Gold Discussion for Investors and Market Analysts

Kitco Inc. does not exercise any editorial control over the content of this discussion group and therefore does not necessarily endorse any statements that are made or assert the truthfulness or reliability of the information provided.

Lan Man
(Tue Aug 26 1997 00:02)
@Works Great!
Thanks Bart, for returning the "whole day" to us. It really flies now, Rcvd 24hours in approx. 15sec. All of us offliners appreciate the quick change...

(Tue Aug 26 1997 00:29)
Viva World Youth Congress Viva Free Cuba.

(Tue Aug 26 1997 00:30)
Viva Fidel

(Tue Aug 26 1997 00:36)
@the scene
Gonzalez -- Kind of like saying, Viva poverty and Viva la Jack-Boot. What a concept!

(Tue Aug 26 1997 00:41)
The poverty is caused by US embargo. Cuba is an example of freedom from Yanqui oversee.

(Tue Aug 26 1997 00:48)
@the scene
If you are so 'free' what do you need the US for, embargo or not? Seems the country was doing quite decently before Fidel, a few 'iniquities' not not even standing in the way. Now look what you've done to yourselves! If it were not so sad, it would be laughable. Ant farms are for ants. So are global plantations.

(Tue Aug 26 1997 00:51)
Someday you government will let you visit this beautiful and great Cuba. Just glad US is so free as to make criminal Travel to our beautifult island. Santa Maria and Veradero are very beautiful. Ignore embargo and travel to our Cuba.

(Tue Aug 26 1997 00:59)
Have you readers seen this latest press release?Doing
my due diligence I came across this latest Press
Release.This Company has something going for it.I can now see
the reason for the interest.


The Company's Inferred Resource Exceeds 1.25 Million Ounces of Gold



Date: August 6, 1997

United Tex-Sol Mines Inc. ( the " Corporation" ) ( ASE-UTX.A ) is
pleased to announce a further increase to its inferred resource
provided by the exploration completed in Nevada in 1997.

Previous estimates of the inferred resource along the Virgin
Target, on the Battle Mountain property was 420,000 tons grading
0.223 oz/t ( 7.6 g/t ) Au and I oz/t ( 34.3 g/t ) Ag. Through the
addition of 16 reverse circulation drill holes a further 522,268
tons were discovered grading 0. 124 oz/t ( 4.25 g/t ) Au and 0.67
oz/t ( 23 g/t ) Ag. The total inferred resource on this target now
stands at 942,268 tons grading 0. 169 oz/t ( 5 -8 g/t ) Au and 0-8 I
oz/t ( 27. 8 g/t ) .

This target alone now has a total inferred resource of 158,834
ounces Au and 768,676 ounces of Ag.

The total inferred resources, of the Battle Mountain property, now
stands at 241,261 ounces Au and 768,676 ounces Ag.

Calculations were made using a sectional method with determined
cut-offs of 0.09 oz/ton, 7 feet true thickness and a volume of 12
cu. ft/ton.

Assays were performed on chips recovered from each drill hole,
sampled at 5-foot intervals and assayed utilizing a one assay-ton
portion for fire assay determination by Chemex Labs. Higher grade
assays ( above 0. 10 oz/ton ) were reassayed up to 4 times to verify
repeatability of each sample.

Of the sixteen holes completed by United Tex-Sol, five holes were
allocated to test the stratigraphy out of which, two were
successful in locating additional gold mineralization. Drill
hole UTX-14 located 0-076 oz/ton ( 2.6 g/t ) across 40 feet ( 12-2
meters ) which was drilled due east at an angle of 45 degrees which
has been determined to be part of the Virgin Target

Drill hole UTX-16 located 0. 1 63 oz/ton ( 5.6 g/t ) Au and 0.65
oz/ton ( 22.3 g/t ) Ag over a drilled length of 40 feet ( 12.2
meters ) . This hole denotes a new discovery in close proximity of
the Virgin Target and was located in the Antler Peak Formation
which hosted the Lower Fortitude Deposit which was previously mined
from 1986 to 1994,hosting 2.O million ounces of gold and 10 million
ounces of silver, 1,000 feet due south.

The Company now has an Inferred Resource exceeding 1.25 million
ounces of gold with its Clavos property and Battle Mountain

2.7 g/t CUT-OFF

Avg. Avg.
Grade Grade

CANADA- 6,131,410 31,921,257 1,026,332 0.151 5.20
Clavos *

USA-Battle 1,981,761 7,503,217 241,261 0.122 4.17

TOTAL 39,422,142 1,267,393

* Announced June 27,1997

United Tex-Sol Mines Inc. is a junior exploration and mining
company with mineral exploration properties in Ontario, Canada and
Nevada, USA. The Corporation will continue on a very aggressive
exploration and evaluation program on its Clavos property located
in Timmins, Ontario and its Battle Mountain property in Lander
County, Nevada.



John M. Rucci Eduard H.Ludwig
Chairman & Director President & CEO

(Tue Aug 26 1997 01:00)
Understand this channel talk about gold. Is this because you dont trust your government. This channel is very interesting. Please Explain

(Tue Aug 26 1997 01:03)
PUETZ: Are you saying that stocks like Asarco, Echo,& ABX ( incl. in S&P ) will take a bigger hit than other metal stocks?? Also, what do you do if you're wrong ( about your next 6 wk crash deadline ) , say "Oh well, back to the drawing board"?? I mean, you, unlike some others, are leaving yourself no room to wriggle, ie you name dates AND numbers. I enjoy your posts and hope you continue ( no matter what happens in DOW ) but HOW can you be so sure?....I hope my forthrightness doesn't offend you.

(Tue Aug 26 1997 01:03)
KILO GOLD MINES LTD - The 52 week low has been 30 cents and high of
1.34. A press release put out by the Company on JUNE 26,1997 AND JULY 15,1997
are very significant. On June 26,1997 the Company announced the aquisition of a
very prospective mining property near the Tyrone Copper Mine in New
Mexico. Preliminary examination of the data indicates an ore body of
approximately 8 million tons averaging .45% copper that is open as to strike
and depth.Validation drilling will be commenced by year end to furthur
delineate the
ore body and next to prepare for a feasibility study. ( economic evaluation )

Here is the latest news release as of July 15,1997

CALGARY, July 15 /CNW/ - The Board of Directors of Kilo Gold Mines Ltd.
wish to announce that they have a geological team on site at the recently
acquired New Mexico claims announced in their last press release. The team is
staking up to 100 additional claims, collecting surface samples, mapping the
area and evaluating drill sites. Management anticipates having drilling
permits by the end of summer and commencing a drill program immediately
thereafter to both confirm existing drilling results and to expand the
prospect. The results of this work will lead to a Level 4 Feasibility Study
including geological Mapping, Orebody Modeling, Pit Design, Metallurgical
Design, Environmental Review and Cost Estimation to put the property into
production. Kilo Gold Mines Ltd. has a 25% working interest in these claims
and Proprietary Energy Industries Inc. ( PPI-ASE ) owns the remaining 75%.
Additional information will be made public as it becomes available.
The Alberta Stock Exchange has neither approved nor disapproved the
information contained herein.



We are aware that stock accumulation has been taking place on a very slow pace.
The downside risk at these levels for the aggeressive investor is very
minimal.The drill permits should be in place by the end of August and
drilling to commence in SEPT,1997. Drilling will lead to a feasibility study
and cost estimation to put the property into production. Give our old buddy Thor Gauti
( 1-800-792-3834 ) a call about KGD.


(Tue Aug 26 1997 01:08)
@the scene
Gonzalez -- What's there to explain? This site talks about metals and such. Other sites talk about other things. How'd you find your way to this one?

(Tue Aug 26 1997 01:08)
MIKE SHELLER: What is your theory about WHY this site is so addictive??............Anyone else have a theory on this subject? I'd like to hear them.

(Tue Aug 26 1997 01:08)
World Youth Congress held here in Habana allowed for a gathering of progress youth from many country like China Viet Nam and Belo Rus and Russia. Some brave American withstood US govt ban and came here in spite of possible problems. Habana and our Malecon were light up for the celebration.

(Tue Aug 26 1997 01:10)
I reveiw information for Cuban Sources.

(Tue Aug 26 1997 01:14)
PUETZ & CAPNKEV: Northern Indiana farmers expect record corn crops...I hear ( but have not seen ) that Southern Indiana is hurting.

(Tue Aug 26 1997 01:15)
@the scene
Gonzalez -- That's nice. What kind of information you looking for? Someone here might be able to help direct you to it. There's a billion places on the net. One can find quite a lot just sitting at home.

(Tue Aug 26 1997 01:16)
We invite all americans to visit our country and develop a friendly business posture as has been done by Europes many business. We welcome you to our beautiful country and but we defend our social system which provides many to those in need.

(Tue Aug 26 1997 01:21)
@the scene
Gonzalez -- We have many here and in the government that do the same here, at a very major and contunually growing expense on everyone else. Tends to put more and more people into 'that' category. Ever hear of the law of diminishing returns?

(Tue Aug 26 1997 01:22)
Hey Gonzoles, amigo, my grandpa was a Cuban and his family helped build the
wealth of that country for over a 100 years....can I come back and see how
you have taken care of his family's efforts? I spit in your face!

(Tue Aug 26 1997 01:29)
BART: Thank you for your magnanimous treatment of all of us. I hope to buy you a drink someday.

(Tue Aug 26 1997 01:34)
This people on the sight here seem to have a dislike for the US govt. Cubans who left Cuba are welcomed back but the problems they caused for the working people and farmers and peasants is why they will never get there property back but it will remain in ownership of our workers.

(Tue Aug 26 1997 01:36)
@the scene
Gonzalez -- Why don't you all build your own business's? After all, you wouldn't want to be beholden to all those foreigners, would you?

Who Cares
(Tue Aug 26 1997 01:38)
Puetz's Prediction

Sorry, Puetz, but I can't buy the "3000-4500" point drop within
six weeks. I still am firmly convinced that Greenspan has at
least one more trick up his sleeve. I believe it would be
possible to buy a few more months time by driving down interest
rates. There's still some shift left from long-term borrowing
by Uncle Sam, and the Fed could probably cover the increase on
the short-end by just issuing cash. For awhile.

Your historical analysis is interesting, i.e. wave 1/2 etc, but
it doesn't account for the government's involvement in this

I believe we will see an aborted crash sometime in October. How
long it will continue after that, I have no idea. Perhaps a

(Tue Aug 26 1997 01:41)
Gonzalez, if the Cubans who left came back to Cuba they would be the only
Cubans on the island... there are no more Cubans in Cuba...meaning
the Original stock of Spanish settlers who opened the new world...there are
now just a bunch of low class quasi-Russian thieves who are running out of
food and time.

(Tue Aug 26 1997 01:41)
LAN MAN. how do you get the whole day?

(Tue Aug 26 1997 01:42)
Savage @ 01:08
Addictive: Good Question. I was completing some work, and checked in,
before turning out the lights. I will be interested in the answer, or at
least, others comments. Good night.

(Tue Aug 26 1997 01:43)
(@ freedom peak)
Gonzales - The reason many Americans lately decided not to trust the government is not because they want America to be like Cuba, but because they discovered that ( despite their wishes ) America quickly becomes LIKE Cuba. There isn't much difference between Clinton and Castro. If they dislike each other it is for the same reason Hitler disliked Stalin.

Socialism is the biggest disease ANY society can contract. Historically, any country infected with socialism gets fragmented and destroyed, the infrastructure ruined, and at least 1/3rd of the population killed.

The critical part in introduction of socialism to a country is destruction of money -- i.e. replacement of real money ( gold ) with fraudulent paper money that the government can print at will. This is the most elaborate form of robbery ever invented.

Do you think you could introduce THESE ideas to your "Cuban Sources?"

(Tue Aug 26 1997 01:43)
This is a beautiful country and we provide medical cares and education to those who need or want it. US you must pay now many go bankrupt as we read rich benefit everyone else bad.

(Tue Aug 26 1997 01:43)
@the scene
Gonzalez -- It doesn't have a thing to do with dislike of the US government! Only the way some of those in power treat THE government. The government is THE people! Or was/should be. If we seem to be 'griping', perhaps it is because we care.

Who Cares
(Tue Aug 26 1997 01:44)
Pondering about Puetz

Yes. How can you be SO SURE of a record-breaking crash? I
was *that* positive, too, in 1993. Then Sam burned me big on
bonds in 94. Rebooted the system.

Why can't Greenspan just burn another trillion off bonds again?

I will admit, this trick will only last so long, and I think it's
a major reason that interest rates haven't fallen below the '93
trough. But heck, I'd bet that a fair number of oldsters will
*still* be in 2-10 year notes, afterwards.

(Tue Aug 26 1997 01:50)
Gonzales (About trusting government)

Gonzales hardly anyone; accept those who get free handouts trust ( or love ) their governments. Most people love their indivigual country though.
In general it's the same everywhere. many here cannot take the ( *&^%$ ) politicos who take money to continue in power.

(Tue Aug 26 1997 01:51)
@ Habana
Petronius: I welcome you to Cuba When you travel here. We welcome opinion but believe in Socialism as the best road as proven by history and will be proven by economic results in the unequal wealth of USA and Europe.

(Tue Aug 26 1997 01:57)
@the scene
Gonzalez -- Perhaps since Cuba is so strong economically, You'll all help the former USSR out of its 'difficulties'. They need a whole of of your good will now. Perhaps North Korea also while you're beneficence is so high.

(Tue Aug 26 1997 02:03)
A Gouvernment should be adjudged by its actions for the workers and should be viewed in a bad manner for anything it does against working class interests. Such should be the rule of democratic policy for any workers interests.

(Tue Aug 26 1997 02:08)
@The scene
Bart -- Question: Any way to 'push' new postings out there to those 'logged' in to your site, much like the one minute quotes are pushed? That would certainly relieve a lot of downloads from occurring. Download once when logging in and thereafter have new posting just come at you! MAN! That in conjunction with a nice search engine would about do it, IMHO! It might mean a separate window to come up for posting that doesn't 'blank out / replace' the viewing window, so it wouldn't require a refresh/reload. Just a thought.

(Tue Aug 26 1997 02:10)
Gonzalez, why don't you tell everyone or the equal treatment of your women?
Stories have it that Havana is running a close second to Thailand for women's
rights. You scumbags can't even feed your own women and you invite us to visit?
Admit to this audience that you are in fact a Russian even if your name is of
Spanish descent.

(Tue Aug 26 1997 02:13)

Do those companies have enough cash to put a mine in operation? That is assuming a feasibility study says they will be economical.
Do they have an existing mill on site, which may be refurbished cheaply? Mining is a tough game, especially with AU in the doldrums, and the Bre-x disaster.
Better a reasonably successful miner, that sells for Can $ 1.30 like Aurizon. Don't let their reserves fool you, those vein mines never report more than four years and last a lot longer.

(Tue Aug 26 1997 02:15)
We all recognize the local support in the South here as very important for an understanding of the racism and other problems which have occured. Listen to Radio Free DIXIE.

(Tue Aug 26 1997 02:24)
Gonzalez, you are a beggar... I am not one of them, but I will tell you that when
the real Cubans retake their country, the likes of you will become glorified
fertilizer. You turned a mecca for trade into a 3rd world trash bin inside
of 40 years. Now you come beg to us to visist so as to sell your poor fool.

(Tue Aug 26 1997 02:33)
Your so called Real Cubans Have no chance of re taking anything and are universally hated for what their ancestors did to working people of this country.

Viva Fidel & Viva La Revolucion.

(Tue Aug 26 1997 02:46)
@the scene
Now there's the typical liberal/socialist non-sequitur! HAR!

Strad Master
(Tue Aug 26 1997 03:37)
VIVA Freedom!!!!!
ELDORADO: I wanted to ignore it but I won't be able to sleep if I don't post this: The Kitco site has now graduated from the inane but good natured socialist ramblings of WW to a full fledged unrepentant Communist - Gonzales. "Viva Fidel! Viva la Revolucion!" Makes me want to puke! It's infuriating to think that apologists still exist for murderous vermin, maggot-infested pond scum like Castro! ( If I wrote what I really think, Bart would kick me off the site for good. )

(Tue Aug 26 1997 03:42)
No Limit...
Bill 21:00 - First of all...Welcome. Second...I am not aware of Any 'limits' on Gold trade ( comex futures ) . It is LimitLESS. Or, to the moon, and on, and on, and on...But wait...we are talking about Gold, right? there are no limit down moves either...

I will not predict when or how much or how quick the move will be, AND, do not rely on anyone here to tell you the correct time or direction ( nobody knows ) ...DO YOUR HOMEWORK...or use my indicators...throw the Darts! oh my! ;- )

Anywho, welcome and stick around, some of these guys/gals actually know what the hell they are talking about. practice my howl at the September 16th lunar eclipse


(Tue Aug 26 1997 03:47)
I'm going AWAY, but not before...
I give BART a great big juicy KISS. SWACK!!!!!!!! I love you MAN!!! work on my feminine side...oh my!


(Tue Aug 26 1997 03:55)
@the scene
Strad -- They kind of sound alike in so much that they say, don't you think? I'll certainly say that I find WWs gold type commentary much much more palatable if not even downright agreeable! Socialists, what a concept!

(Tue Aug 26 1997 04:04)
You been warming up the Bow? Are you ready to rock? The suspense is Killing me StradDudeMastervarious. Give me a small clue. Pique me some more...whatcha gonna plaaaay? the four seasons...


vivaldi Rocks! ;- )

(Tue Aug 26 1997 04:14)
Currencies and Stox...Uh Oh...
Things are hotting up right about now. Bad day for US$ and good day for stocks...tick-tock, these markets are crazy...and one-half hour from now I will be asleep and the markets will have reversed again...oh well...just another opportunity :-$

away for good...zzzzzzzzzzzzzzzzzzzzz

(Tue Aug 26 1997 04:32)
Hello FidleLovers! I spent about 6months of every yr of the last 6 yrs in former "soviet republics" I tell them DENIAL isn't a river in Egypt. Get OVER IT. THAT system doesn't work and frankly never did. Vilnius, Riga, and Minsk have people in Denial - they are starving and they have people who see the future - they are beginning to prosper. But you know what really matters? The smiles on the 4 little cub scouts faces when we went camping last week and panned for GOLD a free country.......without a permit.....without police hastle........without having to tell anyone except their parents where they were going....we were having fun and realising the benefits of this imperfect but BEST system.

(Tue Aug 26 1997 05:14)
CARL: Re "The Spark". I would rather that there not be a spark, that we drop as we have from 8300 in sandpaper fashion. That shows exhaustion. One sign that we might be in that mode now is the news that $25 billion came in to stocks during the past four weeks and still the market has dropped. Of that total 6.8 billion was last week and it hasn't done much.
After the market has been slowly ground down 15% or more then I would expect sparks that could speed up the process. An unexpected brokerage failure due to losses in their own trading account, a marginal retailer bankruptcy due to declining sales and inability to meet debt obligations. An announcement of unusually high numbers of personal bankruptcy. An insurance company failure. Currency trading losses at a large bank.

Strad Master
(Tue Aug 26 1997 05:36)
A teeney teaser!?
EB: Hey Dude... my Bow's already smokin' just waiting for Sunday. We're playing all sorts of cool stuff. A few things that nobody else but the two of us play since they're our own arrangements - all the way from Bach to Hoagy Carmichael. I'll leave it up to you to post a music review after the concert. OK?

(Tue Aug 26 1997 05:51)
DA: Bailouts and deflation. Japan has been doing exactly what South Korea is planning and deflation has been the result in Japan. The Fed bailed out the S&L's and the inflation rate has dropped in the US. It seems confusing because the failures themselves, if ignored by the central banks, would have resulted in instantaneous and devastating deflations. The Panic of 1907 is a good pre-Fed example. The bailouts merely slow down the process of the inevitable and continuing deflation.

It is important to make the distinction that the Central Banks of Japan, Korea and the U.S., so far, are bailing out the banking system. They are not bailing out individuals or corporations. I think it is a mistake. The pre-Fed era of regular bank failures is the healthier option for the country. What was lacking in those days was disclosure of the condition
of the individual banks to allow a person to make a good choice of bank.

George Cole
(Tue Aug 26 1997 05:53)
European stock markets down. Asia mixed. December gold up 20 cents. Joberg gold index up 0.9%. Looks like a good day for the yellow with the stocks leading the way.

DA: Thanks much for the information on your firm's gold order books! Nice to have an "insider" on this site. Your info reinforces my conviction that a secular gold bull is quite close.

Agree with you 100% on the inflation/deflation debate. As long as major corporations, financial institutions, and countries are considered "too big" to fail, nascent deflationary forces will be suppressed. And inflationary pressures -- so far confined primarily to the financial markets -- will inevitably spill over into the real economy.

