were falling and gold rising it would be ALL PRESENTLY TRUE"rising bankruptcies portend credit problems for financial institutions" "slowdown might turn into recession" "Retail sales slowing" etc. Gold Rises as "slowing economy fear generated by slowing sales may lead to higher deficits as dollar slides". In sum the headlines create the background for the investment decisions which affect the capital flows into the mkts. All the foregoing are true but the market action dictates the spin. Control the mkts and control the spin. The reason for the manipulation and spin is to manufacture the sentiment which affects capital flows and mkt prices and thus headlines which affect capital flows. The mkts are so extended this is why they have to go to extreme lengths to keep it going. Your seeing no reason for gold to rise is testament to the success of their strategy. What has changed is the intensity and exquisite timing/this shows they are riding the horse hard. Steve Peutz's letter re the divergence between the "economic numbers" and the "financial situation" is perfect with respect to what is happening and WHAT "THEY" KNOW.

nuf said.

All: How does this fit. We are at a mirror reversed image of January. Then we were dealing with a manic gold market, inflation was rampant, mortgages were 18%, T-Bills were 11%, the long bond was 14% and nobody would buy a stock. You couldn't give them away. The Dark Ages were just around the corner and everybody...I mean everybody but me... was stocking food in the bomb shelters. The Russians would be on the beaches within days. Well...what happened? EVERYBODY WAS WRONG.

Fast Forward to today...Exactly the reverse...EVERYBODY wants stocks, nobody wants gold, even the CB's. This is Nirvana, the business cycle is dead, we will never have a recession, the budget will be balanced by 2002. Every "stock investor" in America thinks that the effluent from his sewer should be pumped directly to Carvel for resale to lucky customers. His stocks keep going up, up, up. He is a genius. How did America grow 260M geniuses in 17 years? Where were these geniuses in 1980?

Can it be possible that everybody is wrong again? Could just the reverse happen again? CB's are just people like us, they can be just as dead wrong as anybody else. This whole negative stuff about gold bothers me. You can't dump 6000 years of tradition on one Fourth of July weekend. Even if gold drops to 200 bucks what do I care if I can buy the Dow for the next runup at 400? Sounds like a good deal to me.

Just posted my Aussie Gold stocks page reflecting trading on Friday, July 4. Of 34 stocks covered, 20 are at 52-week lows. That is, of course, in stark contrast to the Aussie market as a whole which is marginally below all time highs.

It is obvious that there was bargain hunting going on in these stocks during the day, as most of them closed above their lows. Depending on your viewpoint, the Aussie Gold sector represents either a wasteland, or a smorgasbord.

URL of the Aussie Gold stock page is http://www.the-privateer.com/goldprod.html

Some related musings:

Aussie Reserve Bank made announcement of Gold sale at midnight local time. This is 10:00 AM EST in the U.S. and obviously timed to co-incide with market opening. Can you imagine the Fed or a major U.S. govt agency announcing a major policy move at midnight?

Re: Gold as an "investment" vs Gold as "insurance". IMO, everyone should own physical Gold - as INSURANCE against financial upheaval. If you don't own any, someone is holding a fire sale. Even if the price declines from here, you are getting financial insurance at a very cheap price.

Then there is Gold as an INVESTMENT. Here, you should treat it no differently than you treat any other investment. In fact, you should be more careful with Gold as an investment because of the manipulated nature of its price. RJ's posting ( Jul 4 1:30 AM ) gave a masterful account of how to TRADE gold - or anything else. The mere fact that he has been doing it since 1984 ( which, co-incidentally, was the year that The Privateer began publication ) is adequate proof that he knows what he's doing. If he didn't, he would no longer be doing it.

Re Gold bottoms: These are ever and always only recognizable *after* the fact. On my web page showing Gold bottoms back to 1976, the important "bar" on the chart is the one that *confirms* the bottom, not the one which *is* the bottom. The bar that confirms the bottom also confirms a trend change. If you look at the bottom charts - at http://www.the-privateer.com/g-bottom/g-bottom.html - you will see
that in every case, the downtrend has to be broken for a bottom to be confirmed.

