Auric, They will lead all paper down, but not to it's death. The sell off will look like "87" where bonds trade 70 to par value. Things will slosh around for a while, but the U.S. will have a new international problem that will lead us into more debt. Balancing the books into the future right now means squat, but it's a good start. 2002 will lead us down the road another 10 years before it becomes reality. By then we would have seen gold, stocks etc. come and go.

Goldfinger @ 00:12-- Thanks. I think you will agree that big economic upheavals are underway. The question is how well will the damage be contained? My guess is that events are starting to get out of hand. It is going to take a sh**load of Dollars, D-Marks, and Yen to get us out of this looming deflationary spiral.

Dollars and D-Marks and Yen, oh my! What would you advise I do with my Aussie Gold Stocks, eh?

goldfinger; While $250 seems a tad on the low side, I don't discount the markets ability to drive gold prices lower still. A drop to the "sub-300" level would actually be beneficial for us "bugs," producing a more volatile upside for the eventual reversal. I also don't agree with your statement that ( i.e. equity ) markets would have to be in trouble for gold to fall below 300.

I'm hoping we'll be testing the 300 support soon, rather than languishing for a few years bouncing between 315-340, the dreaded alternative action. Every day the negativism here ( on the Kitco forum ) grows stronger, as evidenced by a gold investor ( bug ) here referring to gold as "crap" a day or two ago. But there is room for further growth of bearish sentiment, and I don't see a huge reversal til a few more bulls have been shaken out. It seems the natural course of things, especially since we're working on an 18 year downtrend . . .

We're approaching the next test at 313-314 levels, I'll watch for a penetration to 300, then resume a careful watch for what might prove to be a true bottom at . . . perhaps 280??

"Until the trend changes, we're simply observers."

Best Regards, Niner

I got it! We've been debating INflation vs. DEflation. I am here to tell you, what we have now is INDEflation. Sort of like stagflation, only worse. Trust me! :- )

Selby I was going to give a great explanation, but hell, reality
suggests, the vast majority of Canadians, surely do not give a damn.

Soooo, it is Free Trade agreements, that will keep the dollar down, and
the interest rates up, and the standard of living down, and the unemploy-
ment up, and immigration up,and that will be just a normal happening.
Wages down, part time work up, social benefit cuts will be up, etc,etc,
Continued manufacturing shut downs, and wage cuts, blue & white jobs.

The raw resources of Canada are required at a discount, by USofA.
The free trade agreements require canadian dollar, no more then
.80 Cents. via, back room deals, etc. etc.

MAI ( Multilateral Agreement on Investment ) is next to happen, example:
"No sovereign government ( for next 15 years ) would have the right to
give any regulatory advantage to the firm that are based in that
governments' own country "

Remember the promise by liberals to do away with free trade, they are
involved with the MAI agreement, negotiating queitly, less said, is best.

Inflation, Inflation, Inflation, is the suggested future. O Yea !

6 Pak: I agree with your point about Canada ceding National Sovereignty to a "Trade Treaty". My guess is that such a Treaty is contrary to the letter and spirit of Canadian Constitutional Law.

Here is a copy of the Canadian Constitution: http://www.canoe.ca/InDepthUnity?const_1982.html

Well, that's 400% rise in REAL money, not this crap money
that's being printed. I'd say the real increase is similar. : )

Japan is *finally* flaming on. God, that's great. : ) 10,000
Korean bankruptcies. Man, oh, man, the whole REGION is about
flame big.

I don't think Sam can fix *this* one. How much lower can
he drive short-term rates? 2%? It's obviously futile, since
virtually 0% rates didn't buy the Japanese buy three or four
years. Not even one presidential cycle. : )

Try this for Canada's Constitution: http://www.canoe.ca/InDepthUnity/const_1982.html

"That Japanese life insurance story is the worst news I have posted since I found the Kitco site. How can this kind of news possibly be ignored by the gold market? The stock market?"


If bad news really existed, the television would
have told us so.

Half a league, half a league, half a league onward, Into the Valley of Death rode the six hundred. Cannons to the right of them ( BOOM! ) Cannons to the left of them ( BOOM! ) Volley'd and thundered! Into the jaws of death rode the $600.

For DJ -
Wow thanks a lot for clearing me up. I was confused.
And I had missed the earlier post on the "international
platinum guild" - who I never heard of. They sound sort
of medieval. Perhaps they came to the meeting from a past
life via a time warp. Were they dressed in funny clothes??
Anyway, maybe Japan is taking all the platinum in RSA
from GM and Johnson M at low set prices - anything is
possible. Particularly with time warp people.
But I think the chance of that being true is less than
0.0000001%.
Moreover plat stocks here are not acting that way.
Place to be was lebowa which I had ( price 2.7 to 3.5 ) -
sold ( 4.5 ) - bought back ( 4.5 ) . Now 4.95.
Also northam which I bought around 2-2.2 and now 3.
Now buying impala because its so cheap.
This not hero genius story as these gains do not
offset my losses in RSA golds by long shot. But they
help.

goldfinger @ 00:12-- I remember the "Crash of '87". We will have some disruption similar to that in the near future. We are overdue, IMHO. Good Luck!

To All
Some info on RSA that may be of interest.

1. Platinum/palladium ratio. Generally the ore from
RSA yields PGM in the ratio of 4:1 platinum to Palladium.
Russian ore and US ore ( what there is of it ) yields
4:1 palladium to platinum. Since platinum is generally
higher value than palladium, at the same grade level,
RSA ore is more valuable

2. some production and cost data folows on Rusplat,
leplat and pp-rust in format tons milled, grade ( gm/ton )
cost ( R/ton ) and platinum production.

Rusplat,16.75Mtons,5.3gm/ton,200 R/ton, 1.506 Moz.
pp-rust, 3.25 Mtons,4.3 gm/ton,159r/ton,0.158 Moz
lebowa , 0.93 Mtons,5.0 gm/ton,256 R/ton,.085 Moz.

Thus I make the cost in $/oz for the above mines to
be Rusplat $260/oz, pp-rust 255$/oz, and leplat $350
per oz.

3. News of Noble Max the Gorilla of the Joberg Zoo.
You will recall the citizens arrest made by
Max a few weeks ago. Turns out the man he nailed
is also wanted in other cases including armed
robbery and rape. There is a strong rumour Max will
be brought in to head the Brixton robbery unit.

4 Cosatu strike action. As you make recall, cosatu
had planned to bring the country to its knees via
a rolling action campaign of strikes. Well the
campaign was scaled back to a one hour work stoppage
on Monday last. Management did not notice anything
happening as event coincided with tea break.
Cosatu seems to be losing its grip at a rapid rate.
Rumour next rolling action will be 5 seconds of
sticking your tongue out at your boss

Ford to cut Taurus prices 7.8% in Japan.
( Stocks up 178, No reference to the insurance problem that I can find. The earlier report came from Financial Times in London )

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

Japan changes law to permit perpetual bonds. These issues are expected to be popular with life insurers.

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

Thailand Moves to Stem Deposit Run, Offers Guarantees

Thailand's top financial officials appealed on national television for the public to stop a run on
eposits they said threatened to topple the country's financial system. ``People have to be
confident,'' said Bank of Thailand Governor Chaiyawat Wibulswasdi. ``Don't panic. Don't
withdraw.'' The government guaranteed deposits in banks and finance companies, in an effort to
shore up confidence a day after it shut almost half the country's non-bank lenders.

Markets
Caught Off
Guard as
BOT
Suspends 42
Firms

Business Day
Welcomes your opinions or
suggestions.


THE Bank of Thailand's ( BOT )
decision to suspend the
operations of 42 ailing finance
and securities companies in
addition to the 16 that were
suspended last month caught the
markets by surprise yesterday,
with stocks taking a nosedive
and the baht softening.

The announcement resulted in
hectic sales on the stock market
as it added to worries over the
already troubled finance sector,
prompting the Stock Exchange
of Thailand ( SET ) to halt trading
in the banking and finance
sectors for a brief period.

The benchmark composite SET
Index shed 15.35 points, or
2.31 percent, to close at 648.47
points on 6.653 billion baht
turnover.

While the finance sector closed
down 5.78 percent, the banking
sector lost 2.49 percent.

The SET-50 Index slipped 1.29
points to 49.14.

The baht, meanwhile, fell to
31.70/32.00 to the dollar near
the close in the domestic market
compared with 31.20/31.40
baht in early trade.

In the offshore market the local
unit was traded at 31.25/31.45
to the dollar late, unchanged
from early morning trade.

The one-month baht/dollar swap
premium was at 12/16 satangs
per dollar in the domestic
market and 10/20 satangs in the
offshore market.

The overnight Interbank rate fell
to 9-11 percent in late trade
from 13-14 percent in the
morning on an expected rise in
banking liquidity following the
suspension of 42 more finance
companies.

Of the 42 finance firms whose
operations were suspended
yesterday, 17 are listed on the
SET.

Following the central bank's
announcement, the SET
authorities posted an "SP" sign
against these troubled
companies. They will continue to
remain suspended until their
rehabilitation plans are approved
by the special committee on
merger of finance firms.

These 17 listed companies are:
Thai Financial Syndicate ( TFS ) ,
Nithipat Capital, Bangkok
Investment, Thai Thanakorn
Finance ( TTF ) , Thaimex
Finance and Securities ( TMF ) ,
Siam City Credit Finance and
Securities ( SCCF ) , SCF
Finance and Securities ( SCF ) ,
Multi Credit Corporation of
Thailand ( MCC ) , Poonpipat
Finance and Securities, Ekkapat
Finance and Securities, Sri
Dhana Finance ( SDF ) , Cathay
Finance and Securities, Krung
Thai Finance and Securities,
Wall Street Finance and
Securities ( WALL ) , Pacific
Finance and Securities
( PACIFIC ) , Kiatnakin Finance
and Securities ( KK ) , and
SITCA Investment and
Securities ( SITCA ) . .

Commenting on the central
bank's announcement, an analyst
at Ekachart Finance and
Securities said: "Although it
could make investors jittery in
the short-term, resulting in a run
on deposits, it is a step in the
right direction."

"It could even frighten
depositors who have deposited
their money with finance firms
which continue to operate and
could result in their switching
deposits to bigger banks," he
add ded.

Asia Securities Trading ( AST )
analyst Chai Jirasevenuprapun
noted that investors did not
react much yesterday because
they were already aware of the
problems plaguing the finance
sector.

Mornin everyone!...Well,we came back a little overnight as EBN gold is now only down 1.40 and silver is @ unch....

Malaysian Prime Minister asks banks to lower interest rates.

http://www.jaring.my/~star/current/06zpms.html

Hello Ted: Going to be sunny in a few minutes, 60F now. Can you spare a couple of bucks for your brother in Thailand? His bank may be closed. Something about a run?

Mornin Donald! It's supposed to clear later in the day here...Am out of touch with my X lawyer brother in Bangkok and since he's been investing his and others money on the SET,I doubt he had much money to lose in the bank....

Good afternoon JIN!...We are getting OUR wish.....Happy trading!

Japan says rapid FOREX moves are undesireable.

http://biz.yahoo.com/finance/97/08/06/z0009_29.html

Am off ta read the WSJ.....WAKE UP TORT!...and give us a good one...

DA: Appreciate the info re: who is doing the buying and selling. With producers starting to cover hedges again, the shorts will indeed have a tough time pushing prices much lower for any sustained period.

The magnitude of the 18-year gold bear has been much greater than most realize. The yellow has dropped from $850 in 1980 to $319 currently. But the CPI has risen over 50% between 1980 and 1997. Consequently, the price of gold in constant 1980 dollars is around $150. $850 to $150. Something for those expecting further big declines to think about.

Gold and stock action continue to mirror each other very closely. Anyone who is long-term bearish on gold has got to be long-term bullish on stocks and visa versa.

Analysis of Asian Banking System by FRB, San Francisco Branch 8/1/97
http://biz.yahoo.com/bw/97/08/01/y0004_y00_4.html

The poce of gold in constant 1990 dollars is closer to $200 than $150. But the point remains the same -- the drop in constant dollars has been enormous.

D.A. ( 23:06 ) Thanks for the post!...The dollar continues to surge and is now @ 1.8898 versus Mark....Nikkei and Hang Seng were up...ditto Europe ( so far ) ....

Mooney ( 22:55 ) One of these days I'll get off my "near miss" to ya...Good mornin George!....EBN Gold down 2.0 .....could we be going down to test 300???...Markets love those ROUND numbers...eh...