Miro: You are right on the money re:corporate downsizing. As Steve Roach has pointed out, to the extent that the current profits boom reflects a "screw the lower-level employee" attitude on the part of management -- it is unsustainable and bound to lead to a huge anti-business backlash. As our lavishly over paid CEO's will soon find out -- what goes around comes around.

(Tue Aug 26 1997 05:57)
GSC: I show gold now up $1.10 and the SP on globex down over 5

John Disney
(Tue Aug 26 1997 06:15)
To all DDeeps players wherever you are.

The market is still holding a heavy arbitrage for
buffels - they offerred at 10.3, and blyvoor at 2.7 with
Deeps trading 12.75. The Blyvoor option trades .65
Thus I value the DD option at .65* 4 = 2.6.
Thus 12.75 minus Half of 2.6 = 11.45 = value of option
free share DDeeps.

Breakeven value of Blyvoor = 11.45/4 = 2.86 amd we
are almost there.
However Breakeven value Buffels is 11.45 time 1.1
= 12.6 and on offer at 10.3. So there is a 22 per cent
premium on Buffels.

Woops not any more - I cleaned out everything on
offer below 10.6 - next offer 12.35. However, there
could be a similar play open on the ADRs if anyone is
game. I now have as much as I can stand.

(Tue Aug 26 1997 06:22)
Very Nice Morning
Gold Spot + $1.40
S&S500 -415
NSDQ100 -300
U.S. Dollar Falling Fast
It sure is great waking up to this news, I beleive today going to be very good day for Gold.

Mike Sheller
(Tue Aug 26 1997 06:25)
Savage Retort (:-))
SAVAGE: You asked ME at 1:08 what my "theory" is as to "why this site is so addictive." Puetz you ask about predicting dates for market crashes. ME, the ASTROLOGER, you ask about addiction! Thanks pal. But I will answer your question. Kitco is addictive because there is so much mindless garbage on conventional, AND cyber media, that it's a pleasure for people who think, and have opinions, to be among other people of the same bent. Even if there is disagreement. Kitco provides a meeting ground for a very rare and magnificent kind of human being - the market player with a leaning toward gold. First - such people, to survive, must be relatively intelligent to begin with. And they have to be at least a little offbeat. Second - they must be risk takers, bold, courageous. They cannot allow themselves to think with the herd. Third - they are forced to hone those wonderful human qualities by study, and observation, and the SEARCH FOR THE HOLY GRAIL that will give them that extra edge in the markets. All this makes for strong minds, bold spirits, and keen observations. Nice people to hang with. And LAST, but certainly not least - such people must have, or acquire, a SENSE OF HUMOR. And they learn to take what comes like a trooper. Because if you decide to stay in the speculative game, you better know how to laugh. At everyone else, and at YOURSELF. So what is addictive is not the "site" per se. What is addictive are the people who hang out here. And then there is the simple added dimension of human contact. Even if its over invisible waves in the ether. It's why the other day I was in my car and on the radio I listened raptly to a lilting violin/piano rendition of Gershwin's "Ain't Necessarily So." And I thought of StradMaster. I never met him. But I know him. And I wondered at that moment what he would have thought about that piece of music. I would have liked to listen to it with him. That's why I like Kitco.

(Tue Aug 26 1997 06:31)
@savage 1:08 - why is this site addictive? (top 10 reasons)
1. The gracious and very competent provision and maintenance of this site by Kitco and Bart Kitner without undue advertising or other promotion.
2. The ring of truth, harmonized with grace
3. A decency which is vanishing from our society
4. A paucity of malice, rancor, ill will, hidden agendas, etc., which when they erupt are quickly and strongly discouraged
5. A site all about materialism by people who are not themselves, foundationally, materialistic
6. Humility ( per the common practice of those noble participants who readily apologize when they have erred )
7. A self-adjusting balance of clean, solid humor
8. A strange prevailing altruism typically manifested as the practice of freely and eagerly sharing one's knowledge, discoveries, and insights, with a degree of care given to the nature of its expression
9. A common conviction that something is deeply wrong with our respective countries and the world in general, a situation thinly veiled by the appearance of a healthy global economy, accompanied by the strong suspicion that there is some innate quality in gold as an historic store of value which, if properly exploited, could help to rectify this mess.
10. A refreshing escape from the arrogance of youth, the senility of age, the sentimentality of the effeminate, and folly of the age.

Mike Sheller
(Tue Aug 26 1997 06:35)
To 2 too!
2: Amen Borther! Well said.

Mike Sheller
(Tue Aug 26 1997 06:38)
PREDICTION Time...get ready to TUMMBBLLLE!!!
Speaking of the bold Puetz predictions, Steve Puetz' assessment of Sept 16 being a panic phase date for this correction ( or Bear ) is very interesting. I believe he is basing it on eclipse phenomena. 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. Perhaps Kitcoites have a clue here to follow. Let us see which, if either of these astute gentlemen is correct, or closest to predicting the eye of the storm.

George Cole
(Tue Aug 26 1997 06:43)
Schippi: In a real gold bull FSPMX is virtually certain to significantly outperform FSAGX. Note that FSAGX outperformance over the past few years occurred during a major gold bear. During this period ( until BRE-X fell apart, anyway ) the market focused on companies that might grow their reserves, NOT on miners that might benefit most from higher gold prices.

Sign of the times:

Clinton Photo Tied to Fraud Case

MIAMI ( AP ) -- A jewelry company used photos of its executives posing with
President Clinton to help defraud 15,000 investors of almost $40 million in a
pyramid scheme using cheap necklace kits, investigators say. The executives
fled overseas before the collapse of the fraud, one of the costliest credit card
scams in U.S. history, according to authorities. Losses for banks and financial
service institutions could run higher than $20 million.

(Tue Aug 26 1997 06:56)
Mornin ALL!...Dec. gold up 1.30 @ 329.30...European stox mainly down,led by German Dax,down 102.50 ( 2.52% ) ....Mayaysia down 27.96 ( 3.16% ) was weakest Asian equity market...

(Tue Aug 26 1997 07:09)
6Pak: Sean is packin his car and gettin ready to leave and I'm EXHAUSTED!
Startin ta feel my a hurry!...looks like a good N for the yellow stuff...and my health..

(Tue Aug 26 1997 07:23)
S. Korea -
Seoul won keeps falling

Copyright  1997
Copyright  1997 Reuter Information Service

SEOUL ( August 26, 1997 04:52 a.m. EDT ) - The South Korean won sank
to new lows against the U.S. dollar on Tuesday with talk of a
bigger-than-expected monthly trade deficit dealing a fresh blow to the
pressured currency, traders said.

(Tue Aug 26 1997 07:24)
Donald-re:sparks and manias, You may very well be right. The end of individuals' manias depends on how extreme they are. They are a sense of well being based on a false sense of power, competence and belief in the friendliness and interest of others. They end when others resist this delusion. They crash when the delusion is extreme. They "grind down" into depression when mild. I view the present behavior of market participants as extreme mania - hence I vote for crash.

(Tue Aug 26 1997 07:29)
German - inflation? higher interest rates?
...The Bundersbank is acting 'political' ( EMU ) rather than applying sound economic measures! world problems getting 'bigger'!
This article from EBN News -
German inflation exceeds Bundesbank target

The German Chambers of Industry and Commerce urged the German
government to curb public spending because of inflationary dangers,
saying the Bundesbank was 'on alert' against price developments.

The comments came after the government said western German inflation
accelerated to 2.3% in the six months through August, exceeding the 2%
rate the Bundesbank has set as the country's highest tolerable rate of
price increases.

In the preceding six months, consumer prices rose at an annual rate of

Guenter Albrecht, chief economist of the group, said the central bank won't
necessarily raise interest rates immediately, but added that if 'the
Bundesbank truly wants to take measures to tackle inflation, it has to do it
early, with the proper lead-time.'

Nevertheless, Albrecht added that a policy of gradual interest rate
increases would be bad for the German economy right now. The economy
has only shown a feeble recovery thus far in 1997. Albrecht also said
inflationary pressure is growing and called for the German government to
pursue a more deflationary spending policy.

In addition, Albrecht called for moderate growth in wage increases as well
as a cut in public spending, especially in social insurance costs.

'One thing is clear - the phrase 'inflation is dead' is no longer acceptable.
The rising price indexes are now calling for heightened attention,' he said.

Meanwhile, Germany's trade surplus expanded by a third in June, while the
country's current account swung to a surplus, both exceeding analysts'

The unpleasant inflation figure comes amid a growing assortment of data
pointing to higher inflation in Germany that has sparked market speculation
the Bundesbank may consider raising interest rates in the near future.

On Monday, the Federal Statistics Office reported that western German
consumer prices rose a preliminary 0.2% in the month to mid-August and
2.0% from the same period last year.

On the trade front, the country's trade surplus widened to 13.4 billion
Deutsche marks ( $7.28 billion ) in June from an unrevised 9.8 billion marks
in May.

The current account, meanwhile, swung to a surplus of 4 billion marks
from a deficit of 2.6 billion marks in May. The May deficit was revised up
from 2.5 billion marks.

German exports in June were 23% higher than the year before, the
National Statistics Office said, while imports rose 14%.

Economists had anticipated the German trade surplus expanded to 10
billion in June, while the current account was expected to have swung to a
surplus of 300 million marks. Western German inflation accelerated to
2.3% in the six months through August, exceeding the 2% rate the
Bundesbank has set as the country's highest tolerable rate of price

In the preceding six months, consumer prices rose at an annual rate of

The unpleasant inflation figure comes amid a growing assortment of data
pointing to higher inflation in Germany that has sparked market speculation
the Bundesbank may consider raising interest rates in the near future.

On Monday, the Federal Statistics Office reported that western German
consumer prices rose a preliminary 0.2% in the month to mid-August and
2.0% from the same period last year.

(Tue Aug 26 1997 07:39)
Middle East- the straw ?
Tense showdown between Israel, Palestinian troops in

BETHLEHEM, West Bank ( AP ) -- Palestinian policemen crouching behind barricades aimed their
assault rifles at Israeli troops Monday during a tense stone-throwing protest against Israel's 26-day
closure of the West Bank and Gaza Strip.

(Tue Aug 26 1997 07:51)
GEORGE COLE: You have been using 10% below the high of 8300 as a point where a crash could start to get serious. After seeing Europe down so much this mornong I did some quick numbers. Switzerland, Germany, Netherlands & Belgium are all down 10% or more from their recent highs right now. Finland is down 9%.

(Tue Aug 26 1997 07:59)
Can't wait until Gonzales and the oldman meet.

(Tue Aug 26 1997 08:00)
CARLA: You sound like you know what you are talking about. Can we have your opinion on the degree of this mania vs others in the past? And, do you view it as a worldwide mania or just the US?

(Tue Aug 26 1997 08:10)
Re - Your comment to me last night. You obviously missed the 'stopped clock' argument that explained why predictions such as John's totally unsupported one are totally without merit. Also I am not bent out of shape because of his personal attacks on me, ( he attacked everyone and everything equally - just for his own amusement ) , but I did abhor the useless disruption he caused to this site.
Your comment this A.M. - Do you really feel that Gonzales/oldman would be interesting? I really don't think Gonzales has the capacity to understand the debate.

(Tue Aug 26 1997 08:15)
D.A. and all -- I don't know if anyone has posted this story;

TOCOM raised the margin requirements for the palladium contracts.

(Tue Aug 26 1997 08:16)
Interest Rates - Inflation - Debt
What would happen to US Debt, should interest rates increase?
FRANKFURT ( AFX ) - State secretary to the finance ministry Juergen Stark said an interest rate
hike would not have an impact on the budget deficit as the majority of the country's debt is financed
through longer-term instruments. Speculation that the Bundesbank may raise interest rates soon to
curb inflationary pressures increased after strong July import prices data Friday and provisional
August west German CPI data today. "Official interest rates, by themselves, have no impact on the
long-term borrowing. I do not see any effect on the deficit," Stark said in a meeting with journalists.
While an interest rate hike would affect short-term debt, the consequences of this would not be
"dramatic" as this does not make up any significant proportion of the total debt, he said.

(Tue Aug 26 1997 08:18)
Strad Master - your 03:37 post

Did it ever occur to you that Gonzalas is just WW with a phony
"accent" playing his usual tune and playing you and the others
who are being suckered in to responding to him?

(Tue Aug 26 1997 08:20)
@DFW Airport
Puetz: I am sure that a number of people who visit this site take seriously the postings of people such as yourself, George Cole and others that are affilliated with The Gold Digest. There seems to be an aura of authority and respect for the various Guru's on the digest. I am beginning to have some second thoughts after reading your latest predictions of a crash that you think you have timed so well.

(Tue Aug 26 1997 08:20)
Government prepares against exchange rate speculation

SO PAULO, 08/26/97 - The announcement that the Central Bank ( BC ) will auction tomorrow
R$ 2 million Central Bank Notes Special Series, with exchange rate correction, helped control the
tendency for a rise in the future dollar markets yesterday. Although the sale had been canceled, the
dollar fell in short term contracts negotiated on the Commodities and Futures Exchange ( BM&F ) ,
but long term contracts continue to rise. The simple issue of these securities served to show the
market that the BC has further ammunition against speculation. ( Gazeta Mercantil ) ( SB )

(Tue Aug 26 1997 08:23)
Central Bank is not a hospital for sick companies, says Finance Ministry

BRASLIA, 08/26/97 - A source close to Pedro Malan said yesterday that the position of the
Finance Minister in the Encol case is that the ministry is not a hospital. "The phase in which the
ministry served as a hospital for sick companies has ended and there is no way in which
government funds can be involved in finding a solution. The only concession the Finance Ministry
could make on the part of the government would be the paying of debts to social security and
taxes in installments. Possible financing could be arranged through the National Savings Bank
( CEF ) , for Encol apartment owners. The problem in implementing this suggestion, according to the
ministry, is that the solution to the question of the bankruptcy of the construction company has
become a legal issue. Hundreds of apartment owners of Encol won favorable decisions in court,
and any funds that enter the company, such as possible financing for other apartment owners,
could be seized by the courts. ( Gazeta Mercantil ) ( SB )

(Tue Aug 26 1997 08:24)
Gold- the trend has changed
"The US dollar has weakened today--in fact it's looking pretty sick. If this continues through into when the US market opens
we might see another large move down in the stock index and this could provide a subsequent upside move for gold. I think we
will see $345.00 before we see $315.00," a dealer added.

(Tue Aug 26 1997 08:25)
@the sports bar
Mooney; an RE to Fundy's post and yours on the Cuban chap and Oldman, I think we should plan for this some eve and make it a "pay for view" event, all proceedes going to Bart of course for site support!Hell we could make it a regular thing say, Greenspan and Mr. Rogers next?

(Tue Aug 26 1997 08:29)
Bridge News AGENDA: --Possible Senate committee vote on social security reform MARKET WATCH REAL: The foreign
exchange market very likely will remain jittery Tuesday on continued worries about Brazil's current account position. The
Central Bank may be forced to intervene again on the spot market as a supplier of US dollars, according to some traders. In
futures trading, contracts could remain volatile on speculation about possible changes in government foreign exchange policy
later in the year. Such changes would be motivated by government desire to encourage exports.

(Tue Aug 26 1997 08:30)
The question is what event will end our stock mania? I am not sure but will make this anology. A strong oak tree stands in the forest. A one hundred mile per hour gale ravishes the woods, our oak bends and laughs as the gale prunes some dead wood. Two hundred years later our oak has died still his strong root system holds him upright through a gale of fifty miles per hour. Fifty years later the root system is rotten but a storm of twenty five miles per hour will not topple him. Soon the entire root system is gone save the tap root which is about 1/4 functional. A summer thunder storm bends the oak breaking the tap root. A few years of winters which frost heave the ground around our oak add more weakness.

One bright spring day, with not a wisper of a breeze, a robin decides to bulid a nest in our oak. She is half way done with the nest and is adding a .003 gram piece of dried grass to the nest. Our oak groans lists and falls to the ground. Why did our oak fall?

(Tue Aug 26 1997 08:30)
@the scene
Apparently, the bears found the open barnyard gate. Bulls running for their lives! S$P down 8.45. NASDAQ down over 10. Gold up 1.40. Now we see if the bulls fend off the bears, chasing them back into the forest.

(Tue Aug 26 1997 08:34)
@Long Bond
Long Bond up 3.8 basis points, PREM down 561 basis....

(Tue Aug 26 1997 08:34)
Mooney: I see that you have now managed to suggest I can't read and Gonales can't understand the oldman. Maybe this is the sort of antagonistic posture that is responsible for your problem with Hepcat which was not typical of the many others who had to deal with him. Why not cool out and lets see what happens, if anything, rather than start more problems for yourself. I think we can predict that someone trying to support Castro here is heading for a rough ride no need to start a side show. You can't win anyway. He predicted 3-2-5 months before it arrived and with constant derision from those who were wrong. Forget his ancestry and mental state. The worse you paint them and him the more you insult those who were wrong.

(Tue Aug 26 1997 08:42)
All - here is Fundy ( ref his 08:34 post ) once again bringing up
up Hepcat in support of those who like to disrupt this forum.
Birds of a feather?

(Tue Aug 26 1997 08:42)
@lies, damn lies, and statistics
Canadian spring wheat crop down 25% in 1997 from 1996 levels. Durable goods for June revised UP. It was down .6% for July. Hmmm, sounds like stuff could be on its' way...

(Tue Aug 26 1997 08:43)
Donald, Sorry, I have no mania comparisons that don't sound foolish. I'm just going on the fact that I have the same gut wrenching response to nearly everbody I hear talk about "investments" as I do when I hear a manic patient talk. A mixture of fear for them and fear of them.

(Tue Aug 26 1997 08:43)

Yes it certainly is confusing with two strong forces at play. I do agree with you that it is much better to foster an environment of real risk and real competition and real disclosure. 'Banks' would quickly segregate into different classes. Some would be have higher risk profiles but return higher yields. Others would be lower on the risk reward curve. In a sense this is already happening as more and more money is leaving traditional bank deposits and finding its way into money market funds of varying risk. It is too bad that the loan portfolios of banks are not made public. This would allow for a much more accurate appraisal of their exposures.

As for the 'deflation' in Japan, this has largely been confined to the real estate sector. If you look at Japanese CPI, it is still positive, around 1.6% last I looked. And as always, I think this number underestimates real inflation.

There was an interesting article somewhere in the news yesterday which quoted some French official as saying that they really were in no position to deal with a rate hike in either the US or Germany.

(Tue Aug 26 1997 08:47)
Bart -- You do one heck of a good job with this site! I really appreciate it! Whatever format that you decide on is fine with me. I am constantly 'upgrading' hardware/software/Operating systems on my P.C.'s, so I can appreciate the effort that you put in to this site....

Judge Wapner
(Tue Aug 26 1997 08:49)
The court finds your 8:10 post to be reasonable and eloquent, an effective articulation of the consensus of this forum, and, in summary, to be commended.

(Tue Aug 26 1997 08:50)
Well it looks like gold is up $2.60 and silver is up 4 cents...

(Tue Aug 26 1997 08:52)
George S. Cole:

Just to clear up a bit of confusion. The order books of which I spoke do not belong to our firm, we are only small insignificant speculators. The books are from one of the larger Wall street houses that we do business with. The people on the desk have a pretty good feel for what is going on because they do business across the whole spectrum of players. When we were unwinding our Palladium position we did it through them and they were really great. Most of our deals got done with commercial end users looking to be discreet.

I have a golf date today with the head of the department, so maybe I'll have some interesting things to report later in the day.

Off to beat the little white egg. Cheer on the precious for me.

(Tue Aug 26 1997 08:58)
As reported by Dow Jones, the German DAX was down on a weaker Dollar hurting their exporters. The beat goes on, and the currency game continues. Beggar thy neighbor? BBL...

(Tue Aug 26 1997 09:08)
can't remember
I recently read a very good article listing the five great spreads being played on a global basis. The first was the Japan/US interest rates - you know, borrow at .5% in Japan and invest at 6.5% in the US. Another one was the 2% CB metal loan programs. The sums of money involved are very large and in my opinion very unstable. For example a dollar decline or a fall in bond prices would cause severe losses in the Japan/US play. If anyone out there recalls this article I would be very grateful if you could post the URL. I woke up in the middle of the night thinking that this is the key to the timing of a market crash and the the recent problems in Asia would trigger one of the big spread plays. Thanks in Advance.

(Tue Aug 26 1997 09:12)
@ The Irishman is gone
Sean just left and in his wake he left 72 empties....approx. 4 day total= Sean @ @ 18....Comex: Gold up 2.0; Silver up 4.8 cents and Pl down 1.10....S+P futures down 6.30....

