"El-Nino~" approaches ..
"humble" soy-meal closes on its high

SUGAR !
up, up, and away

The MAI agreement, negotiated quietly by government and trade representatives of the 29 richest nations, is designed to free the flow
of investment capital and profits.

http://www.essential.org/monitor/mai/contents.html

August 22, 1997
Food safety, drug smuggling are key issues in trade talks

WASHINGTON ( AP ) - The "giant sucking sound" may have fallen silent. But other battle cries will replace it this fall as U.S. President Bill Clinton and his opponents launch another big fight over trade.

This time, the struggle will be over giving Clinton the negotiating authority he needs to expand free trade with Canada and Mexico to South American countries.

Among the issues opponents will raise: drug smuggling, unsafe trucks and health threats from imported food.

The actual results from the trade deal's first three years call both sides' claims into question. Unions have trouble pushing their argument of many lost jobs, given that the unemployment rate in the United States now stands at a 24-year low of 4.8 per cent.

And the Clinton administration, confronted with soaring deficits with Mexico and Canada, concedes it oversold the trade deal's job-creating potential. Instead, it issued a toned-down report last month that claimed positive, but modest, economic impacts.

http://canoe2.canoe.ca/BizTicker/CANOE-wire.US-Trade-Fight.html

Savage - I have to be really convinced of the trend before I use buy stops and that rarely happens since markets are in consolidation 80% of the time. I prefer to buy or sell off of support and resistance areas that way I know exactly where my stop should be. It takes longer and costs more to determine if you're right on a break out since your stop is usually run and so many times they turn out to be false. Of course I miss a fair number of good moves but my drawdowns are small.

When "full text" mode is selected, you may view a maximum of one day at a time. Your result will be displayed beginning with the starting date which you selected

BART, any way we can convince you to return the limit to 5, or even 3 days? A one day limit causes undue grief on us goldbulls. Thanks.

Polarbear- Can you get a whole day? I can only load 25 messages at a time! I'm freakin out here. I don't think I can read Kitco this way.

Telecaster: Select Full text and Oldest on top---Submit and see if that works.

Thanks Selby - I tried it, but no go. 25 is the limit

Kitco has joined the DJIA. Both are now in a bear market. Postings before 8-23-97 are inaccessible.

Telecaster: Select Full text and Oldest on top---Submit and see if that works.

I get all of Sat --so far-- with Full text as the choice. Have to hit the submit button too it seems.

Selby - This will be only the 12th post for Saturday so far. Even if I select short text, I can only get 25.

Telecaster: I think we have quickly reached the end of my suggestions. The only one left is the old "switch off and turn it back on and see what that does"

Got to get some sleep --so long

Worked a 15 hour day, my hands are bleeding, and I cannot read everyone's great commentary when I get home. Bart, you are a beautiful man, but with a cruel streak.

Thanks for trying, Selby. It seems Kitco has been rebuilt. When I reach the end of the list, there is a prompt waiting for me, to load the next 25. No skipping around folks. 25, then the next 25. This is the end, folks.

Well, has been very nice meeting you all, and reading your interesting analyses' these past 7 months. I am giving up trying to work my way through Fridays posts. Off to the threads at SI, for some serious cruisin'. Adios.

Thanks for the free ride, Bart. You provide an outstanding service.

Bart -- I think more buttons are needed! It wasn't very pleasant to have to keep clicking 'next 25' to get to where I had previously left off! I don't mind so much the 25 limit once I've caught up, but I can certainly see where many would not bother going back. I thought we were going to get a full days posting. Actually, if a person has been away for awhile, maybe up to two days, it might be nice if the full two days were posted to him ( her ) , then cut back to twenty five. Something like that. One other item, I had to put the 'oldest first' button active in order to use the 'next 25' button. Perhaps one needs to be added at the top also, unless other methodology is effected. Opps, one more. The 'From - To' buttons only accept the same date. If that is truly going to be the case, then it would be best to replace them with just a single date entry. Just my thoughts on the subject. Thanks.

Bart, I frankly do not see the problem with hitting the mouse once to get to the next 25 when necessary. Your service is greatly appreciated in my book and far superior to any other I have tried. Thanks.

I see to get the next 25 one has to change the first date back when necessary.

the finast trading opportunity from the long side in the precious metals ( especially silver ) lies ahead. commencing immediately through the end of october should witness the largest percentage gains in gold and silver as well as the the plats group in several years.
be careful believing those who counsel "one more drop" in the metals in required.
the lows are in, at least for now. the next trend move of significance is assuredly up not down.

WSF: Have we seen a top? It is too soon to tell. The first confirmation would be a Dow down 10% from the 8300 high. That would require a close below 7470. A second confirmation would be S&P and NASDAQ closes also 10% below their highs.

A look at the Dow/Gold Ratio shows a false reversal in 1929, and 1966, a few months before the final high. We are certainly in a reversal but we don't know if it is false yet. It would require a Dow/Gold Ratio reading of 23.4 to be down 10% from the high. The false reversals in 1929 and 1966 were less than 10%. As this has happened only twice in this century, the next top being the third, I would think the top is in if all those things happened. Bond yields above 7.25% would be comforting. An unexpected major bankruptcy anywhere in the world would clinch it. Something like Penn Central, W.T. Grant Co. if you remember those.

News from Tokyo:
Yamaichi affiliate to reduce capital to
cover loss
Debt-tainted Kyoritsu Securities Co., an affiliate of Yamaichi Securities
Co., will reduce capital by about 70% from the current 3.003 billion yen
as part of its reconstruction efforts. As a result, Kyoritsu's capital will fall
below the minimum capital of 3 billion yen needed to maintain the status
of a comprehensive securities firm, the first ever case among the 48
comprehensive securities firms in Japan.

The company believes the capital reduction is a necessary step to
reduce cumulative losses. The move comes amid the belief that securities
firms must improve their finances if they are to survive the Big Bang
financial reforms.

Kyoritsu had racked up 2.477 billion yen in cumulative losses by March
1997, following six straight years of pretax losses.

Some losses are predicted to remain after the capital reduction as the
firm will likely incur another loss in fiscal 1997.

The level of services securities firms are allowed to offer are dependent
on capital. When capital falls below 3 billion yen, a firm loses the right to
lead-manage issuance independently. But this is unlikely to significantly
affect its business as second-tier brokerage firms rarely lead manage
issuances.

Kyoritsu also plans to slim down its underwriting section. As an initial
step, it will cut the number of executives in the section from nine to six as
of Monday.

Korean Bankruptcy & Bailout news:Korea Stocks Post Most Gains in 2 Weeks, Led by Banks

South Korean stocks posted their largest gains in two weeks, led by banks and brokerages on
optimism the government will soon come up with measures to boost the ailing financial sector.
Investors expect the Finance and Economy Ministry on Monday to announce a set of measures to
bolster merchant and commercial banks, hit hard by a raft of bankruptcies at large companies this
year. The benchmark Korea Composite Stock Price Index rose 5.96 points, or 0.81 percent, to
742.58, the largest gain since Aug. 9, when the index rose 1.2 percent.

Dainong Trading Suspended on Bankruptcy Speculation

The Korea Stock Exchange said it suspended trading in shares of Dainong Corp. because of
speculation it's seeking court receivership. Dainong officials weren't available for comment.
Dainong Corp. is a unit of Dainong Group, the retail and textiles group placed under bankruptcy
protection by creditors in May with 1.35 trillion won ( $1.50 billion ) debts. The inter-bank
agreement freezing the group's debts will expire Aug. 27. Dainong creditors will meet on Monday
to decide a course of action for the ailing group. The stock fell 150 won to 1,780 today before its
trading was suspended.

Albanian vultures looking for meat on bones of dead investments.
Dow lovers take note )
http://web.albaniannews.com/albaniannews/headline/d1/text001.html

Philippine government proposes 20% tax on foreign currency savings accounts.
http://www.philstar.com/site/Preview/assets/cgi_bin/nph-general.cgi?j23_aug23&BUS1

Monday evening the Nightly Business Report ( Paul Kangas ) is doing a feature report on deflation.

Donald- Great Stuff.
I just wonder, with all the problems surrounding the U.S.
When will it catch up with the stock market. At times it seems nothing can effect it. But of course I know it will, just to much mess growing as
time goes on.

STALDER: Only the people here at Kitco seem to realize what is happening. Others just look at the stock tables and can't see the rot that is underneath the surface.

In a bored mood last night I turned to PBS and watch Louis Rukeyser ( pardon the spelling-I'm sure this is wrong ) . He asked three guests their assessment of the market for the week. To a person they all expressed the opinion that the market is just readjusting and getting ready to go even higher grounds and that there is no fear. Its too bad they weren't on board the Titanic. They could have helped keep order there and readjust the deck chairs.

This market is like the Titanic, it shall cruise ahead majestically with its unsinkable reputation. But like the Titanic, unknown to its crew and passengers, it is made of a very brittle alloy which will shatter upon collision, sending it down in infamy. I think I hear the screams already and there are not enough lifeboats!

oldman: I heard the distinguishing characteristic is the relative size of the member. For a man of bills size his member is about half as long as what you would expect. Now that is what I would expect!

Mornin Tort!!!!.....Rain+wind prevail....accompanied by huge waves...SOS.
mayday.....

Bart, it would be nice to have a previous button on top to scroll back with, or am I missing something? telecaster, I hope you'll be back, things will get better I'm sure. I feel your pain, I work some of those 12-15 hour days also!

Where the hell is my lifeboat???....I think Bob Rubin took my place...

Hey Bart: Why the change???...this is confusing....and more difficult...

6pak: Thanks for these great histories on our evil fed. I knew they were bad but this has opened my eyes.

In debt over your head? We can help, take out a second mortgage on your house and we will give you our credit card. Consolidate all your bills on the card. Now you can deduct the credit card intrest from your taxes and your card is secured by your house.

Roebear: Very apropos & graphic analogy of the stock markets -

George Soros is a moron.
http://biz.yahoo.com/finance/97/08/23/z0009_4.html

Problems in Asia near a bottom. ( Heh,heh )
http://biz.yahoo.com/finance/97/08/22/z0000_z00_17.html

Dont think there is an international effort to drive the price of gold down? Consider this possibility. Australia and pac rim countries see the coming financial storm and make plans. Australia is told they must be ready to kick five, perhaps as much as ten billion into the bail out pot, depending on how bad it gets. Australia comes to the us and says it may need three to ten billion if things get bad. We say we will think about it. Our gold friends get involved some where along the chain. They see the tremendous potential of a leading gold producer selling most of its gold. So as a stipulation for the backup credit from the us/imf/whoever Australia sells the gold.

'WORLD WIDE RECRUITING AGENCY'- equal opportunity employer
Position: Printing presspersons- paper currencies
Available positions - 100,000
Locations: U.S., Thailand, Malasya, Philippines, S.Korea, Russia, Italy, Brazil, Mexico, Canada, Australia, S. Africa, Japan, HongKong and many more
Wages: Minimum Wages
Position Classification: Part-time worker, shift worker, on call 24 hrs
Hours of work: minimum 60 hours per week,
Other Conditions: no unions, willing to relocate,
Benefits: none
Reasons for openings: expansion, replacement for exhausted workers
Apply to any country Central Bank, and be able to commence work immediately.

Ted, they don't call me ROWbear for nothin'!; ) )

Another domino.
http://biz.yahoo.com/finance/97/08/21/z0009_128.html

Just heard a raio report that Hong Kong is cutting its currency loose fron the US$. Can't find anything in print on the topic.

Wow, now my last post caused a GPF! That never happened before! Is it my system, Bart's new Kitco layout, my humor stressing both the former or did Ted p__s off Rubin? Well ( gritting teeth ) here goes again.

Per Randy Forsyth the three largest foreign holders of U.S. Treasury Bonds are: Japan $307.8, UK $232.7, China $95.0 ( all in billions, China includes $44.1 in Hong Kong )

Bart, Just a short note to let you know the difficulty here re the newest changes. I must pay for each hours use unlike most it seems with their eternity usage per month. With that in mind, I came onto Kitco, got the latest 25 , "had to read them first" before I could go to the next 25. The problem is that if I read them, I'm reading them in "real" time, and it's costing me money to do it. If I go off line to read them, then when I come back, you only give me the latest 25 again. In other words, I'm totally limited to the last 25 postings at any point in time. USELESS comes to mind rather quickly. I had no problem with the 1 day limit before since I could log on and download all the stuff and then go off-line. What would happen to me if I got the last 25 messages from someone like Hep-cat and had to pay to that crap? Sorry Bart, I'm not trying to hurt as you've been absolutely marvellous with us but this one's a bad move in my books and way too limiting. Thanks and hoping we can come to some changes that meet both our purposes.

TTFN

The grains are heating up. The precious metals: some have moved, some are getting ready. Tbonds and stocks looking toppy. Labor comming back to the picket lines. M3 growing out of control. Is it just possible that that rascal who has been forever banished, is showing his nose. Remember the whole game depends on his being gone forever!

ROEBEAR: Probably just Hershey Bar crumbs in the keyboard.

Touche'

Ed Yardeni, chief economist at Deutsche Morgan Grenfell Inc., said Friday U.S.
Federal Reserve Board chairman Alan Greenspan thinks the U.S. market is
overpriced by almost 20%.
He said the fine print in Greenspan's July report to Congress reveals the Fed has developed a "valuation model" for the
Standard & Poor's index of 500 stocks.
"According to Mr. Greenspan's new model, the S&P500 should have been trading around 800 in July," Yardeni said.
The S&P index was over 900 then, and closed Friday at 923.55.
John McCallum, chief economist at Royal Bank of Canada, said this probably reflects the fact that "the old rules of the game
aren't holding" in two ways:
http://www.canoe.ca/FP/aug23_bondsbehin.html

I wouldn't assume that the trend has changed yet. I think that the move up in the metals on friday was the last impulse wave up we are going to get. The bull market in stocks is alot stronger than people give it credit. I do admit that there is a chance of me being wrong. If gold closes above friday's high then we may get alot more to the upside. I don't see that happening. I went home short silver on friday. The DOW was down 138 points when the metals closed and we only closed down 6. I would really be surprised if we opened up higher on Monday. I'm also going to seriously think of putting money into a stock mutual fund soon. A close in the S&P below the low made during the past two weeks would mean there is more to the down side io stocks. Until then I'm assuming the bull is still very much alive! I know this is not a very popular view but fighting the trend can be killer! The trend will change one day. Just not yet.

ROEBEAR, TORT: The Dow may have one more push to a higher high yet. Congress and Prez are out ( some would say the always are ) and no significant govt. index reports until the middle of next month. I think the August CPI will show signs of inflation and become the first nail on the coffin. Next, the 3Q corp. reports will come in somewhat lower than expected. From that point on I think the trend toward lower highs will start signaling the beginning of the bear market. One last small end-of-year rally ( traditional, you know ) may occur, but Dow will probably close 1997 at a small loss from 1996. I believe in the "7 factor" - years ending in 7 are bad for the stock market. We'll see.