Buy International Pursuit, Java Gold, and North American
Palladium .

NINER, thanks for your comment. thank you too AURIC . I believe if gold drops out of bed the equities don't have 4 legs to stand on. Defaltion will kill stocks if it buries gold. One or the other has to move. Gold up and equities can still run, but knock the wind out of gold totallly and equities will collapse or gold will have to rise very quickly.

MOONEY, your comments appreciated. Thanks!

Got your incoming Ted and responded in kind. It looks like another sour day in gold and silver explaining once again why the human breast is so durable; so that we can beat upon it at times like this and howl at the moon. Ted, you may wonder why excrement occurs. Well, here is the straight scoop.


THE PLAN

In the Beginning was the plan.
And then came the assumptions.
And the assumptions were without form.
And the plan was completely without substance.
And the darkness was upon the face of the workers. And they spoke
among themselves saying: "It is a crock of sh_t, and it stinketh."

And the workers went unto their supervisors, and sayeth:
"It is a pail of dung, and none can abide the odor thereof."

And the supervisors went unto their managers and sayeth unto them,
"It is a container of excrement, and it is very strong,
such that none can abide it."

And the managers went unto the directors and sayeth, "It is a
vessel of fertilizer, and none can abide its strength," And the
directors spoke amongst themselves, saying one to another: "It
contains that which aids plant growth, and is very strong."

And the directors went unto the vice presidents and sayeth to them,
"It promotes growth, and is very powerful."

And the vice presidents went unto the president, and sayeth unto him,
"This new plan will actively promote growth and efficiency of this
company, and certain areas in particular."

And the president looked upon the plan, and saw that it was good.
And the plan became policy.
And this is how sh_t happens.

Re-joke: How true!...The mailman must be on a donut break or Willy chased em off as no mail...yet!....Things move slow here in "Jamaica North"...S+P futures down .15...yawn.....fog still thick but sun through the weekend is on the way....

Here you are David!

From the Elliott Wave website. The RP response will be my next post.
August 4, 1997
Mr. Prechter: In your book, At the Crest of the Tidal Wave, you forecast a
severe deflationary period ahead with declining gold prices below $200 per
ounce. This was expanded upon in Peter Rehmer's July 11, 1997 Special
Report entitled "Gold Speaks: `Deflation!'"

In the July 1997 issue of Strategic Investment, James Davidson said, "Gold
has been the ultimate source of liquidity in the world since the days when
Croesus was King of Lydia. Deflation is a consequence of a liquidity
draught. Gold, itself, therefore, does not necessarily suffer in deflations the
way other commodities do. As Lord Rees-Mogg and [Mr. Davidson]
document in The Great Reckoning, the price of gold has tended to rise in
deflations. Disinflation, or falling rates of inflation, do not trigger a
significant demand for gold. But deflation will. The more severe it is, the
greater the value gold will command."

In At the Crest, you also said, "The coming contraction in credit will cause
a rise in the value of all dollars that are not destroyed in the process. When
a corporation's junk bonds are declared worthless, when a government's
bonds drop in value, when a stock portfolio falls, when real estate becomes
illiquid, dollar-based purchasing power is rapidly removed from the system.
The demand for dollars will increase, as debtors facing insolvency will sell
anything and everything, even strong assets, at fire sale prices to raise
cash to keep from going bankrupt."

How do you reconcile these two views? I will pose the same question to
Mr. Davidson at his site http://www.strategicinvestment.com --G. Wallace

Good Morning All!
I don't know if this has been mentioned here or on Kitco 2 but sad news was relayed to me yesterday by Kitco participant and fellow Flag shareholder Ali. The wife of Mr. Murdo Mcleod, president of Flag Resources passed away on Monday Aug. 4. I know I speak for all here and especially all Flag shareholders who have come to know of the man when I express our deepest condolences to Mr. McLeod and his family for their loss. In honour of Mrs. McLeod I post the following:
"We make a living by what we get. We make a life by what we give."
-----Winston Churchill

Response from RP.
I have utmost respect for Jim and Lord Bill, but the two views you describe are not
reconcilable. Deflation occurs in a particular purchasing medium. If the dollar
deflates, it will go up in value generally against everything. If gold is to be an
exception, then there has to be a VERY good reason for it. There may well be.
But if you think a dollar deflation is coming and you are correct, you WILL do well
by holding safe dollars. You MIGHT do far worse or far better holding gold. Now
you are speculating twice. --RP

Mooney: Mornin!...Great Churchill quote....

To David ( formerly Prince....um....um...I mean FRONT ) ...Here it is again!

George Cole - Re Your 6:49. This is exactly why I believe that RJ's $275 is not going to happen. I find it amazing that we've even come this low in the year 1997! If the second shoe does drop it must prove to be one of the greatest buying ops of the 90's! Can anybody give us the current gold ( and/or silver ) price translated into constant 1974 dollars?!!!!??

All:

The economic clock is begining to run much faster and governmental action is becoming more clear. Today's news is highly illustrative of the trend. First, while not yet definitive it appears that someone may have an inside track on the bank of Englands rate meeting. The pound is getting pounded and has fallen 4 pfennigs against the DM and better than 2.5 cents againts $US. The bet is that the BOE will not raise rates because the strong currency is hurting their export oriented manufacturers.

The Germans on the other hand are quite content to sit with their rates at 3% as evidenced by a large injection of liquidity into the banking system. With unemployment still rising in Germany the political cover for inaction on the rate front is strongly in place. It is interesting to note that a lot of the focus in Germany is on unemployment, even at the central bank level. What is interesting about this is that central banks are supposed to set monetary policy based upon forward looking data because monetary policy acts with such a long lag time. Employment figures are lagging indicators of economic health. Nothing like navigating by looking at the rearview mirror.

As Donald has been so kind to point out we have a new law in Japan which allows for perpetual bonds. Look for more laws like this in the near future. Also look for governments strapped by high debt to convert their paper into perpetual bonds. This will be part of the workout. It is unlikely that participation in these conversions will be voluntary for the bond holders.

All of this activity points to the same thing. The deflationists are right in that debts defaults are occuring. The remedy however is clear. When in doubt create more money. The money engine will run hotter and hotter until every place with a debt problem has it papered over.

Inflation is defined as excess paper compared to goods and services. The excesses are mounting at a torrid pace.

In Malaysia we have a call for Bank Negara to reduce short term rates. At the same time there will be some stupid attempt not to let speculators sell the currency short, by banning loans which are not related to trade or commerce. When will they learn.

George Cole - Re Your 6:49. This is exactly why I believe that RJ's $275 is not going to happen. I find it amazing that we've even come this low in the year 1997! If the second shoe does drop it must prove to be one of the greatest buying ops of the 90's! Can anybody give us the current gold ( and/or silver ) price translated into constant 1974 dollars?!!!!??

Sorry for double emphasis George. My internet connection failed just as i hit submit, and when I turned back on it must of resubmitted on its own. Gold/Silver in constant 1974 dollars, anyone?

All:

Cutting and pasting is hazardous to composition. That Malaysian paragraph somehow crept down to the bottom.

1.Stocks, PE ratios and dividends yield are at all time high.
2.Margin Debt at all time high.
3.Inflow of funds, is slowing, as the "vacuum cleaner" has sucked it all in. Foreign funds will slow due to currency devaluations and higher risks.
4.US DEBT at all time high
5.US Consumer Debt at all time high
6.US trade balance deficit growing with China & Japan
7.Earning growth slowing, as it was fuelled partially by restructuring and lower interest costs, when compared to previous periods.
8.Technologies companies need to reinvest in cap. Ex. = increase borrowings.
9.US exports slowing to high US $
10. Europe and Asia's inflation aiming higher
11.US skilled labour wages aiming higher due to shortage
12.EMU uncertain & weak at best. Unemployment in Germany and France at historic high or close to it.
13. Asean economies in shambles. Debt defaults increasing.
14. China factor. Trade balance and major holder of US Treasury bonds. Becoming "troublesome" to deal with, as it is becoming increasingly more powerful re Hong Kong annexiation ei ) Military, Taiwan,
15. South America economies fragile. Lookout if currency devaluations spillover in that region.
16. El Nino could be "catastrophic" in some regions, if levels of 1982-83 occurs.
17. Clinton attacked 3 prongs. The weaker ( Campaign Contributions ) has him as he has broken the law by using the White House. Paula Jones & Co. could be fastidious. Whitewater still not over.
18. Low Interest rates, which is a PREREQUISITE FOR THE NEW ERA is difficult as Treasury Bonds require to be rolled over and not going to be bought by foreigners at low rates.
19. Unexpected domino's.
20. GO GOLD!

Comex: Gold down 1.20; silver up 2 cents; and PL down 15.60....

60% of SA mines unprofitable at current prices and 80% if gold goes below $300. Do these figures look O.K., John Disney?














SA'S gold mines need the same
survival instinct as politicians




THE local gold mining industry is about to demonstrate whether it has the same
instinct for compromise and survival as the nation's politicians.

The choices are similarly stark. Either come up with a new deal, or face
continued decline and near-certain disaster.

Given that SA possesses about 40% of the world's gold reserves, that sales account
for nearly 20% of export earnings and that up to 2-million people are dependent
on the industry, failure to adjust appears unthinkable. But the high-cost,
deep-level mining industry with its antiquated working practices has been
postponing radical reform for years.

Costs have climbed as the richer seams have been worked out, wage demands have
been conceded without any compensating productivity agreements and few rigid
working practices have been eased to reverse the entrenched hostility between
essentially black labour and white management.

When the gold price topped $800/oz, such practices were scarcely relevant. Even
at $380-$400 the need for reform was not supported by much sense of urgency.
But at about $325, the level at which the metal appears to have stabilised
following its precipitous fall this year, analysts claim at least 60% of mines are
not sustainable. The most alarming of analysts' price projections - gold dipping
below $300 and staying there for an extended period - would leave just 20% of
the country's mines operating profitably.

It is against this background that mine managements and the National Union of
Mineworkers are seeking to complete the details of the industry's first ever pay
deal directly linked to productivity.

Mine managements spent five months working out a proposed deal which was put
to the union last month. It provides for pay rises of up to 25% over each of the
next two years for the lowest paid, while most miners will receive two annual
increases of 9%-10%.

In return, the union pledged to increase output 90 tons in the year beginning last
month, reversing the trend which has seen production decline steadily to the point
where last year it hit a 40-year low of just 495 tons. While mine owners have
agreed how the 90-ton increase will be apportioned among them, the fact that
Gold Fields of SA, the country's second largest producer, is aiming to provide
more than 50% of the increase makes the key the agreement with unions at local
level.

Without that, the pay increases will not be met.

Managements have so far reported uneven progress. Nick Segal, president of the
Chamber of Mines, said this week there had been good progress in some
negotiations, but others were experiencing difficulties.

"The picture is uneven," he said. "We are continuing to review the position with
the National Union of Mineworkers and hope a clearer picture will emerge later
in the week."

Anglo American, the world's largest producer, said it needed to achieve a 5%
increase in production just to cover the pay rises.

But Bobby Godsell, the head of Anglo's gold mining operations, warned last week
that productivity agreements would take time to achieve because the battle was to
change decades of confrontational industrial relations.

Although the shape of productivity deals will vary from one mine to another, a
common theme in raising output is the extent to which agreement can be reached
on extending the working year.

The tradition of not working Sundays, every other Saturday and public holidays,
costs the industry 90 days a year.

Some production targets might still be met without changing that pattern, but
most managements believe union flexibility is critical to the survival of marginal
mines.

The government is watching nervously. When last year Anglo American said it
might have to dismiss 10 000 miners, Labour Minister Tito Mboweni stepped in
immediately to demand the withdrawal of the threat.

The crisis was postponed but since then, the risk of redundancies has increased,
economic growth has slowed to little above 2% and the government is failing to
meet an increasing number of macroeconomic targets, particularly in job
creation.

Reserve Bank governor Chris Stals has sought to play down the effect on the rand
of a lower gold price. He said that even if gold remained at $320/oz for a full
year, the loss of foreign exchange earnings would be less than 3% of total
exports.

"Relative to the volatility of net capital movements, the amount should not create
any undue pressure on the rand exchange rate," he said.

But with Stals also under pressure to cut interest rates to ward off the threat of
recession, failure to finalise the gold mining deal would send further negative
signals to the currency markets.