(Tue Aug 26 1997 09:14)

Bart -

Thank you

Thank you

Thank you

Thank you

A thousand thank yous.

(Tue Aug 26 1997 09:15)
Middle East -'kiss of death?'
TOKYO ( August 26 ) - Palestinian Authority Chairman Yasser Arafat may have given the Middle
East peace process "the kiss of death" when he embraced Hamas leader Abdul Aziz Rantisi, Prime
Minister Binyamin Netanyahu warned yesterday at the start of his working visit to Japan.

Netanyahu reiterated his commitment to the peace process, while at the same time asserting the
PA has not met its obligations under the Oslo Accords.

(Tue Aug 26 1997 09:21)
Middle East - ticking time bomb?

The closure: Security boost or ticking bomb?

(Tue Aug 26 1997 09:26)
tekgk ( can't remember ) : REF: Your a dollar decline or a fall in bond prices would cause severe losses in the Japan/US play - here's your answer:

(Tue Aug 26 1997 09:30)
S.Korea - banking emergency lending
S. Korea readies 4 trln won in aid for
financial institutions
SEOUL ( Nikkei ) - The Bank of Korea will extend about 4 trillion won
in emergency lending to Korea First Bank, suffering from bad loans to
near-insolvent chaebol firms, and 21 troubled nonbank financial
institutions, government officials said Monday. The move is part of
government measures to stabilize financial markets.

South Korea is acting to restore faith abroad in its financial industry amid
a speculative run against the Korean won on foreign exchange markets,
observers said.

Korea First Bank is struggling under massive nonperforming loans to the
Kia and Hanbo industrial groups; it is the main bank of both. The
nation's fourth largest commercial bank, with total assets of 43.8 trillion
won, posted a 350 billion won net loss in the first half of fiscal 1997. It is
said to have asked for 2-3 trillion won in government assistance.

The central bank is expected to extend the special loans to Korea First
Bank as early as next week. The term will be for one year; interest will
be geared to banks average fund-raising cost, now on the 8% level.
Government bonds will be issued and handed to Korea First, which will
use the proceeds to raise its equity ratio.

The government is expected to assemble a financial assistance program
for the 21 ailing nonbanks by the end of next month.

George Cole
(Tue Aug 26 1997 09:32)
circuit breakers
From the fiend's superbear page. Why circuit breakers may not prevent a crash.

Given all the talk about how the market can't crash because of trading
restrictions, I thought it would be a good time to repost an old
commentary on the subject.

( From February 20, 1997 )

The Longest Hour

Recently, the limits of when the Dow would shutdown the markets were
expanded to 350 points ( shutdown for a half hour ) and 550 points ( shutdown
for another hour ) . If the Dow dropped 350 points within a day ( only
about 5% at current levels ) it is likely that the 550 point limit would
also be reached since it would be only another 200 points away. With
all eyes on the Dow, the first shut down would attract a lot of attention
but it would only be for a half hour so by the time most people find
out about it, the shutdown or timeout would be over. At that point,
many traders would most likely panic to sell before the next shutdown
occurred so that they would not be stuck. I would not be surprised to
see the market shutdown for the first half hour and NOT EVEN BE ABLE TO
OPEN before the Dow was bid at the next limit of down 550 points.

A Dow loss of 550 points would exceed the 1987 crash loss of 508 points
and the media would have a field day with reporting the "disaster."
By percentage, the 1987 loss would be much more, but the media would not
be able to refrain from blaring headlines, like "Dow Crashes! Worst
Loss In History...Officials Shut Down the Exchanges!!!" The fear would
be so thick, you wouldn't hear a lot about buying and holding because
obviously a lot of people would be in a selling frenzy. If the crash
occurred early in the trading session, the hour shutdown would be one
of the longest hours most investors would have ever experienced.

It is so easy for mutual fund investors to pick up the phone and sell
( or try to ) their positions that this will make the crash much worse.
It should also be considered that mutual funds are carrying very low
cash levels ( 20 year low ) and they would be forced to sell into a panic
to meet redemptions. The 1987 crash featured this of course, but there
is much, much more money involved currently than at that time. It will
be absolutely brutal when mutual funds will have no choice but to sell
into a market where bids will be few and far between. I predict that
investors will stop whatever it is they are doing and listen in to the
TV or radio to find out what is going to happen to the markets. They
will not hear the cheery, enticements to buy and hold stocks, they will
hear panic and sensationalism at its best ( or worst ) .

I don't think it helps things to shutdown the market because trading
will still occur! If a investor calls his mutual fund or broker and
sells his positions, it will have to be honored whenever the markets
finally reopen. What a shutdown does well is eliminate vital information
that investors need to make decisions. If the Dow is already down 550
points, panicked investors could fear further losses and hit their sell
remained open, it would or could keep falling, but it would represent the
current mood of traders and there wouldn't be as much uncertainty.
Uncertainty seems to be the one thing that all investors hate the most.
I've got a feeling that one of the scapegoats of the Dow's crash will be
the shutdown limits. It is up to the reader to decide if the complaints
will be that they were too high or that they were too low.

(Tue Aug 26 1997 09:45)
REF - nomercy ( Middle East - ticking time bomb? ) & nomercy ( Middle East -'kiss of death?' ) : FYI, we received an anonymous email about imminent military turmoil in the Middle-East:

(Tue Aug 26 1997 09:47)
The Oracle articles are excellent at describing Japan CB bond holdings and the impact of such a sale and I agree this is key. However, I was looking for an article that decribes another five such situations that are being played in the private sector. Two of which are bigger than the 220 billion reserves that the CB of Japan holds. For example, private Japanes corps borrow Yen at .5% and invest here in US bonds at 6.5%. The dollar value of this game is over 330 billion US.

(Tue Aug 26 1997 09:52)
The reason that I am so interested in the private sector is that they have far fewer constraints such as political considerations than governments. On any sign of trouble they will be the first ones rushing for the exits.

(Tue Aug 26 1997 10:10)


Just to let you know you made the right decision. I've just downloaded all from 00:00 to now in about 6 seconds. Will read it off-line, and create my comments there. I won't be back till I've finished off all the viewing. This is perfect. I can catch the nightguys in the morning, post during the markets hours, catch an really big turns and why during that same period, and then wait till just before midnight and download all the wonderful evening crowd stuff. Marvellous. THANKS ...


(Tue Aug 26 1997 10:14)
ross@canada see the article "US Back from the Beach"

(Tue Aug 26 1997 10:18)
@ Watch it
Hey Fellow Bugs- be careful here- the patterns, volume and general behavior is not near term bullish in this writers opinion.

We may get a fast crack down, and I don't want any gold bugs getting hurt.

(Tue Aug 26 1997 10:26)
I see from some of the posts that we're about to enter another war scare in the middle east. Well this guy says WHOA! Don't let's jump the gun!
Sure it's bound to come, but is now the time?
Wars here come when people are unprepared, or a surprise attack is in the cards, or there is chaos in the streets, but not when everyone is expecting the inevitable.

Stay Cool, Keep Cool!

(Tue Aug 26 1997 10:35)
@ the scene
XAU and HUI not being 'good' boys today. I think I might just have to agree with Reify. The key is 328 area now. Don't get bitten!

(Tue Aug 26 1997 10:44)
Mike Sheller and 2 ( 6:30 ) : I really wanted to compose a usual convoluted and affectedly erudite response to the addiction thing but after reading your posts, there was nothing left to be said. The two of you covered all the available ground. ...... How is it, you are able do that so early in the day??

(Tue Aug 26 1997 10:50)
tekgk -yen -dollar carry trade
Several articles have to register's free...enjoy

(Tue Aug 26 1997 10:52)
Interest Rates/Mortgage
I need some worldly advise. What is the opinion of Kitco folks re: the threat of U.S./Canadian interest rates rising substantially ( 2 percentage points on a 6 month closed mortgage ) by the year 1999? I am currently debating blend-extending my current mortgage ( at 7.25% expiring in April 1999 ) to 7.0% to the year 2002. Given what the ORACLE suggests in his article about the thread of rising U.S. interest rates due to Japanese dumping of U.S. bonds, I am inclined to consider the risk of a rise of 2.0% a real possibility. On the other hand, what should happen ( theoretically ) to U.S. interest rates in the medium term if the U.S. stock/currency/bond markets do collapse, as gold bugs expect? Have we any examples in history ( eg. 1929-1935 ) to guide us? Any advise or thoughts would be most appreciated.

(Tue Aug 26 1997 11:12)
COLES MARKET INSIGHTS by George S. Cole, CFA & Economist
Interestingly, the other precious metals -- silver, platinum, and palladium -- have all breached their 100 day moving averages. And these "whites" frequently lead the yellow:

(Tue Aug 26 1997 11:15)
Bart....Thank you.

(Tue Aug 26 1997 11:21)
George and ALL :

George ( Da King ) :

George, thanks for posting that warning from the Fiend again. However, I consider it utter B.S.

There is no way in this world that the mutual funds will allow anyone to get their money out if there is a "real" crash. IT JUST WON"T HAPPEN !

Every Mutual fund has in their prospectus, a clause, which gives them the right to delay repayment of invested monies OR to give back the shares directly to you so you can sell them. It's a standard contract phrase in both USA and Canadian funds. If the markets get closed, they will just sit tight. PERIOD.

We went through this all before George if you remember. Even the doubters then who checked in their contracts ( prospectus ) found that the companies who held their money for them in mutual funds had included those phrases.

I believe the funds are their to make money for the funds. period. They are not there for you and me but for the banks and brokers. Sure they'll accept your money, but they'll only give it back when and if it's convenient, and not before. Especially if there's a "run" on the exchanges. They sell, they lose, therefore, they won't sell. To say that they'll be "forced to sell" is so far from the truth to be laughable especially when sent out over the net by a so-called professional ( the Fiend ) as gospel!

I know you were only reporting the article from the Fiend, so this is absolutely not intented towards you George as I still have the highest regards for your intentions and ability, but I just had to clear up a misconception that exists and could be extremely harmful if one was to think they will get their money out of a fund if the market crashes. IT WON'T HAPPEN! YOUR GONNA SWEAT WITH THE REST OF US!

(Tue Aug 26 1997 11:30)
Who Cares & Uris: Nothing is certain except death and taxes. No market forecast by anyone can be certain. Nonetheless, as far as I can tell, the odds are high that we have entered the early phase of a market crash. We should know by the end of next week. If the stock market fails to continue its decline over that period, then the pattern seen in other crashes will have been aborted. For now, the pattern continues to hold. The crash is still on schedule.

(Tue Aug 26 1997 11:33)
MARKUS: I don't think you should make a 30's comparison for interest rates. The US govt. was rock solid in those days; not so now. My own feeling is if you like the house and can possibly do so, pay it off in full. Second choice, fixed rate, shortest term you can afford. I expect deflation, heavy duty, for about 2 years after the crash. After that I am not as sure and we could be back to inflation and higher, even super-high rates. I need to see how it unfolds. During the 30's the T-bill rate got down to .25%, long bonds 1.5%.

An option you should consider is to sell the house and rent.
These are just my opinions, nothing guaranteed, the decision is always your own. At least you are thinking it through. Good luck.

George Cole
(Tue Aug 26 1997 11:36)
base building
Looks like today's early rally in gold and weakness in stocks may have been a fakeout. More base building action ahead?

Front: I am neutral on the question of what mutual funds will do in a market crash. In 1987 people were able to take money out IF THEY COULD GET THROUGH TO THEIR FUNDS. Of course, that was impossible in many cases

With telephone capacity at the funds vastly enhanced over the past 10 years, they would not have this escape catch today. But if they stopped cash redemptions, public confidence in the industry might be permanently destroyed.

(Tue Aug 26 1997 11:51)
Oracle@japanese.SURVIVAL.Part - VI (August 25, 1997)
Financial Tsunami Looming in Land of the Setting Sun. Oracle provides ample evidence Japans Financial Scandals & Crisis will drive US stocks and dollar down, rates & GOLD UP:

(Tue Aug 26 1997 11:57)
EMU - What if delayed? cancelled?
If not Emu, then what?

Think the unthinkable for a moment. If Emu were cancelled, what would be
the result: chaos in the markets? The end of the European Union? Perhaps
nothing terrible at all. By Tess Read

"Europe is looking down the barrel of a gun," says a leading City of London analyst.
"If Emu doesn't happen, meltdown might." This doomsday view is certainly not one
shared by all market analysts. But might there be more truth in it than most politicians
seem willing to admit? The first questions to ask are what is actually meant by
meltdown, what are the reasons why it might come about, and what are the
alternatives for Europe?

A study by the Federation Trust for Education and Research has forecast four
possible outcomes for Europe: an Emu with many country members, a smaller Emu of
a few countries, a Europe that looks much as it does today but without the hope of
future monetary integration and, finally, the so-called meltdown option.

The Federation Trust study elaborates on the last possibility, painting a picture of a
disintegrating Europe in which structures of cooperation and mutual benefit collapse.
This would mean the end of the post-war dream to build Europe into "the third way" -
an economic power bloc to rival those of the US and Japan. On this outlook the
Europe-wide political structures would lose authority and then power as
disagreements and rivalries between national governments intensified without the
unifying force of a common project. Countries would retreat into protectionist shells
and the economic gains from European integration would be lost. The idea of Europe
as a power bloc would lose force and EU countries would look instead to other areas
of influence. About the only thing the study discounts in the meltdown option is the
possibility of a European war breaking out.

Why would abandoning Emu lead to meltdown, rather than just leaving Europe where
it is now? Many politicians and market figures argue that a continuation of the present
situation is what would happen. Stuart Wood, a politics fellow of Magdalen College,
Oxford, says: "There is no reason why all the gains of the single market cannot be
retained if Emu does not happen." But there are problems with this. For industry there
is no such thing as a stopped clock. Businesses need to plan for the possibility that
Emu might be abandoned. Foreign investment strategies might be affected, for
example, as some countries' economies could become more volatile. The risk, says
Graham Bishop, European affairs adviser to Salomon Brothers, would be that "several
countries would cease to pursue the budgetary rigour they have been pursuing
recently; the countries with the high debts are those most obvioiusly at risk".

In this eventuality, there could be but a few short steps to a return to a Europe of
volatile exchange rates and accusations of competitive devaluations. High-debt
countries would be likely to loosen their current tight monetary and fiscal policy, and
so in turn would find interest rates moving against them. In order to protect their
domestic economies they would wish to devalue their currencies rather than keep on
raising interest rates. The vicious circle would have been set in motion and the result
would be an increasingly divided Europe.

Governments of Europe's richer countries would have reasons for chipping away at
European integration in its present form. It has always been true that enthusiasm for a
common European project has varied in intensity across Europe, and that the gains
that have arisen from it have been unequally spread. Euroscepticism has always been
strong in countries that are high contributors to the European Union's budget. For
even though it has been precisely these countries that gain most from free trade, such
benefits are less visible than high annual transfers.

Domino effect

In the acrimonious fallout from a high-profile project like Emu failing, the governments
of such countries as the UK, Norway and, these days, even Germany might be under
pressure from impatient electorates to decrease their commitment to Europe. If this
were to happen, there would be less to stop the net beneficiaries of the EU, such as
the Latin Rim countries, from protecting their own industries at the expense of imports.
Regulations are the easiest way governments can limit the arena of open and free
trade, and any successful move to do so in one market area would cause jitters and a
domino effect in others.

It could turn out to be significant that parties of the left were in power in several
countries of Europe at the time when Emu was abandoned. It is particularly in France
that the left has had a predilection for protectionism. This could resurface if Emu were
cancelled. Germany's SPD, too, has had a history of favouring protectionism.

The EU has always been something of a rich-country club, to which countries
increasingly added their support as their traditional zones of influence faded. But this
could work against Europe if it failed to reach monetary union at a time when the
dynamic economies of the world are clearly elsewhere. European countries would
increasingly turn to emerging markets, and exploit, where possible, traditional zones of
influence. Most significantly, Germany would look east. There are already signs that
this is happening: Germany is the largest single foreign investor in eastern Europe.

The economic and political impact if Europe did slide into meltdown would be
significant. Economists' worst fear is that incremental protectionism, either explicit by
the imposition of duties or implicit by regulatory changes, would destroy the gains
from trade. Since the single market was launched in 1992 intra-EU trade has
increased by 22%. Even without protectionism, Europe's status as a powerful
economic bloc would be affected by governmental disarray as this would decrease the
EU's ability to present itself as a single force in worldwide trade negotiations, making it
considerably harder for agreements to be reached. The political impact of Germany
looking east could be significant: France would again face a large and expanding zone
of German economic and cultural influence, in parallel with a waning of its own
international influence.

Europe without Emu would show the classic symptoms of the prisoners' dilemma. It
would be better for all if everyone cooperated to retain the gains of the single market,
but it would be better for any one country if it alone put up selective regulatory or
financial barriers while all others maintained free trade and exchange rate parity. The
problem is that if one starts the others must follow. This means that for Europe to
avoid the disastrous meltdown option governments must be aware of the dangers it
holds for them and be very careful to avoid sending out shock waves of change.

If Emu does not happen it will be because of non-convergent economies and unwilling
populations. Maybe governments will have learnt a powerful lesson as a result: that an
economic and political project cannot be brought about by political will alone.
Industry has long wanted more European integration, but ever since a Pandora's box
was opened and the people of Europe were asked what they wanted when they voted
in referendums on the Maastricht Treaty it has been clear that Emu is very unpopular.
Governments would do well to learn that simultaneously encouraging your industrialists
to be international and your populations to be nationalistic is likely to end in tears.

Tess Read, formerly with the Bank of England, is working as a consultant in

(Tue Aug 26 1997 12:01)
@the scene
Nothing has been conclusively proven yet today, except that fact itself. Nothing is broken yet. Neither the stocks, nor gold. It's a 'coin' toss still.

(Tue Aug 26 1997 12:04)
vronsky - re: war in middle east. Lybia, Egypt, Syria, Iraq and Iran have all had No Korean missle plants built to produce SCUD 3 type 1200 mile range weapons. Isreal knows it doesn't take much to make gas. But that is particularly onerous since the Nazi exterminations. Guess they would be very angry, poss. strike back. They have many Nukes courtesy of us and So Africa uranium, etc. One of the big arab cities could be obliterated. Isreal would use its air force to do it: more accurate. Poss. a preemptive strike, but that would be REALLY BAD if no chemical strike followed to prove the threat. Oil as a weapon to pressure the West into pulling its commitment to the region.

One of these days things could go this way. Hatrid and overconfidence have started many wars, no?

Gonzales - intelligence service, officer, "student", etc. Look elsewhere for your reports, such as CNN.

Bart - thanks for hearing the many. Its good of you are yours to host us. Nice group and area. Hope its of value to kitco.

(Tue Aug 26 1997 12:37)


I believe people have short memories and big expectations. It's human nature. If the only cheap game in town is to use Mutual funds then people will conveniently forget when they hear that "we did it for the majority of investors in that your selling would affect their share prices unjustly" . Who's money is this anyways is my response. In effect their trying to make you feel guilty for wanting your money. George, it happens already in the restritions by these fund companies in the changing from inter family funds. Altamira in Canada only allows 4 changes each year while Royal Bank has a 30 day waiting period .. all for the sake of the good of the many !

In regards to the phones. Yes I agree the brokers/funds/banks have upgraded their ends, however, your end still rests on the Bell thoughts that there will not be greater than 33% usage at any one point in time. Have you ever tried to enter a big radio station giveaway when everyone else is? I have and all I got was a busy signal even when just picking up the phone. I question it and found that the Bell companies only put in enough computer stuff/lines to handle a "statistical based" volume of traffic. In other words, out of the 10 people on your street, only 3 would "normally" use the phone at one time. Sure hope you don't live on a street with 4 investors George, someone's going to hear a busy signal. As to the availablity of 800 numbers, if Fidelity can handle the calls from the people who own the Billions of dollars worth of stocks in one day, then my hats off to them and I pity their phone bill ! Sorry George, I think this needs the light of day exposing the flaws a bit more than just a minor perusal. It WILL be a problem previously unseen .


(Tue Aug 26 1997 12:42)
Kaufman warns of heavy consumer debt

It's the liquidity, stupid

At worst it will be a crash, at best a large correction. But it has to hit the US stock
market before long. Equities are overvalued, but most market participants are
miscalculating the impact of their being brought down to realistic levels.

Equity players think the pain should be moderate because they've had time to prepare.
Many set great store by their new approaches to risk  quantitative techniques,
marking to market, hedging strategies and a focus on liquidity.

They believe these techniques will see them through. They will be disappointed. The
banks' latest risk models will show as many shortcomings in the next equities crash as
their old ones did in the last. In fact the new techniques will even contribute to market

US economist Henry Kaufman believes quantitative methods giving numerical values
to the risk of a security or credit provide false comfort. "Computer models are based
on past relationships, and they cannot fully give adequate weight to something that is
just changing or is about to happen," he says. "But there has been an added degree of
risk-taking because of the certainty of using numbers."