Front 09:00. I simply scroll to bottom of page a load 25 comments at a time until I have caught up. Then I can go offline. Then use Back button to to return comments as I read them. How much you can save depends on computer cache.

This new way is slower if you want to download an entire day or more but faster if you check in periodically during day for latest comments/news.

This is an excellent site. Thanks Bart.

Bart@ kitco: Just a suggestion. How about buttons similar to the search engines for next 25 2nd 25 third etc, this would allow one to be more selective for point of entry.

That last link on the S&P overvaluation was very interesting. A must read worthy of a bookmark. I still, however, think that the bulls have to be hit in the face with the inflation signpost before they retreat.

Am I understanding that some of you are having to come all the way back to the top of the first page every time you finish reading a post remainder, ( the additional words ) ?, or when you return from a posted URL? I'm not having that problem; older browsers or improperly set cache memory, ( how often current page is compared with the one in cache0, could be the culprit.

Gold mining merger news.
http://www.afr.com.au/

Malasya has through censuring and/or 'softening' the hard realities of economic & banking problems has thus far avoided 'panic' a la Thailand...but can they get away with it?
asked whether the banking sector would be affected by the cooling of the
economy, the Standard Chartered Bank Malaysia executive director said:
"It depends . . . obviously there will be some impact on the property
sector.
http://www.jaring.my/star/current/23bss1.html

Yellow Jacket, Donald, Puetz, voronsky et all: Yellow Jacket, I would have agreed with you until recently but I have become a convert to the deflation scenario. The seven months of down % in PPI is highly unusual, add the currency turmoil, gold as an indicator, CRB as an indicator, falling US budget deficits ( yes I know, [sic] ) , full employment/no inflation, many US corporations with much exposure to world markets re: currency devaluations/strong dollar, and this section of nomercy's post 09:07 caught my eye
"After more than a decade of aggressive investment in new production capacity to make all manner of manufactured goods, the region is saturated," he said. "Much of this new capacity was funded with foreign capital with the intention of serving the rapidly growing Asian market. The only problem with this strategy is that the Asian market is not growing rapidly."
Steve Saldanha, economist at Canada Trust, said "the deflationary forces of a generalized downturn in that region are still underestimated by the rest of the world."
Steve Saldanha may have made a great ( under ) statement.
Questions for all:
1 Are we seeing the birth pains of a new world economy which will ( and has been ) drag the US living standard down while the rest of the worlds rises.
2 World competition seems to be resulting in excess capacity. What happens if the US and a few others lose the ability to soak up that excess capacity?
3 While competition is good to an extent if you are in a saturated market some participants will go down. While this is normal in the dog eat dog market are we able to withstand losses feeding back into the new global market when they effect some of our own? With our own personal debt levels high and all our own personal eggs in one ( market ) basket the system is vulnerable to global shocks.
4 Finally, after 68 years no one can really ID the hot buttons for the Great Depression, can we therefore see the next deflation?
While there is nothing new under the sun and what was shall be, history usually repeats itself with enough of a new twist to throw nearly everyone off. I am not satisfied that we have enough insight into a potential deflation scenario. With all the recent events and their ramifications I wish that the Thinkers of Kitco, more able than I, would crank up their craniums, dust off their crystal balls, recast their chicken bones and regaze the stars. Whatever it takes, we are not yet amply prepared in understanding the great events about to unfold .
Sorry for the long post, I'm done for now..

Front -- Try this, set your cache such that it doesn't verify the document. This will save the page to the cache. Then download in the 'Full text' mode. Click on the 'previous 25' link until you're caught up. Then go off line and use the 'Back' button to scroll through each 'page'. I haven't tried this, but it 'should' work.

What I do, is just keep on hitting the 'previous 25' link until I've reached the last post that I've read. Then I use the back button to 'page' forward. One final note on this subject, I have turned on the 'alert before accepting a cookie' preference so that I can control when I accept the cookie setting my 'arrival' time.

NERVOUS investors dumped listed Indonesian bank shares
yesterday on market talk of a serious liquidity crunch straining
bank finances.

Bank Danamon, one bank widely rumoured to be facing a cash
crunch, issued a denial and said it had the resources to meet all of its
financial obligations.
http://www.asia1.com.sg/biztimes/pages/nfrnt03.html

Hong Kong inflation news. ( Still no HK dollar news )
http://www.scmp.com/news/template/templates.idc?artid=19970823013902035?=fp&template=Default.htx&maxfieldsize=1808

Bart: It looks like you've made some long-needed changes to relieve demand on your server. Why not just show one message at a time? Sort of a Random-Message-Of-The-Day type of thing. You might even experiment with Random-Sentence-Of-The-Day. As the internet grows and demand increases, you could cut that back to Random-Word-Of-The-Day, and later to Random-Letter-Of-The-Day. :- )

Just kidding. LUV 'YA, MAN!

Kidding aside, I do favor a threaded format,  la usenet. On first entering Kitco, visitors would see all the topics, and who responded to whom in what order. And then the visitor could click on those headers he or she was interested in reading. Your server wouldn't have to download hundreds of kilobytes of full text to every visitor -- like me -- who comes to Kitco at least a dozen times every day. LUV 'YA, MAN!

If we break friday into two sessions, which for measuring volitility seems reasonable, we have had seven stright sessions of 100 point moves on the dow. Five broke the record. This tells me the top is near, perhaps we make new highs, but in time the top is near.

MALAYSIA's Deputy Prime Minister and Finance Minister
Anwar Ibrahim said yesterday speculation that Bank
Negara governor Ahmad Mohamed Don had resigned was
untrue.
http://www.asia1.com.sg/biztimes/pages/nseas03.html

The fundamentals ARE VERY convincing for silver and the producers of the white metal. Here is an excerpt from Pan American Silver's 1996 annual report:
http://www.gold-eagle.com/gold_digest/goldbug411.html

The trend HAS changed. The number of 'dow bulls' is less now, due to stock overvaluations, uncertainties, fear, higher risk diminishing returns. The 'remaining bulls' don't want the game to end. All the 'good news' is priced in the stock prices. There are at least 20 reasons, from new accounting disclosure regulations, to currencies, to refunding of the Treasury Debt ( foreign buying has been drying up, and ARE SELLING dollars to defend their currencies & economies ) thus higher interest rates, resulting in higher inflows to bonds ultimately gold and away from stocks. Why would any fund and/or pension manager invest in stocks that are going to yield max. 10% capital appreciation ( forget the last couple of years. Its over ) and ACCEPT HIGHER RISKS, which stocksholders have instead of secure returns of 7-8% in the bond market, and more importantly, gold investments which will naturally benefit as world markets tumble following the US lead. I'm afraid that the remaining bulls will suffer the same fate that gold bulls have when gold was $400-420 Feb. 96, waiting for a breakout over $420. Good luck.

If I want to purchase gold certificates and draw a monthly or quarerly dividend, should I go through a broker or a bank?

"It is not just the relative appreciation of the Hong
Kong dollar which challenges Hong Kong's
international competitiveness," he said.

"Far more serious is Hong Kong companies getting
their act together to make certain we don't start to
price ourselves out of the market."
http://www.scmp.com/news/template/templates.idc?artid=19970823012610023?=biz&template=Default.htx&maxfieldsize=3587

nomercy - I read many posts last summer and again the fall and winter - that were just like yours. Most of the smart money predicted that 1997 had a potential of 10% max and therefore the bull was gored - but here we are. Even Elaine Garzelli has been quiet - :- ) . The fundamentals are still very sound. The cracks that are starting to show are very small still. I'm long on some gold stocks now - but I'm not expecting to make much money on them this year. BE CAREFUL - THIS BULL IS STILL KILLING BEARS!!!!! Even history is against this BULL - but it can't read and doesn't know he isn't supposed to be able to run.

NOMERCY: Re the Dow overvalued 20%. If we accept the 20% figure as overvalued against bonds as per their model then the next question is how much are bonds overvalued against the real value of the dollar? To take it a step further, how much is the dollar overvalued against the DM? Then from there we ask: how much is the DM overvalued against gold? Do you see my point? They are valuing stocks, which represent shares of means of producing real wealth ( even if they are overvalued ) against paper that is backed against thin air. Gold is not even in their model so if someone reads this story and feels complacent because "stocks are only overvalued by 20%" they don't even think of selling until it drops 21% and they wonder, "how can that be?" By then it will be too late.

Roebear:

All of the 'deflationary' forces which you and others see such as overcapacity, market saturation, etc, etc, can never overcome the fundamental point that inflation as it is currently defined is the price of goods and services denominated in the paper currencies of the world. Since the quantity of this paper is ultimately controlled by governments who most assuredly do not want deflation, they will simply print and redistribute enough of it to make absolutely certain that deflation will not occur in any meaningful way. The currency devalutations going on in Southeast Asia are most assuredly inflationary. Ask a Thai citizen what has happened to the price of gold, silver, oil, tomatoes, rice or anything else and he will tell you that it has gone up 25% in the last few months.

If one changed the definition of inflation ( as Donald appears to have done ) it is a more interesting question. Then the point is whether commodity items will increase in price relative to non commodity items such as a car wash or trip to the zoo. The big struggle seems to be whether the new technologies applied to extracting, or growing commodity items will keep pace with the demand from those billions of new consumers that have been unleashed by the ascendance of the 'free market' in economic life. My bet is that the consumers will overwhelm the producers in this area. Long term trend growth in crop yields has been pretty steady so that the technology seems to be improving at a fairly constant rate. A rapid rise in consumption would get ahead of the production curve. This has certainly happened over the last several years if one measures the stocks to use ratio virtually across the agricultural sector. This stock drawdown has occured despite very favorable growing conditions over the time period. With a major ENSO event underway we may well be presented with some unfavorable conditions.

In the extractive industries the balance is perhaps tipped a little more in favor of production. The amount of new areas which have been opened to exploration by the fall of communism may possibly be greater than the demand generated by the new consumers.

It will probably be better to own a tomato patch than a copper mine.

The biggest wildcard in the whole picture is investment demand. Because the cash value of current stockpiles of stuff is so very low, it is possible that wily speculators will endeavor to make plays to corner various markets. This has already occured several times over the last few years with resultant price spikes.

Hopefully this little run in silver is a portent of things to come. I note with pleasure that there is much skepticism about the move so far. There are still plenty of people looking for $4.00 silver, where the 'real' bottom will be made.

One of the amazing things about golds run up in 1979 was the way it blew through 500. It did not pause. Now 500 should be good for at least a bounce you would think. Round 100 number and all. This time it will be the same or more so. The battle has been fought at 400 for almost ten years. Fought with all the deception and lies available to the largest powers on this earth. They will not cede, they must be defeated. Until they lose 400 will hold. Why? Because it must, there is no slipping to 450 or so. Such a slip will be seen as admitting inflation is coming back. The large short position of somewhere above 2000 tons will probably be defaulted in some manner. All this results in tremendous upward momentum that in my opinion will result in an initial move far in excess of 500 when at last it happens.

Roebear -- As I've stated many times in the past, consumers drive the economies. To be a proper consumer, one major item is required. Money. Money may be in the form of credit, but then the consumer needs enough income to keep the credit 'in repair'. Bottom line is still money. Unfortunately, most workers throughout the world are not paid enough to be 'proper consumers'. I define that as not earning enough to be able to generally buy what one makes. That turns it into an export driven market overall. That means someone else has to sop up the excess. So far, that has generally been US, and not many others. All at the same time when higher paying jobs have been being replaced with lower paying service jobs. That helps to drive a decrease in consumption. Thus, we have a world of more and more paper, but less and less real consumption. Interesting to say the least! Unless a whole lot more purchasing power is put into peoples paychecks, and fast, a BIG case of TOO much capacity in manufacturing is going to be felt everywhere! What if they hold a sale and nobody comes? What if they hold a firesale and nobody comes? The spiral becomes very steep! Lots of dollars about, but none of in the pockets of would-be consumers. That may not be deflation in 'definition', but it is deflation in a more real sense.

nomercy - TO state that the trend HAS changed simply because of the past two weeks is absured. I realizr that "could" change soon but the problabilities are against it this year. Gold is no higher now than it has been over the past couple of weeeks. If spot gold were to close above $330 it would impress me, but right now Dec gold can not even do that! It would not take to big of a moved up in Gold for me to be a believer and it would not take to big of a move down in stocks for me too turn bearish either. Right now I beileve that stocks will open up higher on monday and gold and silver will open lower and neither will look back. We shall find out very soon who is right! I beileve that I am right because I review many, many different markets and economic stats and a few important ones are simply dead. They could change in three or four months but not in a week or two. I may be arrogant but I really believe that I will know when the trend has changed to climb on board because the signals will be overwellmingly strong. There will be NO stats that are dead in the water right before the trend changes!

I would like to tell you about all the things which a look over and cover to make such a determination but I will have to save that for another day.

Thanks for the great post! It's stuff like this that keeps me lurking here!

AAAAAAAAAAAAAAAAHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!

as he PULLS his hair out of his head...I've got two Whole days to read and at this rate I'll NEVER get it done before I die from self-inflicted gunshot.

AWAY...to the funny farm...I can't take it anymore...!!!!

EB

change is ( NOT ) good...please go back...it was puurfect before...

Glenn:

What 'dead in the water' stats are there that relate to silver?

BTW: I still owe you an email and I appologize for not getting it done sooner. I will endeavor to get something done over the weekend.

Forgot to say which post - the Greenspan overvalued market one

linear thinking can be very seductive and is by and large how most folks view the world around them. statistics and indicators are quite useful but shouold be viewed in the frame that disraeli did form his 19th century perch when he uttered "lies, dammed lies and statistics".

the world has for some now operated more upon the perception of reality than any concrete fact there to. everyone agrees that "america has a goldilocks economy" so voila! perception becomes positive. during the nixon resignation everyone agreed things were horrible and voila! they were horrible.
statistics and most indicators are forever looking at the world thru the rear view mirror where perspective is fast disappearing but the view is crystaline.

time will of course decide as it always does... whether the glass is half full or half empty. depends on whether you are pouring or drinking!

none of us really needs the media or each others opinion to decide what is real and what is not. we all have our own minds and imaginations for that.
but beware of linear thinking. because a trend has existed for some time suggests it will continue to do so. being a russian in 1989 must have been very confusing. being an american now and in the next few years as your empire draws to its conclusion should be as well.