The present weakness of the rand suggests that even more may be riding on the
gold mining negotiations than the industry on which SA was built. - Financial
Times.




















SA'S gold mines need the same
survival instinct as politicians




THE local gold mining industry is about to demonstrate whether it has the same
instinct for compromise and survival as the nation's politicians.

The choices are similarly stark. Either come up with a new deal, or face
continued decline and near-certain disaster.

Given that SA possesses about 40% of the world's gold reserves, that sales account
for nearly 20% of export earnings and that up to 2-million people are dependent
on the industry, failure to adjust appears unthinkable. But the high-cost,
deep-level mining industry with its antiquated working practices has been
postponing radical reform for years.

Costs have climbed as the richer seams have been worked out, wage demands have
been conceded without any compensating productivity agreements and few rigid
working practices have been eased to reverse the entrenched hostility between
essentially black labour and white management.

When the gold price topped $800/oz, such practices were scarcely relevant. Even
at $380-$400 the need for reform was not supported by much sense of urgency.
But at about $325, the level at which the metal appears to have stabilised
following its precipitous fall this year, analysts claim at least 60% of mines are
not sustainable. The most alarming of analysts' price projections - gold dipping
below $300 and staying there for an extended period - would leave just 20% of
the country's mines operating profitably.

It is against this background that mine managements and the National Union of
Mineworkers are seeking to complete the details of the industry's first ever pay
deal directly linked to productivity.

Mine managements spent five months working out a proposed deal which was put
to the union last month. It provides for pay rises of up to 25% over each of the
next two years for the lowest paid, while most miners will receive two annual
increases of 9%-10%.

In return, the union pledged to increase output 90 tons in the year beginning last
month, reversing the trend which has seen production decline steadily to the point
where last year it hit a 40-year low of just 495 tons. While mine owners have
agreed how the 90-ton increase will be apportioned among them, the fact that
Gold Fields of SA, the country's second largest producer, is aiming to provide
more than 50% of the increase makes the key the agreement with unions at local
level.

Without that, the pay increases will not be met.

Managements have so far reported uneven progress. Nick Segal, president of the
Chamber of Mines, said this week there had been good progress in some
negotiations, but others were experiencing difficulties.

"The picture is uneven," he said. "We are continuing to review the position with
the National Union of Mineworkers and hope a clearer picture will emerge later
in the week."

Anglo American, the world's largest producer, said it needed to achieve a 5%
increase in production just to cover the pay rises.

But Bobby Godsell, the head of Anglo's gold mining operations, warned last week
that productivity agreements would take time to achieve because the battle was to
change decades of confrontational industrial relations.

Although the shape of productivity deals will vary from one mine to another, a
common theme in raising output is the extent to which agreement can be reached
on extending the working year.

The tradition of not working Sundays, every other Saturday and public holidays,
costs the industry 90 days a year.

Some production targets might still be met without changing that pattern, but
most managements believe union flexibility is critical to the survival of marginal
mines.

The government is watching nervously. When last year Anglo American said it
might have to dismiss 10 000 miners, Labour Minister Tito Mboweni stepped in
immediately to demand the withdrawal of the threat.

The crisis was postponed but since then, the risk of redundancies has increased,
economic growth has slowed to little above 2% and the government is failing to
meet an increasing number of macroeconomic targets, particularly in job
creation.

Reserve Bank governor Chris Stals has sought to play down the effect on the rand
of a lower gold price. He said that even if gold remained at $320/oz for a full
year, the loss of foreign exchange earnings would be less than 3% of total
exports.

"Relative to the volatility of net capital movements, the amount should not create
any undue pressure on the rand exchange rate," he said.

But with Stals also under pressure to cut interest rates to ward off the threat of
recession, failure to finalise the gold mining deal would send further negative
signals to the currency markets.

The present weakness of the rand suggests that even more may be riding on the
gold mining negotiations than the industry on which SA was built. - Financial
Times.

RJ - Where are you man? You asked for my words and I gave them to you at yesterday at 9:52 ( Aug. 5 ) . Haven't seen you since. Still looking for a good dictionary?

Time for a trip to Sydney.....looks like strong start for paper and weak one fer gold etc....BBL dudes!

Looks like another exciting day... for paper. Well, it's of to the beach. I think it'll be more 'exciting' there than here. :- ) )

BBML

Jeeez! Talk about bad spelling! How about this, it's off to the beach! Now I know it time to go!

Donald- re:Japanese Life Insurance being bad news. The sheep have no idea how to make an independent assessment of anything. Please indulge me this real life example: I used to work for a division of an insurance company, whose President was obviously ( to me ) obtuse. It boardered on the absurd. But he was a community hero and everyone bought into the image he created.That is, until it was revealed that he had no college degree, and many other aspects of his resume were ficitious. He was quietly removed, and the beat went on. Instead of being condemed in the local media, he was viewed as a victim of everything that could cause a man to be a massive fraud. And no one questioned the record earnings he had been reporting the past several years. I quit many months before b/c of the earnings situation, as did many of my colleagues, but of course the company's stock has down nothing but rise. Bad news simply does not exist in these times.

The strong dollar has the effect of harming domestic manufacturers by having to compete domestically with imports made with cheaper labor and internationally with higher priced products. This should encourage off-shore manufacture, a reduction in domestic capacity, and a reduction in employment. Yet the stock market is predicting greater profits and domestic employment is the highest in 24 years.

The strong dollar has the effect of harming domestic manufacturers by having to compete domestically with imports made with cheaper labor and internationally with higher priced products. This should encourage off-shore manufacture, a reduction in domestic capacity, and a reduction in employment. Yet the stock market is predicting greater profits and domestic employment is the highest in 24 years.

Oz Central Bank sale seen as mistake. BUT CB's gold tonnage remains stable.
http://www.btimes.co.za/97/0720/news/news8.htm

John Disney - Thanks as usual for your information. You are a gem ( nugget? ) . FYI, Stillwater also runs close to a 4:1 ratio of palladium to platinum. However, its average head grade is about .7 oz./ton, which my calculator says is equivalent to 22 grams/ton. Should be worth much more than any of the RSA ore, even though the ratio is reversed.

Vieserre: Good point. As I see it this paradox can be explained as such. The world-wide flood of liquidity, which is being produced by almost all the economic powerhouses, has stimulated demand such that there is work for all. Without the flood of imported labor this country would now have 10%+ inflation even with the phoney cpi. The increased margins from this imported labor enable record profits. Alas as all these good things are being paid for on the cuff, tis all ephemeral.

Donald, Who Cares and WSF: Very interesting. I will send my comment later. I need ten free minutes.

All:

Seeing that during the daytime there are fewer of us regulars here, here's my chance for posterity:

Daughter: Dad, what the definition of BIGAMIST ?

Me: That's when a man marries more than one wife honey.

Daughter: No it's not dad!

Me: Eh?

Daughter: It's a heavy fog over Italy ..... ( Pause ) BIG a MIST !

TTFN

Daytraders. Look at Bart's Platinum graph. Could it be that the traders who went short yesterday around 10 A.M. are doing the reverse today, ( again almost exactly at 10 A.M. ) , covering and/or going long, thus making HUGE one day profits?

I dont know how things get turned around so. To clarify the following from 8/4/97 21:08:

I had an interesting meeting with the Platinum Guild International a couple weeks ago. Regarding South African producers being hedged:
There is a rather complicated formula for platinum deliveries to Japan, but almost all of the next five years platinum production in South Africa is already sold to the Japanese auto and jewelry industries. Although this metal is effectively already purchased, the delivered price is not inelastic. This is one reason the Russian deliveries would seem to play a more important role than the 15% - 17% of total production which these supplies represent.
There is no real lid on platinum prices. The use of platinum is quite small on a per product basis - excepting jewelry - that the price of platinum could double without significant price increases in the final products.



-This would appear to say that SA platinum commitments are in place for the next five years and , through a "rather complicated formula", the delivery price varies. This variance will have a smoother curve than the market as average spot price over the last few months is a major variable is figuring delivery price.. I dont know where anyone reads that here SA mines are delivering PL at a set price. Quite the contrary, "there is no real lid on platinum prices."

This is one of the reasons I am getting frustrated here. I write one thing, then see its meaning turned 180 degrees in less than 24 hours. Maybe it all "came to some young trader perhaps in a dream or maybe while he was dozing off in the bath tub."

Platinum Guild International is not nearly as lofty as it sounds. This is a New York based cheerleader for platinum headed by Jaques Luben @ 212-758-6767. I have found, over the years, that Jaques has a keen strategic knowledge of the international platinum market. Jaques tireless efforts to promote platinum as an investment vehicle were instrumental in the convincing the US Treasury to introduce the US Platinum American Eagle. Although the first one ounce proofs sold for $695 each, I couldnt resist buying one. I might have cost almost twice what the metal was worth, but it sure is pretty.

I will try to respond to some others soon. Been a busy couple days. Took a lot of profits in PL yesterday and silver the day before. I wish now that I had taken profits on more than I did. Hindsight is 20/20.

"The current gold price level threatens the profitability of gold producers, particularly in Australia and South Africa. Gold Fields Mineral Services' publication, Gold 1997, indicates that worlwide cash costs and total costs averaged $262 and $317 per ounce in 1996. In 1996, Australia had the highest production costs, followed by South Africa. Combined, these two countries accounted for 784 tonnes ( 33% ) of gold production in 1996. At current prices, approximately 50% of Western world production in 1996 would be unprofitable on a total-cost basis and 25% of production would be unprofitable on a cash-cost basis ( Gold 1997 ) ."


1996 - Gold Production Costs ( weighted average costs in US$/oz. )

South Africa - cash costs $293, total costs $334
USA - cash $237, total $300
Australia - cash $294, total $358
Canada - cash $222, total $282
Other ( not specified ) - cash $219, total $297
Total Average - cash $262, total $317

----------------------------end quote --------------------

Eventually, the laws of physical demand and supply will overtake the speculative paper management of gold prices.

Cheers

BW I agree with you in that the world is flooded with liquidity. Governments have it great. They can print and print and there is no inflation because the printed money goes into the equity markets, not consumption. The only thing inflated is the equity markets. The governments can run and pay their debts by printing paper which goes into the equity markets. As you have said this cannot last forever.

I continue to nibble at the Junior Gold stocks. Latest aquisition was Vista Gold. I am not wealthy except in spirit ( maybe that is all that counts ) so that when I have extra cash I buy a Junior Gold. This bear market in gold has given me a great buying opportunity. Have a great day bw.

Japans divesture of $US assets will lead to collapse in US bond market, devaluation of US dollar & increase in gold price. Insightful and prophetic. Guest Guru Milhouse:
http://www.gold-eagle.com/gold_digest/milhouse728.html

to all .Check out BYG natural Resources trading on Toronto [SymbolBYG]
Should make 30 cents a share , at least , next year . Trading in the low
90 cent range . Any opinions on this one out there.

http://www.tampabayonline.net/news/news1000.htm

Wednesday August 6 10:46 AM EDT

London gold fixes off lows as complex corrects

LONDON, Aug 6 ( Reuter ) - Precious metals prices corrected slightly from their overnight falls on Wednesday afternoon but dealers said the tone of the markets was still uncertain.

``There is a lot of volatility left in most of these prices,'' one dealer said.

The exception could be gold which gave up its nascent rally from 12-years lows struck last month and seemed to be wedged between producer sell orders above the market and physical buying of the metal on the lows.

``Gold has seen some physical support today and seems to be bumping along its floor,'' one dealer said.

Gold was fixed at $319.35 per ounce up from $318.85 this morning and $321.10 on Tuesday afternoon.

On New York's Comex futures market, the most active December contract was showing a $1.20 loss at $323.40.

For spot gold, the 12-year low touched last month around $314.00 could be tested gain, according to some dealers.

In a commentary from Merrill Lynch Global Fixed Income Research, analyst Ted Arnold argued that a $300.00-$330.00 range would cover most gold trades to the end of the third quarter.

``Rallies will be increasingly seen as forward selling opportunities by producers, funds, dealers and central banks. The immediate downside objective is $300 basis spot. But after that the downside objectives become $280 and $250,'' Arnold said.

Meanwhile dealers said the strong dollar, and the continuing boom in stock and bond markets with little sign of inflation on the economic horizon gave no incentive to buy gold.

Silver picked up a couple of cents from its intraday low to be indicated at $4.36/$4.38, still down three cents.