Kaufman argues that the extent of US households' equity investment and heavy
consumer debt is worrying. A sharp fall in stocks and higher interest rates could
produce setbacks in consumer spending and credit use much greater than cyclical

In a crash, the robustness of institutions is called into question. Players have tried to
draw accurate, up-to-date pictures of their financial health by marking to market. But
Kaufman argues that this is a blunt instrument unless it takes account of liquidity and
beta ( price volatility ) . Indeed, marking to market increases volatility because it
encourages institutions to sell if assets change in value.

Kaufman warns that shorter investment horizons promote an "illusion of liquidity" that
prompts the taking of larger and riskier positions. Yet in a financial crisis liquidity will
dry up and hedging strategies will come apart.

"This contraction of liquidity feeds back strongly onto related markets and often onto
unrelated markets, too," says Kaufman. "The inevitable results are sharp price breaks
and other manifestations of volatility."

(Tue Aug 26 1997 12:52)
Re: Front, getting out
Front: I am afraid you are correct about the majority of mutual fund owners not being able to sell anywhere the top. When you think about the mechanics of this mania it becomes clear it will be impossible. As we have seen in the last month about 30-35 billion in new sucker money has not been able to even keep the market steady. What would have happened had this been 35 billion of withdrawals? The serious liquidation by the big guys has, in my opinion, been completed some time ago. Remember when Warren Buffet told us stocks were over priced? He got out too soon. But when you want to take out tens of billions, you MUST get out too soon. The public will be trying to take out TRILLIONS.

Strad Master
(Tue Aug 26 1997 13:03)
Great minds at Kitco!
MIKE SHELLER and 2: Mike - Despite your initial surprise at being asked, it seems you were the perfect person to answer the question of why this site is so addictive. Your cogent and beautifully crafted response really hit the nail on the head followed by 2's insightful follow-up. To do such virtuosic thinking so early in the morning is really amazing. To be able to read such virtuosic thinking is what makes this site so addictive. Since I was mentioned so kindly, I want to offer special thanks. I have similar feelings for all the regular posters here at Kitco and have often said that despite all the losses I've endured since I first started visiting here, the camraderie and moral support I've received - not to mention the close e-mail friendships I've developed - make the losses not only bearable but ( in the grand scheme of things ) seemingly worthwhile. After all, money can always be made back ( or so I tell myself ) whereas true friendships are priceless. For me that's the most important reason to be addicted to Kitco! BTW the recording you were listening to was probably Heifetz's. He arranged those Gershwin songs and no one has ever played them better.

(Tue Aug 26 1997 13:04)


Is your 'cookie' trying to tell us something?

"It expires on Fri. 31 Dec 1999 23:59:59 GMT"...

(Tue Aug 26 1997 13:12)
Front -- I remember discussing this issue in the past. You are absolutely correct about the communication issue. I had a discussion with a co-worker once, who stated that, "With the Internet and instant communication the markets can move very quickly, people can move their money easily. That's why we have this volatility." My reply was, :- ) ) .

Has anyone ever tried Schwabs' Internet trading when a 'few' people were trying to get in ( due to market moving news ) ??? I have, and it was an unmitigated disaster! I couldn't log on to their server for more than forty minutes, and I was connected through a T3 corporate line ( 45 MB/sec! ) . Forget about trading on-line through the Internet, especially if you're using a phone line. A dedicated, non-Internet connection works much better, but... it's no panacea!

Comments on gold: There's just no interest in gold out there in the U.S. equities markets. This stuff is going to die of BOREDOM!

(Tue Aug 26 1997 13:18)
nomercy, Your comment and quote from HK are right to the point of how mania works. People think they are competent at things which are beyond them. The situation with computer models is much worse than HK states. I've been modeling data since the 50's on computers and I can tell you its much easier to fool yourself than the people who make use of these "results" know. One of my children does this for a living with a large finacial institution and none - none, of the people who make use of the models understand them or their limitations in his experience. Just getting clean data is a huge challenge. But oh well, everybody wants to believe there are automatic systems for making decisions and better yet getting rich.

(Tue Aug 26 1997 13:18)
@ where did it go
Where did it go???? I've always depended on Kitco for the *spot* price of silver and gold but that frame at the top of this page is gone........Would someone be kind enough to post another site which has timely spot price. Thanks

(Tue Aug 26 1997 13:19)
Authorities and soothsayers...ABOUND...
NEWBIES and OLDIES - there are many here who claim to know what is going to happen but as you continue to read/lurk/comment you will find there is NO AURA here. There are just 'experienced' people who have 'been there, done that'. You will find that some tend to repeat and some are just out-right Looney Bin material. Hepcat may have been a bit rough but he was correct when other 'experts' were not and many of his posts, if you sift through the clutter, were quite intelligent ( i kinda, in my sick way, miss the ole hep-rat-cat ) .

You should take this group for what it truly is - A DISCUSSION FORUM and pick and choose and make your own decisions ( as i'm sure you do?? ) . Everyone is RIGHT once in a while as does 'every Dog have his day'. Nobody and I'm saying NO BODY is right all the time-or even half the time for that matter. And if you are, you would NOT be here now.

WE all put on our pants ( and skirts-RJ ) the same way. We are all JUST human ( of course i'm not refering to you 'oh great one' - Mike Sheller ) . Let us all continue to share ideas and have fun. Fun, fun, fun!!! And yuk it up from time to time. This is serious stuff but life goes on. And I like you guys, ALL of you! Even the Morons.

Now get out there and make some 'duckets'!!!!!!!! damnit!

Carla - or is it CARL??? or is it Carl by day and Carla by night?? Or is it two different posters and I'm WAY off base?? anyway, Carl ( a ) is always nice to get new blood here...kind of like a tranfusion... transylvania to get more blood...


(Tue Aug 26 1997 13:23)
Paul Krugman -1995 prediction Asia
...he's worth a search...
Is the Vaunted 'Asian Miracle' Really Just an

Economist Paul Krugman Thinks So-and His Theory Is Raising

By Urban C. Lehner
Staff Reporter of the WALL STREET JOURNAL
( Friday, October 20,1995 pg. A10 )

COPERNICUS IS ONE of history's major figures, while Paul Krugman may never rate more than a
footnote. Yet in his own modest way, the Stanford University economist has a lot in common with the 16th
century Polish scientist, who is famous for challenging the view that the sun revolves around the earth.

Mr. Krugman, too, rejects the received wisdom of his day. In late 1994, Foreign Affairs published his
provocatively titled essay, "The Myth of Asia's Miracle," which questions the notion that the world's
economic center of gravity is shifting inexorably to Asia.

(Tue Aug 26 1997 13:25)
Can anyone tell me where to get good options prices on Gold and Silver? And who supplies 20% of the world Platinum and 60% of the Worlds Palladium?? And how about a really good Pie ( pizza ) . I'm getting HUNGRY! And what's going to happen to this CRAZY stock market?????? And where is that TORTFEASER...I need a good joke........

;- ) ) ) LOONEYVILLE!!


(Tue Aug 26 1997 13:27)
MIKE SHELLER: Well done! Why are you surprised that I knew you were the one to ask?

(Tue Aug 26 1997 13:28)
EB, Its just Carl. I guess I hit the A instead of the tab. Or maybe I should talk to my analyst about it.

(Tue Aug 26 1997 13:28)
2: Thank you for your erudite contribution!

(Tue Aug 26 1997 13:30)
Mr. PUETZ: You ignored me, so I guess that you were offended by my forthrightness. My apologies.

(Tue Aug 26 1997 13:50)
data & models
Carl- I aggree re models, etc. It has always amazed me in my work as an actuary how little concern is given to the limitations of the models and the validity of the data. I once got into it with a senior VP and actuary because he contended that 'well-defined, clean data' was not a 'deliverable' during a corporate love-fest we were having. I quit soon thereafter. I think if the general public had any clue about how bad the data are in this wonderful new information age in which we live, there would be a lot of busy signals at the fund houses.

(Tue Aug 26 1997 13:51)
8th wonder of the world
Bart - Kitco live is the best.

Kitco live users: Wow. Just discovered that you can click on the small graphs to the left and it will take you directly to the full 3-day 24-hour chart. Cool.

(Tue Aug 26 1997 13:53)
Paul Krugman
nomercy- I've posted this before, but I think Paul Krugman is one of very few economists worth paying attention to.

(Tue Aug 26 1997 13:55)
FRONT: And when you do get through ( on the phone line in Japan ) and tell them you want to get out, they switch you to a "PC Girl" who has been specially trained to talk you out of it.

lurking Gbug
(Tue Aug 26 1997 14:03)
Cole, Puetz, et al. My question to you and similar analysts with all the great theories, predictions, charts & graphs, analyses, etc. Looking back over the past 10 years, your track records and those of similar "sky is falling" analysts have caused any investors follwing your advice, about 300% to 400% gains on their investment money's. Even if a major equities correction occurs, the folks who did the OPPOSITE of what all you folks have said, namely people who stayed FAR AWAY from precious metals and put all their money in "overpriced" equities ( from DOW 2300 and up ) have by far and away, not only reaped huge gains, but avoided the terrible financial losses thay would have incured, had they listened to such "expert" advice as what we see here and at the "Gold Digest". AND some of these equity investors are so wealthy now that they have funneled their money to tangible assets such as real estate, businesses, etc. and retired to boot! My question to you. Why should we listen now when you all have had such a dismal long term track record? Keep in mind, I'm a GoldBug at heart, but I was badly burned by folks with your particular market analyses philosophy until I finally "got smart" a few years ago and joined the rest of the sheep in the mutual funds. Since then I've done so well, and put aside so much that EVEN IF the market takes a dive, I can NEVER be "sheared" as badly as I would have, had I continued lsitening to the advice of the "Cole's" and Puetze's" of the world. How do you address this credibility gap? I can't imagine any market cycle scenario that will ever help long term investors recover from having listened to analysts like yourselves, had they started investing, say, ten years ago. Mind you, I'm not hostile to your ideas, but results are all that matter in the long run, not theories. My guess is. more financial "lives" have been ruined by folks like you, than will EVER be ruined by wall street or the Financial market & Govt. policies that have made the current market conditions what they are.

I am "sympathetic but realistic"

(Tue Aug 26 1997 14:04)
Interest rates
Donald: Thanks for the advise...Given that I have no choice but to opt for your second choice ( fixed rate, shortest term ) , my oustanding question is do you think that I am exposed to the risk of short-term ( 6 month ) , fixed rates exceeding 7.00% by April 1999 ( current rates in Canada for 6-month, closed mortgage are about 5.0% ) ? My option right now is to 1 ) let my current mortgage expire in 1999 then renew on a 6month-closed basis and hope that those rates don't exceed 7.00% or 2 ) accept my banks offer today to blend and extend my current mortgage out to 2002 at a rate of 7.0%? If your a gambling man, how would you choose under the circumstances, assuming a market collapse is forthcoming?

P.S. your point about selling your house and renting makes good intuitive sense...unfortunately, our heart says keep the house, despite exposure to risk and uncertainty in financial markets.

George Cole
(Tue Aug 26 1997 14:04)
mechanism of impoverishment
FRONT: I entirely agree that most of those who confidently expect to be able to out of their funds at or near the top will not be able to do so. But the mechanism of impoverishment is uncertain. A crash that takes prices down 25% before most know what is happening? Funds refusal to redeem shares in cash. A prolonged "stock market holiday" modeled after the bank holidays of the 1930s.

My candidate for the most likely method if impoverishment still is a prolonged bear market with numerous suckers' rallies all the way down. That will keep the masses from panicking until prices have dropped to levels that are again attractive to the smart money.

BTW, the stated goal of the "plunge protection team" is NOT to prevent stocks from going down big time. Rather they want to be sure the bear market is orderly and not a crash or crash like event that might endanger the financial system.

But whatever the precise mechanism, the vast majority of investors will be lucky to get out with their original capital intact.

(Tue Aug 26 1997 14:07)
back in the barrel
The fallen sons return to the fold,
after love they crave only GOLD.

(Tue Aug 26 1997 14:08)
duh, click where?
Spot metal prices and you don't even have to leave Kitco. Thanks for the observation about clicking on the little chart button.

Who Cares
(Tue Aug 26 1997 14:16)
Remortgaging My Data Models

Markus - here's an idea I'm toying with regarding my mortgage.

I could put on one of my credit cards @ 5.9% for six months. If
rates remain stable, I just roll it over, month after month.

If rates go up, I declare bankruptcy, writing off "personal
unsecured loans", getting a free house in the bargain.

This is posted only half-tongue-in-cheek. There's so damn much
lying and cheating going on now, it just seems like the thing
to do. : )

Re: Inaccuracy of data models. Sure, data isn't 100% accurate,
but in my experience, it certainly is accurate enough to be useful.
The biggest problem I saw was that inaccurate *assumptions* are
made about the data, not that data is bad.

Like, the Feds seemed to think we could get a 100% accuracy check
on thousands of uploads per day, with roughly two hundred data
elements, subjected to dozens of UNDOCUMENTED edit-checking rules,
coded by different programmers in different languages at different

Like - No way, I said. NOT gonna happen. Didn't happen. Still,
we did get something on the order of a 98% accuracy eventually.

(Tue Aug 26 1997 14:17)
David Christenson ( sp ) has a book entitled "How To Survive The Mutual Fund Crisis" ( close ) . In it he deals heavily with 'mania' and what he considers its hallmarks. Seven steps, I recall. He is a voice on Wall St. The book was written in 1995, just prior to the big run-up we've seen. He indicates that taking loans to buy into a "sure thing" market is one of the very last steps preceding a crash. Unfortunately his scope of solutions only goes to bonds and CD's.

Interesting post on Indonesia's 47.5% interbank loan rate. But who would want to risk loaning money to any institution at that rate ( which would indicate ultrahigh risk ) ?. Also So Korean's 1 TRILLION Won bag of "cash" thrown at its banks to keep them solvent. At some point alot of governments will be doing this and people will realize that its all a show and opt out.

George Cole
(Tue Aug 26 1997 14:21)
bulls and manias
LURKIN GBUG: I am the first to admit I turned bearish on stocks and bullish on gold too soon in this cycle, but did correctly call this final blowoff to 8300. And my call for an August top is looking better every day. As is the lilihood of a summer bottom for gold.

BTW, I made a pile in the market during the 1991-93 bull phase when values were still reasonable. So I am not anti-equity in any sense, just anti hyper inflated equities. I do plead guilty to not having seen the extent to which this mania has gone.

I hope you are able to maintain your winnings during the looming bear. I know I will.

(Tue Aug 26 1997 14:25)
Lurker goldbug: Most posters here realize the opionions expressed offer no guarantee of future performance. They are instead, food for thought. Each person is solely responcibilty for where he/she decides to put his/her money.

Besides, I've paid good fees to my broker for his advise and still lost money. At least the advise here is free. ( : ) )

Neil Collett
(Tue Aug 26 1997 14:26)
Did anyone see today's article (  13h00 ) on Yahoo that after the Dow fell 50 points trading curbs were implemented. The article has subsequently been removed from the site!!??

(Tue Aug 26 1997 14:27)
LURKING GBUG: I think you need to go back to a Kitco post on July 27, 1997, at 5:34 AM. You will find two consecutive posts by bb fisher. It is a 100 year chart of the DJIA priced in ounces of gold. Set your printer to horizontal and print out the two charts. Trim the edge of the right hand one until you get a match and then you will be able to look at the two charts as a single 100 year stretch. If you have a problem come back here and I will send it to you by US Mail. I think that you will have a better feel for the future after you have seen that chart.

(Tue Aug 26 1997 14:29)

Since we are in the annointing mode-i.e. King George ( or ol' King Cole ) - I nominate Bart as GOD. If that is too extreme, then at least Sainthood is in order. Saint Bart--has a ring to it, eh?

(Tue Aug 26 1997 14:31)
lurking Gbug
Count yourself lucky. Most people have their life savings on the dow. You should try to help them out, buy stocks.

(Tue Aug 26 1997 14:33)
Lurking GBug - you rode the wave. But now you are out before the tube collapses. Nice reward. What convinced me was the run past historic marks on P/E and the departure from typical 10% returns ( div+share price ) . These are danger signs. The posts and links here have helped me to appreciate a much wide arena: the context of our own markets in the world.

Question: Do you have gains or do you have paper gains? Smart people such as yourself ( and I'm sure there are a few out there ) have done just what you have done. They cashed in some chips, enough for comfort, and are into other areas before everyman awakes.

Can you share with us some of your vision of the future?

Who Cares
(Tue Aug 26 1997 14:33)

I just to repeat it again. Of all the predictions I've read,
Alfred Malabre's _Beyond Our Means_ has *easily* been the most
accurate. I would strongly urge everyone to read, or re-read

Today, I just read about the "Gore Brain Trust" in Silicon
Valley. It seems clear from the article that SV CEOs are
"suggesting" government policies.

In other words, we have seen the emergence of the new Robber
Barrons, and they live in Santa Clara. : ) Under the Clinton
adminstration, they have discovered their real power, and
just as the Railroad Barrons got lots of free government stuff,
I believe the Silicon Robber Barrons will soon be shaping
policy to fit their own pocketbooks.

Under Malabre's scenario, government absorbs the banking collapse,
regulates and restricts the crash so that it never really happens.

He predicted this in 1986, just prior to the Crash.

Just a big, creepy increase in bureacracy, where the only way to
succeed is by paying off the right government guys. And lo,

We have Johnny Chung, Charlie Trie, John Huang, Carl Linder,
Jackson Stephens, Coia, Riady, etc, etc, etc, with direct, paid-for
access to the White House.

I tried to follow Malabre's model, involving myself in state, and
then Federal projects, but ultimately, I just didn't have the
requisite moral values to succeed.

(Tue Aug 26 1997 14:34)
My vote is for a stock market correction taking the form of a 6-month negative SLIDE, bottoming out where the S&P500 PE = 15. More difinatively, the slide will be "slot machine" style...50-100 point down days with occasional "flat" or slightly UP days, where dippers intervene.

World markets are too interconnected to permit any of them to immediately crash. Even Japanese gov't/investors won't DROP KICK their US Treasury holdings because it would be tanamount to economic suicide. The US would threaten to close their markets to Japanese exports and the American consumer would shun Japanese imports. That's not to say the Japanese wouldn't pare their holdings of same over time.

I wouldn't necessarily look to the economy for stock market signals. The economy is STRONG, the stock market is simply OVERVALUED.

(Tue Aug 26 1997 14:37)
Predictions of Goldbugs
Lurking Gbug; Puetz, Cole Lurking Gbug raises some interesting points that many of us neophyte goldbugs can relate to. I would agree that many of us in the short term, having taking the advise of goldbugs have realized losses in our portfolios while others continue to ride the hyperinflation wave.

However, I must admit that having considered the evidence ( supply/demand of precious metals ) and the advise of goldbug experts/analysts like Cole and Puetz ( to whom I am grateful as an economist myself ) I am led to believe that smart money is moving into gold, as we speak. I joined the gold smart money wagon in March. If I lament or learned anything it is that I put too many of my eggs in one basket too early. Granted, I could have ridden this hyperflationary market one dizzying rung higher, but my intuition tells me that this market is for suckers. But, I chose not to...have missed the last percentage gains in the DOW and suffered the ravages of being a gold bug since March 1997...and believe me, I have egg on my face at the office. Intuitively I think we are right but its painful watching the rest of the crowd continue to benefit while goldbugs suffer. We also have a lot further to come to recoup our short-term loses.

My real interest is in what so-called smart money would do and is doing. My sense is that the George Soros and Warren Buffets of the world are either shorting the market, as we speak, or have gotten out completely in certain sectors ( as Buffet just did with Wells Fargo ) . As Cole suggests, smart money ( if they have any influence/control ) will also attempt to ensure that the bear market that ensues is "managed" in their benefit, skimming profits from the latter day small investors yet not creating a calamity that would result in an "Albany-type" riot of angry investors.

Let us ponder for a moment the possibility that the market is not as "free" as we think; that it is in fact "managed" to the extent that the smart-money is making money in both bull and bear!

If I could be a fly on the wall with George Soros, I'd bet that these types are consolidating their positions in hard assets ( gold, real estate ) as the rest of the lemmings pile in near the top.

An interesting comment from Gordon Pape ( Canadian market commentator ) was made yesterday. He noted that in 1987 the market actually topped in August before making its plunge in October. Something to consider.....does history repeat itself?

(Tue Aug 26 1997 14:38)
MARKUS: If I could accurately forecast interest rates Bill Gates would be my shoeshine boy. I regret to tell you that I shine my own shoes. I don't want to give specific advise, especially about Canadian rates. I do think that US long bond rates will exceed 7.25% shortly but probably only stay there long enough to hurt stocks badly, and then recover.