Tlaga has a somewhat extreme view of the Federal Reserve monetary system and the EURO. You may NOT agree, but his depth of research is admirable:
http://www.gold-eagle.com/editorials/Tlaga004.html

Thank you for your replies. D.A. I thought the definition of inflation was an increase in the money supply rather than its effect, increasing prices. At any rate, what I am trying to say, manufacturer's cut prices when they cannot sell their product. In a deflation this comes from lack of demand, which comes from lack of maney. We are experiencing this price disinflation or deflation from global competition at this point ( ? ) Will this not eventually cut into profits coupled with a stronger dollar ( relative to devalued currencies ) and effect the performance of US blue chips. Poor earnings will cause the market to fall, causing a reverse wealth effect = people will tighten up the purse strings, demand will fall more, prices will fall more, wages will not increase and unemployment goes up. Presto; recession + deflation in prices. Am I getting this right Eldorado, as a deflation in a real sense ( rather than a contraction of money supply ) ? I suppose I am being unfair, using the classical definition of inflation and then using the "symptom" definition of deflation. I don't care if I'm all wet, I just want to understand the possibilities. Thank you gentlemen for building on the hypothesis. BTW everyone is welcome at the Kitco school for the fiscally impaired ( cst moi )

D.A., ELDORADO: I concur with D.A.on the short term and w/ Eldorado on the long term. I think ( moderate ) inflation is the short term concern and deflation more a long term phenomenon, say 5-10 yrs. out.
Have a good weekend all! I'm on my way out to Atlantic City for a real study of capitalism in action.

The 'cracks' as you term them are not as 'small' or insignificant. I'll outline 'circumstantial evidence' to my theory that the 'run' is over for all intensive purposes.
1. Statistical gathering and diffusion are 'educated guesswork' and/or 'manipulated'. Revisions are made 'after the fact'. ei ) US GNP was grossly understated in Q2 and being 'revised upward' next week. The fact that either the Feds and economists are working from incomplete/unreliable no's is scary in itself as the 'Markets' can be blindsided by 'natural economic forces'.
2.New Era or paradigm which 'stock marketeers & promoters' have latched on to is self-rewarding, and to hell with the real people ( economy ) . The fallacy or inability for the Feds to curb this 'exhuberance' has lead us where we are today, which HAS REDUCED THE MARGIN OF ERROR, in World financial stability. The 'sheeps' are being led to the slaughter house as the 'powerful money' has aimed at reducing 'middle class' America. Let these 'new investors' try to materialize their 'paper profits'.
3.Currency devaluations in Asia is more serious than being reported, and the collateral shortfall and debt defaults are going to rock world's financial stability. Japan who is a major holder of Treasury bills is caught in a catch-22 to maintain a stable Yen for the Asian trading partners & a devalued Yen to jump start their economy. Will they be able to buy US Bonds at the same rate as they have been? Will any of the Asian Tiger countries be able to buy them? More importantly if you look into US treasury refunding or renewals starting from Sept.97 and throughout 1998, there's an average of $26-30 billion dollars monthly debt to be re-purchased by these bond-holders? They will demand a 'higher' premium because a ) they've leverage b ) higher 'risks' exist in the US as the sustainability of the economy and the Market is questionable.= HIGHER INTEREST RATES
4.As we witnessed World stock markets are interest rate sensitive and gyrations and movement of funds are made accordingly. Money goes where there's a higher reward and minimum risk.
5.EMU delay is almost a certainty, as the BofE, strongly suggest and will Kohl 'risk' his re-election ( Sept 98 ) over a devalued mark. I don't think so. Is this good news for the US $? It certainly is for gold as 'diminishes' the CB threat of selling, or more aptly put, the 'spin doctors' have to find another reason other than the threat of EC selling to justify 'the shorts' position when gold demand is heading to historic highs.
6.Stocks have all the good news priced in as expected earnings and P/E multiples, have factored a 'low interest rates' scenarios? Will this be the case?
7.Are inflows going to sustain a high market in lieu of higher yielding bonds?
8.Are investors going to take advantage of lower capital gain taxes in the US?
9.Are the new accounting regulations, aimed at disclosing and booking derivate risk exposure going to enhance earning?
10.Is the high valued US $ going to be a plus in Multinationals bottom line when translating from devalued currencies?
11. Are other countries going to be 'forced' to devaluate to maintain their export capabilities in global trading? Is that going to help US exports?
In conclusion, the 'cracks' or TREND HAS CHANGED. It'll be interesting to see the power of conviction that the 'paper bulls' have in coming weeks and months.
Gold is 'being controlled and manipulated' as it is an 'indicator' or tool of reference used by investors and the public. Unco-ordinated powerful forces are 'pushing' the metal down to suit their individual purposes. Each of these 'forces', such as the Feds & gov't officials who really believe in what they're doing, and provide an 'a scenario of confidence and optimism' to stimulate and manage the economy. On the other hand 'promoters and powerful money' take advantage of this scenario and use it to their own advantage. Its ironic that these billionaires are the 'only' ones which can 'afford' to buy gold and keep it as an investment or insurance and which will be the 'forces' which will destroy the mutual fund & retail investor by 'driving up ' gold prices at the 'oppurtune time' CHOSEN BY THEM. Is this the time? or do they want more 'lambs'?
Goldbugs turn to relish is imminent.

Credit card companies pushing for revamped bankruptcy laws.
http://www.yahoo.com/headlines/970823/business/stories/credit_1.html

Bart: I was wrong about the bear market at Kitco. Now that I know how the new format works, I think it's great -- a big improvement. Thanks for the changes.

APH - If you are around Sat. or Sun. could you please post your current 'support' level for Dec. Silver? Thanks. My own patented 'mickey mouse chart eyeballing technique' has it around $4.55. With this new Kitco system could you take an extra minute to e-mail it to me also? Just in case I miss it.
bb fisher - Do you also have an opinion on this?

Evanston, Ill. --- Researchers at Northwestern University have combined gold
and DNA in an innovative way that should lead to new techniques for
detecting many types of diseases. Screening for genetic and pathogenic
diseases -- that is, those transmitted through heredity and those transmitted by
microorganisms -- may be done using the new material, according to one of its
inventors, Chad A. Mirkin, professor of chemistry at Northwestern.
http://www.sciencedaily.com/story.asp?filename=970823083852

bb - love ALL your posts, 11:47 just being the latest fine example. Keep them coming! Thanks.
ALL - The exemplary comments made here every day of the year are what makes our site so addictive. Bart must be one proud father!

nomercy . PLEASE. Are you REALLY trying to convince the non-believers that gold actually has some intrinsic value? :- )

BART: Like the changes once I got on to how they work and like the faster download. I changed from 8 megs of RAM to 40 the same day you started the new format but I'll give you all the credit if you will do what you can to get the "Squelch" button going.

My view appears 'longer' term than yours. You're a trader and as such are a momentum player, and I wouldn't be surprised at all if the Markets turn upward next week as last year we witnessed a new high in the last week of August trading. Will it repeat?
I maintain that the TREND HAS CHANGED as fewer & fewer bulls are forecasting higher markets and that certainly a trend change. Also the UPS labor strike was another significant trend change, as they obtained higher wages & benefits.
About a month ago both Munk of ABX and Wilson of PDG, were very pessimistic about gold prices.
NEM's purchase of their hedge and Wilson recent statement ( see Paths posting yesterday ) were another trend change.
The only one that hasn't changed is Ted Arnold of ML. I wonder why?
Bill Buckler http://www.the-privateer.com/gold6.html, has an excellent post in this week issue re: Dubai gold imports to double. That's a trend change.
Glenn, I respect your opinion, however, I have to disagree as I think that Donald's dow to gold ratio will be MUCH LOWER than today by the end of October, more like 20-21 area than its present 24+
Will see who blinks first. ( not meant to you personally ) but to the paper bulls!

The Economeister

Back Home Page Directory


( 16:48 EDT 08/22 ) US TSY MKT ENDS MUCH LOWER; NEVER RECOVERS FROM O/N SELLOFF

NEW YORK ( MktNews ) - U.S. Treasury prices ended lower Friday, largely due to a sell-off
overnight on several factors that the market could not overcome in the New York session.
After the hectic overnight and early morning flurry of selling in New York, the market was only
ably to meander in a choppy sideways range most of the day, buffeted by movements in other markets,
traders said.
Initially, an overnight sell-off in dollar/mark, sparked by a sharp increase in German imports in
July -- which has many believing the German Bundesbank will raise interest rates -- helped push bond
prices down, traders said.
Adding to that selling pressure was the continued crisis in the Thai currency, which prompted
selling of Treasury holdings by an Asian central bank, players said. Reports circulated that the Thai
central bank had spent more defending its currency several weeks ago than originally thought, which
may put the IMF bailout in jeopardy.
Yet further pressure was options-related selling which saw many firms short 113 puts, which had
to be offset by selling T-bonds as the Sep T-bond stayed down near 112, traders said.
Weakness in equity markets also kept Treasuries lower, although there was some flight-to-quality
bidding in the short-end near during morning trading, traders said.
"I thought the equity markets would give us a better bid," said a cash trader at a New York
securities firm.
The Dow Jones Industrial Average, which spent much of the day down more than 100 points and
as far down as 177 points, eventually ended down only six points.
The trader added that with the day's sell-off, the market may try to bring it back up next week. "I
think managers will be looking for places to buy," he said.
At 4:28 p.m. EDT, the U.S. Treasury 30-year bond was holding at 6.652% compared with 6.673%
at 7:58 a.m. EDT. -- Ted Howard, 212-509-9270; email: ted@mktnews.com


U.S. Treasury debt price indications:



6.375% 5.875% CBT Sep T-bond 2-30YR Yld
Aug 30-yr Jly 2-yr contract spread
Fri 4:28 p.m. EDT 96 13/32 99 276/32 112 16/32 70.6 bp
Fri 3:33 p.m. EDT 96 11/32 99 282/32 112 16/32 72.0 bp
Fri 12:29 p.m. EDT 96 06/32 99 282/32 112 15/32 73.6 bp
Fri 9:42 a.m. EDT 96 10/32 99 292/32 112 17/32 74.0 bp
Fri 8:48 a.m. EDT 96 08/32 99 286/32 112 16/32 74.0 bp
Fri 7:53 a.m. EDT 96 05/32 99 270/32 Not Open 71.3 bp
Thu 5:00 p.m. EDT 97 01/32 99 296/32 *113 06/32 68.7 bp
*Project A



Back Home Page Directory

Ted: No, the last-hour rally in the DJIA didn't ruin my weekend. Besides, West Lafayette won their season opener last night, 30-6. My son Luke, was 3-for-3 in passing ( only problem is, 1 of those was an interception ) . West Lafayette runs a Bo Schembechler-style offense, run, run, run, and then run some more. Luke's first pass came with 4 minutes to go in the first half. They were rated 18th in the state before last night. We'll have to see how the ranking go on Tuesday.

Now that I have my monthly letter written and mailed, and football is out of the way, I can concentrate on my Kitco-addiction some more. There were a lot of interesting postings the past couple of days. I'll respond to most of them during the next hour.

A rally of consequence, at least in Homestake, is underway.

Judging by the consistent and large volume of transactions ( too much clutter on the chart... use your own daily/weekly database to see what i mean ) registered on the tape beginning in late September 1996 and carrying into nearly Christmas of that year it is reasonable to postulate that someone has high confidence in Homestake and it should move up into the retail and possibly beyond retail levels marked upon the accompanying chart between late September and Thanksgiving and perhaps a bit beyond.

Of importance it should be noted, that Homestake has traded LOWER than the October 1996 lows for only the briefest of moments. Considering the fact that Gold bullion has been decimated "with no end in sight" : )
since November of 1996 this nonsequtir should not be under appreciated.

The momentum indicator adds import to the above conclusions. Time will tell!

comments to mr.daubin@virgin.net

EB: I just read your 1:14 a.m. posting from 8-22. We must eat at the same diner -- I've tried the bbq'd crow myself. It never does taste good.

Eldorado: You must be on cloud-9 after seeing silver's action friday.

Ted: The dipsters saved the day for you on friday. However, don't count on the same next week. I'll explain shortly.

Greenspan is siting with the spirit gold who has assumed the form of a neolithic warrior. Gold has just asked Alan why he Greenspan has betrayed mankind. The tears well in Greenspans eyes, his throat constricts he cannot speak. "Tell us man WHY?" Alan thinks back to the thousands of speeches he has given, all the correctly chosen words, surely he can think of a few of those words now. I was weak. They were breaking people, killing people. I just played along. Gold continues to impale Alan with his gaze as a sad cloud crosses his face. "Come Alan we will go see a little of what your weakness has wrought."

Gold and Alan are transported to a central asian land. There is a battle going between soldiers holed up in an armory and a shouting mob. Gold explains the situation to Alan. "These people have just been told most of their financial savings as well as much as their countries savings have disappeared. Do you know why Alan?" I would guess its because the holdings were in usa tbonds which have defaulted. "Alan you are a quick study. Lets see if we can do some good here." Gold puts his hand around Alan and they advance across the open space to the armory. A machine gunner turns his weapon on them and looses a stream of bullets. As the copper coated lead projectiles come within about three feet or so of the pair they glow a brilliant red and drop to the ground as small golden nuggets. "Thought alchemy was a bunch of bs did you Alan?" Gold is smiling broadly, he expands his mammoth chest and draws himself up to his full nine foot height. Every soldier is now firing at the pair as they stand twenty feet from the blazing armory. "It is usually best to let them unload a few clips Alan." There is now a pile of golden nuggets in front of the pair. Gold reaches down and grabs a handfull and throws it into the armory. The firing slows. He reaches down with both hands and throws twenty pounds of gold to the soldiers. All firing ceases. Gold instructs the soldiers to throw their weapons in a pile. When this has been done. Gold gleefully smashes the weapons into pieces and turns the pile into gold. The mob and the soldiers storm the pile but Gold forces them to line up and each is able to walk away with a few pounds of gold.

Gold and Greenspan are standing apart from the crowd when an old man approaches them. "Greetings grandfather, please help yourself to some money." I do not want money I want my son who has been killed in the fighting. "I am sorry grandfather. This man is sorry also are you not Alan Greenspan?" On hearing these words the old man draws a dagger and plunges it deep into Alans heart.

Alan watches the steel plunge into his chest. The blood spurts out in a broad stream striking the old man and Gold. Alan feels the pain burning, never has he felt pain like this. At last its over he thinks, I have had enough pain. Gold reaches down and pulls the dagger from Alans chest. Alans wound disappears but some of the pain remains. Gold hands the golden dagger to the old man. "Come grandfather let us go some where and eat and drink, all this alchemy gives me a great thrist." The old man says please come home with me.

Gold, Alan, the old man and his family are seated at a table which has been brought out of the house for the gathering. Gold sits at the head of the table on the ground. They have had a meal and are drinking wine. Gold speaks "Now Alan you will explain to Songe why his son had to die." Greenspan starts to sweat he feels the exact pain he felt when the old man plunged the dagger into his heart. I am sorry sorry sorry ... The people start to drift away. "Alan you explain to Songe I'll be back in a few hours."

When Gold returns Alan is seated alone at the table. Greenspan looks like a ghost there appears to be little life left in him. Please dont do this to me Gold. Please! "Alan tonight is but the first time. Get used to it you must explain to thousands, hundreds of thousands. Do you know how many lives you have destroyed? MAN do you?" You will find out Alan, you will find out.

Good to hear you're weekend wasn't ruined...and congrats on your son's football team....Sounds like the old Woody Hayes offense.....

Eldorado,couldn't agree with you more.The base of the money pyramid is getting smaller ( consumer base ) and the pyramid is getting higher and a little heavy economic wind will blow it over.Wasn't that the case in 1929 too?Too much money concentrated in too few hands spells disaster always.