That's what recently happened to the $A Gold price chart. The downtrend was broken ( on a P&F basis ) . The subsequent downmove all the way back to previous lows is unusual, to say the least, but it is just one more illustration that using Gold as a trading vehicle is a potentially very dangerous pastime. I probably shouldn't be, but I am constantly amazed by the number of people who e-mail me wanting to know my predictions of how low Gold can go and what its precise bottom will be. I DON'T KNOW - and neither does anyone else.

I am perfectly sanguine about Gold as insurance. Gold as investment? I'm perfectly happy to wait and see.

WW Your views are well-presented and taken. I cannot dispute that the ACB sale was previously in the market which may account for the market action, and that the Comex action at the end of the market close suggests it was premediated. For someone to lay off as many contracts as DA reported means to me that it was thought out in advance.

But I canot accept that this was done to protect financial and stock instruments, and gold cannot be allowed to rise in view of this. To take this position means that gold will never rise, and if that is the view, what will happen to gold when the shorts cover, as they will ultimately. Or will this expected rise also be prevented somehow. And who are these governmental surrogates that are willing to risk funds on behalf of the stock market and for the benefit of short players. And would not the same financial concerns be presented if gold were to collapse in price as being a sign of pending deflation as Steve contends and why would not the government support gold in view of this. Questions are just phrased to consider and not necessarily to respond to.

OOPS: My last should have read, January, 1980.

Stock market correction to begin next week. Cause: Louis Roukeyser is going on vacation. His vacations are a nearly perfect indicator. The only bear on his show tonight ( looking decidedly uncomfortable ) recommended shorting Homestake. oi vey

Auric - Re: Your 19:24 - WRONG! The #1 answer would be Five Three Two!

Vieserre: I agree with you and Peutz about eventual gold buying but lets look at the current situation. Wall St warehouses bonds/ Wall St receives fees for assets under management and from underwriting/stock transactions etc. The govt has more money to spend if interest rates are low, further incumbents tend to be re elected when there are alot of feel good stories generated by the stk mkt advance and not by hearing about slowdowns and bankruptcies which would be the stories if stk prices had other than a perfunctory declinre ( believe me it would feed on itself and create more bad headlines ) . RIGHT NOW the worry is about higher rates caused by either a weak dollar ( the econ weakness problem ) or inflation expectations and higher rates ( which will adversely affect the aforementioned's interests ) . So gold is a target. When DEFLATION is obvious they will have openly lost the strong econ argument and when it is in full swing they may buy gold. Talk of deflation is not there yet we are still conversing about low inflation as being good. This wont change until stks start to plummet.

MIKE HENRY: Are you there lurking? CNN now showing photos from Mars. End of 10K plated gold chain stretching to USA Shopping Mall is clearly visible! Congratulations on a great call!

George Cole ( Jul 4 19:51 ) George, the Aussie miners *are* mad as hell. So is the West Australian govt, the state where most mining and exploration takes place. BTW, the WA govt is the same party as the Federal govt.

I watched four separate newscasts on Oz TV last night and the gold sale was top story on every one of them. Has been top stories in the "quality" papers for two straight days now. One trader, interviewed on camera, pointed out the fact that the "income" from the bonds that the RBA is buying with the proceeds from the gold sale will all go straight into the govt. coffers.

I have in the past tried the experiment of asking "ordinary" people what they think the backing behind their currency is. In most cases, the answer is "Gold". The huge media coverage inside Oz of this action by the RBA is potentially very damaging to the govt. It will be interesting to see what public reaction - if any - is over coming days.

The Germans dont want to sell gold the Japanese talked about buying it/ They needed this timely announcement of old news!! The other spin had gold not collapsed might have been about its stability and the orderliness of the decline given huge CB sales and that the Aussie news was old and Japanese had actually mentioned buying ala Hashimoto. NEWS FOLLOWS PRICE/ CAPITAL FLOWS FOLLOW NEWS!!!.

Mooney @ 21:10-Yes sir, you are correct. Five-two- three it is!