George Cole
(Tue Aug 26 1997 14:44)
PYRAMID: Our stock market thinking is virtually identical. A severe bear market, but probably no crash.

Who Cares
(Tue Aug 26 1997 14:44)
Peter Eliades

Re: Markus and top of August '87, crash in October.

Peter Eliades posted a *really* interesting technical analysis
to the misc.invest newsgroups about six weeks ago. I would
strongly urge anyone interesting in the timing from Aug to Oct
scenario to use either Dejanews or Altavista to find a copy of

I might post it, if I can find it.

(Tue Aug 26 1997 14:53)
Eldorado: Just in case you missed it a few days ago, here is a great chart link for you for stocks,bonds, and commodities.

(Tue Aug 26 1997 14:54)
Eldo: OOPS! I keep forgetting to "paste"; Here is the site link:

George Cole
(Tue Aug 26 1997 15:03)
goldbugs and paperbugs
Markus: Much wisdom in your latest post!

I want to correct one misconception held by some. To be bullish on gold does not make one a goldbug. A goldbug is one who is ALWAYS bullish on gold. I doubt there are many or any on this site who fit that definition. But there are plenty of paperbugs around.

As with any other asset, there is a time to be bullish on gold and a time to be bearish. With gold and gold stocks truly on the bargain counter and as cheap as they have ever been relative to financial assets this is not the time to turn long-term bearish. Especially with the stock market topping out and gold stocks acting much better ( even though not as well as I would like ) .

Many of those who are sure they will be able to pile into gold big time just before it takes off as are as naive as those stock market investors equally certain THEY will be able to ride the wave to the peak and get out just before the reckoning.

(Tue Aug 26 1997 15:11)
pyramid, Re your expectation of a bottom at S&P500 PE=15 - Are you assuming flat earnings over this fall? I love your senario, but I don't trust it mainly for the reason that it depends on a lot of people acting out of rational considerations. Suppose the Japanese or others HAVE to raise money. Isn't there a real threat to the world economies world wide from dumping by South East Asian countries and China due to there wildly over built capacities?

(Tue Aug 26 1997 15:24)
@Food for thought 1
VIX index...

(Tue Aug 26 1997 15:25)
@Food for thought 2
TRIN index

(Tue Aug 26 1997 15:26)
@Food for thought 3
HUI index

(Tue Aug 26 1997 15:27)
Your 5.9% rollover plan merits discussion. Obviously, we all get enough offers and have enough credit to park a mortgage ( $150K or so ) in cards. The problem is getting the money in without the cash advance fee. Most of the card offers I have seen are limited in where you can roll from. Obviously, too, once short-term rates skyrocket you are stuck, and right now mortgage rates are very low, so there is not much to be gained.

I recently got a credit card offer that gave a 1% rebate toward my phone bill ( it was a Visa card sponsored by the local phone company ) . It came with several checks for no-fee cash advances and a $9K credit limit. Although I questioned such a stupid offer as TGTBT ( too good to be true ) , I quickly churned all ( four ) checks through for a quick profit of $360 ( was that ethical of me? comments welcome ) . The only drawback was I was now known by the gods of consumer information as someone who carried a large credit card balance ( $9,000, to be exact, although I never carried it for long ) which led to an all-out telemarketer attack.

IMHO, a clever retiree with good credit and a lot of stamps ( or better yet, online banking ) could make several hundred dollars a month by "churning" $100K or so through multiple credit card offers that included some sort of incentive, as in my phone company deal.

(Tue Aug 26 1997 15:36)
Quite ironically, I WILL be holding on to my gains because this VERY DAY I bailed completely from my Fidelity funds. Now I have to figure out where to put the money..Hmmmm.... I bought some Platinum Proofs from the a few weeks ago, ( liked the low mintages and quick set sell out ) Any thoughts on why Platinum has been taking such a beating the past 2 weeks? Was the quick run up a phony one due to short covering and forward sales combined with supply threat from CIS and overexuberance over the new U.S.PLatinum bullion coin program? ( Supposedly none of the Platinum for the coins will be coming from the open market, they're using the strategic reserves ) .

Yes folks, in spite of my earlier post, I do have a very queasy feeling about the Equities market at these PE ratios, but I also want to make the point that in the LONG run ( going back 15 years, and perhaps also going AHEAD 15 years ) most "little guy" investors with 401 K's and IRA's, will quite likely be WAY ahead of the game if they forsake market timing and just dollar cost average most of their investment dollars into Mutual funds.

(Tue Aug 26 1997 15:39)
Biding my time
Thank you all for all the wonderful instructive comments that you have all been posting today. I really don't have a thing to offer but I found myself thinking back to the late fall of 1929 ( of course I wouldn't say how old I was then, but I can tell you that I was sewing a button onto Daddy's shirt at the time ) . You know, those were hard times, but not as hard as the times that were coming, although thank God we didn't lose the farm like so many of our friends, mainly because Uncle Perry and his half-brother Dave got work in Chicago and sent us $3 a week, every week, even though I know they needed it, too.

Anyway, I just remember sitting there and I said, I feel happy today, Daddy. And he said, We don't have much, princess, but we're happy, aren't we darling, and he bent down and kissed me on the forehead, just like that.

(Tue Aug 26 1997 15:45)
George , Auric, Donald


I agree 100%. This should not crash suddenly. A slow drift like today with 50~150 off 2 out of 3 days for a couple of months with the brokers saying "Hold for the long term" and we'll be ready to start another 'Bull' term. Anyways, Rubin can always print enough to buy enough futures of the S&P to bring any real damage under control short term.


Bart as GOD ... NOT! gOD ( small g ) maybe, but there's too many clouds coming my way every time I use a capital "G" . I think I'll start using gold instead of Gold, also, you never know, maybe HE likes Silver more ( God not Bart! ) .


Been there ... Done that ... Same girl I'll bet! Even had the damn clerk tell me it wasn't my money anymore once I had deposited it with them ! I guess posession is 9/10 ths of the law. Talk about customer relations eh!


(Tue Aug 26 1997 16:06)
Savage: I wasn't offended by any of your remarks. I always welcome the challange of differing views. If I did not respond to one of your questions, it was an oversight on my part. Usually, I skim through the postings. I imagine I miss some of them on occasion.

(Tue Aug 26 1997 16:11)
ALL: The expected stock market crash is still on course. The next critical tests will come in the next few days. 1 ) A retest of the lows at DJIA 7700 made on 8-15-97, and 2 ) A test of the 7500 level, which marks a 10% correction from the all-time high around 8300.

I expect both of these tests to fail. Then the panic will intensify in strength.

(Tue Aug 26 1997 16:19)
I'm reading Sinclar Lewis's novel, 'Main Street' and am astonished at how the problems they had in ~1918 are basically the same problems we have today. I used to think that the problems we have today are new and unique to our time in history, but I was wrong. Thus if its the same old sh*t over and over, then no way is gold dead, just sleeping. The reading of this novel has only confirmed my belief that buying gold now is the right thing to do and the elite have their reasons for pushing the price of gold down.

(Tue Aug 26 1997 16:24)
Dow/Gold Ratio 23.88 First time back in the 23's since June I think.

(Tue Aug 26 1997 16:26)
@the scene
GVC -- Thanks for the chart link.

George Cole
(Tue Aug 26 1997 16:29)
at home
Gold stock action today left a lot to be desired.

Puetz: Agree that a drop below 7500 will touch off heavy selling. But I think the damage will be contained for awhile at the 6800-7000 level.

Granny: I am friendly with a lady whose family was riding high during the 1920s, but lost most of what they had in the 1929 crash. They lost the rest in the early 1930s when the depression wiped out their real estate investments. But she still has some beautiful furniture from the glory days.

(Tue Aug 26 1997 16:33)
Ohio Sorgham Memories
Granny - Welcome. Talk some sense into us! We need it. Always thinking about 'stuff'. Talking about 'stuff'. Need a bit more on the people side. Thanks!

(Tue Aug 26 1997 16:41)
LSTEVE: I applaud your reading the "classics" for application today. Too bad that most are too busy watching television for such "deeper insights". ....Also, that most completely neglect the spiritual in pursuit of only temporal gain. While we chase the gold, let us not forget THE Gold.

(Tue Aug 26 1997 16:50)
The S&P futures collapsed big-time after the NYSE close at 3:00 p.m. September S&P futures were trading at 916.00 at the time. By 3:15 p.m., Sept S&P futures had dropped 9 full points -- to 907.00. It looks like the DJIA could open 70 points lower tomorrow morning. It looks like the retest of 7000 will come sooner, rather than later. The expected stock market crash is fitting the pattern of previous crashes to a T. Everything is still go for a stock market crash during the next 5 to 6 weeks.

Who Cares
(Tue Aug 26 1997 16:51)
Peter Eliades Article (Un-Technical Analysis)

Here's a fascinating article on technical analysis. Sorry to post
the article, but I don't have a reliable URL for this. Normally,
I don't put much stock in "technical analsysis".

What was most interesting about this was the firestorm it
kicked up in the misc.invest.bulls&buy&hold-forever
newsgroups. Quite interesting. And I definitely buy his
bull / bear sentiment reasoning.

Subject: Eliades on Market Top?
From: Peter Eliades
Date: 1997/07/13
Newsgroups: misc.invest.technical,misc.invest.futures
[More Headers]

Conventional technical analysis suggests there is almost no way the
market could yet be at a top. The number of daily 52 week highs on July
3 hit a staggering 537, the greatest number since 1982, and even though
the number is not anywhere as impressive as the 1982 figure because of
the dramatic increase in the number of issues traded on the NY Exchange,
it is a very high number even on an adjusted basis. Most technicians
will tell you that market tops rarely coincide with peaks in the number
of 52 week highs. They are right. Price highs after peaks in 52 week
highs usually take anywhere from several months to a year or longer.
The McClellan Summation Index, a companion tool to the McClellan
Oscillator, is a marvelous technical indicator and currently receiving
much publicity because the Summation Index is hitting all-time highs as
recently as yesterday, July 11. There is little question the Summation
Index is at a very high level, but it also requires adjustment because
of the greater number of issues traded on the NY Exchange. Our own
adjusted McClellan Summation Index on Friday was high, but nowhere near
a record. It was, in fact, only the 702nd highest reading in the past 57
years. Nevertheless, it would be rare to see the stock market reach a
top coincidentally with the Summation Index at a new recent high,
although it has occurred before.
So much for just a few of the reasons we could well be wrong about a
market top. Now well present you with some of our perhaps not so
conventional technical reasons why Tuesday and Wednesday of this past
week could well have marked a final top in this greatest of all bull
Lets start with market sentiment. We have always had a
proper reverence for sentiment indicators, but we also have some real
bones to pick with the conventional use of most sentiment indicators. We
believe sentiment readings should somehow incorporate the underlying
market movement that accompanied the sentiment readings. A put-call
ratio could have different interpretations depending on whether it was
registered during a market rally, decline, or consolidation. We have not
yet been able to do the research we hope to ultimately do in that area
We are fast accumulating data on what we believe will ultimately be one
of the best sentiment indicators available although the history is
limited to the past four years or so. It is the asset data from the
Rydex Group of funds. Rydex is the only fund we know that actually has a
fund inversely indexed to a market index, in this case the S&P 500. It
also has two other funds positively corellated to stock market indices,
the Nova Fund indexed to the S&P 500 with a beta of 1.5 and the OTC Fund
indexed to the NASDAQ 100. There are other funds in the Rydex group such
as a precious metals fund indexed to the XAU index but for market
sentiment purposes, we believe the Ursa, Nova, and OTC funds are almost
ideal. Currently the bullishness evidenced by money managers and
individuals in the Rydex funds is unprecedented. To give you some
reference points, at the late May 1996 market top, a top that led to an
almost 10% decline on the Dow and the S&P 500, the ratio of Nova plus
OTC divided by Ursa i.e bulls divide by bears, was 1.45 on May 20. On
July 2, 1996, at the secondary top before the large decline, the ratio
reached 1.62. Around the February 18, 1997 closing high on the S&P 500,
the highest bullish reading was 3.16 on February 12. Despite the runaway
bull market since December 1994, sentiment ratios never reached 3.0 or
higher until 1997 except for one other day, and even as late as May of
this year, there had never been a ratio higher than 4.0. On Friday, July
11, the ratio closed at a stunning 4.64 and the 10 day moving average
was 4.16. That works out to be 82.3% bullish and 17.7% bearish in
conventional sentiment terms. It is almost inconceivable that bullish
numbers could get much higher. You should be aware that the majority of
managers who use the Rydex funds have a bearish bent to begin with, and
are there primarily to be able to use the Ursa Fund. The fact that they
have been almost totally converted is a very ominous sign for the stock
market. We believe it is marking that long elusive market top and is
doing so with numbers we may not see again in our generation.
Now lets discuss our RSI 316 indicator. In our last posting
to this newsgroup in mid-June, we suggested that a rare reading of 60+
on a daily Dow chart with a 316 period RSI could well mark the final Dow
high based on prior history of the indicator. We will not go into the
details of that analysis here but it now appears that the Dow will not
reach the 60+ level seen in 1987 prior to the August top. The 1929 top
also did not reach the 60+ level at the top. We should explain to those
of you who did not read the first post in June that there have been only
three prior general time periods in this century when the Dow reached
60+ on the RSI 316 indicator. Two of those three periods, 1928-29 and
1986-87, led to the greatest crashes of this century. We have now
experienced the fourth such period with 60+ readings in early 1996 and
early 1997. All such prior periods this century led to final market tops
within, at most, 529 calendar days from the first reading of 60+ on RSI
316. Friday, July 11, marked calendar day 519 from the first RSI 60+
reading in this time period, also the first such reading since August
1987. It occurred on February 8, 1996. It was interesting to us that in
looking at the NY Composite Index this past week, it virtually reached a
60 reading on July 3 with a reading of 59.97. We should also note that
the highest reading on the DJIA this century was 61.7. On Friday, July
11, the Value Line Composite Index ( arithmetic ) closed at an RSI 316
reading of 61.76. Unlike shorter, more conventional RSI periods such as
9 and 14, the very long period RSIs used in association with secondary
stock indices often top out coincident with price tops rather than after
momentum divergences. The current reading on the Value Line points to
one of the most overbought readings on a market index seen this century.
Thats not all, folks! There is the Coppock Curve ( or
Coppock Guide ) so-called Killer Wave. For those of you not acquainted
with the Coppock Curve, it is constructed by adding an 11 month rate of
change to a 14 month rate of change on the S&P ( or any other index ) ,
then calculating a 10 month weighted total of that sum. It has been one
of the most spectacularly accurate long term buy indicators ever
devised. Its last buy signal was given in January 1995. A buy signal is
generated when the Coppock Curve turns up from below the zero level.
Its that simple. The beauty of the Curve is that it tends to move above
and below zero very smoothly with little or no hesitation. The Coppock
Curve was not designed to give sell signals, but an analyst with A.G.
Becker, Don Hahn, discovered long ago that if the Coppock Curve turned
up by more than 10 points within two months of a bottom above the zero
level, it was called a killer wave. Up to now, there had been only three
killer wave signals given over the past 35 years. They came in November
1968, September 1972, and July 1987. A double Killer Wave signal has now
been given in both February and May 1997. The three prior signals led to
three of the largest declines of the past 35 years. The current signal
now calls for an equally ominous decline. The timing of the decline is
not a pinpoint affair, but as you can see from the dates of prior Killer
Wave signals, they preceded the final tops: 1 ) just days later ( December
1968 ) , 2 ) 3 1/2 months later ( January 1972 ) , and 3 ) one month later
( August 1987 ) . Three instances are not, of course, statistically
significant but the suggestion from those prior three occasions is that
the top should be seen between June and September 1997. The past three
Killer Waves preceded declines averaging 34.4%. We believe that would be
a minimum type decline expected from the next top.
The next technical point is also from our own work. It is a
simplistic but, we believe, elegant indicator. The indicator is derived
by looking at DJIA monthly closes this century. We began this study on a
weekly basis but moved to monthly, but lets backtrack a moment to give
you our thinking on the matter. Here is a quote from our October 18,
1996 newsletter. One of the more simple techniques of measuring market
cycles is to calculate how many days ( weeks, months, etc. ) the market
index you are following was up over a specified period of time. We have
done that often on a daily chart with varying degrees of success. We
experimented over the past few days with weekly data........We looked at
a Dow weekly price chart going back almost 60 years. The longest
uninterrupted advance seemed to be the period from October 1962 to
February 1966. It consisted of 172 weeks. Over that 172 week period, the
Dow Industrials were up for the week a total of 113 weeks...since 1943,
there have only been 45 weeks with readings of 111 or higher.[In the
last 40 years, the first] readings of 111 or higher occurred in the
original test period of 1966. It began on the week ending January 14 and
continued the next two weeks. On February 4, 1966, the reading reached
112. At the market top week, the week ending February 11, the reading
reached the record 113. The next two weeks saw readings of 112 and 111
respectively and then the string ended. As the string was ending, the
market was registering a high that would not be significantly surpassed
for over 16 years. Perhaps of equal significance is the fact that the
magical and rare reading of 111 or higher would not be reached again for
over 20 years. The next occurrence was the week ending August 21, 1987.
The 1987 pre-crash high on the Dow was registered two market days later
on August 25. Thats the thinking behind the indicator. Moving now to
monthly studies, the two monthly time periods we have found to be
significant in the past have been 40 months and 100 months. Monday, June
30, 1997 marked the end of another month.It was an up month. Only one
other time this century has the DJIA been up more than 68 months out of
the past 100 months. That occurred in December 1961. Just short of 6
months later, the Dow was down over 28% from the December 1961 close.
There is also another first that occurred on June 30. The century old
records of 30 months up out of 40 and 69 months up out of 100 was
achieved in the same month. It is a record extreme based on these two
extreme readings being reached in the same month. Let us put these
current readings in perspective for you. The only times this century the
market has been up more than 67 out of 100 months prior to the past year
were October 1961 through February 1962 ( all readings of 68 except for
December which was 69 ) and January, February, and April 1966.
Similarly, the only times this century the market has been up more than
29 out of 40 months prior to the past year were February 1937 and April
through August 1961. In 1937, just in case you dont remember, the Dow
topped out 9 market days after the February close and proceeded to
decline 16.5% intra-day in the next 3 1/2 months, 40.8% in the next 7
1/2 months, and 50.2% in the next year.
We have come this far- lets go just a bit further. Lets
just make the mad assumption that, against all odds and certainly
against all sentiment, the market is at or fast approaching a major
major top. We went back and examined the most important market tops of
the century making sure to include the tops that were signalled by the
Coppock Killer Wave formation, namely December 1968, January 1973, and
August 1987. We were curious to see if there was a consistency in the
time of the final leg up that led to the major tops. We discovered there
was indeed an impressive consistency. We used the major tops of 1929,
1937, 1968, 1973, and 1987 to measure the time span of the final rallies
leading to the tops. The results were: 1929--78 trading days,
1937--63 trading days, 1968--65 trading days, 1973--57 trading days,
1987--67 trading days. The average of the 5 resolutions is 66 trading
days and the extremes were only only 9 days shorter ( 1973 ) and 12 days
longer than average ( 1929 ) . So far the DJIA intra-day top occurred on
July 9, 1997. One look at a chart makes it obvious the current rally
began from the low of April 14. Friday, July 11 marked the 62nd trading
day from the bottom. We are in the heart of the average period to a
final top using trading days. Using calendar days and throwing out 1968
because there was no trading on Wednesdays during the period in
question, we arrive at an average of 89.25 calendar days as the length
of the final rally leading to a major top. Saturday, July 12, was the
90th calendar day from the April 14 intra-day low.
There is much more of interest, but we have probably been
presumptuous already, posting this long a message. The bottom line of
the message is there is some decent evidence we have seen a top already.
Imagine the irony if we dont see a close above 8,000. It is surely
taken for granted now. But the level is far less important than the
timing of the overall picture. The above indicators are screaming that
some kind of a serious top is imminent and it could well lead to one
hell of a bear market. As to a crash, it depends on your definition
thereof. I believe the chances are real that 7-8 weeks after the final
top, a secondary top will be seen that will lead to crash-like behavior.
But, you say, crashes dont happen when people are predicting and
debating their possibilities. HA! Go read the September 5, 1929 edition
of the NY Times and see if a crash was not being debated just two days
after the market top and just weeks before one actually occurred.

Peter Eliades
Editor-Publisher Stockmarket Cycles

(Tue Aug 26 1997 16:55)
Japanese report
Japanese view of US Bond market and Forex market:

John Disney
(Tue Aug 26 1997 16:56)
To all you DDeeps players

Believe I have solved mystery of strange anomaly regarding low
price of Buffels relative to DDeeps and I predict that anomaly
will soon vanish. This only of interest to a few players so wont
expand. Email me directly and Ill fill anyone in that wants to know.