In view of Fridays 247 point plunge in the DOW, AUROPHILES prophetic erudite & incisive analysis is a must read by serious market students:
http://www.gold-eagle.com/gold_digest/Aurophile810.html

I'm counting on Dow 9,000 by Friday!!!....

I will be there to watch the expert...and if I can't make it...I will listen on the radio. I'll come back stage and meet ya' if that's OK. Look for the guy with the Led Zeppelen ( sp ) t-shirt, with the sleeves cut out and the bic lighter screaming for encore ;- ) Speaking of instruments... will you be playing the guitar with your violin bow? It worked for Jimmy Page...

BART - I would like to apologize for my earlier RANT. I DO appreciate this site and would like to continue to be a participant, however, my patience for this new format runs THIN. I'm getting "11 more comments" then "1 more comment" etc... It is pretty frustrating... and I'm sorry to all for going on like this. Go back!!! PLEEEEEAAAAAASE!!!!!

LAR - If you are NEW to the options market S&P's is ABSOLUTELY NO PLACE to start. You will be bitten, half-chewed, swallowed almost whole, regurgitated and swallowed again. This process will continue over and over until there is barely a hint of your former self left. By this time your money will have disappeared to the sharks and your broker will say: "send me some more cash, I think you're getting the hang of it". That is the LONG and the SHORT of it... it is NOT the easy money that some may lead you to believe. This bull is not OVER as many say...tick-tock, tick-tock...'time is truth'.

BadSpeller - you're spelling was fine...and I'm a PROUD product of public schools ( including my stint in S.D. any AZTECS out there? ) . Don't get me started on Public vs. Private...

David - Thanks for the commentary. You're posts are valid and need further analysis...I will do so. btw, I have been long sugar way back when volatilty was LOW. It has been in a nice run. It's been prime for a goooood break for a while, no? EL NINO~?!? WildCard?? Friday's OI and volume were down though...we shall see what happens.

GLENN - GET IT ON!!!! YOU GO MAN!!! The Bull will continue. Short silver??? hmmmmmmm... If you were to trade at NYMEX what would you do with PL?

Someone, I think yesterday, wanted a good options page. If you have read this far here is your reward. BOOKMARK IT! It is the best one I have come across ( thanks Bernie! ) and I've posted it a thousand times. OK, maybe just a few times, but BOOKMARK IT and USE IT! please. http://router.minot.com/~bohl/

All - what signifies a TOP in the DOW? And if this is a top are you saying that it will never go over 8300 again? Is this the top for good...all eternity...next week...what? And don't you all have ANY 'retirement' money in the stock market? Do you truly want a crash or a big-long-term-bear market? Just so your gold will go up? Or your gold stocks? Or what do you hope to gain from the 'downfall' in this impressive market. PLEASE ANSWER these questions. WHAT DO YOU HOPE TO GAIN??? HOW WILL IT BENEFIT YOU? WHY DO YOU WANT TO BENEFIT FROM SUCH A TRAGIG OCCURENCE THAT MAY DOOM MANY? DID YOU NOT MISS A HUGE MONEY MAKING OPPORTUNITY? i'm still so confused as to the wants and needs of the majority of kitcoites...oh Eric ( i ask myself ) , what do they hope to accomplish? could it be only an "I TOLD YOU SO"?? Oh hell... go to the movies...sorry for the Saturday ramble...

Now, I must go see the babe of the big screen G.I. Jane...

AWAY...to play G.I. Joe with G.I. Jane...oh my! :- ) ) ) !!

EB

NONMERCY: The trend in stocks and gold is indeed changing, but the process isn't finished yet. More choppy action likely in both markets before decisive reversals are in place.

Glenn: Agree that stocks probably will rally early next week. Nor so sure about gold going down considering the strong gold stock close on Friday. As far as not looking back -- couldn't disagree more. Any rally in stocks and/or drop in gold will be brief and soon reversed.

nomercy: Your 12:21 is excellent and hits the nail on the head in my book, with many excellent reasons to back up your conclusion. I do not trust the govt's figures. They ( Klinton et al ) are master psychologists in their use of figures etc. It has become an art form with them. How long can this go on? I will give the guy credit, he is a master salesman.

DA: I have not changed the definition of inflation, it is the government who has mesmerized people these 64 years since we came off the gold exchange standard. The price of things has always been measured in ounces of gold. I am trying to get people re-programmed so they return back to the correct definition. There is no difference in the Dow top of 1929, 1966 or now. The bb fisher chart proves that. If you don't think in terms of gold then the government has won and the next time you get a raise you will think you are better off. Thats what they want you to think when you go in to vote. Don't fall for the con. We have investment opportunities for you in Albania!

EB...Take your time and try to get accustomed to the new format... GLENN ....I too went home short silver....Mine was more or less a hedge against some gains, but I too think the lows are not in for gold and silver... Should be getting real close in time though..I am anxiously the moment when the bull runs again...

EB: I do not think most of us goldbugs here are doomssayers so we can make a few bucks on our golds as you infer. We are merely trying to assess the market and position ourselves to at least stay even, and if possible make a few bucks. Most of us consider our golds insurance and feel the stock market has gone too high at this point based on our frame of reference. I suspect most of us are diversified to meet our goals.

Lar: It seems there has been some confusion on the S&P options. There are two types of S&P 500 options: 1 ) The big S&P is traded on one the Chicago Merchantile Exchange ( CME ) , and the value of 1 contract is calculated by multiplying 500 x the quoted option price. 2 ) The small S&P is traded on the Chicago Board Options Exchange ( CBOE ) , and the value of 1 contract is calculated by multiplying 100 x the quoted option price.

I my postings a few days ago, I was referring to the cost of a small S&P option. The S&P December 850 put had a trading range between 15 and 26 last week. It closed at 20 3/4 on friday.

At 21, 1 contract of the little S&P would cost $2,100. A big S&P contract would cost $10,500.

In the past, I have been critical of RJ because it seemed to me was too short-term oriented -- frequently flip-flopping on his views. Correct me if I'm wrong, but it think it was EB and Mooney who wondered if I wasn't being hypicritical in recommending put options -- which are certainly short-term. EB and Mooney are certainly correct that there is great risk in buying options. In the past, I have always recommended the put options on stocks should be a small percentage of your portfolio -- most of your assets should be in gold and silver coins.

With that said, however, some risk is OK if the potential gains far outweighs the odds against loss -- and you can afford to lose the capital at risk. I believe that's now the case with S&P put options. I believe a crash is now developing. The height of the panic should occur between mid-September and mid-October.

With that in mind, there may be closer in and lower strike prices that don't cost as much, but give you the same potential for gain in case of a crash. For example, an October 800 put closed at 6 1/8. One small S&P put would only cost $600 ( instead of $2,100 for the Dec 850 put ) . If the S&P crashes to 450 by mid-October, 1 contract of a small S&P Dec 850 put would be worth $40,000, and 1 contract of a small S&P Oct 800 put would be worth $35,000. The risk-reward may favor the October 800 put.

George Cole: I agree we are headed for a bear market in stocks, however, I disagree that it will be slow in coming. Rather, it will be a crash. I will explain more later on.

Off to read Barron's for a while.

Fidelity Select American Gold & Precious metals Charts
5 Years, 30 day and hourly charts at:
http://www.geocities.com/WallStreet/5969
Click on Gold Sectors
FSAGX has a STRONG looking 30 day chart.

Donald...Glad to be able to teach you something ( that karat thing yesterday ) ..Goes to show that we all have something to offer here at KITCO ( THANKS BART!!! ) ...Have you ever noticed that there is hardly a subject that comes up that someone on here knows a lot about ????

Just want to point out that we may soon see approval of new legislation that would be bullish for stocks ( especially multinationals ) and bearish for gold.

Clinton has been seeking fast-track authority for a new international treaty -- the Multinational Agreement on Investment ( MAI ) -- that would further increase the "rights" of global investors vis-a-vis governments and peoples around the globe. This treaty would essentially forbid signing nations to discriminate against foreign capital in any way whatsoever.

I suspect that anticipation of the quick approval of MAI ( I believe it comes before Congress next month ) is one reason why the big-cap stocks have rallied so sharply from recent selloffs. If this agreement is approved, as seems likely, stocks probably will rally and gold decline, before both markets final reverse coarse on a secular basis.

Another reason why stock bears and gold bulls should not expect too much too soon.

Bart:
I'm a long time trader.As a rapid reader I can generally catch up on a day or two's postings in a relatively short time. With the "25 post limit" it now takes much much longer, and in fact it takes so long I will have to forgo it. The 25 post limit really doesn't work for me and so I losing the immense value of this site that every nth posting is insightful in the extreme. There aren't enough hours in the day to plough through it the new slow way. Is there any way I can persuade you to revert to the old way? Or could you grant the frequent readers the old download rights - per the 80/20 rule that the top 20% ( i.e. the heavy hitters ) are what make this site the best gold site on the planet? Thanks. . .

Saturday, August 23, 1997

Official: 10 tax police officers killed in Russia this year

MOSCOW ( AP ) -- Tracking down tax evaders is a dangerous pursuit in Russia, where more than 10 officers have been killed and another 40 wounded this year, a news report said today.

In addition to the deaths and injuries, more than 500 other crimes were directed against tax police officers in the first half of 1997, Soltaganov said.

In addition to the deaths and injuries, more than 500 other crimes were directed against tax police officers in the first half of 1997, Soltaganov said.
http://www.canoe.ca/News/aug23_tax.html

Saturday, August 23, 1997

Cambodian warring factions trade artillery fire

CHONG CHOM PASS, Thailand ( AP ) -- Cambodia's warring factions traded artillery fire Saturday, a day after forces loyal to strongman Hun Sen botched a sneak attack through Thai territory when they tripped several land mines.

About 22,000 civilians who crossed into Thailand when fighting intensified have been settled into a refugee camp at Khuen Hoeichueng, four miles from the border. The number was earlier estimated at 35,000 people.

http://www.canoe.ca/News/aug23_cambodia.html

Has Warren Buffett concluded that the stock market is overpriced?
http://www.forbes.com

Here is a link to a listing of El Nino news stories in the mainstream press, arranged by date. http://www.pmel.noaa.gov/toga-tao/news1.html We all know some prick is going to burst the bubble. The El Nino is looking like a bigger prick all the time.

TO EB & ALL ELSE WHO ARE LESS THAN THRILLED WITH THE FORMAT CHANGE:

Heres how its supposed to work - A maximum of 25 messages at a time will be displayed. You have to select "View next xx Comments" at the bottom of the page to view the next 25 messages, and so on. If there have only been ten new postings since your last visit only those ten new ones will be loaded. If, for example, there have been 36 new postings since your last access the first screen will display 25, and the next will stop after loading the next 11. Use the submit button and viewing options just as before to review messages that youve already seen.

IF IT"S DOING SOMETHING ELSE OR SEEMS TO BE ACTING REALLY STRANGE THEN PLEASE EXPLAIN THE DETAILS OF THE PROBLEM IN AN EMAIL TO bugs@kitco.com. !!

Server relief as Ron pointed out was the objective of the changes. The pages load quicker because theyre dishing out 25 messages or fewer at each request. Youre all sharing the same host and when many people are getting served at the same time it slows everyone down. The sooner the messages are finished being loading the more time the host has to take of the next guy. Theres probably a good restaurant analogy here, but I think you get the idea.

Bandwidth consumption is also way way down which is a good thing because bandwidth costs money.

WSF: The action of the past 2 weeks does suggest that a crash may be developing. History shows that once a market becomes as leveraged and as over-valued as stocks are presently, the market must do 1 of 2 things -- either keep going up, or crash. The problem is, once an over-leveraged market begins to decline significantly -- say, over 20% -- margin calls come due. It is the mad-scramble to find cash to meet margin calls that created the panic that causes a crash. The ingredients for a crash are there: Extreme leverage and extreme over-valuation -- both are much greater than either 1929 or 1987.

Hence, the coming crash will probably be one for the record books. The major averages should fall from 50% to 75% during the next few weeks. Imagine it's now mid-October, and the DJIA is somewhere between 4100 and 2000, and the S&P is within the 480 to 240 range. Be prepared, because it's going to happen. The only question remains: When?

There are several resons why the crash probably is developing now.

Here is another, even better site for El Nino in the press. Very "clean" and easy to use. For those interested in this event, this would be a good place to bookmark. http://www.ogp.noaa.gov/enso/press.html

Who Cares: You are right, crashes have a tendency to trace out a top over a 5-to-6 week period before collapsing into the panic-phase of the crash. That is why I believe mid-September is so critical ( since the primary top made during early August appears to already be in place ) .

Randall Forsythe's article says it all. US Dollar Stks and Bonds overowned on a worldwide basis. All are also in oversupply. THEY need to keep ALL of the oversupply overowned marts up and the underowned and shortage marts down, especially the precious metals. There can be no weakness in any leg of the $/Stk Mart/ Bond mart troika without each affecting the other. Notice the Yen reversal on Fri. They are the biggest holders and buyers of Treasuries/ Someone made a call. What they paid for the favor Who Knows. It is easy to see how this things could get out of control. The problems in Asia/ the apparent failure of the EMU and vast problems in Latin America only thicken and stir up an interesting brew. One of these mornings gold is going too take off so fast heads will spin and it will be emotionally impossible to get on board.

Roebear: You are correct in preparing for deflation. Regarding your reference to re-gazing at the stars to predict what will happen in the next in the markets: I have done so. Here is what I see...... I see a Total Lunar Eclipse on September 16, 1997. A lunar eclipse that occurs 6 weeks after an over-valued market has topped, has coincided with the start of the panic-phase of the Panic of 1857, the collapse of the Tulip-mania in 1637, the gold-and-silver crash of 1980, the stock market crash in 1987, and the Tokyo crash on 1990.

When a lunar eclipse does not mark the start of a crash, a full-moon within 6 weeks of a solar eclipse has: Examples are: the gold-and-silver crash of 1920, the Panic of 1873, the collapse of the Mississippi Bubble in 1720, the crash of 1929, the Panic of 1869, the soybean crash of 1977 ( Bunker Hunt's speculation before silver ) , and the South Sea Bubble of 1720.

Before you laugh too hard, I estimated the chances of the relationship between full-moons and crashes being random events. The calculation came out somthing like 1 in a million that they are random.

Beware of the full-moon on September 16th. It's a special type of full-moon -- a total lunar eclipse. That's when the panic-phase of the crash should start. This ought to get everyone at Kitco a howlin'!

Volatility?? ( Bart, please install that requested spell-checker. ) The VIX temporarily exceeded 30 on friday. During the past couple of years, that's the level I've been telling everyone to watch for to indicate the crash has started. In 1987, when volatility got that high, it marked the start of the crash. It's probably doing the same thing now.

These daily swings of 100-points or more are probably starting to scare investors -- especially when they are down days. Excessive volatility is not good news for the bulls.

I'm off to read Barron's some more. I'll be back later.