Some dealers forecast further weakness for silver this week ahead of the Comex option expiry on Friday.

A downside target of $4.25 was being promoted for silver by the end of the week.

Platinum was indicated at $438.00/$441.00 down $9.00 but $12.00 above its opening level.

Platinum and its sister metal palladium had a wild time on Tokyo's Tocom market overnight when investor short covering pushed palladium futures limit-up for the sixth successive session before professional selling plunged the market lower.

``There is a lot of voaltility left in this market,'' one dealer said of palladium which was down $6.50 at $228.00/$231.00.

Gold stocks doing well today considering.

Mooney; This is just an estimate, but the current price of gold probably is around $100 in 1974 dollars.

I received the following E-mail today. Perhaps somebody here can answer this student's questions.


Date:
Wed, 6 Aug 1997 15:45:22 SAST-2
From:
"KUTTEL RW" KTTRIJ01@sonnenberg.uct.ac.za
To:
gscole@ix.netcom.com


Dear Sir
I am a South African student currently writing my finance thesis. I
am trying to obtain certain information and I would be very gratefull
if you could asisit me with this.
This information I require is as follows :

- What is the annual gold production of Australia and China
- What gold mining methods are used in Australia and China ( eg. the
average depth of shafts, quality of ore etc )
- What is average cost of gold production ( per ounce ) in Australia
and China
- The names of any marginal mines in Australia and China and their
average cost of gold production
- The names of the successful/promissing mining companies in
Australia and China

If you could answer ANY of these questions ( either fully or
partially ) , I would be most grateful

Yours faithfully
Rijk Kuttel

Active Lurker: Thanks for the Vonnegut post yesterday. I sent it to my kids and others. However http://www.nytimes.com/library/cyber/week/080697vonnegut.html

RJ - Thanks for the clarification. There are still some inconsistancies between your information and that of John Disney, but the important thing is that the RSA mines can apparently benefit more or less fully from the current market prices.

John Disney - Here is a web page maintained by the Platinum Guild if you are interested.

http://www.researchmag.com/platinum/twip.htm

The troubles in Thailand need not scare us too much. The 40-50 billion they need to extricate themselves we could print in one afternoon. Whats that you say, but we are dozens of times bigger! So we would need a few weeks to print it. Look how neatly we handled our savings and loan problem. A mere half trillion added to our tbond load and it was done.

RJ: You the Platinum Kid! Just for what it's worth, from my bizarre technical point of view, October Platinum chugging thru my first resistance at 435 is quite peppy ( no Pepi, down bwah, I wasn't talkin' to you ) . The return move from a longterm major breakout is IN. This current rally should now test the previous spike's high. If price gets past 475ish, my observations suggest 500-600 quite readily. Also, astrologically ( I know how you read the papers just for your 'scope ) Mars conjuncting NYSE Neptune this Friday and Monday could signal a blowoff, reaction, or impetus for a continued advance in Platinum ( and also OIL ) . How's that for political speak? The real message tho, without presuming on God, is possibility of extreme volatility in next few days ( what have we BEEN having, Sheller? ) I was heartened by your comments that , from a usage point of view, the price could double and not severely disturb the economies of its ethereal applications. Hindsight, as you point out, is my most valuable indicator. Just like my favorite pocket calculator, on which I have made millions in the markets over and over. Bought some Platinum physical ( lovely Lovely Maple Leafs - I'm too distracted with projects, and chicken, to do futures at present time - maybe in future ) when they were in the high 300's a while ago anticipating the "Rhino" pattern breakout. Never enuf. Shoulda, coulda, woulda....

Korean banks to secure Kia assets.

http://www.koreaherald.co.kr/kh0807/m0807b01.html

Another Korean conglomerate requires emergency loan.

http://www.koreaherald.co.kr/kh0807/m0807b05.html

Korea comments on Russian currency reform.

http://www.koreaherald.co.kr/kh0807/m0807b12.html

Mike - once again, your dissection of Messages and Things is uncanny. We were friends in another 'dimension/time'. In May, I was driving through LonGah ( very hard G ) Island and I felt I was in the presence of an Ethereal demi-god ( can you believe that?... long island?? ) . In our time, you were the benevolent, omnipotent, Kingly Dude and I was merely a serf ( surf ) trying to walk in your HUGE footsteps. I am feeling the need to crawl on someones shoulders...any ideas?

Go PL...AWAY...through all resistence, to your new home of 500-600/oz!!!and make Haste!

EB$$

Comex: Gold down 1.20; silver up 1.5 cents; PL down 14.6; and PA down 12.00 ....XAU up 1.17.....

Before you bet that lower gold is due,...you better consider all available clues;
otherwise, you may look back and rue,..."I should of paid attention to the XAU"

for DJ/RJ
Lo and behold - the annual results for rusplats,
lebowa, and pp-rust came out in todays Business Day.
Rusplats are the important item. Their earnings in
1997 fell to 2.12R/sh from 3.14 in 1996. This is due to
the fall in the platinum price from an average of 413$/oz
in 1996 to 387 in 1997, coupled with an increase in
on-mines costs of 7 pr cent.
They produced 1.5 million oz of platinum in 1997.
Lebowa did 80,000 oz, amd pp-rust 150,000 oz.
I havent seen a s/d balance for plats for a long
time but I think that total demand is something like
2 million ( do I tell a lie?? ) . Also I think that
Japan comprises 80 per cent or so of that amount.
Now, if my guess is correct and 2 million is something
like the truth, then the 3 anglo mines ( exclude implats
and northam ( which is smallish ) must produce 80 or so
per cent of world supply.
Thus I believe it goes pretty well without saying
that Japan would be taking almost all of the RSA supply
and pretty well always has done so.
Where I come unstuck is on the phrase " a price that
is not inflexible" - I dont find that phrase very clear
you know and I could really live without it. Also I dont
know who the agent is in Japan ( or are there many agents?? )
How do the Japanese buy platinum?? One agent handles
jewelery as well and catalyst needs??? - I would expect
the companies associated with the various Zaibatsu
trading houses would buy through them - Also where
does Johnson Mathey fit it.
The Rusplat report contains the following statement.
" There are signs that Russian platinum sales will be
lower in 1997 than they were in 1996 and it is expected
that the lower supply levels will be maintained for the
foreseeable future which should result in a higher average
platinum price than in the 1997 financial year".
There is no mention of a contract PRICE ( flexible or
not ) and implies that sales are at some average of the
spot price.

Further to my posting earlier today, equity inflows are slowing and" Outflows from international equity funds were unusually high at $1.8 billion, the tracking agency said. In the prior period, an
estimated $1.4 billion went into international equity funds, it said."
http://biz.yahoo.com/finance/97/08/06/y0004_y00_5.html

John Disney - As an exercise for the student, I checked the calculated costs/oz. from the data you posted. My results were close to yours. However, you also posted the total metal production for each mine in Moz. My calculations show these figures to be way low. I show 2.85, .45, and .15 Moz. for the 3 mines respectively vs your 1.51, .16, .08 figures. For example, for rustplatz: 16.75Mtons at 5.3 gms/ton = 88.78Mgms. Divided by 31.1 gms/troy oz. = 2.85 Moz.

What am I doing wrong? If your figures are correct, this implies the cost/oz would be much higher than those you show.

For DJ
Thanks for the Platinum Guild site. Im so relieved to find
that these guys are from cyberspace rather than through a time
warp.

Vieserre: I think that you're right in that the XAU is tryin to tell us something....I'm starting to think that the XAU has already put in its low...Comex: Gold down 2.10; Silver up 2.5 cents; PL down 18.60; and PA down 12.00...XAU UP 1.56 ...

David, I like that bigamist story. But then I am kind of warped, so you better keep and eye on your daughter. She could be inputting stuff on this site under a name like Smartfeasor.

I'm printing out some VERY good info. Much appreciated...indeed! Try to come together ( fix DJ's calculator or whatever ) on some supply numbers, this could be ( IS ) some very important Stuff. TIA.

Away...to food like platinum...to the Moon... ( as stomach growls )

EB

Is essential during BIG trade days...Thanks...yuk..yuk...

AWAY
EB

really growling now...Ted...what to eat? And drink?

Looks like Xau is trying to work its way back to that 98 Xau starting gate. Last race was postponed for a few days. Hope THIS one is for real. Today's low in the Xau bounced off the weekly uptrend line which extends back to lst week of July,97.

EB: brocoli sandwich on the menu... ( whole wheat+Rye bread topped with brocoli,onions,and cheese.... )

Must have been a plat. del. today and yesterday.

Dow only up 86....XAU up 1.72....back to the kitchen!

I just looked at a chart that shows relative performance between the XAU, GOX, HUI, Fidelity American Gold ( FSAGX ) and Vista Gold ( VGZ ) . When you look at the three indexes and the mutual fund, they have marched step by step with each other. However, Vista has way underperformed. It appears to me that this junior stock ( VGZ ) has been beat to hell for no real good reason. Is there something wrong with this company that I'm not seeing, or is this a buying oportunity waiting to be bought?

http://www.stocksmart.com/ows-bin/owa/ri.tgraphs.d?duration=YTD&abs_rel=R?tion=Submit&symbols=+xau&symbols=gox+&symbols=hui+&symbols=fsagx+&symbols=vgz+

Byron -- This ones for you...

John Disney -Thanks for the annual results. No surprises here - close to analyst predictions.

Re: s/d for platinum, the CPM Group shows projected demand in '97 at 5.3Moz., slightly higher than supply. They say RSA total production is 3.4Moz ( in 1996 ) . The figures MUST be accurate, because CPM charges megadollars for their exclusive reports!! ( These are the same people who forecasted $425 gold by the end of 1996. ) They also show supply of PL and PA exceeding demand for many years. Eyeballing the oversupply, and adding up all the years, there should be 4Moz of platinum and 8Moz of palladium sitting around somewhere. How does this jive with the current extreme squeeze caused by lack of supply? It seems when it comes to expert advice, you don't get what you pay for. I think I would prefer to ask Glenn, D.A., or RJ about supply/demand.

BTW, you are right about the meager production of N.A. SWC always makes a point, which is probably right, about being "the only significant source of platinum and palladium outside S. Africa and Russia". By my calculations they supply about 1% of the world's platinum and about 2.5% of the world's palladium. Still, who cares, if we can make money!

Byron -- Again, but different...

Gene: ( 11:05 ) If so inclined? Check out:
Richmont Mines ( ric ) . At CyberWispers hit the news button or http://www.richmont-mines.com
Prime Resources ( pru ) , same button at CyberWispers or
http://www.prime-res.com
Both companies consistenly make money and have proven ability to handle debt.
Also River Gold ( riv ) , not having all the characteristics of the above, but, thus far is making money and seems to be on right track. They even paid a dividend.
I would also take a good look at Aurizon Mines ( arz ) .

Here is a news item from a web site in India relating to Reserve Bank of India setting up a trading facility for gold. The expressed purpose is so that gold can be sold for the purpose of "soaking up excess dollars." The only alternative now is to buy U. .T-bills!!
http://www.makroindia.com/hlight.htm#01

For George Cole -
80 per cent unprofitable below 300 looks a bit
over the top. Some quick numbers - I think RSA
produces something like 16 million oz a year.
It has several large low cost producers

Vaal Reefs, 2.1 mill at 281$/oz -
Southvaal , 1.2 mill at 248$/oz -
Dries , 1.5 mill at 259$/oz -
Beatrix , 0.5 mill at 223$/oz -
Joel , 0.2 mill at 274$/oz -
buffels , 0.3 mill at 260$/oz -

From the above we have 5.8 mill that will remain
ok at 300. Problems are huge mines like fregold
with 2.6 mill at 336 $/oz. High cost shafts can be
closed and get in say half production under 300$ so
say 1.3 mill from fregold.

Kloof is another one. Kloof itself is under 300,
but leeudoorn and Libanon would have to close.
so keep 0.6 mill from Kloof.
This makes total of 7.7 mill still onstream at
a 300 $ price or 7.7/16 = about 50% rather than
20 %.
If it helps to make the gold price go up, then
lets pretend the whole place closes down at 300 $/oz.
But just between us I'd say at least 50% of the
production would still be profitable at 300 $.

John Disney: Thanks for the info on SA mine costs. It confirms my belief that things are not quite as dire for the SA gold industry as some would have us believe. This kind of doomsday also helps the mines in their negotiations with the unions.

