BADGER: There is another physical form of metal I really like. And Kitco is one of the companies which sells it. I'm talking about casting grain. I'm brand new at buying and selling the paper associated with metals but I've been casting them for nearly 18 years and unequivocably believe it to be an easy way to save and store them ( except for the pgm's, which are really difficult ) . My own peculiar hobby has been casting silver objects, including some massive bracelets and the like, but gold is actually easier to cast and is well suited to massive forms. For the paranoid, gold is easily tin plated...imagine a tacky "pewter" mug on top of your refrigerator that nobody would ever think of stealing.

BADGER: There is another physical form of metal I really like. And Kitco is one of the companies which sells it. I'm talking about casting grain. I'm brand new at buying and selling the paper associated with metals but I've been casting them for nearly 18 years and unequivocably believe it to be an easy way to save and store them ( except for the pgm's, which are really difficult ) . My own peculiar hobby has been casting silver objects, including some massive bracelets and the like, but gold is actually easier to cast and is well suited to massive forms. For the paranoid, gold is easily tin plated...imagine a tacky "pewter" mug on top of your refrigerator that nobody would ever think of stealing.

Savage: I caught Jim Rogers on Friday. As I recall, he said that he did not like Au up to two years out based on continued CB selling.
I trust his insight too, but I'm praying for the same inaccuracy as his short selling Intel a year or so ago. He was supposed to do a piece 3:30
Eastern Friday on past El Nino' ( sp? ) market effects. Missed it.

Savage: I caught Jim Rogers on Friday. As I recall, he said that he did not like Au up to two years out based on continued CB selling.
I trust his insight too, but I'm praying for the same inaccuracy as his short selling Intel a year or so ago. He was supposed to do a piece 3:30
Eastern Friday on past El Nino' ( sp? ) market effects. Missed it.

My guess.... The bubble is OVER. It just hasn't had the decency to POP yet. I say the sign to look for will be a PANIC in Japan. Until that happens, NO major moves. North America, Europe, and Japan are the three lynch pins holding this bubble up. Of the three, Japan looks ready to crack first. The crisis in S.E. Asia has all but assured that event. Can't say exactly when it'll break, but once it does....POP!... "Like a ZIT! Get it?"

My guess.... The bubble is OVER. It just hasn't had the decency to POP yet. I say the sign to look for will be a PANIC in Japan. Until that happens, NO major moves. North America, Europe, and Japan are the three lynch pins holding this bubble up. Of the three, Japan looks ready to crack first. The crisis in S.E. Asia has all but assured that event. Can't say exactly when it'll break, but once it does....POP!... "Like a ZIT! Get it?"

A CNBC commentator mentioned his mother called
to ask his advice on 'rotating' her money into small cap
stocks. He said the word 'rotate', coming from his mother, brought a 1929 story to mind.

A CNBC commentator mentioned his mother called
to ask his advice on 'rotating' her money into small cap
stocks. He said the word 'rotate', coming from his mother, brought a 1929 story to mind.

Double bottom @ 405 today in PL, everything I see tells me to buy it. The near term top looks to be only back to recent highs, but I still think a move above 500 is in the cards.

Gold is sick, maybe terminally; it should break 320 again. Im looking for new lows before the year is out. If silver breaks 4.57 ( Sept ) lookout below, I suspect we will see a run at 4.80 which should be fun.

Im seeing a lot of hype on the ten year anniversary of the 1987 crash. I wonder if a repeat could become a self fulfilling prophesy. Interest rates were rising sharply in 87, dont see that happening soon here. Oh well, DOW back up, PL up, PA dont care.

Double bottom @ 405 today in PL, everything I see tells me to buy it. The near term top looks to be only back to recent highs, but I still think a move above 500 is in the cards.

Gold is sick, maybe terminally; it should break 320 again. Im looking for new lows before the year is out. If silver breaks 4.57 ( Sept ) lookout below, I suspect we will see a run at 4.80 which should be fun.

Im seeing a lot of hype on the ten year anniversary of the 1987 crash. I wonder if a repeat could become a self fulfilling prophesy. Interest rates were rising sharply in 87, dont see that happening soon here. Oh well, DOW back up, PL up, PA dont care.