Any opinions on a good LEAP to buy to take advantage of a stock market downturn? Thanks. As a long time member of the "audience", this "show" at Kitco is unequalled.

Mr. Bart Kitner:
I would be the 1st to fully agree this site is your's to do with as you please. Scanning thru 25 posts per logon and time spent bypassing useless multiple posts by hepcat, smartwad & al capon is a step in the wrong direction. Not everyone subscribes to an unlimited "net time" arrangement. Thanks for listening, the next time I'm in Canada I'm going to stop by and give you a great big kiss! Go Gold.

From the FWIW dept: Stocks are in a corrective pullback, with new highs to come shortly. Gold is in a corrective rally, with new lows ahead. They are both in what the ellioticians call "wave 4." If Klinton is successful in getting the necessary help from "Neutered" Gingrich to get fast-track authorization to bring most of the rest of the third world into NAFTA-like arrangements, this thing can continue indefinitely. The Klinton boom's foundational supports are low wages in the US and an ever-increasing supply of low-priced goods from the third world, paid for with gov't. debt paper that will either be "rolled over" in Hillary's second term ( 10 yr notes ) , or defaulted in Chelsea's second term ( 30 yr bonds ) .

This stock market bonanza started the very day after Klinton, with the help of Gingrich, shoved GATT through a lame-duck congress. Thats the paradigm, and Klinton's present drive for new "fast-track" authority means that the Klintonistas are not gonna go down without a fight.

No one should buy puts on the stock indexes at this time, unless you are:1 ) So rich it doesnt matter, 2 ) heavily long stocks and using long term leap puts as insurance, 3 ) A clairvoyant. If the last be the case, you owe it to your fellow Kitcoites to give the date and the extent of the fall you forsee, as Mr. Puetz has so graciously done.

Well , there seems to be two camps of though...1 ) those that expect a meltdown of sorts soon , like Puetz and 2 ) those that expect problems to develop down the road , like GSC. Put me in the Puetz camp. The recent volatility is definately forecasting bad things to come. Bulls and dippies will get used to large moves and, hence, will continue to hang around and pour more money into the market on down days. Then , one day, the move will be so large that they will panic, setting up a selling climax. The major volatility I expected in the metals markets this last week did not materialize ( except mabey in silver ) , but it is coming and soon, imho.

Wouldn't the proposed Mulinational Agreement on Investment ( MAI ) have a possitive effect on North American Gold Stocks, considering their relatively small total value and Far and Mid Eastern interest in gold?

The depression was like some natural physical catastrophe, a flood,
tornado, or hurricane, bringing monumental hardship in its wake. It was
understood as little by the average man as if it had been some arbitrary
disaster of nature.

But, unlike a hurricane, it did not blow itself out. It continued year
after year, 1929 + + + + + +, getting worse and worse, stronger and
stronger, stripping millions of jobs and shelter, forcing millions to
the homeless road; spreading to Latin America and Europe, enveloping
nations and continents, the proud empire of Britain, France, Germany,
Italy, Austria, the Balkans, all of Africa and Asia.

World production fell by 42 % while world trade decreased by 65 %. There
were some fifty millions of unemployed in all parts of the world.

But the Red Cross did not come after the depression struck. There was no
ralling of forces or coming together to care for the sick and hungry
although their number, increased daily, was far greater than those
injured or made homeless by tornado or earthquake.

At first each man was alone, often sitting silently in his home, hiding
his unemployment and growing poverty as if it were a shameful disease.

The newspaper The Record was right, of course, when it pointed out that
no one with get-up-and-go, no one with real initiative and enterprise,
was on relief.

Going down to the county relief office had been worst. He had had to
stand in line with Negroes, and foreigners and people ragged enough to
be bums. As a taxpayer and solid citizen he had never believed in the
dole.

Sure he was a union man but the AFL didn't believe in it either. Well, he
hadn't gone there until Fanny and he had been hungry.

Hundreds of thousands of Mr. and Mrs. Grossups of every age, trade, creed
national origin, and political belief were coming together to fight the
depression in 1933. As they changed, they changed the country.

They transformed America from a place of despair to a country of struggle
They astonished themselves, not only by their courage and their militance
but by the swiftness with which they learned, throwing aside old beliefs
and habits which had brought them nothing but disaster.

Everyone was learning and experience was the teacher. In struggles
against evictions and foreclosures, for food and shelter, the social
power of people united--a power difficult to come by but absolutely
irresistible when achieved--was being slowly perceived.

The great lesson might be learned by such a simple occurrence as a man
pleading for more relief, separately and alone, and being refused, and
then winning the increase a week later when he returned with 5,000
members of the Unemployed Council.

Such a tax if imposed on the Filopenos would definately cause a rush to the yellow. Either that or bags of cash would leave the Islands.

Great story - enjoyed it very much. Take care.

Kenya: Package paves way for fresh IMF
talks

SATURDAY AUGUST 23 1997

By Michael Holman and Michela Wrong in Nairobi

The Kenyan government yesterday announced a package of measures
designed to meet the economic cost of last month's collapse of its loan
agreement with the International Monetary Fund and pave the way for
fresh negotiations.

The measures, which include raising taxes, cutting state spending, speeding
up the privatisation process and improving revenue collection, were
announced as an IMF mission headed for Kenya yesterday in response to
President Daniel arap Moi's request to reopen talks.

In the frankest assessment yet of the impact of the July 31 breakdown of
relations with the IMF, Musalia Mudavadi, the finance minister, said that
"urgent fiscal measures" were needed "to prevent the emergence of serious
macroeconomic problems" and maintain the budget deficit for 1997-98 at
1.7 per cent of gross domestic product.

Kenya faced a shortfall in external funding for the budget of KSh8.3bn
( $120m ) and a further KSh4.4bn ( $64m ) shortfall in balance of payments
support as a result of the lapsing of the $220m IMF loan, he said.

The government would raise duties on petrol and diesel, increase the
maximum value-added tax rate and implement spending cuts totalling
KSh5.5bn ( $80m ) .

Despite IMF insistence that the top-level mission headed for Nairobi
would be conducting "talks about talks" rather than reopening negotiations,
news of the mission boosted the shilling to 65.11 against the US dollar
from Thursday's closing rate of 69.10.

Mr Mudavadi seemed determined to dispel the concerns that originally
prompted the suspension: the failure to crack down on top-level corruption
undermining revenue collection and foot-dragging on privatisation of the
power sector.

He said the government "was taking steps to accelerate the privatisation of
the government-owned public enterprises" and pledged that the
government "would strengthen the organisational and operational capacity
of the Kenya Revenue Authority" and enforce "maximum compliance" with
payment of import duties and VAT.

The removal of Kenya's top customs man, Samuel Chebii, who IMF
officials say had been trying to put a stop to sugar smuggling by well
connected businessmen at Mombasa port, was the step that ultimately
convinced the fund that Kenya was not serious about eliminating graft.

Many donors remained sceptical yesterday about the minister's assurances,
saying that the removal of what were regarded as reform- minded officials
at both the Kenya Revenue Authority and the finance ministry following
the suspension of IMF talks had damaged the government's credib-ility.

Donor suspicion was reflected in a blunt speech by Prudence Bushnell, US
ambassador to Nairobi. "Kenya's government says it is serious about
economic reforms and combating corruption yet it has chosen to risk
economic stability rather than see its promises through to completion," she
said.

She said conditions set out by the IMF for assistance were both
"reasonable and appropriate" and the US would continue to call for
economic reforms and "vigorous measures to address corruption".

Since when will the World Bank speak up as a mediator for Soros. The Maylasians are right; its none of their business. Maybe George is part of the overall scheme? As a goldbug; Soros never been my hero.

More I am learning about how the markets operates these days more
disillusion I get that we can predict with any accuracy what the market
will do in a short term. There is only one truth I can see in the stock
market - when it turns it will burn and will need some rebuilding from
scratch.

This morning I was listening to some money talk on a radio and they talk
about "blind bidding" in mutual funds. It suppose to work like this. Big
fund managers can not track anymore individual stocks in their
portfolios. For that reason, when they need to unload some stocks, they
offer a block of holdings ( e.g. $400 mill. indicating what kind of stocks
there may be but not a specifics what companies are included ) . Other
fund managers bid and the highest bidder takes it. This means that they
buy and sell just for purpose of trading not even knowing what they buy
or sell. On a premise that mutual funds represent the most significant
holding in todays stock market it explains "exuberant, irrational
behavior of market". OTOH, it tells me when the things go bad, there
will be a huge change in attitude and resistance to buy "cat in a bag".
Good and bad companies will get burned just because the way this market
operates.

So please, any of you stock traders, investors in individual stocks, and
market analyst, if you try to predict market based on some rational and
fundamentals, I dont think there is any justification for that. This
market is not any better than Las Vegas casino and when it will go down
we will see a significant change which will require a "purification
through the fire of hell" and significant downturn to make a space for
the return to market which operates more on economic rules than on a pure
speculation.
JMHO

( Mabye Chaos Theory will help us figure out what the markets will do next )
Victoria Griffith: Order out of chaos

Originally published: FRIDAY AUGUST 22 1997

Five people set out to wash a pile of dishes. They could organise the task
in a number of ways: with all of them fighting to get at the sink together or
with each waiting a turn to do their fair share. The chances are that they
will divide the work into tasks.

The group has self-organised, and it is from this sort of example that a
growing number of executives are deriving inspiration for a new
management philosophy that has been called "self-organisation and
complex systems" or more concisely, "complexity theory".

Followers of complexity theory gathered in Cambridge, Massachusetts,
this month to flesh out new applications for the philosophy, including ways
in which companies could adopt its ideas.

The movement alludes to Adam Smith's invisible hand theory, which
asserts that individuals working selfishly to improve their own lives act as a
positive economic force for the larger community. But the bones of
complexity theory itself were outlined by Stuart Kauffman, a scientist who
argued in his 1995 book At Home in the Universe that biological
organisms organise themselves in an elegant, ordered manner, like a
honeycomb, for example. This is true, he asserts, of even the most
complex systems.

The basic premises of the theory are fairly simple: Decision-making units
called "agents" - which include everything from a factory worker deciding
which piece to fit on first to a bumblebee deciding which flower to land on
- interact with other agents to trigger unpredictable consequences.

So how do complexity followers reconcile such unpredictability to their
sense of order? According to Mr Kauffman, organisms exist at the edge of
chaos, finding order, but in a haphazard way.

In fact, complexity followers also embrace chaos theory, a mathematical
theory that asserted that a seemingly insignificant occurrence, such as a
butterfly flapping its wings, could trigger a sequence of events that lead to
an earthquake on the other side of the world.

The upshot of all this in the corporate world is that the company machinery
is in the hands, not of senior executives, but of lower-tier workers.
Complexity theory, therefore, makes the task of management both simpler
and more difficult.

On the one hand, it implies that employees can largely be trusted to
accomplish tasks in an ordered fashion. On the other hand, any
management intervention must be carefully thought out. Since corporations,
like organisms, are often resistant to change it may be close to impossible
to get workers to move in the direction senior executives want. Yet,
according to the chaos theory portion of the philosophy, the smallest
interference might lead to wild, unpredictable changes.

The trick, according to complexity theorists, is to look for the appropriate
"sensitive points": small interventions that will trigger substantial, positive
change. Complexity advocate Chris Meyer, director of the Ernst & Young
Centre for Business Innovation, points to the success of the "zero
tolerance" policy introduced by William Bratton, former police
commissioner of New York, in the mid-1990s.

Instead of large-scale solutions like hiring more policemen, Mr Bratton
concentrated on small but important tasks. "He tried to change the way the
system worked in subtle ways," says Meyer. "And that's how he brought
down the crime rate."

Complexity theory fits in well with fashionable management trends. The
move by many companies to flatter, less hierarchical organisations, for
instance, acknowledges the power of the lower-tier workers to instigate
change. Opening up the lines of communication between upper-level
executives and their employees is also in line with the theory.

Like other management theorists, complexity advocates find themselves
grappling with the definition of a chief executive's role. Ralph Stacey, a
professor at the University of Hertfordshire, UK, and a complexity
follower, believes executives should think of themselves as leaders of a
group therapy session. "They try to guide, but not dominate, by eliciting
responses from different members of the group," he explains.

The philosophy is also being applied to business in unexpected ways. Bell
Canada, the telecommunications company for instance, concluded that
since individual workers were making decisions for the entire organisation,
they should be given some understanding of their impact.

Bell Canada has tried to do this by inviting low-level employees to
participate in computer simulation games that reveal the impact of certain
actions on the business.

Some corporations have used complexity theory to argue that machines, as
well as workers, should be treated as decision-making units. Deere & Co,
the agriculture equipment group, for instance, gave its computers what
might have once been part of the managerial or administrative role,
enabling them to set a manufacturing schedule to avoid bottlenecks in the
system. "By allowing the system to make decisions, we increased efficiency
at the company," says Bill Fulkerson, who championed the computer
program at the company.

While complexity theory is attracting a growing number of believers, others
doubt its suitability in companies.

Stephen Jay Gould, a science professor at Harvard University, questions
the wisdom of applying biological theory to economics at all. "Inheritance,
for instance, is a factor in economics. But in the biological world, animals
and bacteria don't pass on wealth to the next generation," says Prof Gould.
Such examples, he argues, should prevent managers from taking
complexity theory too seriously as a guide for running their businesses.

Oldman makes some interesting and perhaps valid arguments. Based on what he has stated the issue is as follows/ Did the creation of GATT and the current NAFTA movement create the environment for mass amounts of liquidity to be invested in US Stks and especially bonds for the last three years. If so, why and is it sustainable because of further Naftaization. Again if so why. Oldman's observations are correct but lets establish the case for continuation based on current and relevant identifiable factors and evidence. IE What is apparent and known now ie Oldman's arguments may not continue to hold true as they are related to trends which may be becoming unsustainable.

( Letter to the Editor, Financial Times, London )
Gold lacks value-orientated shareholders

Originally published: WEDNESDAY AUGUST 20 1997

From Mr Brett L. Miller

Sir,

I read with interest Kenneth Gooding's article
"Finding a way forward for gold" ( August 15 ) .

In support of Mr Julian Baring's views I would
like to add a number of points.

First, the reasons investors seek exposure to gold have been well
reiterated elsewhere. The basic point is that investors do seek exposure to
gold by a variety of methods, one of which is by buying shares in gold
producing or gold exploration companies.

If these companies hedge their output by selling forward their gold
production, they are denying their shareholders the opportunity to be
exposed to fluctuations in the gold price ( if investors wished to purchase
such a risk profile they could invest in a variety of other more appropriate
instruments ) .

I would argue that when such companies do hedge their output, many
shareholders exit to seek more appropriate exposure to gold and as they
do so the shares of such companies may fall in value.

Second, by hedging their forward sales companies place a cap on the
upside potential, thus denying investors full exposure to price fluctuations.
Investors in mining companies are generally prepared to accept a higher
risk profile than many other investors and in return wish to reap the
maximum of rewards when the gold companies "get it right". Spectacular
fortunes have been made in the past in this way.