Bill Buckler @21:23: Your comments regarding currency backing may be more relevant than they appear on the surface. Given the sorry level of financial understanding by the average citizen, it may be a widespread 'belief' that gold does indeed stand behind every one of those paper dollars. ..... The idea would make for an interesting survey.

Congratulations,America.Just watching the stunning pictures from Mars down here in New Zealand.Have completely forgotten about the Gold Price.

It's now old news that the Australian Central Bank sols a big chunk of gold. However, for every seller, there's a buyer. I want to know who bought that gold from Australia. Anyone have any ideas?

I'm not as poetic or knowledgeable as most on this site, and my grammer
stinks,so ( bear ) with me.... Being a Canuck who has experienced the 87 market and what I've seen the governments do in past years, I'm certain there is a rainbow going to appear after this monsoon is over. I've posted before , that Japan holds the cards in this game of economic warfare.But there is still a chance of Billy shooting himself in the foot!!Complacence is running wild on the Dow & TSE.
1987 x 5 IMHO

I see fireworks in the markets next week.

Perhaps the Australian Central Bank, sold all that stuff, to those in the 'interior', the aboriginals.

Steve Puetz-Re: Buyers of Gold--Good question. My guess is Soros, Templeton, Hong Kong, and possibly Japan's Central Bank. What are your thoughts?

Vieserre: The stock market wasn't a good leading indicators of the economy in 1929. Given the slew of indicators pointing to recession and deflation, it's not a good leading indicators this time, either. As Dr. Kurt Richebacher said in his latest letter: "The psychiatrists have a phrase for this type of behavior: the [stock market] patient is 'in denial' of reality."

Auric: First, the Boilermakers have a new football coach this year. You won't see them in the cellar anymore!!! Second, I think the buyer had to be a big buyer -- probably another Central Bank.

July 4th Barbecue warning. If you see somebody a little overweight/breathing heavily as they barbecue for kids and relatives and wife is yelling orders/ dont worry this is normal 4th of July response. If he is spewing anything about gold call 911 as emergency trauma care is immediately necessary. If in States avoid state hospitals and use private for this patient.

Steve Puetz- Them Wolverines and Buckeyes won't have it all to themselves in Footall this year. Neither will all them gold bears.

Mooney: Every picture I have ever seen of molten gold has had a red tint to it so the green is a surprise to me. Have never ever seen it poured. Live and learn. I did not want to use red on this thread as many of us have had bad experience in the red with the yellow metal of late. Just a play on words, I thot. What's wrong with those pictures?

STEVE PUETZ: Touche', as to the 29 market. As to whom the ACB sold to, wire reports I read speculate that a bullion bank bought it and has been feeding it into the market so as not to unduely affect price. Reportedly, this can easily be accomplished by such a bank. Your question deserves a broader answer. Who has been buying all the gold that has been sold by the shorts, hedgers, CB selling and leasees during the past year. Once gold is sold, the seller cannot sell it again. So who are the buyers and what are they doing with it. Seemingly, the sales are more than can be absorbed by fabrication demand and COT reported commercial net longs. Yet, one does not hear of "this side of the story".

My guess is that Green is not one of Kodak's favourite colours. ( But of course Silver is, as it is also one of mine! )

A SALUTE TO S. PEUTZ ( PITTS ) regarding his letter juxtaposing the economicl situation versus the financial situation. I have never seen anyone state it better and more accurately. If Steve is right it explains the frantic efforts to keep the bubble growing. Steve can we copy this for redistribution? You state the facts accurately and this is a useful piece in understanding the big picture. Thanks!

WW: Yes, you can distribute copies of my explanation of Economic conditions vs. Financial conditions. The only thing I ask is that you include my address with the distributed materials: The Steve Puetz Letter, 2800 Wilshire Ave., West Lafayette, IN 47906.

I am pleased to see that my most recent letter was such a big hit. This is the best response I have gotten in quite a while. A great number of people have thanked me for explaining this difference -- an important difference that they were unaware of.

CANADA SELLS NO GOLD IN JUNE

Ottawa, June 04 ( Reuter ) Canada sold no gold in June, the Finance
Department said Friday. Its holdings remained at 3.1 million ounces
as of June 30, the Department said.