Panda: Gonna have to wait until one of the graphic computers become free ( or else I can attempt to bump out two teenagers who are currently using same ) . Since the XAU tried to make it thru 98 several times in the last couple of weeks ( with conviction ) and failed, I've decided that it has a new plan of attack. It will sneak up on the 98th line and try to quitely slip through. Actually, I wouldn't be surprised to see a "pop" in the next two days. ( that is pop up. ) I'd say we see the 105 area by the close on Friday. Anybody else like to take a shot on the Friday close. The prize: Ego gratification.

Coffee Time At the Library. ( ^*^ )

With bullion down another $2 bucks, the market had every excuse to massacre the gold stocks today. But the XAU jumped 2%. What goes on here?

My take is that stock investors are taking a longer-term viewpoint than futures traders. They seem to agree with the idea that gold prices have been forced to unsustainably low levels by huge speculator short selling aided by an intense anti-gold propaganda campaign in the media and on Wall Street.

The bears could indeed be correct that bullion will shortly make a new low. But the bulls probably also are correct in asserting that gold will be well above current levels a few months hence.

for dj
I think problem is that gm/ton number is total metals not
just platinum - ie palladium,rhodium, amd nickel. These last
three treated as byproducts and revenue therefrom subtracted
from operating cost. Thus your 2.85 mill oz versus mu 1.5
mill oz contains all the other metals - does this work for you??

Vice President Al Gore made at least 48 telephone calls
from his White House office seeking political
contributions for the 1996 election season, more than the "few
occasions" on which he has acknowledged phoning donors.
http://www.washtimes.com/investiga/investiga1.html

George Cole said: "gold prices have been forced to unsustainably low levels by
huge speculator short selling aided by an intense anti-gold propaganda campaign in the media
and on Wall Street". Couldn't agree more with this statement. Now I
would like to ask the big question WHY? It seems to me that the more sophisticated the market technologies and derivative
trading programs the easier it is becoming to actually move or manipulate
various markets, whether they may be equities or futures. In my opinion the big money on Wall Street and other money corridors around the world
hold hostage the small investor and speculator. Is there really hope after the bubble bursts for
our "free markets" to survive or will a BIG BROTHER figure appear to
save our economic system? Will the dawn of a new millenium bring in the
collapse of our monetary system as we have come to know it?

John Disney - Your computed costs/oz come from dividing the R/ton number by the gm/ton number and converting as required to $/oz. If you are correct in that the Moz/year numbers do not include the ancillary metals, then it seems to me your cost/oz calculations are invalid because the data used are contaminated by the other metals.

To get the correct costs, we need the R/ton figures AFTER the credit for the other metals is applied. Then using the total tons mined, we get the correct cost/oz. Since the credit/oz of the non-platinum metals is undoubtedly less than the average mining cost/oz of all the metals, the real production cost of platinum should be somewhat higher than the numbers you posted. Es verdad? ... or is my mind failing me? ( Either is a distinct possibility! )

"The rumour is that a [US financier George] Soros
fund has sold 1,000 lots [of 200 shares each] of
Maybank through Singapore. I have confirmed this
with two independent parties," a dealing manager at
a domestic brokerage, said.
http://www.scmp.com/news/template/templates.idc?artid=19970806004634056?=mar&template=Default.htx&maxfieldsize=2429

RIO DE JANEIRO, 08/06/97 - The Rio de Janeiro Stock Exchange ( BVRJ ) and the National Trading System ( SENN )
yesterday closed down for the fifth consecutive day. With a 0.6% fall in value on Tuesday, the IBV and SENN registered
respective drops of 7.35% and 7.78% in relation to Tuesday of last week. Total trading volume on the Rio de Janeiro market
tallied R$ 9.926 million. Analysts believe the markets are now in the hands of speculative traders. Marcos Jorge, a trader for
the brokerage firm Corretora Agenda, added "Right now, with maturation dates on a variety of futures fast approaching, all
sales orders are speculative to bring the index down." ( Gazeta Mercantil ) ( JM )

nomercy: Old al should be on very thin ice here but as he is to be the next chief unindited felon, er president, he may be above the law. As I understand it one occurrance of soliciting political contributions, legal bribes, from federal property is a felony. So al will be charged, have his day in court, be convicted, impeached and sent to prison. This is what would happen to you or I ( save the impeachment ) should we commit a public felony. Since we are a nation of laws not kings and dukes this is what must also happen to al.

All : The man is consistent. http://www.marketweb.com/commentary/JF0806.HTM

Panda:
Got a chance to look at your charts. Hope it is not too difficult to adjust the charts. Notice your XAU only goes to 98.50 : )

Reminds me of the story when the church people gather at the church to pray for rain. The first question the precher asked was "Where's your umbrellas??"

105 would do fine with me, thank you. ( Will need it by Friday's close. ) 8- )

bw---its a matter of time--noose is getting tighter
``Tomorrow could be an interesting day in gold, and I would think there is still some serious downside risk as basically there's
just been one major player supporting the market,'' Swiss Bank New York precious metals dealer, Greg Drury, said.
http://biz.yahoo.com/finance/97/08/06/nem_y0023_1.html

If we consider that "Wall Street" benefits from a paper Bull it is not difficult to appreciate 'how' negetive sentiment in gold price propects could be exagerated and exploited. This is especially important when we consider gold as a contra currency and investment alternative. The gold market is small enough to be managed and important enough to be managed.

Cheers.

JF Aug5 - 19:59 - Re: Silver puts. A fund was the buyer and a Precious metals dealer was the seller.

Ron Aug5 - 20:10 - Re: Buying of calls - Unknown source was the SELLER and the Floor traders were forced to be the buyers. Not very bullish.

Steve Aug5 - 22:29 - Re: Buying July98 $3.50 puts and then buying futures. That seems far fetched. After all since the silver contracts are more expensive as you go out ( Time ) July98 silver is about $4.60 or so. So someone is using a $1.10 plus the 5 cents for the put, $1.15 stop in silver. Then if silver is below $4.65 but above $3.50 the puts expire worthless and you have a big loosing position needing to be rolled forward??? From a bullish perspective it does not look good. More than likely the fund is gambling that, like Gold, silver will break it's '93 low.

Ted and all,
news from fwnews,try this http://www.futuresource.com/cgi-bin/get32.exe.
put my order last nite at 315 per oz.FAILED!Probably this morning,not sure!QUITE CLOSE ,YET TOO FAR!
RGDS,
JIN.

JF Aug5 - 19:59 - Re: Silver puts. A fund was the buyer and a Precious metals dealer was the seller.

Ron Aug5 - 20:10 - Re: Buying of calls - Unknown source was the SELLER and the Floor traders were forced to be the buyers. Not very bullish.

Steve Aug5 - 22:29 - Re: Buying July98 $3.50 puts and then buying futures. That seems far fetched. After all since the silver contracts are more expensive as you go out ( Time ) July98 silver is about $4.60 or so. So someone is using a $1.10 plus the 5 cents for the put, $1.15 stop in silver. Then if silver is below $4.65 but above $3.50 the puts expire worthless and you have a big loosing position needing to be rolled forward??? From a bullish perspective it does not look good. More than likely the fund is gambling that, like Gold, silver will break it's '93 low.

Sorry about two posts my connection was not working.

An enigma wrapped in riddle...gold down today...yet ABX up 2% to
22 7/16ths...nicht verstehen???

Under the heading: Workers of the World Unite!...First UPS..maybe
Amtrak...whose next?...Are there cracks in this Brave New Goldilocks
World?

As I was driving to work today, there was this "money talk show" on a
radio. One fellow asked the question: "I have this $10,000 for
emergencies .. you know .. when my car breaks or my home central air
condition gives up I dont get a good return from my bank and would
like to put it into stocks  So what is the best mutual fund?.." :-o

In that spirit I took a liberty to modify Tortfeasors morning joke:

THE DOW

In the Beginning was the DOW.
And then came the assumptions.
And the assumptions were without form.
And the DOW was completely without substance.
And the darkness was upon the face of the experienced investors .
And they spoke among themselves saying: "It is a crock of sh_t,
and it stinketh."

And the old investors went unto market analysts, and sayeth:
"It is a pail of dung, and none can abide the odor thereof."

And the market analysts went unto economists and sayeth unto them,
"It is a container of excrement, and it is very strong,
such that none can abide it."

And the economists went unto the Federal Reserve Board and sayeth,
"It is a vessel of fertilizer, and none can abide its strength,"
And the directors spoke amongst themselves, saying one to another:
"It contains that which aids plant growth, and is very strong."

And Alan Greenspan went to Capitol Hill, and sayeth unto them,
"This new market will actively promote growth and efficiency of
this economy, and certain areas in particular."

 And the president looked at the testimony, and sayeth to his
countrymen: "My fellow Americans, I gaveth you a strong economy with
no inflation and growing stock market. Dont worry, put your money
into mutual funds"

And the Johny homeowner took a home equity loan and put money into
mutual fund.

And this is how sh_t happens.

South Africa: Speculation surrounds
mining restructuring

WEDNESDAY AUGUST 6 1997

By Mark Ashurst in Johannesburg

South Africa's two leading black businessmen are set to emerge as the key
players in the restructuring of the country's troubled mining industry,
following a bid for Tavistock, JCI's coal subsidiary, by Gold Fields of
South Africa.

The move is the first indication that Mr Cyril Ramaphosa, deputy chairman
of New Africa Investments, South Africa's biggest black- controlled
company, could enter into negotiations with Mr Mzi Khumalo, chairman of
JCI, the country's first black-controlled mining house.

New Africa is in talks with Rembrandt, the industrial and mining group
controlled by South Africa's Rupert family, to acquire joint control of Gold
Fields, the world's third largest gold producer.

The talks are widely expected to install Mr Ramaphosa, who was last year
defeated by Mr Khumalo in the bidding for Anglo American's controlling
stake in JCI, at the head of Gold Fields.

Analysts said a deal between Tavistock and Gold Fields, which owns coal
reserves adjacent to JCI mines, could trigger a new era of co-operation
across the mining industry.

"My impression is that this initiative comes from the highest level. If they
have aspirations to build sound companies, they will forget their
differences. Without increasing its size, Gold Fields Coal does not have the
critical mass to survive in the longer term," said Mr Dean Cunningham,
analyst at Investec in Johannesburg.

JCI last month secured an option to buy Anglo American's 26.7 per cent
stake in the UK-based Lonrho group for R2.45bn ( $529m ) , and is already
pursuing closer ties with Duiker, Lonrho's coal subsidiary. The Gold Fields
offer will increase pressure on Lonrho to re-examine Mr Khumalo's
proposal to merge the UK-based group with JCI. Merger talks broke
down in June following opposition from Lonrho.

If JCI's merger ambitions with Lonrho fail, analysts say JCI could accept
the Gold Fields offer, which would help fund its obligation to Anglo, due in
November. A deal with Gold Fields Coal could signal "the first intention of
an aggressive takeover of Lonrho" by JCI, said Mr Cunningham.

Shares in Sentrachem, the South African chemicals producer, gained
almost 25 per cent to close at R10 in Johannesburg, following a takeover
bid by US-based Dow Chemical. The shares were suspended at R7.92 on
Friday.

Dow's offer of R10.50 a share was this week accepted by Sankorp, a
subsidiary of life assurer Sanlam, which holds 38 per cent of Sentrachem.

What! No word from the Gold Show in Las Vegas which I believe ended today. Well, truely a sign of the bottom.: )

Kenya: Turmoil in markets after IMF loan
suspension

Originally published: SATURDAY AUGUST 2 1997

By Michela Wrong in Nairobi

The International Monetary Fund's decision to suspend Kenya's loan
programme triggered alarm in the country's markets yesterday, with foreign
investors scrambling to dump equities and treasury bonds as the currency
plummeted.

Despite an appeal by Mr Micah Cheserem, governor of the central bank,
for investors to behave responsibly, the news that the IMF loan had
collapsed because of the government's failure to tackle corruption hit
investor confidence as soon as markets opened.

The shilling, which closed on Thursday at 59 to the dollar, touched 65 in
the morning, its lowest point for four years, but later rallied to close at 61.
The Nairobi Stock Exchange saw unusually high turnover, with the
20-share index falling 13.68 points to stand at 3453.18.

Worst affected was the fixed-interest market, as foreign investors sold
Ks250m ( $4.1m ) worth of central bank treasury bonds, compared with a
total of Ks13.35m sold during the whole of last week.