Finally, as Mr Baring explains, some holders of gold are selling because it
is a non-income producing asset. This is fair enough. If investors seek
income producing assets they should not be holding bullion. However,
problems arise when the management of gold companies hedge their future
sales because they are then ignoring the fact that investors in gold shares
are attracted by growth in capital value.

At a time when valuations in other sectors are looking a bit stretched, the
gold sector looks attractive and ripe for consolidation. What it does lack is
some value-orientated active shareholders.

Brett Miller,
Flat 4, 17 Gledhow Gardens,
London SW5 0AU, UK

Jan & Panda ....
Well Gentlemen, it seemed to work. Strange eh, don't compare and it saves ! Microsoft speak I guess .....

BART:
Of course, I'll still have to hit the 25 button 7 times. OK Bart, I sort of knew it was coming with this site getting so popular. The length of the downloads wasn't slow as I took it all at once. Wouldn't it be nice to have a button at the top that said "Do you want the last 24 hours, 12 hours, or 1 hour data" and then let us chose. OK, guess I'm just clutching at straws and, as has been mentioned, I won't leave just because of the inconvenience. A pain to be sure but maybe a worthwhile pain in the end ( ie pain in the butt! ) . You can laugh now ! Thanks for your best efforts Bart. It really is appreciated.

ALL:
I heard an interesting item on CNBC Friday night from a "Short"
investor as to what was happening with the market and the monies
it's receiving each month as new input. Apparently, the market
received ~25B this month as fresh input, however that vast
majority of it came in the last week. That's when the market
started to go up after the -240 drop. Now that money was invested
and caused the market to increase for the 3 @ 100 pt. days and
then we got the drop today with the saving at the end. The drop
was seen by him as the "running out of new money" as it had
already been placed into the market to get the 3 @ 100 days. In
other words, to keep this market afloat, it requires 25B a week
of fresh money! It also shows that the new money is waiting for
the drop to come in and perhaps the buy and hold strategy is not
being used by the majority of knowledgeable investors. The buying
of futures of the S&P etc. was mentioned as the reason for the
late rise. In other words, the feds rose the market by buying the
S&P future baskets thereby increasing the water level.
( Re-painting the waterline to delay the ship from sinking ) .


TTFN

Russia: A quiet revolution

Originally published: TUESDAY AUGUST 19 1997

By John Thornhill

Scarcely a day passes in Russia without a scandal erupting around the
country's banks. They are accused of buying state assets on the cheap or
mishandling budget funds, manipulating government officials or corrupting
the media.

But amid the noise and fury, a quieter and potentially far more significant
revolution is under way: some of Russia's 1,700 free- wheeling banks are
mutating into recognisable financial intermediaries. The growing trend is to
raise longer term capital from international investors and domestic
depositors, and pump it into the local economy.

Sergei Aleksashenko, deputy chairman of the central bank, says the
successful stabilisation of the economy signals the end of fast profits for
Russia's banks; either they must adapt or die. "Many Russian banks lived
and live like financial trading companies, making money speculating on the
currency and government debt markets. But profits from these markets
have sharply fallen away," he says.

"If banks do not find their place in the normal credit business, then they will
have a very sad fate."

Already, Mr Aleksashenko's predictions are coming true. Like other
post-communist transition economies, Russia is experiencing a banking
crisis - albeit in slow-motion. Over the past two years, 450 banks have
collapsed, including some large regional banks, such as Tveruniversalbank,
which ranked as the 17th biggest. Local bankers expect a further wave of
failures and mergers as the sprawling industry consolidates.

But a small group of powerful banks, including Oneximbank, SBS-Agro,
and Alfa Bank, which have jointly raised $650m from eurobond issues
over the past few weeks with the aim of making long-term industrial loans,
are pointing the way to the industry's future.

"The time has come when banks must begin in earnest to do what banks
everywhere are ordained to do - which is to lend money," wrote Tanya
Azarchs, an analyst at Standard & Poor's, the international credit rating
agency, in a recent report on the sector.

Oneximbank, which has recently attracted publicity for controversially
buying government stakes in the Svyazinvest telecommunications company
and the Norilsk Nickel metals group, is planning to invest long-term capital
in developing its related industrial assets. In effect, Oneximbank is
emerging as the treasury for the associated Interros financial industrial
group, which controls 24 industrial companies with combined sales of
$10bn.

Vladimir Potanin, head of Oneximbank, says the bank's chief aims will be
to strengthen its capital base and broaden its branch network to service its
diverse industrial assets. With access to capital from abroad, Oneximbank
will be able to lengthen the maturity of its loans to up to three years.

At the current stage of Russia's economic development, Mr Potanin
argues it is far safer to lend money to enterprises which the bank controls.
Poor legal and accounting standards make unsecured third-party loans a
risky business. "We want to be sure that the money we invest will be
properly managed," he says.

But other banks are pursuing different strategies, arguing it is both
dangerous and economically inefficient to be over-reliant on a captive client
base. For example, Alfa Bank, founded to support the Alfa Group of
companies, is busy disentangling itself from most of its related group
businesses to strengthen its credibility as an independent corporate bank.

Mikhail Fridman, head of Alfa Group, says that being a pocket bank of a
big financial-industrial group leads to excessive concentration of assets and
risks, and leaves enormous opportunities begging elsewhere.

"We understand that to develop as a nationwide bank, a universal bank,
we need to have more transparency for investors. We are therefore trying
to develop the bank as an independent entity with an independent strategy.
Now the relationship between the bank and the group is absolutely
commercial," he says.

At present, Russia appears considerably underbanked - especially
outside Moscow. The average bank has only two branches. As of
mid-1996, 81 per cent of all loans extended by Russian banks were for
less than one year. Total banking assets at the end of 1995 amounted to
just $132bn, or 34 per cent of gross domestic product. In the Czech
Republic, for example, the comparable figure was 155 per cent.

SBS-Agro, which was formed last year from the merger of the Stolichny
Savings Bank and Agroprombank, the state agricultural bank, believes its
future lies in retail banking. At the moment this sector is dominated by
Sberbank, the state savings bank, which boasts 34,000 branches and
holds 70 per cent of all retail deposits.

But Andrei Lykov, first deputy chairman, argues the vast, unwieldy
Sberbank is vulnerable to competition. He says SBS-Agro now has 1,400
branches covering 62 of Russia's 89 regions, and expects to win 10 per
cent of the retail deposit market by the end of the year.

The bank is offering a growing range of consumer products, such as credit
cards, savings accounts, and insurance services to attract retail depositors.
"Our population may have between $20bn to $40bn of money under their
mattresses and if we can attract even part of that money, we will have a
very stable and independent funding base," he says.

In contrast to Oneximbank and Alfa, SBS-Agro is concentrating on loans
to the small to medium-sized business sector, where competition is less
intense and the demand for efficient banking services is all the greater.

"One year in Russia is like 10 years abroad," Mr Lykov says. "The
situation changes very fast. But it is clear that bankers should now
specialise in banking."

FRONT, ALL: Front has a great post at 17:05. Be sure to expand it to read the full post about new money into the market. Probably the most insightful piece of information you will read today about the future direction of the stock market.

Did anyone follow my forbes link re Warren Buffett buying zero coupon bonds? Since Thursday market drop was attributed to a rumor that Buffett was selling stock in Wells Fargo, does anyone think this article that says he's buying bonds could have a similar effect on the market Monday?

In case you missed it: http://www.forbes.com

On friday, the closing TICK on the NYSE was +1185. A TICK reading that high usually means some type of sharp down-turn within a day or two. It can be regarded as an over-bought indicator. Also, NYSE margin debt is at a record high $116 billion. And short-interest has declined for two months in a row. In the past, short-sellers have had a tendency to liquidate their positions too early as a crash was ready to begin. It looks like their doing the same thing this time.

Three stories...I'll leave it to your expertise..
1 ) Banking problems ( suspension BCP ) http://www.lanacion.com/97/08/23/e11.htm
2 ) http://www.lanacion.com/97/08/23/e01.htm
3 ) Higher deficit in July ( trouble meeting IMF conditions ) ?
http://www.lanacion.com/97/08/23/e02.htm

Jack: Remember the golden rule. Anything that increases the power of capital versus labor is bearish for gold; anything that increases the power of labor versus capital is bullish.

I am not becoming bearish on gold as is Oldman: Gold's movements are determined by the totality of the factors influencing its price. But this MAI will definitely be a negative if Congress gives Clinton fast track powers here.

I do agree with WW that this trend is unsustainable much longer. But the birth of the gold bull will be a protracted affair, and those expecting a huge move up this year probably will be disappointed.

BTW, if gold does manage to move up in the face of MAI and a probable stock markt rally, that would be exceedfingly bullish.

Kohl Backs Waigel After Shock Quit News

BONN ( AFP ) - Chancellor Helmut Kohl stepped into the fray Thursday to back embattled Finance
Minister Theo Waigel after his shock announcement that he would leave the ministry after general elections
due next year.

As a key government ally called for Waigel to resign immediately, Kohl, on vacation in Austria, said in a
statement that he had known about Waigel's plans not to seek another term at the Finance Ministry.

Waigel has been in the post nine years.

"I respect his position and understand his decision, especially since I know that he is not weary of his job,"
said Kohl.

Waigel, 58, made his announcement in a regional television interview broadcast late Tuesday -- two weeks
after it was recorded by Bavaria's radio and television station.

The news then went mysteriously unnoticed for almost a day.

"Nine years at the Finance Ministry are enough. I have done my duty and am still doing it. But there's a
limit," Waigel said in the interview.

At the center of Germany's post-unification financial woes, Waigel has become bogged down in
controversy.

He has far failed to find a compromise with the opposition social democrats on a sweeping tax reform
intended to help bolster Germany's economic position in the world.

Approval by Germany's biggest opposition party is needed because the SPD controls the Bundesrat, the
upper house of parliament which represents the country's 16 states.

Waigel is also having a hard time slashing Germany's budget deficit to three percent of gross domestic
product to meet the criteria for European Economic and Monetary Union.

In his statement, Kohl said the government would do everything to revamp the tax and pension system as it
has pledged, and that as Finance Minister Waigel "will naturally make his contribution."

Kohl said Waigel's announcement was "not linked to an ongoing debate about a cabinet reshuffle."

The debate had been started by Waigel himself earlier this month when he called on Kohl to bring new
heads into the cabinet before the end of the year when the post ministry will be disbanded due to
privatization.

Postal Services Minister Wolfgang Boetsch is a member of the Christian Social Union ( CSU ) which
Waigel heads, which means that the party will be losing a cabinet post.

Waigel, a key member of Kohl's center-right government, has been at the helm of the Finance Ministry
since April 1989 when he replaced Gerhard Stoltenberg, making him the longest-serving German finance
chief since the Federal Republic was founded in 1949.

Walter Doering, a senior figure in the Free Democrats ( FDP ) , who are an essential element in Kohl's
coalition, called Thursday on Waigel to resign.

Waigel himself had called for "a new team" to be formed before the general elections due in September
next year, Doering noted.

He added that Waigel had no chance of becoming foreign minister after the election, referring to
speculation that Waigel was planning to swap his finance job for the post of foreign minister, currently held
by the FDP's Klaus Kinkel.

"The `Lord of Holes' will not be a `Lord of the Air'," Doering said, in reference to the recurrent gaps in
Waigel's budget figures and a foreign minister's many travels abroad.

FDP Secretary General Guido Westerwelle said Waigel's announcement had been "inconsiderate and
ill-advised."

Hello to all!

I had the opportunity to read a private reports/discussion over the last week and thought
this one would have some meaning to this group. The thoughts come from a different
culture and land mass so they required conversion to Western style communication. Here
is from one you dont get here anymore.

Why do they view their debt in terms of yield when it only returnees more of the same
paper? The only way to convert the return on this American debt is by buying something
real with it. Only then do we have a yield. So let us continue to view it as always before,
using its pricing gage to determine value, the US dollar.
The marketplace is never wrong to give a high price to a low value debt as long as it
uses an unreal  currency as a value gage. The Westerners use paper to price paper
and more paper to price more paper in an endless quest to add value where value only
exists in the minds of men. To this end they say we have lost holding gold, but our
families and children cannot go broke? No one owes us and we owe no one, and we do
not convert paper to something real to create yield. We already own our yield, no
conversion needed!
Now they have created the illusion of gold in great supply to lower its value in
currency terms, and the Americans accept this. They do not question that this illusion was
done using paper contracts ,that do not hold gold but are priced in currencies that offer a
yield valued only in human emotion terms. It is in this fashion that the greatest folly of
Western thinking will bring an end to an era of unvalued money. It will come about as the
entire world evolves into those that have military might using paper currency maneuver
little people countries with gold. But all gold is owned by someone, somewhere and is not
free for the taking. In the near future a real value will be exchanged for gold and those
that hold paper gold will bid much higher to obtain what they thought they already had!

Remember now, a broke superpower ever destroys a simple country that has gold,
they will do business with them !
Big Trader


Now that most have converted paper gold contracts to real gold we have but to view the
great scramble from far away. To the advantage of many, the Americans continue to
position themselves in opposite fashion from the third world. They sell all real gold to hold
gold contracts and gold stocks.
At some point all of the gold will be off the market. Then the CBs will be forced to
become the full primary suppliers. This continued drift to CB sales will no doubt destroy
most bullish gold traders until London is forced to sell real gold. Then the true volume will
drive the price of gold in all currencies to such heights that it will force a reevaluation of
what was primary supply in the first place. During this lock up time all Asians will be
happy with the conversion price during the summer of the last few years.
Know this to be true, the millions of ounces out on hidden contracts will not be made up
for by the CBs once the problem begins. During this time the new currency price of the
entire gold stock will equal all the paper money in existence and the CBs will suddenly
claim they have very little gold in an effort to hide all they can.
Big Trader

This rewrite is very close. It comes from the real one, not the fakes. good luck!

Puetz, That is very interesting and I was unaware of it. I am no astrologer, however. Thanks very much and I wonder what Mike Sheller has to say about this! Where is Mike anyway, stuck somewhere back there between 199-200 X 25 posts? BTW, you have courage, Puetz, I howl not!

Homesake studying Chilean gold deposit.

http://biz.yahoo.com/finance/97/08/22/hm_y0023_1.html

Except for Homesake, XAU volume was unimpressive Friday. Does not look like we are on the verge of a big breakout October a much better bet.