Auophile: I guess the thing to do is to take some time and go through the early archives and see what the man had to say. As pointed out earlier the Hepcat didn't leave any rationale and nuff said a few weeks ago about my flat-footed views. A tricky issue to sort out the valid prediction from the lucky guess.

Spent the day in your old haunt Stratford at the Pattison Theatre--clearly the runt of the litter and in need of a face lift. Saw a one man play that had the house laughing for almost 2 hours.

Auophile: I guess the thing to do is to take some time and go through the early archives and see what the man had to say. As pointed out earlier the Hepcat didn't leave any rationale and nuff said a few weeks ago about my flat-footed views. A tricky issue to sort out the valid prediction from the lucky guess.

Spent the day in your old haunt Stratford at the Pattison Theatre--clearly the runt of the litter and in need of a face lift. Saw a one man play that had the house laughing for almost 2 hours.

WSF @ Would somebody please tell me what coins to buy?

Never pay a large premium for coins like the Saint Gaudens. If you want to be a coin collector, collect coins, but remember, they are only worth what someone will pay you for them. The reason to own gold - for times of economic uncertainty - is the very reason collectibles will be worth their intrinsic bullion value and not much more in those same times. Buying collectibles is a game for those with disposable capital, not for hard times. Likewise, stay away from proofs, in most cases the premium is not worth it. I do confess to having recently bought a Platinum American Eagle Proof, but at $695, the price is about 65% higher than what the damn thing is worth. I bought it because it is a historic first, but as soon as I bought it, I valued it in my mind at about $420, the cost of PL at the time. Stay away from anything that carries more than a 5% premium over spot. If you want an education on this, go out and buy a collectable coin, then take it somewhere to try and sell it. You will find that you will loose most of the premium you pay.

Forget about the KR, its not only ugly, its alloyed, likewise the American Eagle, alloyed, but still in demand because it is American, although most demand outside the US is for pure gold coins. Of the three .9999 coins, forget the Australian Nugget, its pretty but obscure. That leaves the Maple Leaf and The Austrian Vienna Philharmonic. The Maple Leaf is still the preferred coin in North America and India, but it has the major drawback of being reportable. If you ever sell Maple Leafs in the US, the purchaser is required by law to take your social security number, and report the sale to the IRS. This intrusiveness is exactly the type of thing most gold investors would like to avoid. It should be no ones business that you own gold but yours and the person you sell to. The KR is also reportable as are all forms of bullion.

I am very partial to the Austrian Vienna Philharmonic. It is a .9999 coin, and non-reportable. It was also the biggest selling coin worldwide in 1996 so it is well recognized. I sell the VP for about 4% over spot. All the coins I sell are mint new, and the mint gets most of the spread.

In about 3 weeks, my company will be the exclusive source for the new Canadian Mounty. This new gold coin will have a face value of $310 Canadian. The Royal Canadian Mint will guarantee to buy this coin back within 3 years for $310. Now $310 Canadian is only worth about $235 US, that still makes it the highest face value gold coin in the word. I dont have pricing yet, but I should know more in a couple weeks.

Lastly, if you want to buy gold, get it for as close to spot as possible, anything more is a waste. Oh, you might look at platinum also. Platinum American Eagles should be out in another month. Good Luck.

WSF @ Would somebody please tell me what coins to buy?

Never pay a large premium for coins like the Saint Gaudens. If you want to be a coin collector, collect coins, but remember, they are only worth what someone will pay you for them. The reason to own gold - for times of economic uncertainty - is the very reason collectibles will be worth their intrinsic bullion value and not much more in those same times. Buying collectibles is a game for those with disposable capital, not for hard times. Likewise, stay away from proofs, in most cases the premium is not worth it. I do confess to having recently bought a Platinum American Eagle Proof, but at $695, the price is about 65% higher than what the damn thing is worth. I bought it because it is a historic first, but as soon as I bought it, I valued it in my mind at about $420, the cost of PL at the time. Stay away from anything that carries more than a 5% premium over spot. If you want an education on this, go out and buy a collectable coin, then take it somewhere to try and sell it. You will find that you will loose most of the premium you pay.