"This has been one of my worst days," said Mr John Munge, a Nairobi
broker. "Foreign investors keep ringing up asking whether the country's
whole macro-economic reform programme could go into reverse.

"They want to know how bad the falling-out between Kenya and the IMF
was and how long it is going to take to get back to the drawing board.
Unless someone at senior government level issues a clear policy statement
the market is going to remain very nervous."

Analysts said much of the market reaction was prompted by expectations
that bilateral donors and the World Bank would also freeze assistance,
putting a brake on economic growth.

But western donors kept a discreet silence yesterday, admitting only to
being "very disappointed" by the Kenyan government's failure to satisfy
IMF concerns.

The loan suspension came after President Daniel arap Moi over-ruled Mr
Musalia Mudavadi, his finance minister, who had earlier agreed to reinstate
the dismissed commissioner of customs and excise.

Widely regarded as a linchpin in the fight against corruption, Mr Samuel
Chebii's dismissal last week - bypassing the supposedly-independent
Kenya Revenue Authority - dealt a final blow to IMF confidence in the
government's commitment to crack down on graft.

Opposition leaders yesterday welcomed the IMF move, saying it would
further their campaign to force Mr Moi to introduce constitutional reforms
ahead of elections due later this year. "This is welcome," said Mr James
Orengo, deputy head of the FORD-Kenya party. "Together with the
political pressure we are now mounting it may bring Moi to his senses."

Mr Mudavadi yesterday outlined the size of the problem now facing the
country. He said Kenya had been counting on the IMF to provide it with
$74m in foreign exchange support in the 1997/98 budget and that World
Bank, African Development Bank and multilateral grants linked to the IMF
programme would have produced an additional $141m.

He gave no details on how he intended to bridge the gap. Analysts
speculated import duties, income tax and VAT might be raised and
development expenditure slashed. But the government may also need to
increase domestic debt by issuing new treasury bonds.

Both Mr Mudavadi and Mr Cheserem have said they hope the government
will soon start discussing a possible shadow programme - in which the
IMF provides advice but no credits - with the Fund. But some observers
believe the acerbic nature of the final exchanges between Mr Moi and the
Fund meant a pause would be necessary to allow tempers to cool.

The political fallout of the suspension was still making itself felt yesterday
within the administration, as the rift between pro-reformers appalled by the
break with the IMF and hardliners resentful of outside interference
continued to widen.

In a gesture of defiance towards the president's office, the revenue
authority said it would not approve Mr Chebii's transfer to the Ministry of
Finance's audit department, saying it regarded the move as "illegal".
Officials said Mr Fares Kuindwa, the head of the civil service who
originally authorised Mr Chebii's removal, had demanded an apology from
the KRA for its refusal to rubber-stamp the reappointment.

There were also signs that the government was trying to win at least some
approval from the donor community with the publication of a draft of a
tough anti-corruption bill.

But it was not immediately clear whether the bill put forward by Mr Amos
Wako, the attorney-general, would create an authority which would have
the sweeping powers to prosecute top officials implicated in scandals that
donor countries would like to see.

EB: We former Bronx and Brooklynites tend to pronounce it LUNG Island. But in any event, as far as my "omnipotence" is concerned, from your lips to God's ears! My wife may have other comments.

Things dont look too good for bonds

http://biz.yahoo.com/finance/97/08/06/z0000_z00_29.html

http://biz.yahoo.com/finance/97/08/06/z0000_z00_28.html

A large throng had gathered during vacation week at Washington's
Ford's Theater...A long line queued its way to a guest register where visitors from all over the nation were signing their name and home town. Just then...
a rambunctious, young boy named Sheldon bolted away from his parents
and rushed ahead to sign the register just ahead of a group of
nuns...Right then and there...Sheldon's parents rightfully scolded the boy...blurting out to all within earshot.."Wait till the nuns sign Shelley!"

OR, if you prefer and you're old enough to remember: "Wait Till the Sun Shines Nelly..."

Thailand: Government unveils tough
economic reforms

WEDNESDAY AUGUST 6 1997

By Ted Bardacke in Bangkok

The Thai government approved a sweeping package of economic reform
measures designed to give it access to $12bn-$15bn ( 7.3bn-9.2bn ) in
emergency credits from the International Monetary Fund and elsewhere.

In a separate announcement, the Thai central bank suspended the
operations of 42 struggling finance companies after negotiations with the
IMF on restoring stability to the ailing financial system.

Mr Michael Camdessus, managing director of the IMF, "greatly
welcomed" the package, saying he hoped to present it soon to the Fund's
executive board for endorsement. He said the Fund was "working with the
authorities to develop [the plan] into a multi-year adjustment programme
that could be supported by IMF resources."

The central bank said it had lent Bt500bn ( 9.6bn ) in emergency liquidity
support to these and 16 other companies suspended in late June. It also
said the financial system had seen withdrawals of Bt15bn-Bt20bn a week
for an unspecified period.

"We can't take this burden any more," said Mr Chaiyawat Wibulswasdi,
central bank governor. "We need to get tough, before the whole financial
system is infected, or we will have no financial institutions left."

The suspensions and volume of government support shocked financial
markets and overshadowed the government's decision to authorise the
finance ministry and central bank to sign a loan agreement with the IMF as
soon as it was ready. An IMF official said good progress was being made
and it was expected that an agreement would be sent to the IMF's
executive board for approval soon.

The stock exchange closed down 2.3 per cent, while trading in bank and
finance stocks was suspended. The baht was slightly weaker in domestic
trading and slightly stronger off-shore.

Other parts of the package include a pledge to maintain foreign currency
reserves of at least $25bn, or three months of import cover.

Monetary policy will remain tight and value added tax will rise to 10 per
cent from 7 per cent from August 16. The government budget will be
balanced, beginning with cuts to next year's budget of up to Bt100m,
although spending on education, public health and infrastructure will not be
affected.

Targets include a reduction in the current account deficit from 8 per cent of
gross domestic product last year to 5 per cent this year and 3 per cent next
year. Economic growth is pegged at 3-4 per cent for the next two years,
while inflation is targeted to be no more than 9 per cent annually.

In a televised address, Mr Thanong Bidaya, finance minister, blamed the
country's problems on too much foreign borrowing by the private sector to
invest in the stock market and property sector and too many imports.

TED: Here it would be lon GUYLAND, noo YAWK

WHO CARES?: Over the philosophical weekend you called yourself a "libertarian" I believe. And there was much banter back & forth about "free markets." I urge you to
read "Man, Economy, and State" by that great free market economist Murray
Rothbard. ( Nash Publishing ) . It may be hard top find in this age of Robert Prechter
and Deepak Chopra, but it is a magnificent exposition on true economics in the most
radical manner.

WDL: Your reference to Ford's Theatre reminds me of a famous one-liner, still in bad taste 132 years later...Other than that, Mrs. Lincoln; how did you enjoy the show?

George, John and etal- one way that SA has to combat lower gold prices is to lower the Rand. In the article I posted about Western Areas buying back their hedge the chairman Brett Kibble predicted a lower Rand and higher gold prices. Now, a situation like that could be explosive for the right SA shares. During 1996 for a brief preiod we had that situation and our position doubled in the SA golds. THEY AIN't GOIN TO LET THOSE JOBS GO DOWN THE DRAIN. Also, as I have said many times here most prople do not understand the SA mining industry. These mines are like a big warehouse, they can mine ore from the shelf that the current gold price dictates.

Tally Ho

D-Mark: Fall to 8-year low against dollar

WEDNESDAY AUGUST 6 1997

By Andrew Fisher in Frankfurt and Richard Adams in London

The D-Mark fell to its lowest level against the dollar for eight years in
European foreign exchange trading yesterday, prompting speculation of
Bundesbank intervention to bolster the currency.

In London, the German currency shed 1.5 pfennigs to close at DM1.879
against the dollar. During trading the US currency was sold for over
DM1.88 - its highest rate since 1989 - before the D-Mark rallied in
Europe.

The D-Mark's fall has increased expectations that the Bundesbank could
let short-term interest rates rise to lift the currency. The test will come next
week, when the central bank announces the next round of securities
repurchase ( repo ) agreements, which it uses to provide market liquidity.

The latest repo, announced yesterday, was again at a fixed rate of 3 per
cent. But only the first two repos during the four-week summer break will
be fixed. The third could be switched to a variable rate next week,
allowing it to attract investors and halt the dollar's climb.

Some economists say a small repo rise could hit Germany's slow recovery,
with little effect on the dollar. It could also anger other European countries
with currencies linked to the D-Mark, especially ahead of monetary union.

Others argue a pre-emptive move by the Bundesbank could nip inflation
in the bud.

Mr Otmar Issing, chief economist of the German central bank, expressed
concern about the rising dollar and its impact on potential inflation. But in
an interview with Brse Online, an investment magazine, he said there was
"no automatic link" between interest rate decisions and a particular dollar
level.

"As the dominant world currency, the dollar of course has special
importance," Mr Issing said. "It is not the level, but the rapid decline in the
value of the D-Mark that is a cause for concern," he said in the interview
last week, when the dollar was below DM1.84.

Mr Issing also said the economy could reach the government's growth
target of 2.5 per cent. Some economists said this suggested that concerns
about slowing economic growth would not hinder a change in policy.

Late yesterday, the Bundesbank denied rumours that its central bank
policy council was planning an emergency meeting today.

Investors assured
A-share market bounces upon
pledge of support

By Xiao Wu

SHANGHAI'S A-share market rebounded moderately
amid thin trading last week, helped by the central
government's pledge of continuous support for the
securities market.
On Thursday, Vice Premier ZhuRongji restated the
importance of securities market during his inspection tour
of State-owned enterprises in Northeast China's Liaoning
Province.
Zhu said the market is an effective way to collect money
for cash-stripped State-owned enterprises, the sector the
government supports.
Zhu's remark helped improve market sentiment, local
traders said.
The exchange Composite Index, charting mainly A shares
available for domestic investors, improved 21.97 points, or
1.88 per cent, to close at 1,192.82.
However, the B shares reserved for foreign, Hong Kong,
Taiwan and Macao investors ended lower with most
investors waiting for clear direction.
The B-share index lost 1.84 points, or 2.43 per cent, to
end the week at 73.79 points.
More than 1.6 billion A and B shares changed hands
during the week to generate 16.6 billion yuan ( $2 billion ) in
trading volume, compared with 24 billion yuan ( $2.9
billion ) traded the previous week.
The thinner trading indicated that there's no fresh capitals
flowing to the market and retail investors kept to the
sidelines, local traders said.
Of 398 stocks traded, 255 gained and 137 lost. Six shares
were unchanged.
Traders said the rebound on the A share market is also
helped by the slow-down of new shares listing, which
would otherwise siphon a large portion of capitals off the
market.
On the other hand, some institutional selling of stocks that
were expected to post poor interim results depressed the
market, which made most investors unwilling to make
additional purchases, traders said.
All listed companies are required to issue interim results by
the end of August, but only a handful have done so, they
said.
The A-share market opened last week in a dull mood with
the index falling 29.08 points on Monday.
The market rebounded gradually in the next four days.
B shares did not move in tandem with A shares, declining
continuously in the first four days and ended slightly firmer
on Friday with funds seen flowing back into the market
from abroad. Much of the demand focused on market talk
of Shanghai Chlor-Alkali Chemical restructuring.
There were signs that the Government is going to make the
stagnant B-share market more appealing to foreign
investors, according to the Shanghai Financial News, an
in-house newspaper of the People's Bank of China,
Shanghai branch.
The newspaper noticed that slews of reports discussing the
ways of buoying B-share markets have been widely
published the past week.

Earlier news story alluded, that shorts are ready to "squeeze" producers who face the dilemma of selling forward or closing their mines. Obviously the 'speculative shorts' are keeping the pressure on, though lease rates are climbing back higher. 'Shorts' volume in recent days is not that significant ( perhaps its a few locals, who believe in their own negative generated news quotes and wishful thinking ) . Unless significant short selling volume is in the imminent horizon, these 'small speculators' will get blown out as physical buying season is underway in Asia. Labor Day is not that far away...that's when I expect the Dow to commence a mild 10-15% correction.
If we get significant short selling volume it'll be a showdown at the old corral. Timing appears to be on the 'longs' side, but that won't hinder the shorts. Greed never knows when to stop.
I'm ready.