PUETZ, totally disagree with ya, till the money stops comin' in to MF's
thing is gonna' keep on chuggin along 150 points aint squat no more , a measley 2 % or so , there isnot any where else for JOHN Q PUBLIC to put their money in ( at least in the eyes of the sheep ie public ) this thing is going to 9K with or without you, RUBIN & CO will see to that, besides
at this point in time do you see high intresst rates , disgruntled public, people unhappy , till a REAL REASON COMES for the people to panic where goin up no two ways about it, for now anyhow mabye next month things will change I dont really know , but ya gotta take it day by day or ya' gonna drive youreself nuts, donot try and see what it really is see it as how JOHN Q PUBLIC SEES IT , and just keep SHEARING THE SHEEP , so to speak. GO WITH THE FLOW, dont fight it , worst case scenario you'll be wrong only once , and then become A BEAR, wait for the change.
capnkev

Hey OLEMAN, have youre fills at LW been crap lately? mine have been real poor.
Kev

GSC: The economic depressions rolling thru the world ( albeit misreported ) will increase the power of labor versus capital as the value of capital becomes more uncertain. As to Capn Kev and Rubin/ I would not take lightly the rumors of his resignation in June. Didnt happen but I am sure he had the rumors spread as cover for when things really start cracking like now as he knew was going to occur. They/ probably Wall ST BEGGED him to stay. He knows it wont do any good but he was made an offer maybe he couldnt refuse.

them plane crashes CAN BE A BITCH.

WW, do you really believe everthing you read & hear?

BBL goin out to dinner, later gators.: )

CAPN Rubin is probably the smartest person in WAshington and more than the POLS and even Greenie knows the limits of the manipulation. He is a mkt winner and the resignation rumors are to give him cover for saying he WANTED to get OFF the USS TITANIC before ot hit the economic iceberg. Which Rubin knows is coming soon. He will later say the rumors of his resignation were true because of policy disagreements but he stayed on in spite of what he knew might happen to hopefully be of help. WAKE UP CAPN RUMORS ARE SPREAD FOR A REASON!!

Puetz -- Let us suppose that a 'crash' scenario materializes as you suggest. A trader buys the recommended put options. If the market declines to the levels you see, about 2,000 to 3,000 points in a week or two, what makes you think that you will be able to 'collect' on the put options? It's a zero sum game. If the other guy goes belly up, how are you going to get paid? Is your supposition that the financial intermediaries going to make good and pay you? Is that a good assumption for the scenario that you are painting?

The only point that I'm trying to make here, is that if you believe things are going to be that bad, then why would you hold any paper at all? When the Bear comes, I'm operating under the assumption of a slow, grinding bear market. For the time being, I see a choppy market, another bear killer coming, and then when all of the bears are dead and buried... then we can crash and burn. Just because there will be no buyers of last resort ( the short sellers ) .

WORLD ECONOMY IN
BRIEF

Date: 8/25/97

FRANKFURT:

Import prices surge 4.2%

German import prices surged 0.6% in July from
June and 4.2% from July 1996, the biggest
year-over- year gain since June 1989, the Federal
Statistics Office reported.

The July result was well above expectations. In
addition, the July result stands in sharp contrast to
the June figures which showed a 0.2% decline on
the month and a 3.3% increase on the year.

Export prices on the other hand rose 0.2% on the
month and 1.9% on the year in July after a 0.3%
monthly and 1.5% annual increase during June.

A separate, seasonally adjusted import-price
measure from the Bundesbank showed prices
rising 0.8% in July from June and 4.2% from July
1996, according to Market News Service
calculations.

FRANKFURT:

CPI up modestly

The German state of Bavaria reported that its
consumer prices had increased by 0.1% in August
from the previous month while rising 1.8% above
year-ago levels, the state statistics office reported.

During July, consumer prices surged 0.5% on the
month and 1.7% on the year.

Separately, the German state of North
Rhine-Westphalia saw August consumer prices
increase 0.1% on the month and 2.2% on the
year, the state statistics office announced. In July,
they rose 0.5% monthly and 2.1% from a year
ago.

Bavaria and North Rhine-Westphalia are two of
the four large states used to calculate preliminary
West German inflation figures.

MEXICO CITY:

Inflation still slowing

Mexico's consumer price index rose 0.48%
during the first half of August, compared to the
second half of July, according to the Bank of
Mexico.

The first-half rise in August tied the first-half rises
in July and May for the lowest inflation increase
for a half-month since December 1994 - the
month the peso was devalued.

HANOI:

Privatization to pick up

Prime Minister Vo Van Kiet issued a directive to
speed up the privatization of some state-owned
enterprises, a finance ministry official said.

The directive, issued Wednesday, asked relevant
government agencies to ease the privatization
process and persuade citizens to buy shares.
More than 6,300 companies remain in
government hands.

Only about 10 companies have changed status
since a privatization program was launched in
1993. The majority of state-owned enterprises
have assets worth less than $1 million apiece.

BONN:

Growing signs of upturn

There are growing signs that the upturn in
domestic investment activity may soon intensify
and help underpin an ongoing recovery in
Germany's economy, the Economics Ministry
said.

''The continuing upturn in demand and, in its
wake, rising production together with results of
Ifo's latest economic survey show that overall
investment activity could soon increase,'' the
ministry said.

The government's current forecast of almost 2.5%
GDP growth ''should be reached'' if the uptrend
maintains its current pace in the second half of
1997, the report said.

LONDON:

Inventory gains slow

Stocks in the U.K. production, construction and
distribution industries in the second quarter rose
by 731 million pounds on a seasonally adjusted
basis compared with a rise of 1.290 billion
pounds in the previous quarter, the Office for
National Statistics said.

Manufacturing stocks fell by 170 million pounds in
the second quarter - the largest fall since the third
quarter of 1993 - following a rise of 148 million
pounds previously.

LONDON:

Capital spending jumps 10%

Provisional U.K. capital spending in the second
quarter in the manufacturing industries rose 10%
from the first quarter and was up 26% from the
same period a year ago, the Office for National
Statistics said Friday.

The second-quarter figure for capital spending is
3.627 billion pounds - the highest level since the
second quarter of 1990 which was 3.741 billion
pounds. The first-quarter figure for capital
expenditure was 3.303 billion pounds.

LONDON:

Car output drops 7.9%

Seasonally adjusted U.K. car output in the six
months to July fell 7.9% compared with the
previous six months and was up 0.9% from the
same period a year earlier, the Office for National
Statistics reported.

The seasonally adjusted index for total car
production stood at 122 in July, down from the
126 recorded in the previous month.

Since many want predictions, here my 2 cents. Gold and gold stocks will make an abrupt move up during the next two weeks. ...Any quetions?.....I'm out of here until Monday. Leaving the scene of the prediction. 8- )

quetion: like in question.

change?
at kitco?

our generation ( baby boomers ) has seen more aggregate change
in a shorter time, than any other group in recorded history.
why would the click of a mouse cause so much angst?
my damned modem has been out for a week; talk about angst!

let the wind wail, let the oceans' oscillate, let the
liberal democrat chicken chokers chortle; the ssm has
super-charged its' capabilities beyond comprehension.
there are many routes, only the difficult seem to be
traversable. the smoke-signals have been evident and
observable for many months. the bitter-root that generated
the massive mushroom clouds, smoulders amidst the
sleepwalkers and their spawn. to believe, that negatives
will exceed, their greed, is quite non-sensical ( in their minds ) .
how can that has given all, take that, and more? history?

to see the future, study the past.

time is short----

"dost thou love Life? then do not squander Time;
for that's the Stuff Life is made of."
benjamin franklin

words of wisdom, for what lies ahead.

cherokee!; ) rider-on-the-storm ( doors ) , friend-of-the-wind,
and,------ back-in-a-flash----------------




chaos and flux have tapped into the zones of subduction
that drive the rings of fire across the volcanic regions
of the world. montserrat, ethiopia, mexico city, and the
zones under the great oceans are lining-up to present a
spectacle of world-wide proportion.

PANDA: Yours of 19:23, I worry about that a lot. I always bring my certificates home. Also, a lot of brokers are undercapitalized and could close down. It will take months, years, to get stuff out.

NOMERCY: The sign on the door of the Bank of Provincial Credit ( BCP ) says they have been ordered closed for 30 days due to "irregularities" or until the auditors will sort things out per law No. etc.

NOMERCY: The second story quotes the CEO of the bank saying that the bank is safe and there is no problem. The government officials are trespassing on private property to do their audit and he is going to take them to court to get the bank reopened.

NOMERCY: The third story says that they are in danger of not meeting the terms of the IMF agreement in the Third Quarter ( Oct. 1st ) The risk of a miss is very high.

Loads much faster now; thanks for the improvement!

NOMERCY: Proceeds from the sale of this bank were to go toward defecit reduction. ( as I recall )
http://biz.yahoo.com/finance/97/08/22/y0004_z00_1.html

NOMERCY: I found the story in English using the search word "Banco"
http://biz.yahoo.com/finance/97/08/21/y0004_z00_2.html

More on India from the World Gold Council. If only they would report these things as rapidly as Captain Bill. Kitco and the Privateer still the world's greatest gold sites.



Gold Markets & Demand Trends [Gold Flash Archive]
Gold News Flash 21 August 1997

PROGRESS TOWARDS GOLD
LIBERALISATION AND CAPITAL
ACCOUNT CONVERTIBILITY IN
INDIA

.
RESERVE BANK OF INDIA RECOMMENDS THAT
GOLD LIBERALISATION BE USED AS A PILOT TO
TEST CAPITAL ACCOUNT CONVERTIBILITY

India on the way to gold market liberalisation

The Union Finance Minister Mr. P Chidambaram in his budget speech
for 1997-98 had asked The Reserve Bank of India ( RBI ) to appoint a
group of experts to lay out the road map towards Capital Account
Convertibility ( CAC ) .

The Committee released its recommendations on 3rd June 1997. Among
other recommendations for Capital Account Convertibility, the committee
expressed the opinion that ".....Capital Account convertibility is
inextricably linked with liberalisation of the gold regime in India."

The Committee recommended a three phase transition towards
convertibility. Since gold liberalisation is seen as an ideal way to test
capital account convertibility and the extent of capital flight, if any, the
recommendations on gold are included in Phase One which commences
in the financial year 1997-98. The following recommendations have been
made with regard to gold in Phase One:

Banks and financial institutions fulfilling well defined criteria to
be allowed to operate freely, both in the domestic and
international markets.
Sale of gold by banks and financial institutions to be freely
allowed to all residents.
Banks to be allowed to offer gold denominated deposits and
loans.
Banks fulfilling well defined criteria may be allowed to provide
working capital gold loans to jewellery manufacturers and
traders.
Banks may be allowed to offer deposit schemes akin to GAP's
( Gold Accumulation Plans ) .

The Committee recommended that in Phase Two, i.e. 1998-99, both the
government and the RBI will establish steps to develop a gold market in
India including gold derivatives and forward trading. Both residents and
non-residents would be allowed to operate in this market subject to well
defined guidelines.

WGCs role in the liberalisation process

WGC has been actively working to allow freer flows of gold into the
country and allow banks in India to deal in gold and gold related
products, and in a short time good progress has been made.

WGC brought gold to the centre stage of economic thinking in India
through its Gold Economic Conference held in November 1996 in New
Delhi. Since then, three significant developments took place in quick
succession:

The Finance Minister increased the Non-Resident Indian
Baggage Allowance from 5 kilos to 10 kilos of gold every
6-months, effective 31st December 1996.
The Exim ( Export/Import ) Policy for 1997 - 2002 released on
1st April 1997 added to the list of nominated agencies allowed to
import gold "any agency authorised by the Reserve Bank of
India". Further to this announcement, the RBI invited all
"scheduled commercial banks to apply for licences to import
gold". In July, the RBI spelt out 5 eligibility criteria for banks to
be allowed to import gold covering capital requirements, capital
adequacy ratio, risk management systems, history of regulatory
compliance and gold-related experience.
And finally the Capital Account Convertibility recommendations
on gold.

Keeping up the momentum for change

To maintain the momentum and assist in the actual implementation of
gold banking, WGC with the support of RBI held a two day Gold
Banking Seminar on 2-3 August in New Delhi. The Seminar was
aimed at:

Accelerating the implementation of imports through the banking
channels.
Gaining wider acceptance of the CAC recommendations on gold
amongst policy makers and opinion leaders in the government
and the industry.

Targetted Benefits

The banking sector will provide a legal channel for imports of
gold thereby bringing the gold industry in India above ground.
This will create a more acceptable environment for large
corporations in India to deal in gold and gold jewellery
fabrication, leading to a more efficient market.
The banking sector with its large distribution network will make
gold and gold related products available across the country and
ensure regular and streamlined supplies.

Import of gold through the banking sector will bring down the local
premiums, fuelling consumer demand in the worlds largest gold market.

Capital Account convertibility report is available on the World-wide Web
at:
http://www.reservebank.com



.

mucho gracias amigo!
a manana ( sp )

Capnkev: I see you have a great deal of faith in John Q. Public and Rubin & Co. Your faith in national financial heros reminds me of the blind faith heaped upon Charles Ponzi ( 1920 ) , John Law during the Mississippi Bubble ( 1720 ) , Charles Mitchell ( Citibank ) and Richard Whitney ( president of the NYSE ) during 1929, and Bunker Hunt's silver purchases during 1979 and 1980.

Conversely, I prefer sound analysis rather following the manic actions of non-thinking crowds.

ROEBEAR, STEVE PUETZ: I cannot speak for Steve's statistics re the Lunar eclipse phenomena of the past, but my hat is certainly off to him for that research. If that's the case, nice going Steve! I myself am basically a "corporate" astrologer - working with horoscopes based on date of incorporation or foundation ( individual companies, & NYSE chart, specific commodity contracts, etc ) In other words, I do not specialize in eclipses and independent celestial phenomena. Too taxing for my brain. I do acknowledge their power though. However, Steve's assessment of Sept 16 being a panic phase date for this correction ( or Bear ) is significant. I have recently been contacted by my previous Astrological Investor interviewee Mr Chad Meek, the colorful and brilliant natural resource executive and astrologer. Chad went on record in public that July 28 would mark the start of a bear market in stocks, and he was only about 4 days off from the very top. I daresay he is so far the most accurate predictor of the turning point in stocks so far. What is more intriguing is that he now tells me that "September 8th will be a very Black Monday." He foresees a stock decline on or around that date of 300-500 points! He claims to be "75%" certain of this. For those who wish to comment on this, please remember this is Mr Meek speaking, not me. I am just bringing you the best quality astrological opinions I can find, and Chad's is certainly one of them.

Panda: Regarding your 19:23 posting -- you make a good point. I worry about the financial system surviving during a crash. During 1987, a number of brokerage firms were rumored to be in serious trouble. There was much concern about the financial system remaining intact.

For that reason, I recommend holding virtually all assets in gold and silver coins. I do believe the Federal Reserve will react the same way they did in 1987 -- supplying reserves to to banks for lending to brokers and other non-bank financial institutions.

However, during an extreme panic, even the Fed's efforts will have a limited effect. Eventually, the system will fail no matter how much the Fed intervenes. For the next year, however, I believe you could collect on profits in S&P put options. If brokers fail, the obligations to honor the contracts fall back onto the exchanges and the federal government -- which should be able to honor them for awhile.

MAN -- This is SOME Saturday! Even had a damn fine posying attributable to Big Trader! What a concept! Anyway, a few responses/comments of my own.

Jellow Jacket -- Re your 12:16, I believe the 5-10 yrs started that long ago, with Reagan at least. But especially with Nafta and Gatt!