The Canadian Government has a policy of gradually selling off its
gold reserves and replacing them with interest-bearing assets.

http://www.canoe.ca/MoneyNews/home.html

What is so complicated as to who are the players buying all the gold?
Gold perception is obviously manipulated.
Gold debasement is necessary to continue the equities Ponzie game.
Gold perception must be low, at all costs, to maintain the game a little longer.
So w h y can't these buyers SIMPLE be the same Central Banks, basically selling the same gold to each other, then giving truthfull and "timely" press releases of the amounts that were sold. I guess you could call this a "white lie" in comparison to the equities scam.

P.S. During the last year and a half, gold ALWAYS goes down the day after I buy ( really! ) , so I'll post next time I buy, and short like hell. ( This is just getting too depressing, bought another 400oz yesterday morning. )

Correction:
P.S. During the last year and a half, gold ALWAYS goes down the day after
I buy ( really! ) , so I'll post next time I buy, and *you had* better short like hell. ( This is just getting too depressing, bought another 400oz yesterday morning. )

6pak: I don't know the exact figure. But, in 1990, Canada had something like 20 million ounces of gold. Now they have 3.1 million. Essentially, they have no more gold to sell. The same is true for Australia, Belgium, and The Netherlands.

To George S. Cole, When Mr. Hashimoto complained that the US was not acting to stabalize its financial markets was he talking about the bond market or was he talking about the stock market. Everyone assumes he was talking about the bond market but perhaps he is worried about a financial collapse triggered by the over inflated US stock market. If he was, he would want the US to raise interest rates sufficiently to bring down the stock market. Recently the BIS issued a warning about the destabilizing effect of the inflated US stock market. What do you think?

No one can hit the bottom exactly. As long as your purchases are not leveraged, you will be happy with them in the long-run.

Gene: The question I ask is this: Who has a better understanding of stock market valuations, the Bank of International Settlements and Alan Greenspan ( who warn of over-valuation and irrational exuberance ) or the hords of baby boomers and Generation-X investors pouring into the markets?

Free Newsletter covering Gold Stocks.Just email us for FREE subscription
at gmr97@usa.net Visit our website at www.globalminerals.com
regards
GMR

Dear Kondrateiff students,

I appreciate so much, your discussion groups, and various web-sites, including: http://www.1-888.com/longwave/olafg.html; and, http://weber.u.washinton.edu/~krumme/207/development/longwaves.html .

I first re-learned of myself, Kondrateiff, in about 1972, or '73, most likely, thru a financial publication such as "The Bank Credit Analyst", or some other financial/economic/investment newsletter.

The collaborative update of my work, for this 20th century period, suggests that
either spiraling inflationary, or spiraling deflationary pressures are
about to take hold, not only in the U.S., but world-wide.

Furthermore, my current interpretation, is that the world, as you earthlings know it/experience it, is actually based on, and operates on,
a consistent cycle, or rhythm, or heart-beat, of 52 years.

One can take this number, and divide it by four, as in 4 - seasons, so to
speak. Then, it is possible to identify economic
"boom & bust" cycles: "boom" - being 'economic-spring & economic-summer'; and "bust" - being 'economic-fall & economic-winter'. It is also reasonably clear that various international, military, politcal, social, and cultural changes/periods -- of expansion; contraction/stasis/staus-quo; and turmoil/upheaval; also tend to concentrate, or turn, on or near, these important 'turning-point years' ..... give or take a few.

The proverbial turning-point years, and cycle periods, for this
century, according to this perspective, are as follows.

spring: 1890 - 1903
summer: 1903 - 1916
fall: 1916 - 1929
winter: 1929 - 1942
spring: 1942 - 1955
summer: 1955 - 1968
fall: 1968 - 1981
winter: 1981 - 1994
spring: 1994 - 2007

Bear in mind that these "turning-point" years, although useful, and
perhaps 'verifiable' by major events that coincide, or almost coincide,
with them; it is important to allow for the 'rubber-band-effect', or
the 'accordian-effect'. This flexibility will thus include the possibility that history, does not always, turn on your dime,
so to speak.