WASHINGTON ( AP )  Two Treasury Department officials who
hastily composed memos justifying $11 million in grants to banks
owned by friends of the Clintons resigned Wednesday, Treasury
Secretary Robert Rubin told a congressional committee investigating
the matter.
http://www.foxnews.com/js_index.sml?content=/business/wires2/f_0806_119.sml

From Hyperspace, by Michio Kaku:
"If this occured, a tiny bubble might suddenly appear in our universe. Within this bubble, the Standard Model would no longer hold, so a different set of chemical and physical laws would apply..... This bubble would then expand at the speed of light, swallowing up entire star systems, galaxies, and galactic clusters, until it gobbled up the entire universe......We would never know what hit us."
Is he talking about the stock market?

After 1914 ( note:USofA Federal Reserve Created ) Britain could not lend
convertible currency to Canada. Canada's New York loans, therefore,
helped to pay for Canada's imports from the USofA. Life became more
difficult in 1918 when USofA, having entered the war, placed an embargo
on new foreign borrowings. Sir Thomas White, minister of finance, in
May 1918 sought an exception from the rule. As a result, in June 1918,
was a New York loan for $65 million which pushed the dominion's USofA
borrowings to $285 million. Sir Thomas had borrowed far larger sums in
Canada. ( WW I August 04,1914 )

Since the end of World War II, foreign investment in Canada has undergone
two major changes. The first was a great increase in total amount from
$8.7 billion in 1950 to $68.6 billion ( long term ) in 1975. Even allowing
for inflation of 140 per cent, an increase of that amount is without
precedent in any major industrial country, with the possible exception
of Australia.

Foreign capital invested in Canada rose from 39 per cent in 1946 to
46 per cent in 1950 and to 58 per cent in 1960. Since 1966 it has hovered
between 58 per cent and 61 per cent with no particular trend.

Of the $39.8 billion of ( *direct* ) foreign investment in Canada by 1975,
$32.2 billion had been invested by USofA corporations. The impact of this
change toward *direct* investment by the largest corporations can be seen
in the ownership of the 200 largest Canadian industrial corporations: 91
are the subsidiaries of firms numbered among the 500 largest USofA Corps.

Foreign *direct* investment tends to be one of two quite different kinds:
either an investment made to take advantage of opportunities in the
market of the *Host* country, or, an investment made to
*exploit Resources* available in the *Host* country. The nature of the
assets transferred from the *parent* corporation to the subsidiary varies
accordingly.

Foreign ownership is particularly high in manufacturing and non-renewable
resources ( petroleum and mining ) . In 1974, the total capital employed
in these two major sectors was $62 billion, nearly half of the $129.7
billion of capital employed in the major industrial sectors of Canada, of
the $44.1 billion in foreign-owned investment in the ( *non-financial* )
sectors in Canada in 1974, $33.6 billion ( 76 per cent ) was in
manufacturing and non-renewable resources ( petroleum and mining ) .

In making investment outside their base countries, multinational enter-
prises are maximizing the *rent* they can obtain from their *Core Skills*
( " Information not just of a technology or of a market, but of one in
relation to other...A *collective skill* transfered most efficiently
within the administrative channels of the multinational corporation,
rather than between corporations through the market, by arms length
transactions, between independent firms " )

Canadian-controled firms to be efficient and to compete against foreign
subsidiaries who have access to their parent *core skills*. Because of
this access, foreign subsidiaries often enjoy a significant competitive
advantage over Canadian-owned firms. In research done for the Commission,
Caves, concluded that although there was no systematic decrease in the
proportion of *Value Added* accounted for by Canadian controlled
establishments in large size classes, their productivity was
( * 19 per cent * ) below that of foreign-controlled subsidiaries, mainly
because of this technological gap. ( * Collective Skills * )

Sooooo, the saying goes:
Information is knowledge...And knowledge is power.
Truth-full and honest information, is difficult to obtain, the noise
associated with the available information, makes investing a near
impossible task.

Risk is highest in an environment with such noise, as 1997. The modest
investor, has two choices, run with the paper ( nothing = something,thing )
winnings, or get back to the basic ( Gold )

The bankers, have conned, and seized, our money system and created
money according to their will. This money is based on our resources, and
they have plunged us into unpayable debts, making this money system
a swindle against the Canadian citizen.

how now bright xau? is there a futures contract in the Xau?
Does anyone have any thoughts on futures compared with options
for the Xau? Is the Xau the best gold index to trade?
if you are able to spare a moment...

Research by leading American banks reinforces fears of worldwide disruption to business at the end of the century, writes Frank Kane

Millennium bomb may cripple Wall Street

AMERICA's top investment banks are becoming i1ncreasingly worried about the millennium time bomb  the built-in dating fault that threatens to wreak havoc with computers at the turn of the century.
According to the latest research from three of Wall Street's
biggest banks, the problem could damage New York's
financial industry by disabling those banks that are not
prepared for the change.
Merrill Lynch, which has a $200m ( 125m ) budget to
tackle the problem, says it "poses a genuine challenge to
the networked world". Morgan Stanley, which is spending
$60m, describes it as "a serious and critical challenge for
all modern organisations". Goldman Sachs says the
problem has "far-reaching implications, not just for the
computing services industries but for all businesses".
The evidence will worry European financial centres still
trying to assess the scope of the problem. Goldman says:
"It is already clear that the combined expertise of Europe's
computing services industries will not be sufficient to
address the problem; many new businesses will be left out
in the cold as the new millennium approaches."
******One banker says: "This is not a prediction, it is a certainty 
there will be serious disruption in the world's financial
services industry. I can't tell whether it's going to be 10%
business failure, or a meltdown, but it's going to be ugly." ******
He predicted a millennium-induced worldwide crash
"around the middle of 1999".
The millennium problem arises because most computers
read only the last two digits of the year's date, assuming the
19 prefix. When the clock ticks at midnight on December
31, 1999, many computers will not recognise the 2000
date and will malfunction. ***If this happens on a global scale,
the results could be catastrophic, experts believe.***
The task of rewriting computer programs to recognise the
new date is labour-intensive and costly. Programmers
expert in arcane computer languages will have to go
through miles of programs and change each date
individually. Merrill puts the global cost at $600 billion 
more than the cost of the Vietnam war or the Kobe
earthquake in Japan.
The complexity of changing existing programs is illustrated
by the project undertaken by Morgan Stanley, which is
among the most advanced. It says it is the biggest
information technology ( IT ) project the firm has
undertaken, involving 400 man-years of work.
The project has been under way for 18 months, and only
10% of software has been rectified so far. But the firm is
confident it will complete it in time to set up and test by
1999. So far, 250,000 "debilitating bugs" have been
uncovered, any one of which would create a glitch in the
system. IT experts believe that if all were left unremedied,
the firm would almost certainly be put out of business.
Merrill warns that many institutions that have corrected the
problem will still feel the millennium bomb's effects. "Even
institutions that have fixed their own internal problem will
feel the ripple effects from the problems recurring
externally," it says.
The bank says the millennium is the "centre of attention
among top executives, line managers and technologists. A
team of 100 people is working round the clock to
inventory, examine, correct and test all systems before
2000. With 170m lines of code running worldwide, this is
no small or inexpensive task." Over the next three years,
about 1,500 man hours will be spent on the problem.
Merrill says: "As we enter the 21st century, meeting the
challenge is not a choice, but a condition of survival in the
digital economy."
Goldman believes the problem has big investment
implications. "We urge investors to examine the level of
compliance across the companies in which they are
investing," it says. "Without trying to sound alarmist,
investors must consider the risk of significant additional
expenditure not just after 2000 but in the years preceding
it." Goldman says next year will be the "year of answers"
when companies will hit peak spending on millennium
projects.
Some brokers have viewed the millennium problem as an
investment opportunity for those companies  software
groups and programmers  that could expect to see a surge
in demand, but Goldman warns: "We assume that 2000
will provide only a modest benefit to the companies in our
coverage list."
Greg Gould, the firm's technology analyst, says: "There
could be a market correction sooner than 1999, maybe the
second half of next year, when some companies start to
miss profit forecasts."
However, in contrast to its two Wall Street rivals,
Goldman does not see the problem as a threat to its own
systems. It says: "We have assessed the problem well in
advance and due to the providers we use and our
technology mix, this is not a significant issue for the firm."

EBN Gold up .30 and Silver @ unch....quiet night....eh...

6pak: transnational corporations which happen to be incorporated in delaware, usa for legal reasons are no more american than they are canadian or icelandic. for a discussion of the transnational corporation versus the nation state see eric hobsbawm's "the age of extremes" published by pantheon books ny/london, 1994. also when the usa was being developed in the late 19th century, the bulk of the funds were european: mines, railroads, agriculture, you name it.

Wednesday August 6 6:30 PM EDT

Shrinking bank loan reserves worries U.S. agency

WASHINGTON, Aug 6 ( Reuter ) - A U.S. federal regulatory agency warned U.S. banks on Wednesday over declining reserves for
bad loans and leases, and easing loan underwriting standards in general.

The Office of the Comptroller of the Currency ( OCC ) said it sent an advisory letter to national banks urging them to be fully prepared
should adverse economic conditions occur.

Noting that the U.S. economy has been healthy for several years, with record levels of bank earnings and capital, the OCC said:
``Banks must be prepared for the possible onset of adverse conditions.''

``This is also an appropriate time for banks to strengthen allowance methodologies and, if necessary, the the allowance itself,'' the
OCC said.

Shek's discussion of the upcoming millenium problem triggers a very serious concern addressed in today's Boston Globe. Columnist
Richard A. Knox writes at the beginning of his article, "The terrorists
released an odorless areosol in a Logan Airport terminal, but no one knew the attack had occurred until several days later, when passengers all over the world began dying from anthrax, a deadly bacterial infection."

The article goes on to talk about the fact that major cities throughout the country are preparing for what they feel will be an eventual biological or chemical attack. "It's just a matter of time, in the opinion of some specialists. The nation must prepare for a 'new age of terrorism' involving cheap and hard to detect biological weapons." The article goes on to say that the scary part of all this is that "With biological weapons, someone could perpetrate an event and you wouldn't notice for three to five days." Finally, the article states that an unsolved episode occurred last fall in a Dallas hospital in which donuts and muffins were inoculated with shigella, which causes dysentery.

Note that I don't know how this will look once it is posted so please bear with me here folks.


( 1 ) Year
( 2 ) CPI ( 1982-1984=100 )
( 3 ) Avg AU price in constant 1978 dollars
( 4 ) Avg AU price in constant $ as a percent of the 1978 price


( 1 ) ....... ( 2 ) ....... ( 3 ) ........ ( 4 )
________________________________

1978.......65.2......193.24......100.00
1979.......72.6......275.42......142.53
1980.......82.4......484.86......250.91
1981.......90.9......329.78......170.66
1982.......96.5......253.89......131.39
1983.......99.6......277.63......143.67
1984......103.9......226.13......117.02
1985......107.6......192.23.......99.48
1986......109.6......218.89......113.27
1987......113.6......256.00......132.48
1988......118.3......240.70......124.56
1989......124.0......200.22......103.61
1990......130.7......191.37.......99.03
1991......136.2......173.41.......89.74
1992......140.3......159.83.......82.71
1993......144.5......162.35.......84.01
1994......148.2......168.99.......87.45
1995......152.4......164.30.......85.02
1996......156.9......161.15.......83.39
1997......160.4......129.75.......67.14

I created this today by simply gathering the data ( CPI numbers and gold prices ) and doing the multiplication.

Comments and cordial attaboys are welcome.

Thai Gov't Tries to Reassure People

By Jiraporn Wongpaithoon
Associated Press Writer
Wednesday, August 6, 1997; 3:02 p.m. EDT

BANGKOK, Thailand ( AP ) -- Stockpiling cornflakes,
hoarding cash and discarding credit cards, Thais braced for
tough times Wednesday after their hard-pressed government
shut down dozens of finance companies -- and rumors spread
that banks were next on the chopping block.

Prime Minister Chavalit Yongchaiyudh urged his worried
countrymen to stay calm while government leaders scrambled
to meet the conditions of a much-needed loan of at least $10
billion from the International Monetary Fund.

Chavalit's future hangs on whether the IMF-engineered
austerity and bailout plan can succeed in saving a foundering
economy where his 9-month-old government has failed. He
agreed Tuesday to IMF demands that he overhaul Thailand's
economy -- closing 42 finance companies and increasing taxes.

``We ask all Thais to be united in order to get through these
obstacles,'' Chavalit said. ``Don't panic about the rumors.''