Nomercy -- Re your 12:21, You said a 'most proper' mouthful! YOU GOT IT RIGHT! ( Whenever that happens, it's worth shouting about! )

Puetz -- When a market breaks above an obvious resistance level, it is bound to catch a whole lot of buy orders there. If all else fails, go with the flow and capture the 'gold'.

WW -- Re your 15:29, I agree. The move WILL be 'meaningful', when it happens. I think I've said this before and am now repeating myself.

oldman -- You might be correct in the playout of this scenario. I think for your scenario to play out though, a number of things have to happen first. 1 ) The currency crisis happening stop in their tracks. I do think much of it is manipulated in order to gain a bigger thumb over the 'sovereign states' by the 'powers'. 2 ) The stock market makes a 'decent' correction. I would not be a bit surprised to learn that George Soros isn't on 'their' team! 3 ) Paychecks increase. Necessary to move the goods! 4 ) Interest rates must stay low, and go lower. Got to keep liquidity; got push that wet string! 5 ) All that US paper doesn't come floating back here! Not good for 'consumerism' or the last market on earth.
Since I do not see these things yet occurring, You'll find me on my 'toes', eyeballs glued to the numbers. This is not to say that the end of golds decline and the papers 'promise' is yet at an end. But unless these items I mentioned are not addressed, and a few others, I don't see how even their manipulative games can continue! Best regards!

Now for more catch up!

Bart Kitner ( 15:07 ) : Many of us join the fray late in the day and begin reading in sequence, from the earliest. It would be nice to be able to scroll up through the gossip, in units of 25, without having to backtrack through units of 25 AFTER EACH USE OF SUBMIT. Perhaps there is something I am overlooking but, if there are 4 units of 25 in the day's transactions, I find it necessary to retrace after each use of the submit button.

T'would be nice to just select 'next 25 up' from any lower level. T'would also save you bandwidth as well. ..... I do like the old format better but if this modification is possible, the new is just fine. ..... But, come hell or high water, Kitco.com has the greatest collection of sound minds in this or any other universe.

By the way, speaking of things Lunar, silvers powerful breakout on Friday may be signalling a good move here. Stress lines don't converge on the weekly chart until $5.17. We can reassess things there, but that would be a healthy move. Actually, if silver gets thru 4.85, it will be busting loose from its entire containment within the downtrend connecting the 83 and 87 peaks - a VERY important move. If resistance does come in at 5.17, we can expect a return move back to the breakout to eat up the late fall/winter. Then the uninterrupted bull can emerge.

I have been waiting for the Gold Stocks to lead the way up. Checking in everyday to see to see if has strongly pass 101 mark and shoot up. But maybe this is not the case this time as before. Here are some examples I have read tonight.
George Cole- On India and the World Gold Council, ( not to mention the idea spreading in Asia, with all there problems they are facing ) .
Donald- Bold Companies hedge their output, ( bearish on Gold Stocks )
Miro- Blind Bidding of Holdings, ( bearish on Gold Stocks maybe ) .
Than again most people might just be ignorant sheep.

BART: For what it's worth, go back to the old way here. I didn't mind scrolling thru the past events unbroken. I am now dazed and confused. Of course, I also preferred the old 6 team NHL. But seriously man....

Puetz ( 15:11 ) : Your comments regarding margin are well taken. Commentators here have not paid a great deal of attention to that particular element.

With all players accustomed to only up markets it's reasonable to assume that most of them are margined up to hilt. Anecdotal evidence suggests that this is true not merely for standard margin accounts but also for those who have mortgaged everything in sight to expand there leverage in the market. It should also be recognized that most new money is in the market above DOW 4500. ....... It would also be interesting to know, at what level, most new margin money is in.

Bart: What you really need is 1 more factor in your screening process -- time. For example: 1 ) I know the last time I read Kitco was 4 hours ago. So I request all of the postings between 16:00 on 8-23-97 and 20:00 on 8-23-97. Example 2 ) There was a posting 2 days ago that I want to re-read. It happened somewhere around noon. I'll ask for the postings between 10:00 on 8-21-97 and 14:00 on 8-21-97. In both cases, it's a lot better than searching a whole days postings.

GC: Would you please explain why you feel the MAI treaty would be bullish for stocks and bearish for gold. At first glance, it would appear to me to have the opposite affect. I thought one of the reason the US market is currently so stong is due in part to the security that comes from investing in this country. If the MAI will create a more secure enviornment in other countries, then maybe some of the money in the US will begin to flow into those markets made *safer* by the MAI treaty. Please enlighten me. What have I missed? Thanks

.....by the way, I really respect your opinion and look forward to your postings.

I'm bullish short term both silver and gold. I'm extremely bullish short term on the XAU and bullish long term the XAU. I'm bearish the stock market short term. Rising interest rates and a rising CRB indicate to me that the stock market is now more over priced than when it began it's recent decline. I expect both the crb and interest rates to continue to rise short term putting further bearish pressure on the stock market

Now I'm forgetting who I wanted to post a comment back to! Bart, I think I'll vote for 'slow' over this!

George ( I think ) -- Re your 18:04. YES! Exceedingly BULLISH, given that!

Earl: I appreciate your comments. Last week, CNBC gave a report on the number of people who borrowed money to buy stocks. The report was amazing. It admitted that a great amount of home-refinancings loan money went into stocks. And even more amazing, a MasterCard study suggested that a large part of their loans were not going into consumer purchases. Instead, they were borrowing to buy stocks. That's why the traditional measure -- NYSE Margin Debt -- grossly under-estimates the amount of leverage in stocks.

Oldman -

Enjoyed your comment on gold and Dow.My principal guides in this are Prechter and Dan Ascani. Ascani used to work for Bob and then set up his own shop and arguably has a better track record.

A few points:

1 ) They both agree on the count for gold calling for another down leg. That is fine although silver's 20 cent gain raises the stakes, but this move not really supported by gold stock action.,

2 ) Prechter calls for an ultimate low in gold $100 - $200. But, if you look at the gold price in constant dollars, we are already at that level, and if that is true, The Bottom could be any day now.

3 ) re the Dow, Prechter is calling for a third wave up. Third waves being the most explosive this would maintain the expontential slope, and a subesquent fifth wave might be a lower momentum affair that doesn't keep the slope and rolls over into the major bear downmove.

4 ) but Ascani on the Dow says the top is in for the year and we'll see a good rally soon but no new highs, and then down for the rest of the year. Dan has done a better job of calling the Dow, but still have had his putative tops blown away over the last 2 - 3 years.

In sum I don't know who to believe, but a move to a new high would favor Prechter and vice versa Ascani. There isn't much a a time component left so it should resolve soon. A penny for your thoughts. . .

WW: You are a lawyer. Up to this point, I have assumed you are a logical person. But, now, I am perplexed. You propose that the power of labor will increase as the value of capital becomes more uncertain. How do you suppose laborers will be paid? Do you suppose it will be in the capital of the uncertain capitalists? If so, won't that make labor at an even greater dis-advantage then they are now? WW; You need to explain yourself. Your arguements make no sense at all.

Mr. Peutz-- I think many if not most would deny using plastic or
mortgaging the home to speculate in the stock market. Sort of a
psychological firewall against engaging in that sort of practice.
But if one examines the increase in credit card and home equity debt
and the concommitant increase in 401 ( k ) contributions and what those
contributions are being invested in, I think a plausible case could be
made that running up one's household debt to maintain standard of living
while purchasing equities in a retirement account is, in effect, using
plastic and mortgaging the home to speculate in the stock market,
knowingly or no.

2BRO2b: Right-on BRO!

O.K. Back to more mundane stuff here. Regarding the comments about the S&P-500 and the mining shares contained in it; Here they are ( one more time )

AR Asarco
ABX Barrick
BMG Battle Mountain Gold
CYM Cypres Amax
EC Englehard
ECO Echo Bay Mines
FCX Freeport McMoran Copper and Gold
HM Homestake
N Inco
NEM Newmont Gold
PDG Placer Dome

Now, for the stocks that are in the S&P-500 AND the XAU ( There are six ) ;
( The XAU is comprised of eleven stocks )

ABX Barrick
BMG Battle Mountain Gold
ECO Echo Bay Mines
HM Homestake
NEM Newmont Gold
PDG Placer Dome

Now, for the stocks that are in the S&P-500 AND the HUI ( There are four )

BMG Battle mountain Gold
FCX Freeport McMoran Copper and Gold
HM Homestake
NEM Nemont Gold

Without looking to close, I would guess that the XAU is more sensitive to the movements in the S&P-500 than the HUI is. Hmmm...

Mr. Puetz-- a trillion or four has gotta come from somewhere, follow the
money. BOJ, the Fed, fractional reserve banking system through loans,
who the hell knows. If it disappears back into the aether from whence it
came there's gonna be a whole lot of dashed expectations if not hell to
pay...as usual devil take hindmost on account of the loudest voices
proclaiming a watching out for those interests.

The domestic indices up by 50% in the past year and doubling in
little more suggests equities were drastically undervalued in the quite
recent past. That either shoots efficient market theories all to heck
or something different afoot. An increase in market valuation in 12 months larger than a $1.6T federal budget ain't chump change.

Steve Puetz:
Thanks for your response to my question about expensive S&P's. I have already opened an account and, now armed with the info you have offered me, I will discuss with my broker. Thanks again. Appreciate the fact that you are so available for questions and comments. Best of health and good luck. 73, Larry

Gold does have the potential to make a decent move up short term, but it NEEDS to close above the key numbers you've seen posted here! I will simply say that if/when that happens and you are not already aboard or do not get aboard very very quickly ( perhaps on the overnight markets ) , then you WILL miss out on a good part of the move! It will be very fast but it will also have a lot of 'turmoil' within parts of the move. There will be gaps up and down from the overnight market moves. It'll be 'stressful' for those not in early enough at the lower volatility areas. It will become a 'bit' difficult to climb aboard unless you are willing to close your eyes and pull the trigger! One can make a reasonable estimate of support and resistance areas, but those might still be way out of line of the actuality of the market. It all depends on the 'times' as they be at the moment. Note this as the thoughts of one trader in the markets and also note that this does not necessarily mean that we are at this stage yet. The same activity could yet occur to the downside. Just pay particular attention to the key support/resistance areas! Dec gold banged its head on one Friday. The one above that is near 336. The one above that is mid 340's. Some of these are moving targets on a sloping trendline and change by the day, yet are important for the quick moves. The true support/resistance areas can be expected to be tested, though depending on the 'times' as they be, anything can in actuality happen. Watch those short term trend lines and good trading to all!

what do you think of the kondrateiff model of "52" years

i think this number holds a subtley powerful vibration & essence

( forgive my woo-woo spiritual words/tinges; perhaps i've been in so. cal.
too long )

the myan calendars of 'some time ago', emphasized the number 52,
repeatedly ..... so to speak, pun intended

our planet earth, takes 52 weeks, i think, to get back to where ...
it started from

if we take 13 years times 4 we get 52

if we divide the "world" of economies, finance & industry, commodities,
food, money, energy, and civilization, into 4 seasons::
( earlier in our century ) economic winter: 1929 to 1942
economic spring 1942 to 1955
economic summer 1955 to 1968
economic autumn 1968 to 1981
economic winter 1981 to 1994
economic spring 1994 to 2007 ...... oops !
that blows that whole theory, and model, all to hell !

or does it ?

that Kondrateiff rhythm of '52' never leaves me ....

we are living in an ( imperfect ) world ruled by "rubber-bands" ..
( so to speak )

there is always the "accordian effect" ... of give & take, for every
ideal, economic-cycle-model, in all 'cycles' research ....

perhaps, we've been "indulged" ( -for a couple decades ) ...a long,
protracted, credit-whoring, debt-grovelling "indian-summer" ...

the winter storms are coming

i see them on the horizon
i smell them in my nostrils
i feel them
crawling in
from the beach
everywhere
all over our skin

winter..too long postponed
wrecks a vengence

My data provider doesn't have the HUI index. So I'll compromise and settle for the SPX versus the XAU. You can draw your own conclusions from the chart. I looked the correlation, and at best, it's weak for the data that I have. Isn't a picture supposed to be worth a thousand words though?

Boy it gets lonely here when you're the only posting listed! :- ) )

Panda -- I don't do long term charts. Only minutes and daily. As for your 'lonliness' try reload vs. submit and see what happens. If that doesn't work, click back to medium or short text, submit, then change it back to full. I agree. This place ain't all that 'busy' when all you see is a couple posts, if that!

By the way, has anyone else noticed that the submit button only works after a button has been changed? Else, you need to hit reload? That seems to be how my AOL netscape is working. That's also the way the AOL browser works too. I.E. No diff. Maybe I'll find a difference Monday on my 'real' machine.

Steve look who gained power from the twenties to the thirties/ Labor gained and capital lost. The nature of Depressions is to empower workers through PROGRESSIVE legislation. When people are worried about their future Democratic Socialism becomes in vogue. Health Care and Education are taken care of in almost every country outside the US.
When things go down here and the average person realizes that they are not a rich capitalist entrepreneur they will demand the benefits. Politicians who oppose will have short lived careers.

DAVID: You're starting to sound like Cherokee! ( :- ) )

WW -- I view labor/capital as the two sides of the same coin. If either is 'mis-treated', self correction occurs. If capital isn't treating labor fairly, then sales must decrease. It takes purchasing power to buy the product. If labor 'mis-treats' capital, then capital begins to disappear until a form of repair has been done. The two have to work together in a mutual symbiotic relationship. Else, 'dislocations' happen!

WW: And having been "empowered," the "workers" of America themselves accumulated capital, stuffing it relentlessly into the stock market in recent years, thus bringing it full circle back to the "capitalists." It seems the workers have the same goal as anyone else with a little sense. Ain't America Grand? But when the bough breaks, and the cradle will fall, down will come workers, capitalists, and all. If you really feel for the "workers" you should be out evangelizing them to buy gold.

So, how about that run in platinum??

Eldorado and MIke S: You cannot enlighten a liberal. They are impervious to the facts. Take affirmative action, for example. Pat buchanan has a simple and imminently fair solution, but the liberals would oppose it to the bitter end. It would work thusly: Every white applicant for college admission, employment, etc. would answer the question, "Do you believe that diversity should be attained, even if it means denying the position to a more qualified white person?" then you admit, hire, award, etc., based on merit alone. After all the slots are filled, and the desired level of 'diversity' is not attained, you simply canvass all the white applicants who were accepted and who answered "yes" to the question, and orrer them the opportunity to "practice what they preach." When they all decline to give up THEIR position to the disadvantaged, then the "yes" group's names would be dropped in a hat and the names drawn until a sufficient number have been kicked out to attain 'diversity'. Sounds fair to me. Can you imagine the two white female Dummocrat senators from California, who applauded wildly in San Diego when Klinton announced that as of next year, whites would be a minority in California, drawing straws to see which one of them resigns so a Hispanic Dummocrat could take his rightful place in the senate. Yeah.

Liberals dont believe a word of what they preach. They just say it 'cause it makes them FEEL good.