(Tue Aug 26 1997 17:00)
Sell-off of S&P 500 futures at the close of the day session. Globex could be interesting tonight. This sell-off was NOT reflected in the Dow and S&P cash closing values. If the approximate ratio of 12:1 holds true, this would seem to indicate a Dow closing of some SIXTY FIVE points LOWER ( an indicated DOW close of ~7717 ) than we saw the Dow close at today ( actual close: 7782.22 ) . So, the Dow 'should have' been down about 142 points at the close today based on the S&P 500 futures. What does this mean? Either someone was setting up the night session, or there was really bad sentiment at the close!

(Tue Aug 26 1997 17:02)
PUETZ: I'm glad that you're not offended. I think you may have the scenario right, but the timing off a tad. I'm curious as to what makes you so certain ( ie-6 wks ) . You name dates AND numbers... is credibility ever an issue with predictive economists? What do you do if you're wrong? Simply say, "Oh well, back to the drawing board"?? What if some idiot just bet his inheritance on your words? Don't get me wrong, I'll be OK if your timing is correct, or, if it's not. I've already paid my tuition. But, I'd feel better if you added some caveats for the untutored.

(Tue Aug 26 1997 17:08)
In your previous posts you have warned investors of the inevitable market crash and advised to buy bullion. How much bullion? What bullion? ML? Liberty? Krugs?

(Tue Aug 26 1997 17:10)
Puetz -- You beat me by ten minutes! :- ) )
But my chart makes the statement more 'eloquently'. :- ) )

(Tue Aug 26 1997 17:11)
To Puetz,

you said:

" The expected stock market crash is fitting the pattern of previous crashes to a T. Everything is still go for a stock market crash during the next 5 to 6 weeks."

You 'really' believe that this is the beginning of a crash? I just do not see your
pessimistic scenario.. This market will correct further.. I now see the 7450 area
on the Dow as support. Corrections occur in A,B,C forms and we are completing
the "C" leg of this minor correction. The major trend is still in place ( up ) Possibly
10 to 15 percent declines are "crashes" to you?

(Tue Aug 26 1997 17:11)
WHO CARES: Thank you for that great Peter Eliades post.

George Colw
(Tue Aug 26 1997 17:20)
Who Cares: Let me second Donald's thank you for the Eliades post. He is one hell of a technician.

Russell 2000 small cap index rose slightly today despite Dow selloff and is less than 1% below its high. Leadership is shifting from the generals to the troops.

(Tue Aug 26 1997 17:28)
Donald, George Cole, bw, Eldorado, Puetz, Strad Master and all.
Assuming market crash and/or slow decline how would you position yourself financially? Wht to invest in? What to sell? Consider inflation and deflation.

(Tue Aug 26 1997 17:33)
NOTAGOLDBUG: Look around the world, currencies and markets in free-fall in Asia. Europe, Mexico, US, Canada stock charts looking like the Matterhorn. Five countries in Europe down 10% from recent highs with economies having unemployment in the teens. Personal bankruptcies soaring in the US. Banks on the ropes in Japan, Korea, Thailand. Insurance companies on the ropes in Japan. Earnings hankey-panked by derivatives, stock options, underfunded pension plans and one time event downsizing. Rampant fraud at Sumitomo, Prudential, Daiwa and Barings. A rush of IPO's and secondary offerings. Dell Computer valued at 66% of all the gold at the Fed. Coca Cola worth all the companies in France. Microsoft worth all of India?? Calling for a market crash under those circumstances does not seem unreasonable.

William J. Bennett
(Tue Aug 26 1997 17:50)
With all due respect to Peter Elides, I wasted time and money listening
to his doom and gloom forcast since December of 1995. Someday we will
all be correct im our predictions. Timing is everything!

(Tue Aug 26 1997 17:53)
Surf's up
killer waves and golden shores

(Tue Aug 26 1997 18:06)

To Donald:

you said:

"NOTAGOLDBUG: Look around the world, currencies and markets in free-fall in Asia. Europe, Mexico, US, Canada stock charts looking like the Matterhorn. Five countries in Europe down 10% from recent highs with economies having unemployment in the teens. Personal bankruptcies soaring in the US. Banks on the ropes in Japan, Korea, Thailand. Insurance companies on the ropes in Japan. Earnings hankey-panked by derivatives, stock options, underfunded pension plans and one time event downsizing. Rampant fraud at Sumitomo, Prudential, Daiwa and Barings. A rush of IPO's and secondary offerings. Dell Computer valued at 66% of all the gold at the Fed. Coca Cola worth all the companies in France. Microsoft worth all of India?? Calling for a market crash under those circumstances does not seem unreasonable."

These situations occur in both good times ( financially ) and bad times.. The
reality is that our markets, though at extremely high levels ( by the numbers ) ,
still have value and will continue higher.. This corrective phase will pass,
and you will argue ( all the way to 10,000 Dow ) that it is the end of the world..

Who Cares
(Tue Aug 26 1997 18:12)

Mr. Bennett -

I *could* claim that I *wasted* seven years listening to James Davidson. The truth is that Davidson's view of history *did* enable
me, partially, to do well for four years.

I *could* also claim that I wasted the past five years of my life,
which I often believe these days, working from Malabre's model
of government containment and encroachment.

However, in the interests of people like Davidson and Eliades,
I *will* state that their views did empower to accomplish more than I
would have on my own. Davidson's general view was pretty good,
and I avoided losses in excess of $10,000s by fleeing California in 1990.

Malabre enabled me to leap ahead in my career, too. I failed to appreciate the ramifications of his predictions.

(Tue Aug 26 1997 18:14)
It takes attitudes held by many like notagoldbug to make a top. This bull is based on falsity and thus will crumble much more harshlly than others.
Remember Notagoldbug a "bear mkt falls down a mountain of hope".
Seems to me hope is springing eternal. Keep the hope!!

(Tue Aug 26 1997 18:16)
crash scenario
Three stock market positives that augur against a crash in the near future:

Gold has not yet broken out.
Relatively strong advance/decline statisitics
Bullish new/high/new low readings

As long as the overall market continues to strongly outperform the DJI and S&P 500, a crash is unlikley. We need to see more strength in gold, weaker advance/decline numbers, and many more new lows before the crash scenario becomes credible.

Today there were only 13 new lows on the NYSE despite the Dow falling 77 points to a level about 6% below its high. If a crash was imminent we probably would have seen over 100 new lows today.

(Tue Aug 26 1997 18:24)
To WW:

you said:

"Remember Notagoldbug a "bear mkt falls down a mountain of hope".
Seems to me hope is springing eternal. Keep the hope!!"

I trade technically and "try" to keep emotion on the sidelines.. So, my "hope" as
you so inadequately described overall market opinion is solely based on the fact
that the current correction in the S&P and Dow are only "corrective". There is no
technical damage done.. Even Prechter, in his most recent "Elliott wave theorist
short-term update" ( 8/22/97 ) sees this as "only corrective". He has been a perennial bear and now believes this market will continue higher. How do you
base your trades? On fear??

(Tue Aug 26 1997 18:26)
@todays Haikus
Wonderful Kitco
suppling with the site
calm confusion

Great Bank of Korea
extending with 4 trillion won
Hot printing press

Crashing market
ringing upon its cradle
phone unanswered

small nuggets
resting upon the sand
warm dream

George Cole
(Tue Aug 26 1997 18:31)
gold action
Today's rather modest gold rally in the face of a weak dollar and the poor gold stock action leads me to believe the yellow will agsain test the lower end of its trading range very shortly.

(Tue Aug 26 1997 18:33)
Prechter ONLY Corrective LOOK OUT BELOW. He was also only seeing a small correction in Sep, 1987. Quoting Prechter as only seeing a correction should send a chill up every bull's spine. Technicals be damned. By the time the damage is done it is too late.

(Tue Aug 26 1997 18:42)
WW, Elias, peutz, George
This is one equity investor who could care less whether this market made it's highs based on "phony" fundamentals, "hope", etc. The fact remains that some of us have now taken our enormous profits into cash, while you Doom and Gloomers would have had us miss most of the entire market move. A correction ahead? No doubt. A crash? I don't see how. Forget historic waves and models, and 1987. Someone ealier told me to look up the price of gold vs. DJI for the past 100 years. What's the point? All these comparisons to 1929, 1987, ad nauseum are pointless. Today we have a booming diversified economy, high prodiuctivity rate, low interest rates, low inflation, stable energy prices/supply, and a HUGE pool of BILLIONS pouring into Equity funds weekly from the endless contributions to 401K plans that most of the country's workers invest in, and will continue to invest in during our forseable lifetimes. Sure we can see a cyclic change favoring metals and causing a correction, but best to keep it in perspective. I'll be dollar cost averaging into the metals AND back into the Equities market, once I see a reasonable correction of 15% to 20%. A crash? Laughable! Peutz should have his feet held to the fire on his inanely ridiculous predictions once December rolls around.

(Tue Aug 26 1997 18:45)

To WW...

You obviously have your mind made up.. I do not agree ( with you ) that this is the
top and from here; the feared "crash".. I respect your opinion, the market will make one of us the fool..

best regards.. notagoldbug.

(Tue Aug 26 1997 18:46)
yes, the trend is changing!
Yes, the change in market trend is really here. I make this statement
based on attitude of bulls/bears in gold/stock market expressed on this
forum. We have purists and believers in both camps - goldbugs and
paperbugs. While things are good, the "winning" camp is getting
complacent, pretty much "no comments" attitude, just enjoying the ride
with no reason to explain why things are good.

When things start changing, you see more posts explaining why the
downturn is just a temporary correction which will be followed by new
bull rally which will bring us to the new high. Notagoldbug post is
example of this. Eventually the bull turns into widely acknowledged bear.
Loosing camp starts predictions ( supported by different analyses ) when
the bull will wake up again. ( this is where goldbugs are right now )
Eventually, predictions will become more accurate and the change will
happen ( as I believe is imminent at this point of time ) . After that,
the whole cycle will repeat again.
Nothing is forever! Smart investor tries to digest all information
provided by both camps and make his own judgment how to time changes in
his investment strategy. I hope most of us are doing just that.

Now what the heck happened to gold stocks today?!

(Tue Aug 26 1997 18:48)
Goose, Re your comment "ith the site calm confusion Great Bank of Korea extending with 4 trillion won Hot printing press Crashing market ringing upon its cradle phone unanswered small nuggets resting upon the sand warm
dream -"

Who do you think you are, Maya Angelou?? PS No one ever commented on PLatinum??

(Tue Aug 26 1997 18:49)
gold coins
Is there a rational reason for the spread between Maple Leafs and K-rands? Any opinions on what manner to hold one's gold?

Who Cares
(Tue Aug 26 1997 18:55)
Eliades Posting

I made the Eliades posting simply because it has historical
evidence that supports Puetz's predictions. I hope everyone
found that part.

(Tue Aug 26 1997 19:05)
You said "Even Prechter, in his most recent "Elliott wave theorist short-term update ( 8/22/97 ) sees this as 'only corrective'. He has been a perennial bear and now believes this market will continue higher."

No one know the future, that's why someone is always there to take the the other side of a trade. However, the fact that a perennial bear turns bullish, would not be enough for me to hang my financial hat on. Just the opposite. A contrary indicator?

None the less, keep your comments coming. They help keep our golden feet on the ground ;- )

(Tue Aug 26 1997 19:08)
Do you base your take on the economy on government stats? If you buy the low inflation- I don't b/c I include the stock market as one of those goods too much money is chasing- then we do NOT have low interest rates. Stable energy? OK for now, but would you bet much on it staying that way for long? I'm pretty sure the most people do not contribute to 401k's, and that of those that do, a large chunk of that goes into the stock of the company for which they work. Talk about diversification! You should care about how you made out so well, because you can't be lucky forever, unless of course you are Bill Clinton. Knowledge of his deeds alone should have scared everyone out of the market, but I guess I overestimated how easily the general herd could be bought off. I've been lucky plenty of times in the past, but I'm smart enough to realize it so that in the future I can reduce my risk.

Mike Sheller
(Tue Aug 26 1997 19:12)
catchup ketchup
SAVAGE: I was not surprised. I was flattered. And if some idiot bet his inheritance on Puetz, or me, or whoever, and lost it all, it would be karma, and there would be no way to avoid it. And he would BE an idiot. GRANNY: At last a rival to Bernatz! LURKING GBUG: See above @ Savage. And in case you haven't learned anything, now that you've sold out your "normal" stocks, in answer to your question, put everything into Echo Bay Mines, Sunshine Mining, and Gold Standard, Inc. Then write down this date and note the closing prices of those 3 stocks today. If you can tell me they didn't perform up to your standards a year from now, e-mail me at THE ASTROLOGICAL INVESTOR ( that scurrilous rag-sheet at Gold-Eagle ) and I'll take you to dinner, or send you a check so you and a companion can go out on me! OK? DONALD: Ever try an army spit shine?

(Tue Aug 26 1997 19:13)
LURKING GBUG: For your own safety I urge you to reconsider and find that chart on this site. It will only take a few minutes and it will open your eyes about those profits you claim you made. You will learn at a glance that NO ONE has made any profits. You owe taxes on an illusion of profits foisted on you by a series of governments that specializes in illusions. Low interest rates? A real rate of 5% is one of the higest in history. Another illusion courtesy of your government. Billions into the market? They were borrowed from home equity loans and credit cards. That is not real money. And last month 25 billion came in and the market dropped 6%. That is one of many signs of a top. It will take 50 billion a month to stay even it appears. Buy on a 20% setback? That is EXACTLY what wiped out the most folks in 1930. In 1929 we had a 11% drop, in 1930 on the dip it dropped the other 80%.

(Tue Aug 26 1997 19:15)
Ted- you got any fire ants up in Cape Breton? I just stuck my hand in a nest and I'm ready to move. Anyone know of a cure?

BTW, my father's parents were from Nova Scotia. Do Cape Bretoners consider themselves Nova Scotians, or is there some rivalry which should make us enemies of sorts?

(Tue Aug 26 1997 19:21)
MIKE SHELLER: Nah...I'm holdin' out for Gates. Sometime next week I figure. Do you have a chart on Gates?

(Tue Aug 26 1997 19:23)
My problems with your statements are as follows; Firstly "luck" has had nothing to do with my own investment success. Listening to wise counsel of those who have taken the long view of the market and the economy has. People like Bob Brinker for example, who has been humiliating the "Doom and Gloomers" at DOW 3000, 4000, 5000, 6000, 7000, and 8000 and who even now gives sage advice by NOT giving a "buy" signal at these levels, but remaining long term bullish in the long view. OK, I'll concede you this, I did get "lucky" around 1989 when I STOPPED listening to the advisors and analysts who even then were making the kind of predictions as Puetz and company are making now ( and have been making, to their total discredit for many years ) . Secondly, as to low inflation being Gvt. numbers. I agree that inflation is higher than stated, after all in my area, cars, homes, etc. have skyrocketed in price, however, the "official" inflation numbers are relative to earlier "official" inflation numbers. In COMMODITIES and CONSUMER GOODS, however,it's quite obvious that inflation has been quite low/non existant, for many years.

(Tue Aug 26 1997 19:32)
LONGTIMER: I am buying Central Fund of Canada and Rydex Ursa fund in equal amounts right now. I have some Sr. and Jr. gold and silver shares also but I do not plan to add to those until there is a convincing move up in the XAU.

(Tue Aug 26 1997 19:33)
MIKE SHELLER: I already have a bunch of Echo, Sunshine ( I believed you ) etc., I am prepared for a crash. We're in gold, silver, oil and agriculture. HOWEVER, if the crash waits another few weeks or months, I'll have even more of those ( at better prices ) . So, I believe it's coming... it's just a question of when. Imminent, to me, means before 1999.

(Tue Aug 26 1997 19:36)
my turn
I think 'official' numbers have changed. I'm quite serious in saying that Clinton discovered that the numbers matter and he found people willing to say what he wants, so I don't think we are comparing apples to apples. I can't speak for the others here, but I haven't been bearish the last ten years. Before desert storm, I was begging people around me to buy anything. They wouldn't then, but certainly are now. I remember a 'financial expert' laughing at me for suggesting buying stocks. But early into the Criminal Administration it no longer made sense.
One more thing- I've heard Bob Brinker just a few times, so what I say is based on a small sample, but I think he is an idiot.

(Tue Aug 26 1997 19:39)
@no more haiku
LurkingGBug.. Sorry, no more haiku about todays events..
TOCOM ( Tokyo commodity exchange ) to raise margin requirements for Sept. make it easier to cover short positions...interesting.!!

(Tue Aug 26 1997 19:39)
REF: Who Cares ( Peter Eliades Article ( Un-Technical Analysis ) ) : Many thx for the profound Eliades post.

(Tue Aug 26 1997 19:40)
NOTAGOLDBUG: Prechter a bull? I read he is a bear who is playing a bullish wave at the moment. Here is his site. Folks can decide for themselves.

(Tue Aug 26 1997 19:40)
gold coins,2
Would somebody please tell me what coins to buy? So much for DD.

(Tue Aug 26 1997 19:42)
Donald, Thanks but I've seen the meaningless chart before.AS to my "illusion" that I made money in this market for 8 years ( and wish I would have been in a lot longer ) Is it an "illusion" that I'll be taking some of my profits to pay off my mortgage, take a vacation, and even BUY ( yes BUY! ) some gold coin as I wait for a good time to enter back into the Equities market? Or could it be that I've been "fooling myself" these past 8 years as gold PLUMTTETED and folks who think like you lost billions?? Oh yes, I remember, you didn't REALLY lose all that money because it's just PAPER we're talking about based on the full faith and credit of the U.S. right? All I know is this. The profits I took today ( and a few weeks ago when I began my selloff ) are going to buy me a LOT more goods and services, including my home mortgage payoff, than the same money would have if I'd have invested in the meatls in 1989 or virtually any of the other years you folks were pushing for a market crash. Only now, with P/E ratios too high and no "good news" left to drive the market higher, do I believe it's time for me to get out and stay on the sidelines, and it sure won't be an indefinite position. Give me a 15% to 20% correction for Christmas and I'll be back in the Equities market for the new year......and like I said before, I'm not anti gold ( hence my name ) I love the stuff, but logic and reason must prevail over the metal's allure my friend. And BTW, where the heck is HEPCAT? He may have been annoying, but at least he could exercise some deductive reasoning ability in this whole debate! ( and NO you conspiracy freaks, I'm NOT HEPCAT, Son of HEPCAT, agent of HEPCAT, nor connected in any other way ) y I did however, appreciate his ability to tell the truth to those with their heads firmly planted in the sand of their completely discredited "theories". Time will tell folks, time will tell. Talk to me in 2010 and we'll see where DJIA is vs. Gold vs. a loaf of bread vs. my home vs......paper currency....vs................

(Tue Aug 26 1997 19:50)
Malaysian stocks succumbed to a fresh round of
selling by foreign funds yesterday as already weak
sentiment was further dampened by declines in the
ringgit, dealers and analysts said.
South Korea
The decline raises concern Korea will follow
Thailand and Indonesia and allow its currency to
devalue because of a slowing economy and a large
current account deficit.

Foreign banks have said they are reluctant to lend
money to Korean companies, particularly banks
that have more bad loans than shareholder equity -
making them technically insolvent.

(Tue Aug 26 1997 19:50)
Lurking Goldbug: I see you've bit into the "always up in the long-run" bullish scenario for stocks -- hook, line, and sinker. If it comes to holding my feet to the fire in December, please keep my toes a good distance from the flames. Although, I doubt that you will have to light any fire on my account.

(Tue Aug 26 1997 19:51)
Fidelity Select American Gold & Precious Metals Chart.
Ten market days ( seven hours / prices per day )

(Tue Aug 26 1997 19:55)
@LurkingGbug on inflation
LurkinGbug, I can not quite agree with your comment "In COMMODITIES and
CONSUMER GOODS, however,it's quite obvious that inflation has been quite
low/non existant, for many years."

I believe that the way we measure inflation for consumer goods is very
misleading. We look just at the price of the item and do not consider
the life and required frequency of replacement. My experience is that
the most new goods have a shorter life and you have to replace it much
sooner than the old ones. This is due to materials, quality, and in many
cases much faster aging of technologies ( and required "upgrades" )
I can cite many examples, e.g., when I moved into my current home, 22
years old central heat/air-condition unit was still running. The new
unit is giving up after only 12 years. This means that due to a sorter
life the new unit is twice as expensive but this does not show in
"inflation index".
The faster replacement rate is also one of the driving forces in
"healthy" economy ( need to make replacement goods ) . Well, who is paying
for that? - John Doe who is happy about the low inflation and cheap
goods he can buy not realizing that he is subsidizing the company profit.