Many Thais apparently didn't listen -- regulators rushed to stop
a run on deposits after rumors spread that commercial banks
would be next to face government closure. The Siam City
Bank said depositors had withdrawn about $20 million since
Tuesday.

``Don't think that if one bank goes, the rest can stay
comfortable forever,'' warned Som Jatuspitak, the bank's
president. ``We have to help each other.''

Ordinary Thais hoarded food, canceled credit cards and
weighed buying gold as a hedge.

``I've got a headache,'' said Duangkaew Chanruang, 36, a civil
servant. ``I can't believe Thailand faces a situation like this.
Many people will lose their jobs and crime will go up.''

Duangkaew was buying all the Kellogg's Corn Flakes and
imported powdered milk she could carry at a Bangkok
supermarket.

Pisanu Sakoontanak, 36, a Diner's Club employee, reported
that hundreds more people than usual had canceled credit over
the past few weeks, in an apparent bid to tighten spending.

Thais reported keeping cash on hand in case of emergency and
many said they were considering buying gold.

After a decade of spectacular growth, Thailand's economy has
been falling since 1996, the victim of a slump in exports and
heavy borrowing in foreign currencies. The finance companies
were stung by bad loans to developers who overbuilt during
the boom.

Regional leaders hope the IMF can clean up Thailand's mess
before it spreads. The de facto devaluation of the baht last
month triggered speculation against other currencies in
Southeast Asia.

Other once-thriving Asian ``tigers'' have faced their own
problems recently: In Japan and the Philippines, financial
systems are still plagued by instability because of similar loan
crises, China worries that debt-laden state-run enterprises
could slow growth and South Korea is just coming out of its
worst economic slump in years.

Japanese Finance Minister Hiroshi Mitsuzuka on Wednesday
welcomed Thailand's tough economic reform program, and
pledged to support international aid to the Southeast Asian
country. His ministry confirmed that Japan will make the
biggest contribution in an international aid package to Thailand.

Chavalit said the government would instill fiscal discipline by
cutting the budget, but did not say by how much.

Besides closing the finance companies, the government has
agreed to raise the value-added tax from 7 percent to 10
percent, increasing the prices of goods and potentially
worsening inflation.

It pledged not to let foreign reserves fall below $25 billion. The
central bank's latest figures for foreign reserves put them at
$32.4 billion in June, down from $33.3 billion in May.

Hey 2, that is a varry nice chart! Thanks.

Tally Ho

Thank you, Ray. That was _exactly_ the sort of comment I had in mind.
Note that 1976 is not necessarily the best reference year, since it yields a 1/3 drop in the constant $ value of gold to present. The base year 1976 ( I had not found CPI figures back that far ) yields a kinder result, namely, that gold is now ( at $320 ) worth 91% of what it was worth ( on average ) in 1976. If we take the 1976 low for gold as our base price, then gold right now is worth ( in constant $ ) 114% of what it was worth in 1976.

So, in summary, the "ounce of gold buys you a good suit" maxim has tended to hold, depending on what time of year you buy clothing!

Examining the positive nature of XAU today, I found the following:

11 gold funds up. 20 gold funds down. Major gold stocks with sizable volume were all up but three, including those which make up XAU.

Conclusion: Most gold stocks are still sagging with the price of gold; but most large enough to be in XAU are rising. Ergo: money coming into gold stocks is going into large capitalization stocks. This is not the average small investor. I suspect this is new money from other mutual funds getting smart. If so, this would be a major paradygm shift because it won't take much new money to create a bull market in gold stocks and funds, regardless of gold. ( see Spring, 1993 for details )

Historically, the XAU moving up by itself usually preceded rallies, but not always.
This message brought to you as a courtesy of the EagleWing page on gold funds, http://www.eaglewing.com

I appreciate your work and it tells me about what i expected.

Call volume for Dec 360 calls was 4610. And for Feb 360 it was 4607. Sure glad some high roller somewhere thinks 360 is a good strike price, as I have a MUCH, MUCH, MUCH more modest position at this strike. Also it looks like those 2000 Jul 98 $3.50 silver puts Glenn told us about yesterday were finally traded today. Kind of doubt these are protection for a subsequent long position, since that would indicate a willingness to suffer a $1.00/oz -- $10 million -- loss. Comments are welcome and needed!

Fed says they will print lots of money. Inflation ahead?
http://www.bog.frb.fed.us/BOARDDOCS/TESTIMONY/19970730.htm

Shek, regarding your Y2k post, somebody posted a newsflash that Goldman Sachs current gold buying, is the only reason golds price isn't falling.

How about this!
Chairman Robert Bennett of the Subcommittee on Financial Institutions
of the Senate Banking Committee made this statement on July 10:
"The financial services industry is particularly susceptible to the Year
2000 problem. The industry uses computers to calculate interest and
mortgage payments, process stock trades, and access account
information. Without reliable systems to do this work, interest could be
miscalculated, stock trades could vanish, and customers could have
difficulty accessing their account balances or their credit cards. The
financial services industry must also recognize that the Year 2000
problem presents business risks that go far beyond the task of correcting
their own systems. The financial services industry is so interconnected
that systems failures by other businesses, including their customers and
vendors, could present significant business risks. Banks could incur
significant credit risk if their borrowers' systems fail. Securities firms could fail to execute trades as a result of a flaw in a counterparty's system.
"The financial services industry must also deal with perception risk. Even if all the computer systems are in working order by the end of 1999,
consumers may feel threatened by the uncertainty associated with the
date change. This could result in excess withdrawals from financial
institutions or a sell-off on Wall Street. Consequently, the financial
services industry must work to develop a comprehensive remediation
and testing effort to convince consumers of the integrity of the system."

Fidelity Select American Gold & Precious Metals Chart.
Ten market days ( seven hours / prices per day )
http://www.geocities.com/WallStreet/5969/agpm70.htm

Here is the opinion of U. S. Senator Christopher Dodd
"Let me paint a picture for you, Mr. Chairman, of what could happen if
this problem is not addressed. It's December 31, 1999; you're at home
watching the ball drop in times square.
"By the time the ball hits the ground, your bank accounts could be gone.
Your mutual funds and pension accounts - gone. If you're a small
businessman, your billing systems could be gone. All vanished into
cyberspace purgatory.
"Fortunately, the financial services industry is somewhat ahead of the
curve in dealing with this problem.
"However, it's important to note that there isn't a single financial
institution, securities firm or insurance company that is year
2000-compliant today. So we're basing our optimism for compliance
on the hope that everything the banks, securities firms and insurance
companies are doing today will actually correct the problem."

Hang Seng continues to mirror the dow...up 144.....Nikkei down 69...

Interesting study from JP Morgan
http://www.jpmorgan.com/MarketDataInd/Research/Y2Kupdate/Y2K.HTM

Year 2000 Hits The Bottom Line
By Bruce Caldwell
Year 2000 expenditures are reaching the bottom line. Several companies say they will cut corporate earnings to account for the cost of the millennium fix as they find they can't fund their entire year 2000 projects from existing IS budgets. Two research reports indicate thatmany more companies will have to go the same route.
In its annual report, Equifax Inc., a $1.9 billion financial services company in Atlanta, deducted 1 cent per share from earnings to account for its 1996 year 2000 spending- and stated that additional year 2000 spending in 1997 and 1998 would trim four to five cents per share. Year 2000 costs ate up $1 million in the first quarter this year alone.
Southern New England Telecommunication Corp. expects to spend $15
million to $20 million this year on its year 2000 fix, which means cutting its earnings for the year from $3.20 to as low as $2.90, estimates Scott Wright, a telecom analyst at Argus Research Corp. in New York. "That's not chicken feed," says Wright.
Because SNET's year 2000 spending exceeds its IS budget, the expenditures
will impact earnings, acknowledges Richard LeFave, CIO at the New
Haven, Conn., telecom company. "But our intent was to address year 2000
[issues] up front," he notes. "Companies are saying they don't want Wall
Street taking them apart in 1998 because they didn't tackle this sooner."
Indeed, stock analysts say it's not companies like SNET and Equifax that
worry them. "Most analysts will see that companies have a handle on it and will not change their rating on the company," says Terrence Tierney, an equity analyst at J.P. Morgan Securities Inc. in New York.
Tierney warns that if a company doesn't have a good handle on the problem
going into 1998, the impact on earnings could be more than a few cents. Late starters on the year 2000 problem will face rising costs and increased risk of legal liabilities associated with the failure to make sure their company's computer systems are capable of handling dates in the next millennium.
In a recent J.P. Morgan report titled The Year 2000 Problem-It's Worse
Than We Thought, the firm adjusts its opinion of year 2000 from ***"big deal, not a disaster" to "disaster"*** because so many companies and government agencies have yet to begin working on the problem. The report says that last year, using an estimate that total year 2000 conversion costs would be $200 billion, J.P. Morgan calculated that 99.6% of the cost could have been met by IS budgets. Now, using a revised estimate of $600 billion, J.P. Morgan estimates IS budgets will be able to cover just 60.2% of the total expense. There are ways to make room for year 2000 fixes in the IS budget, however. The results of a worldwide benchmark study released last week by Meta Group Inc., a Stamford, Conn., consulting firm, shows that 90% of the 873 participating companies expect to spend 25% of their IS budgets on year 2000 projects. But instead of calling for additional funds, a lot of that money can be culled from existing IS funds, says Howard Rubin, the Meta Group research fellow who conducted the study.
According to the study, 30% of IS spending is slated for non-value producing activity, such as maintenance of systems that don't help generate revenue. "People wondering how to fund the thing can get smart and start to improve their effectiveness," says Rubin.
CONTAINING SPENDING
Some early starters may be able to keep most or all of their year 2000
spending contained in the IS budget. Chase Manhattan Corp. in New York,
for example, expects its IS budget will be able to absorb nearly all of the bank's estimated $250 million in year 2000 conversion costs.
Similarly, at First Union Corp., total year 2000 costs are estimated to be $42 million, an amount that can be absorbed by the IS budget with some juggling of IS staff responsibilities, says Richard Alden, business application manager for special projects at the Charlotte, N.C., bank. "It's a big cost," he says, "but there are things we would have been doing anyway," such as purchasing additional DASD hardware, that will have usefulness beyond the year 2000 project.
Copyright ( c ) 1997 CMP Media Inc.

( 1 ) Year

( 2 ) CPI ( 1982-1984=100 )

( 3 ) Au/oz in 1978$

( 4 ) AU/oz as % of 1978 price ( constant dollars )

( 1 ) ....... ( 2 ) ....... ( 3 ) ........ ( 4 )

___________________________

1971.......40.5.......65.68.......33.99
1972 ......41.8.......90.72.......46.95
1973 ......44.4......142.91.......73.95
1974 ......49.3......210.62......108.99
1975 ......53.8......195.14......100.98
1976 ......56.9......143.05.......74.03
1977 ......60.6......158.92.......82.24
1978.......65.2......193.24......100.00
1979.......72.6......275.42......142.53
1980.......82.4......484.86......250.91
1981.......90.9......329.78......170.66
1982.......96.5......253.89......131.39
1983.......99.6......277.63......143.67
1984......103.9......226.13......117.02
1985......107.6......192.23.......99.48
1986......109.6......218.89......113.27
1987......113.6......256.00......132.48
1988......118.3......240.70......124.56
1989......124.0......200.22......103.61
1990......130.7......191.37.......99.03
1991......136.2......173.41.......89.74
1992......140.3......159.83.......82.71
1993......144.5......162.35.......84.01
1994......148.2......168.99.......87.45
1995......152.4......164.30.......85.02
1996......156.9......161.15.......83.39
1997......160.4......129.75.......67.14

Other:

Average of the year-average prices of gold since 1971, in Aug 1997 dollars: $582

I think a graph of the above data ( i.e., column 3 or column 4 ) would be illuminating, if anyone has the inclination.

Of course, this is all based on the CPI, which is a controversial number.

Ideally, of course, the price of gold, once accepted as the international standard backing for currency, and stabilized naturally over time, would itself serve as the natural and authoritative consumer price index coefficient. Then, all those government employees wouldn't have to go out shopping every month to check the latest prices.

And every purchase would be, in effect, bought with gold. Wouldn't that be a wonderful world?

EBN Gold up .20.....Good night ALL.....

Does anyone know the tick value for the XAU futures? info
a bit hard to get from australia, thought the broker can trade
them.

2: I will graph the data if you provide 400-500 words to tell the story. OK?