Forget about the KR, its not only ugly, its alloyed, likewise the American Eagle, alloyed, but still in demand because it is American, although most demand outside the US is for pure gold coins. Of the three .9999 coins, forget the Australian Nugget, its pretty but obscure. That leaves the Maple Leaf and The Austrian Vienna Philharmonic. The Maple Leaf is still the preferred coin in North America and India, but it has the major drawback of being reportable. If you ever sell Maple Leafs in the US, the purchaser is required by law to take your social security number, and report the sale to the IRS. This intrusiveness is exactly the type of thing most gold investors would like to avoid. It should be no ones business that you own gold but yours and the person you sell to. The KR is also reportable as are all forms of bullion.

I am very partial to the Austrian Vienna Philharmonic. It is a .9999 coin, and non-reportable. It was also the biggest selling coin worldwide in 1996 so it is well recognized. I sell the VP for about 4% over spot. All the coins I sell are mint new, and the mint gets most of the spread.

In about 3 weeks, my company will be the exclusive source for the new Canadian Mounty. This new gold coin will have a face value of $310 Canadian. The Royal Canadian Mint will guarantee to buy this coin back within 3 years for $310. Now $310 Canadian is only worth about $235 US, that still makes it the highest face value gold coin in the word. I dont have pricing yet, but I should know more in a couple weeks.

Lastly, if you want to buy gold, get it for as close to spot as possible, anything more is a waste. Oh, you might look at platinum also. Platinum American Eagles should be out in another month. Good Luck.

RJ: Since your're around tonight, I want to remind you to be sure to turn on my concert this Sunday afternoon at 4 PM on KUSC ( 91.5 FM ) . You'll enjoy it.

What is casting grain? I'm serious, I am a very big dummy when it comes to this stuff. I guess I can look it up but I would get a 'reader's digest' version. Response anyone? Thanks.

away
eb

A small step to improve golds tattered image?
http://www.yahoo.com/headlines/970826/health/stories/gold_1.html

Well, for once I agree with RJ. No collectibles. I have zero
faith in "NUMISMATIC VALUE". Zero faith in Sam, too. : )

My wife and I re-evaluated our metals purchases last year. We
both decided we bought too many Eagles, and no platinum. : )
DANG it, I should have bought some last year, when we discussed it.

On a happier note, her wedding ring, originally set with, gad,
my memory, a 7 or 8 ct tanzanite stone, looks like it's gained
about $1K in value. : )

Platinum eagles? Yeah. I *like* it. : )

An interesting URL I picked up tonight....

http://members.aol.com/Invest5052/chronoworks.html

I picked up a similar URL several months ago, named "CrashWatch"
that showed the "impending crash" at the juncture of the new
high on this most recent URL. ; )

As I mentioned before, I don't particularly buy into "technical
analysis". However. I believe that Peter Eliades has at least
*ADDRESSED* the problem of the Heisenberg effect within financial
markets, i.e. bulls who when polled self-deluse themselves into
believing they are truly bears, because if they are bears, then
sentiment is contrary, so they can continue making LOADS of
cash by really being a bull.

I mean, come on. Isn't this obvious in the "sentiment" indicators?

We got TONS of bears buying stock as fast as they can. Ridiculous.

And. I would humbly submit to Mr. Selby that, if a traveller
from the future appeared on your doorstep, pushed you aside
just before a BUS would have hit you... I would submit to you
that this traveller from the future is NOT a "stopped clock".

I believe there is credible evidence that the minions of Uncle
Sam not only ANTICIPATED a major economic depression, but
scoured the vaults of history in order to circumvent it.

Fact - Congress passed a major real estate tax revision bill
that popped the real estate bubble in 1986-7.

Fact - Greenspan was ready on the liquidity trigger in '87.

Fact - Greenspan refilled the banks during 91-94.

I ask everyone here to IMAGINE what WOULD have happened if
the 1987 "crash" had been allowed to grow into the "Crash
of 1990-1", concurrent with the Nikkei Crash and real
estate crash.

Mr. Selby, I ask you. If James Grant correctly predicted
in 1985 that an economic meltdown would occur in 1991,
and the government acted on his information, is he a

"stopped clock"?