(Tue Aug 26 1997 19:57)
Financial crises have a habit of hitting where the world least expects

Cracks in the plastic

Credit cards aren't what they used to be. When they were first sold, they were marketed to financially
sound bank customers. Their relatively high interest rates reflected not so much risk as the fact that they
weren't intended to be used for long-term loans. They were unsecured, but banks chose customers
carefully. But credit cards turned out to be money-spinners for the issuers. That meant more banks
scrabbling for market share. In turn, this implied less discrimination about customers and lower interest
rates  but also a frightening increase in defaults.

The result is that credit cards now head the banking risk list. Credit cards represent a risk so severe that
defaults could create a debt crisis as significant as LDC and property loans in the 1980s. Loan volumes
are huge  $360 billion in the US alone, more than twice Brazil's foreign debt. Loans on cards are
showing rapid growth: in the US it has averaged 20% annually for the past three years, with some banks
expanding their portfolios 500% in that period. Not surprisingly, as the quality of borrowers diminishes
an increasing proportion of them are going bankrupt. Bankruptcies have reached record levels  they are
expected to rise 30% to a forecast 1.15 million this year. At a time when the US economy is healthy,
loan losses are almost as high as they were at the height of the 1991 recession.

So if the economy takes a nose-dive, losses are likely to get completely out of hand. The banks whose
only line of business is credit cards are likely to be hit first. The crisis will then engulf all major banks.

"Credit cards are the number one risk in banking ... and the pressure can only intensify if we have an
economic recession," says a report by US brokerage Gerard Klauer Mattison. It warns that unease
could spread if a bank were to admit to difficulties by increasing loan-loss reserves or if regulators were
to request higher capital allocations. The risk manager at a major UK bank says that "credit cards could
certainly be a big issue in the UK and Europe as well as in the US".

In their bid to win market share, banks have waged a marketing blitz. Last year in the US 7,000 issuers
sent out 2.7 billion mailings to attract new customers. Over the past two years, the average adult
American has received 32 mailings offering him $130,000 of credit.

Individual banks have no clear picture of their borrowers' full debt position; the loans are without
collateral and their repayment is a lower priority than home, car and other loans. Bankruptcy is a
relatively easy procedure with little stigma attached. Half the net losses of large card issuers result from

Under extreme conditions, securitization of credit card debt may make banks more, rather than less,
vulnerable to losses. Loans have not been sold on and, if losses were to rise dramatically, the terms
under which cards are securitized would force them back onto the banks' balance sheets. No capital has
been set aside to cover such losses. On the contrary: "A prime reason for securitization on the part of
card issuers is to reduce their capital and loan-loss reserve requirements," says George Salem, senior
vice-president of Gerard Klauer Mattison.

If it comes, the US credit card crunch will expose banks to large loan losses that will show up their
capital inadequacies. Banks wishing to avoid disaster should review their portfolios now.

(Tue Aug 26 1997 19:57)
Re your question, since I've been bashing stock Bears ( and by implication, Precious metals though that was not my intent ) , let me reverse roles and try and answer your question on best investment coins. Amercian Eagles are great, very liquid, and I personally like Maple Leafs because of their 99.9 purity ( Krugerands and Eagles are an alloy ) , but my own best preference is for the early 1920's U.S. Saint Gaudens gold Double Eagles in Brilliant Uncirculated. You have to pay a premium over bullion coins of course ( about $100 to $150 more for a one ounce coin ) BUT, you have the NUMISMATIC collectibilty value of the coin as well as the gold content. In a bear market they can drop less in value to to collector premium. In previous gold bull markets, the "Saints" went up in value substantially more than plain old bullion coins. Also, it is considered by ,many collectors to be the most coin design of all time. If you want to know more from a Numismatic "semi"- expert, e mail me at "". I also like U.S. modern PROOF gold coins because of their low mintages, and the new Platinum Proof issue from the U.S. mint. had ultra low mintages for a new issue of it's type ( If you hurry, the mint may have a few left, the 4 coin sets sold out quickly but there may be some singles still available ) .

(Tue Aug 26 1997 20:04)
Financial crises have a habit of hitting where the world least expects

A new bank debt crisis

Latin America's debt problems look as if they could return. Debts are building up again and the risk of
default is increasing. Banks that thought bonds, not loans, would cause the problems this time around are
mistaken. They will be dragged in as deeply as before.

If Latin American countries defaulted on their bonds, the banks would be forced to pick up the pieces 
as they did after the 1994 Mexico crisis. They will advance new loans in place of sovereign bonds. Fairly
soon they will be carrying large and problematic exposures to Latin America. Sorting out these bad debts
will be much more like the LDC debt crisis of the early 1980s than last year's Mexico bond default.
"When capital market flows dry up, the countries go to the banks and the banks have to lend. They have
no choice," says Raphael Soifer, a banking analyst at investment bank Brown Brothers Harriman.

Soifer continues: "There will be peer pressure, political pressure and pressure on their own portfolios [of
bonds]. Many US banks hope to do a great deal of banking business in the countries themselves. In
order to keep the government friendly they must support its borrowing needs."

A report by the Institute of International Finance confirms that "total bank flows [to emerging economies]
almost doubled in 1995 to $83 billion ... [This partly] reflected the temporary restriction in availability of
bond finance following the Mexican crisis."

Besides the fallout from bonds, the banks could be in trouble because of their generally high level of
emerging-market lending  not just to Latin America. Stealthily  often without telling their shareholders 
US banks are increasing this. In 1995, according to a report from Brown Brothers Harriman,
emerging-market lending increased by 5% on the previous year.

Notable increases in exposure were to Brazil, up 25% to $14 billion; Argentina, up 8% to $9.8 billion;
Indonesia, up 27% to $3.9 billion; China, up 48% to $2.2 billion; India, up 47% to $2.2 billion; South
Africa, up 59% to $2 billion; and Turkey, up 55% to $2 billion. Of the $83 billion total exposure, the six
US money centre banks account for $63.2 billion, almost as much as their combined tangible common
equity and 5% of their total assets.

Emerging economies are financing ever-larger current-account deficits with short-term borrowings, so
crises look inevitable. Many analysts argue that the lending banks are better capitalized than they were in
the 1980s when a systemic collapse was narrowly avoided. But this time they have extensive derivatives
positions on emerging market instruments. If these turn out badly, there could be spectacular failures.

(Tue Aug 26 1997 20:06)
Who Cares: Thanks for the Eliades excerpt.

(Tue Aug 26 1997 20:06)
Wait a second here Miro! I just paid $1800 for a Pentium 233, 4gb drive, 64 MB RAM, Super powerful video card, 20 X CD, Bells and whistles and software galore machine. Now I think back 5 years to my $4,000 pricetag for my dinasour 486 machine which had a much HIGHER failure rate expectation on the Hard drive, etc. Then there's the lower prices on better quality TV's, stereo systems, VCR's, microwaves, etc., the longer life and quality of most Auto makes, foriegn ( and more recently ) domestic, ( and the MUCH better performance if you follwo any of the AUTO pubs. ) the advanced energy saving features of modern Heating, refrigeration and air conditioning systems, far higher construction standards for new homes as opposed to say the 1960's, I could really go on and on for hours but you get the point I'm sure.Ahh yes, but we always long for the "good old days" hmm?

(Tue Aug 26 1997 20:08)
LURKING GBUG: We found something to agree on. I prefer U.S. gold coins also, not encapsulated, no rare dates, and I agree that the premium moves pretty much with the gold content value. Condition is not important to me as long as they are not damaged.

(Tue Aug 26 1997 20:13)
Savage: All of the great market crashes from the past have had a 6-week topping pattern. I see no reason why this one won't be the same. 6 weeks after the early August peak puts us at September 16th for the final peak ( probabaly at a much lower level the the primary peak near DJIA 8300 ) . Also, September 16th is the date of a solar eclipse -- an event that has very often coincided with the beginning of a crash.

Add to that the leverage and other extremes, and we have a high probabilty situation for a crash during the next 5 weeks.

If I'm wrong: I or anyone else should be in a position to profit from the next high-probability situation, if the present one does not work out.

(Tue Aug 26 1997 20:16)
Brazil-seeks consultations on currency valuation?
Fishlow acknowledged that the reais currency was widely regarded as being overvalued but he said appreciation occured
naturally in the early phases of all economic stabilization plans, like Brazil's ``Plano Real.''

``Obviously it doesn't mean the appreciation continues,'' he said. ``The way of reducing this is to increase productivity... ( and ) I
see the country is doing precisely that.''

(Tue Aug 26 1997 20:16)
LMB: Have most of your money in gold and silver coins. Buy S&P puts with cash you can afford to lose.

(Tue Aug 26 1997 20:16)
LMB: Have most of your money in gold and silver coins. Buy S&P puts with cash you can afford to lose.

(Tue Aug 26 1997 20:26)
( Not gold related but of interest to all )

US judge makes internet safer for financial


By Matej Vipotnik in London

A US federal judge has cleared a barrier to the export of software that
would make the internet a safer medium for conducting financial

Judge Marilyn Hall Patel ruled that the US state department licensing
requirements, which restrict the export of encryption software, violate free

The future of commerce on the internet depends on the safety of
transactions between users. Encryption is a process which scrambles
information to protect it from computer hackers. The process is particularly
important for companies and traders who accept credit card payments via
the internet. But the US government fears it could be used to conceal
sensitive military information.

Judge Patel issued a permanent injunction barring the US government from
enforcing its ban on the export of the software which was the object of the
case and expects the US government to appeal. The program, called
Snuffle, was developed by Daniel Bernstein, a university professor.

But software firms whose products incorporate encryption were unfazed
by the narrowness of the ruling and indicated that it undermined the US

"As far as Netscape is concerned, the ruling sets a legal precedent and
applies to all encryption exports," said Sam Sethi, UK marketing manager
for Netscape, a software group.

"The judge realised that encryption is speech and that the government's
restrictions on the export of encryption are unconstitutional," said Shari
Steele, staff attorney with the Electronic Frontier Foundation, a non-profit
organisation supporting civil liberties on the internet which sponsored Mr
Bernstein's suit.

Mr Bernstein sued the State Department in 1995, when he discovered that
his invention was classified as a defence article and required a special
licence before it could be exported. In his suit Mr Bernstein claimed the
regulations restricted his free speech, preventing him from sharing his
research with other scientists.

Judge Patel had already issued two rulings in Mr Bernstein's favour.

Netscape is one of six companies granted export licences for software with
128-bit encryption - the most powerful scrambling software available. Less
powerful encryption software has already proved vulnerable to computer
experts seeking to break through the encryption.

These companies have agreed to deposit the keys which unlock encrypted
communications in an escrow account accessible to the US government.
But the US software industry, including those companies which have been
granted export licences, want the removal of all restrictions.

"The breaking of 40-bit and 56-bit encryption did not leave the US
government a technical leg to stand on," said Mr Sethi. "They had to allow
the use of 128-bit encryption lest they stifle the growth of internet

Mike Sheller
(Tue Aug 26 1997 20:26)
LURKING GBUG: I for one can tell you are not hepcat. You are far too civil. Hepcat was ( hopefully still is ) very intelligent ( not that I'm saying you aren't ) , and if the truth be known, quite sensitive. He just didn't know how to, or couldn't, play well with others. There are limits.
But you are right when you state that a dollar cash profit is a profit, not an illusion. That is the ultimate game, and you have done right and well in this stock bull. I am truly happy for you. By the way, closing prices on the 3 stocks I mentioned are ECO 5 1/8, SSC 13/16, GSTD 19/32. I am with you on the Maple Leafs. My darling wife has forbidden me to buy anything other than pure gold. Yes Dear!
SAVAGE: re ECO & SSC - We don't need a crash. I don't WANT a crash. A good old fashioned 1972 - 75 Bear market will suffice. I still have a few stocks and astrological stock plays coming up. A violent bash is not conducive to my kind of speculating. I prefer stable to mildly rising markets for my longs. I have a couple I would like to ply before this is all over. And perhaps even while the trend starts down. I have been getting back into gold stocks only since the spring. Patience is now the key. Even in a normal end of cycle business expansion, the golds have 30-45% upside from here in a year EASY! It will beat the Dow from here in, don't you think? ECO is practically at book right now. Maybe a half buck above it. "Get Real, Get Gold" is the watchword!

(Tue Aug 26 1997 20:26)
Notagoldbug: Crashes develop for two main reasons: 1 ) Leveraged positions get too extreme, and 2 ) the market becomes grossly over-valued. Once these conditions develop, it's nearly impossible for the bull market to end in any way other than a crash.

The reason why is simple -- Once a bear market begins, "margin calls" are given to the leveraged players. Because so many people are leveraged, the selling to come back within required limits is enormous. This selling causes more "margin calls" to be issued. The process snowballs into a major panic and a crash. With leverage and over-valuation at unprecedented levels, the coming crash should set records for its severity.

Prepare for deflation. Deflation results from a massive build-up in debt. Deflation is the process that forces liquidation of that debt.

(Tue Aug 26 1997 20:27)
You forgot cars ( $3200 in 1973 ) $30,000 1997
You forgot property taxes ( $200 ) in 1973 $3000 in 1997
You forgot homes $38,000 ( 1970 ) $300,000 in 1997
You forgot car insurance $200 in 1980 $1000 in 1997
You forgot tuition fees
You forgot...taxes ...yes income taxes from 12-15% in 1970 to 30% in 1997
You forgot bank charges, telephone charges, electricity, home heating gas, gasoline, construction materials, clothes,
You forgot...

Mike Sheller
(Tue Aug 26 1997 20:27)
LURKING GBUG: I for one can tell you are not hepcat. You are far too civil. Hepcat was ( hopefully still is ) very intelligent ( not that I'm saying you aren't ) , and if the truth be known, quite sensitive. He just didn't know how to, or couldn't, play well with others. There are limits.
But you are right when you state that a dollar cash profit is a profit, not an illusion. That is the ultimate game, and you have done right and well in this stock bull. I am truly happy for you. By the way, closing prices on the 3 stocks I mentioned are ECO 5 1/8, SSC 13/16, GSTD 19/32. I am with you on the Maple Leafs. My darling wife has forbidden me to buy anything other than pure gold. Yes Dear!
SAVAGE: re ECO & SSC - We don't need a crash. I don't WANT a crash. A good old fashioned 1972 - 75 Bear market will suffice. I still have a few stocks and astrological stock plays coming up. A violent bash is not conducive to my kind of speculating. I prefer stable to mildly rising markets for my longs. I have a couple I would like to ply before this is all over. And perhaps even while the trend starts down. I have been getting back into gold stocks only since the spring. Patience is now the key. Even in a normal end of cycle business expansion, the golds have 30-45% upside from here in a year EASY! It will beat the Dow from here in, don't you think? ECO is practically at book right now. Maybe a half buck above it. "Get Real, Get Gold" is the watchword!

(Tue Aug 26 1997 20:29)
CB's golden era over soon?
As gold is classed as a commodity is it, I wonder, factored into calculations on inflation put out by the Reserve Banks?
This, it would seem, gives a clear reason for a Reserve Bank, that has been given the sole mandate of keeping inflation at a low target, to sell this "commodity" down an keep inflation down.
The only problem with this is that now that governments ( following the model in New Zealand ) have handed over the job of inflation to the people who really have the tools to do so, is that the Bankers are selling off the family jewels to others who haven't bought into this bizzare scenario. Next question is what will happen to inflation when they figure out they can't keep pushing gold down to achieve their targets and keep their jobs?

(Tue Aug 26 1997 20:30)
GOOSE.. I believe I read somewhere this morning that the Koreans were selling US T-bills to raise cash.

OTHERS.. Sometime last summer when gold was sliding between 390 and 400, trying to decide what to do, Eliades stated in his self confident manner that gold would see 362 within months. There was NO other person on Kitco or the newsgroups who agreed, not Selby, Big Bad Wolf, and certainly not Hepcat. Everyone thought he was off the deep end, including me. Since my method only looks out 2-4 weeks, I just took it under advisement as another weird idea. L0..HARK. He was right. Because he uses valid technical arguments, I pay attention. Just throwing out numbers doesn't mean much.

DONALD.. I appreciate your many inputs and news reports, but do not agree with using Central Fund of Canada unless you want to ride bullion, mostly silver. Other gold funds will move 3-4 time as much. By the time gold hits 360 and confirms a rally, some funds will have doubled. A few are already up 10% from their lows in July. Most gold stocks are just above a two or three year low and are ripe for the picking. A good fund removes the fear of picking one or two lousy stocks, which I have been known to do.

(Tue Aug 26 1997 20:32)
Mr. Yen speaks and is concerned
Japan: Bonds at new low


By Gillian Tett in Tokyo

Japan's economy has been harder hit by a rise in consumption tax than
originally expected, according to Eisuke Sakakibara, the influential
Japanese government official known as "Mr Yen".

"We have started to feel some concern about the weakness of
consumption and the equity markets in the last two weeks," Mr
Sakakibara, vice minister of finance for international affairs, said in an
interview. "I am more concerned about the economy than I was two
months ago."

The comments of the career civil servant are significant because he has
established a reputation for moving currency and other financial markets by
making sometimes blunt remarks about the state of the Japanese economy.

They came as long-term interest rates in the Japanese markets plunged
yesterday to a record low in Tokyo, reflecting traders' unease about a
possible slowdown. The yield on 10-year government bonds touched 2
per cent, after declining steadily in recent days. Yields on government
bonds have not fallen below 2 per cent anywhere in the world for over 50

Mr Sakakibara said he believed the Japanese economy would rebound
soon and that the government would meet its target of 1.9 per cent growth
in the 1997 fiscal year.

He also said the $16.7bn support package for Thailand, orchestrated by
Japan and the International Monetary Fund, should be sufficient to plug its
financing needs following the recent currency crises in the region. He said
Asian countries should recover from the turmoil without too sharp a
slowdown in growth.

The problem was not one of the "Thai crisis spilling over, but that other
countries have the same structural problems", he said, and these should be
tackled through better banking supervision. He said south- east Asia
needed to promote co-ordination, including the possibility of establishing a
regional organisation to ensure financial stability.

Mr Sakakibara said he was confident that Japanese banks, which had
loans totalling $37.55bn to Thailand as of June 1996, about half the total
private debt, would roll over their short-term loans to the country, averting
a possible liquidity squeeze. "The major proportion of banks have already
agreed to roll over their loans," he said. "I am sure they will fulfil that

"If they roll over the credit, the IMF package will be sufficient."

Japanese banks have indicated that they are unlikely to make any
co-ordinated statement on a rollover, although most are now independently
rolling loans over.

Mr Sakakibara said Japan was now better prepared to play a regional role
that reflected its economic status.

"Japan would like to fulfil a major role in the area, but we want to consult
with the other Asian countries so that it is not always Japan that takes the
initiative," he said.

(Tue Aug 26 1997 20:36)
Mr. Yen
Eisuke Sakakibara: Mr Yen's delicate


Gillian Tett talks to Japan's vice-minister of finance for
international affairs

Eisuke Sakakibara, Japan's newly appointed vice-minister of finance for
international affairs, leans forward with an impish grin. "The problem is that
Asian countries are a little too polite," he says. "We do not like imposing
policy or interfering in each others' affairs."

The comment seems somewhat disingenuous, coming from a man with a
reputation as one of Japan's wiliest international operators. As director
general of the International Finance Bureau, he had earned the nickname
"Mr Yen" for his behind-the-scenes influence in talking the Japanese
currency up and down. And since his promotion in July, Mr Sakakibara
has used his influence to get Asian countries to back a $16.7bn package
arranged by the International Monetary Fund for Thailand.

But as he sits in his new office Mr Sakakibara, 56, faces one of the most
delicate challenges of his career. Currency turmoil has left him in little doubt
that Asian countries need to take collective action to tackle their structural
problems and to prevent the crisis from spreading.

The question is whether Japan can help arrange such action, given its deep
reluctance to seize leadership roles abroad, and the lingering distrust that
the country provokes in parts of Asia.

"Japan is prepared to play a major role", he says, "commensurate with its
economic size. But we are not prepared to be a Big Brother in the region.
We cannot be like the US in Latin America."

Mr Sakakibara, who worked in the US as an academic, is clear about
what needs to be done. First, he says, Asia must develop a better system
of banking supervision. "The area has attracted huge amounts of capital but
the banking supervision system has not developed fast enough with this.
We really need to strengthen the supervisory structure."

Second, south-east Asian countries need to adjust their manufacturing
bases. Their manufacturers, he says, have been squeezed. Lower
technology industries have faced competition in recent years from countries
like China with lower labour costs. And Japan has - inadvertently - added
to their woes: the weakness of the yen last year, he admits, has left
south-east Asian exporters struggling to compete against higher-tech
Japanese manufacturers.

Third, he says, the countries may need to adjust their exchange rate
regimes, in which currencies ( such as the Thai baht ) have hitherto been
pegged to the US dollar. "The region has been operating a de-facto dollar
regime. We need to rethink that," he argues, pointing out that almost half of
the area's trade now takes place within the region.

Does this mean a yen regime might be more appropriate? Mr Sakakibara
chuckles. One aim of Japan's Big Bang financial deregulation, he admits, is
to make the yen more international. But Japan has few illusions that this will
happen soon. Instead, it wants to promote a new regional debate about
exchange rate policy.

"Some intra-regional co-operation on exchange rates and monetary policy
is needed. This idea is emerging in many Asian countries. The Thai
package is one sign of that," he says.

If Asia can address these issues, then Mr Sakakibara is convinced that the
region can rebound. In contrast to the Latin American crises, Asia has an
important advantage: a high saving ratio. "The recent problems are part of
a necessary adjustment process," he argues. "There has been a bubble,
rather like in Japan."

Even if all these things should be done, should Japan take a lead in doing
them? Or someone else? Mr Sakakibara certainly wants Japan to play a
larger role. "I am ready for that," he says. "The Ministry of Finance is

This is more than bluff. Japan was an important organiser of the IMF-led
package, and the largest single donor. The US, by contrast, did not make
any independent donation, although it will contribute to a bridging loan that
is being arranged by the Bank for International Settlements.

Japan also helped arrange the BIS loan: it first raised the issue with the BIS
a month ago, and has pushed the idea with tenacity against European

Officials in the Finance Ministry and the Bank of Japan are now pondering
whether some form of new regional institution might be needed. One
option would be to strengthen the existing collaborative organisation
between Asian central banks. "We need a regional group. The European
single currency is coming, and the North Atlantic Free Trade area is
growing and so we need co-operation in Asia," Mr Sakakibara says.

But he remains cautious. "We absolutely do not want to rush. Being too
hasty in creating a regional group could fuel political friction in the area.
The worst thing that could happen would be to politicise the issue."

So what are the alternatives? The best one, Mr Sakakibara says, is the
IMF. Japan has insisted ever since the currency crisis first erupted that it
would not aid Thailand without the Fund's participation. In recent weeks it
has preferred to hide its own co-ordinating efforts behind those of the
Fund: Tokyo insisted that the meeting called to arrange the Thai rescue in
Tokyo be "chaired" by the IMF.

Mr Sakakibara believes that the Fund's role - as a figleaf or otherwise -
will remain crucial. It is the only institution that can impose financial
discipline on a country. It also enjoys a crucial advantage in Asia that
Japan does not: it is an outside, neutral player.

"The IMF can impose peer pressure, which is something that is hard to do
in Asia." Mr Sakakibara chuckles again. "We are certainly very keen to
keep working closely with the IMF." Japan's influence, it seems, will rise
one way or another.

Bonds at new low

 Copyright the Financial Times Limited 1997
"FT" and "Financial Times" are trademarks of The Financial Times Limited.

Mike Sheller
(Tue Aug 26 1997 20:37)
Double Double, toil & etc
Sorry for the double post. I always sat here and sneered contemptuously at posters who seemed to be like neophytes on an M60 machine gun. Now I don't know where to hide. DONALD: I don't have a chart on Bill Gates. I got Clinton, I got Chairman Al, I got George Soros, I got a Jimmy Rogers, I even got Ted, and George S. Cole. But no Gates. I'll trade you a Newt Gingrich and a Bob Dole for a Gates if you got it.

(Tue Aug 26 1997 20:40)
nomercy ( 19:57 ) Great post...extremely well written. You have been on a roll this week.

Many , many people have used easily obtainable credit cards to enhance their lifestyle. For example, if someone earns $30k per year and has a credit card ( s ) with a $15k limit, that person can live at the equivalent of $45k a year salary level. Until it catches up with them ... as it inevitably does.

The banks PUBLICLY extol people to use credit responsibly, but PRIVATELY issue unsolicited, preapproved cards to the masses, increase credit limits to people who exceed their limits, only ask for a very low MINIMUM PAYMENT each month, and WRITE-OFF losses to people who go bankrupt. All the while they extract 3-5% of receivable income from the merchants who accept the cards. The sad part of this continuing story is the now bankrupt user is simply reissued new credit cards at an even higher interest rate by the same or different banks ! The banks are crying all the way to the FED. Securitization passes the problem onto other investors. So why change ? Let's not forget the frequent flyer miles accrued by using the card....if people only realized the annual credit card fee of $65/year x 4 years time to accrue 20,000 points for a domestic US round trip, PAYS FOR THAT TICKET.

What I have not heard is anyone asking if continued and increased useage of credit cards is building-in a permanent 3% inflation to the economies, excluding that portion commerce transacted by cash, check, money order, or debit card.

(Tue Aug 26 1997 20:41)
@LuringGbug and Inflation
LurkinGbug, No, I am not "good old days guy" - I would not be working in
high-tech IS area. I agree with you on declining prices in electronics
area. At the same time this is the prime example of fast aging
technology and required upgrades/replacement at pace which is not
healthy to company books ( due to permanent replacement upgrades and
required new development - meaning high labor cost )

As far as quality of house construction goes, I respectfully disagree.
My neighbor is in construction business and I dont like what I hear
from him about "quality of new construction" BTW, growing number of
class law suits against builders in new subdivisions supports my
skepticism. As far as you other examples go, I just quote your previous
post "I agree that inflation is higher than stated, after all in my
area, cars, homes, etc. have skyrocketed in price"

(Tue Aug 26 1997 20:58)
On the New York Stock Exchange there were 107 new highs and 13 new lows, with 1300
stocks advancing and 1487 stocks declining. The index put-call ratio was an extremely
optimistic ( borderline euphoric ) 0.96, while the equity put-call ratio was a moderately
optimistic 0.36.

Tuesday's COMEX gold estimated volume was a light 21,000 lots. Total COMEX gold
open interest on Monday fell by 1,422 to 201,232 contracts, demonstrating speculator
short covering. COMEX gold warehouse stocks plunged by 32,456 ounces to 846,824
ounces. The Johannesburg gold index closed Tuesday morning at 1039.2, up 12.8, with
the U.S. dollar quoted at 4.6905 rand. Early Thursday morning the rand hit a new record
intraday low of 4.7905 to the U.S. dollar.

(Tue Aug 26 1997 20:59)
S. Roach
Note: "Fourth reason" a MUST READ "I believe there is increasing evidence that the global liquidity cycle is about to turn against the
financial markets in a surprisingly violent fashion."
US: Back from the Beach

There's nothing like a vacation to freshen the soul and challenge the discipline. This time, I was utterly
determined to escape from that shroud of bearishness that had enveloped my waking ( and, at times,
sleeping ) moments over the past year. I won't tell you how I did it, but I succeeded. At the end of the
two weeks, I could barely spell my name. And so I re-enter the battles in these increasingly turbulent
financial markets with something of a clean slate.

Surprise of surprises, I find that my bearishness on bonds remains very much intact. Four recent
developments support this conclusion -- the first being the UPS strike and its subsequent settlement,
events that I believe are very much in sympathy with our controversial worker backlash call ( see
yesterday's comment, "The Worker Backlash" ) . A second factor is a familiar one -- yet another dose
of upside risks to economic growth. Based largely on incoming foreign trade and inventory statistics,
we now believe that 2Q97 real GDP growth will be revised up to 3.4% ( from 2.2% ) this Thursday.
That follows two consecutive quarters of growth averaging 4.6%; at the same time, we stand by our
view that the economy is expanding at a 3.5% to 4% range in the current quarter. All this means is that
there is little or no evidence of an emerging slowdown in the real economy that might let the Fed off
the hook in its attempts to manage cyclical inflation risk as seen from the vantage point of a classic
"output gap" analysis.

A third factor is the Fed itself. Right now, of course, Greenspan & Co. have been placed on a
pedestal. Yet recent evidence raises several questions about a number of the Fed's key assumptions
that underpin its current strategy of monetary accommodation. For starters, the central bank continues
to underestimate the vigor of the real economy -- a forecasting blunder that I believe will eventually
have adverse consequences for inflation. In addition, the Fed appears to have been wrong on making
an upbeat productivity call; indeed, the recent re-benchmarking of the national economic accounts
failed to reveal the widely anticipated upward revision to productivity growth in the 1990s. Finally, the
Fed seems to have overplayed the theme of worker insecurity as a factor shaping the macro climate;
as a result, the monetary authorities were unprepared for declining personal saving, emerging wealth
effects, and the onset of worker backlash -- all of which challenge the new paradigm bet that the
central bank seems to have embraced in recent months.

Fourth, I believe there is increasing evidence that the global liquidity cycle is about to turn against the
financial markets in a surprisingly violent fashion. Many of us, myself included, are probably guilty of
couching the market debate in overly intellectual terms. At Morgan Stanley Dean Witter, we've called
it "fire and ice." Others have called it a battle of paradigms. Yet it may well be that there's nothing
more at work in the financial markets that a good old fashioned liquidity-driven blowout, aided and
abetted by an extraordinarily strong dose of monetary accommodation by the world's most powerful
central banks. As I read the tea leaves, those days could well be coming to an end. I still see the Fed
surprising the markets by at least two 25-basis-point tightenings by year-end 1997, and it now
appears as if the Bundesbank will follow the same script, responding to the upside risks of Germany's
cyclical growth and inflation prospects. The Bank of Japan is, admittedly, a holdout, reflecting a
Japanese economy -- and, for that matter, Asia in general -- which looks a good deal softer than I had
thought four months ago. But with two of the three most powerful central banks in the world more
likely to tighten than not, I believe these liquidity-driven financial markets are about to face their
sternest test.

Adding it all up, I can honestly say that I feel even more bearish today than I did when I staggered off
to the beach in early August. The pendulum of economic power is starting to swing back to labor. The
slowdown in the US economy appears to be vanishing before our very eyes. The Fed's analytical
discipline is being challenged on several key counts. And the liquidity cycle seems set for reversal.
Consequently, that ever alluring sweet spot, which for years has spawned the best of all worlds for
frothy financial markets, is starting to taste increasingly sour.

Stephen Roach ( New York )

(Tue Aug 26 1997 20:59)
S. Roach
Note: "Fourth reason" a MUST READ "I believe there is increasing evidence that the global liquidity cycle is about to turn against the
financial markets in a surprisingly violent fashion."
US: Back from the Beach

There's nothing like a vacation to freshen the soul and challenge the discipline. This time, I was utterly
determined to escape from that shroud of bearishness that had enveloped my waking ( and, at times,
sleeping ) moments over the past year. I won't tell you how I did it, but I succeeded. At the end of the
two weeks, I could barely spell my name. And so I re-enter the battles in these increasingly turbulent
financial markets with something of a clean slate.

Surprise of surprises, I find that my bearishness on bonds remains very much intact. Four recent
developments support this conclusion -- the first being the UPS strike and its subsequent settlement,
events that I believe are very much in sympathy with our controversial worker backlash call ( see
yesterday's comment, "The Worker Backlash" ) . A second factor is a familiar one -- yet another dose
of upside risks to economic growth. Based largely on incoming foreign trade and inventory statistics,
we now believe that 2Q97 real GDP growth will be revised up to 3.4% ( from 2.2% ) this Thursday.
That follows two consecutive quarters of growth averaging 4.6%; at the same time, we stand by our
view that the economy is expanding at a 3.5% to 4% range in the current quarter. All this means is that
there is little or no evidence of an emerging slowdown in the real economy that might let the Fed off
the hook in its attempts to manage cyclical inflation risk as seen from the vantage point of a classic
"output gap" analysis.

A third factor is the Fed itself. Right now, of course, Greenspan & Co. have been placed on a
pedestal. Yet recent evidence raises several questions about a number of the Fed's key assumptions
that underpin its current strategy of monetary accommodation. For starters, the central bank continues
to underestimate the vigor of the real economy -- a forecasting blunder that I believe will eventually
have adverse consequences for inflation. In addition, the Fed appears to have been wrong on making
an upbeat productivity call; indeed, the recent re-benchmarking of the national economic accounts
failed to reveal the widely anticipated upward revision to productivity growth in the 1990s. Finally, the
Fed seems to have overplayed the theme of worker insecurity as a factor shaping the macro climate;
as a result, the monetary authorities were unprepared for declining personal saving, emerging wealth
effects, and the onset of worker backlash -- all of which challenge the new paradigm bet that the
central bank seems to have embraced in recent months.

Fourth, I believe there is increasing evidence that the global liquidity cycle is about to turn against the
financial markets in a surprisingly violent fashion. Many of us, myself included, are probably guilty of
couching the market debate in overly intellectual terms. At Morgan Stanley Dean Witter, we've called
it "fire and ice." Others have called it a battle of paradigms. Yet it may well be that there's nothing
more at work in the financial markets that a good old fashioned liquidity-driven blowout, aided and
abetted by an extraordinarily strong dose of monetary accommodation by the world's most powerful
central banks. As I read the tea leaves, those days could well be coming to an end. I still see the Fed
surprising the markets by at least two 25-basis-point tightenings by year-end 1997, and it now
appears as if the Bundesbank will follow the same script, responding to the upside risks of Germany's
cyclical growth and inflation prospects. The Bank of Japan is, admittedly, a holdout, reflecting a
Japanese economy -- and, for that matter, Asia in general -- which looks a good deal softer than I had
thought four months ago. But with two of the three most powerful central banks in the world more
likely to tighten than not, I believe these liquidity-driven financial markets are about to face their
sternest test.

Adding it all up, I can honestly say that I feel even more bearish today than I did when I staggered off
to the beach in early August. The pendulum of economic power is starting to swing back to labor. The
slowdown in the US economy appears to be vanishing before our very eyes. The Fed's analytical
discipline is being challenged on several key counts. And the liquidity cycle seems set for reversal.
Consequently, that ever alluring sweet spot, which for years has spawned the best of all worlds for
frothy financial markets, is starting to taste increasingly sour.

Stephen Roach ( New York )

(Tue Aug 26 1997 21:03)
COLES MARKET INSIGHTS by George S. Cole, CFA & Economist
Interestingly, the other precious metals -- silver, platinum, and palladium -- have all breached their 100 day moving averages. And these "whites" frequently lead the yellow:

(Tue Aug 26 1997 21:19)
re: WSF...
It's not which coins you buy my friend but what premium and sales tax you pay ON them. I've been in the business of fine jewelry, coins and collectables 21 years now and as long as it's not obscure ( Franklin mint trash et al. ) ,gold is gold. The Krugerand here the past several years has suffered a bad rap for obvious reasons ( not to mention it's just plain ugly ) , and can currently be bought for 2% over spot or sometimes even money whereas the Maples and Pandas trade for as much as 6% over! When it comes time to sell, well, if a coin STILL has a premium attached, fine and good but sentiments change and in the end, gold is still gold. Buy what is cheap and well known. Many times a coin dealer will have a "damaged" coin; something with a blemish,scratch or something and let it go for spot!, buy'em!! Lastly I must point up that it takes the same amount of work ( read that "cost" ) , to strike a small coin as it does a large one, so the premium you pay IS NOT constant, because the cost of labor per coin IS! Thus you pay a lot more for the ownership of smaller denominations.
Here I must add a personal observation: silver is VERY undervalued as is gold and we have TONS of 90% silver U.S. currency we can buy at record low prices for use as "fractional monies",purchaseable these days at premiums I've not seen before. This a recogniseabe form to nearly all peoples everywhere. Lastly, don't pay sales tax! Here in Texas, if you buy more than 1000.00 in bullion tax is'nt required, ditto mail order however weigh your shipping ( as a percentage ) ,into your buy price and treat it like a premium cause your paying it!!,sort of like brokerage fees; a necessary evil.

compliments & regards

(Tue Aug 26 1997 21:24)
Oracle@japanese.SURVIVAL.Part - VI (August 25, 1997)
Financial Tsunami Looming in Land of the Setting Sun. Oracle provides ample evidence Japans Financial Scandals & Crisis will drive US stocks and dollar down, rates & GOLD UP:

Mike Sheller
(Tue Aug 26 1997 21:36)
BADGER: Neat advice on bullion coins. It is defintely most important to buy out of state to avoid sales tax. I am wondering what your view is on Canadian Silver Maple Leafs, given their $5 CDN face value and the low price of silver. Am I wrong in calling it the "People's Investment of the new Century" ( but only if you are accumulating them NOW ) ?

(Tue Aug 26 1997 21:38)
How come when you go off to read a full post, you can't come back to where you were but have go back to the beginning?
I am beginning to think that political news will bring down this market, like Watergate did in 73 and 74. What do others think?

(Tue Aug 26 1997 21:42)
Thanks, Badger.

(Tue Aug 26 1997 21:49)
don't hold your breath
Westly- I've been thinking that for 4 years. The darn thing is, I still think it !

(Tue Aug 26 1997 21:52)
Larryn ( Eliades ) : Don't think I ever saw the name "Eliades" before so I guess he left before I arrived. Seems like he might be another one that we should try to get some idea from re: how they make their predictions.
I'd really like to know how they do it . As Mooney said a stopped clock is right twice a day. But as I was recently hauled up on--a running clock is wrong all day every day if it shows the wrong time.

(Tue Aug 26 1997 22:05)
@the mint
Mike Sheller; I've seen a few of those handsome coins but bought none save across my counter;used,so to speak,so do tell, what do they cost? You were saying the've a five dollar face value I believe and indeed silver a under five bucks is cheap; but what's their premium? I agree that just about anything in silver given a decent premium right now is a good value but I must say I've bags of old Canadian silver in my vault that surely sells for only a few cents over it's silver value and therefore represents great value.some times I find even 40's and earlier stuff in some lots and of course theres always the beautiful Canoe dollars Canadians once had in their pockets: indeed I believe I'd compare the premium on the two coins, the Canoe on the one hand and the new Maple on the other ( I'll bet the Canoe is cheaper and definately more historic ) , and remember theres lots of people who've not seen ( read"trust" ) the new Maple, yet fully remember the old silver money of their proud country,things like that can count someday when the chips are down.

compliments & regards


Yellow Jacket
(Tue Aug 26 1997 22:11)
Market pressure vs. politics
WESTLEY: While political events may at times have significant short term affects on the market, I believe that history supports market factors ( overvaluation, speculation ) as the causes of the major market downturns. I think the whole thing is more numerical than political. I highly recommend reading Who Cares' post of 16:51 that has the "Eliades" bull / bear analysis. A picture is worth 2050 words, and they're worth a read.

(Tue Aug 26 1997 22:16)
@the scene
nomercy -- Nice posting! 'Tis true. Sometimes one must back away from the trees to see the forest.

(Tue Aug 26 1997 22:32)
Eating @Cosmic @Pie
Gold a substitute for the true warmth of the Sun is but a trap for the ever evolving soul in its long journey toward perfect self.P.S. Gold should hit 297 in a few weeks about the time I return from more holidays.Happy Trails.

(Tue Aug 26 1997 22:41)
MIKE SHELLER: We probably agree on most things financial, many things cultural, and a few things spiritual. Regarding "the crash", while I don't think it is quite as imminent as Mr. Puetz; my motto is the same as when people ask me about "the Rapture" - "Let's hope for the best, and prepare for the worst! BxYtF

(Tue Aug 26 1997 22:59)
WESTLEY:We've said it before but... Nothing sticks to teflon.

(Tue Aug 26 1997 23:12)
$1800.00 ??? C'mon...where? Who must I kill?
Lurking Gbug - That is quite a Small amount of 'clams' for such a 'souped-up' ( butt-fast ) computer. Where did you get it, because I want some of that! P233, 4gig, 64mg ram, 20x ( overkill ) cdrom?? I know, the 56k modem cost $1500.00, right?


(Tue Aug 26 1997 23:14)
Anyone know what Jim Rogers current posture toward gold is??? Say what you will, that guy has some record. I like his cheetah waiting for a crippled calf analogy.

(Tue Aug 26 1997 23:26)
Savage ( 23:14 ) Jimmy Roger's current posture on gold is neutral,according to what he said on his last appearence on CNBC Squawk Box...Nikkei 225 down 263 ( 1.40% ) ...Hang Seng down 143 ( 0.92% ) ....Dollar mostly up...Dec. gold down .20....

(Tue Aug 26 1997 23:29)
Good night ALL.......

(Tue Aug 26 1997 23:51)
TED: Thanks Ted. I guess he ( Rogers ) feels the calf isn't crippled enough yet.

(Tue Aug 26 1997 23:52)
Hi Selby! Mr E. has some fancy cycle stuff. That's all I know.