If you visit the Treasury's website, and pull up their
historical information, you'll see that the "real" and
"claimed" deficits began in earnest in 1987. I don't
think this is a coincidence.


I would also strongly urge others to NOT underestimate Greenspan's
estimation of what is happening in our economy. In my opinion,
he has circumvented depression at least twice in the past
seven years. Much to my surprise.

Submitted for your approval - a theory from a F****** NUTBALL.

God, I feel like shouting this in class sometimes.

Imagine an public informtion flow that *appears* to be a free
market, that we are told from *childhood* is a free market,
but in point of fact is NOT a free market.

Imagine a public information flow, consisting of an oligopoly
made up of ABC, CBS, and NBC. For those who sigh in disgusted
smug satisfaction, I submit the model of FORD, CHEVY, and
CHRYSLER as an analogy. A model which KNOWINGLY foisted the
Ford "Fireball" Pinto onto the public. A model which steered
Americans into gas-guzzling iron beaters just prior to the
oil embargos.

Now. Imagine a public information system which has grown so
accustomed to functioning as an oligopoly that it can NOT
adapt to a new environment. An environment that shifts the
foundations of information gathering, processing and
dissemination.

In such an environment, I think we could make the case that
BASING your competitive advantage upon the MONOPOLIZATION of
informtion is FOOLHARDY at best.

Yet. Paradigms die hard. Organizations continue to function
on assumptions that are no longer true.

In that case, we *might* imagine a future where "political
concerns" that were previously masked through information
monopoly suddenly emerge into the public consciousness, forcing
the public to re-examine its own assumptions about its culture,
beliefs, etc.

That *might* "cause" a crash, I think. At least, it might
*appear* to cause a crash.

I liked the analogy of the oak tree that rots away. : )

like it or not the past 5 centuries culminating with the glorious 20th have seen the white race, more specifically the male portion of it explore, colonize, conqueor and otherwise subdue the entire globe. two empires have been largely responsible for most of the good and the excess that emanated from this adventure. first england and now in its twilight days the american empire is mercifully drawing to a close.

the tribes are on the march once again. europe is being invaded from the east and from the south. america largely from the south with a smattering from everywhere else. like it or not the 21rst will see the white race slightly darker in hue. in a hundred years time we'll all be darker in hue but then no one will care one way or the other. for now though these things matter.

as a male member of the white race we have subjugated women and blacks and other minorities for probably the last time on a global scale. the difference between how we fought the germans in ww2 and how we fought the japanese in the same engagement can be summarised in one word, 'race'. the germans were after all cousins and the conflict there was as much a family dispute as anything else. the japanese are part of what was called in those days 'the yellow peril' and the war there was as much about who was going to control the pacific and asiatic trade as anything else you will ever read or see memorialized about in movies. the british had subdued the chinese into sleep and servitude in the 19th century and taking care of the 'japs' was our contribution to making the world safe for white males and anglo business hegemony.

america has now run out of money and nearly run out of time to maintain its far flung global hegemony over business. the tribes are on the move, splitting peacefully in the case of the now defunct czechoslovakia and less peacefully in the former yugoslavia. but splitting they are and everywhere you look. demographics suggest that non whites everywhere are breeding faster than whites anywhere. the presure is building at the exact moment when the west but especially the usa has nearly run out of gas.

in american business interests best efforts to find new sources of cheap labor and new markets for their products both hi and lo tech they have gone to china, "the sleeping giant" which even Napoleon in 1806 warned "only a fool would awaken". increasingly the spent west but especially the spent united states depends almost totally upon the credit of japan and china, the not so long ago yellow peril for its survival. yes, race does indeed still play a role even if we of the white race wish to conviently forget for the past few hundred years. then, the yellow race was the white man's burden. in the 21rst century we shall be theirs.

historically, no empireor leading society ever bases its money upon the debt or seignorage of one of its vassals. harsh, perhaps! but history is about the study of tribes and they are on the move. as the sun slowly sets in the west and rises in the east it would be wise to recognize that japan though rich and courteous to its former conqueror is merely standing in for the new power to be. China, invaded yes, occupied yes, but undefeated in living memory, immensely wealthy in untapped resources both basic and human, a naval and trading society from ancient days whose citizenry is unindebted and still innocent to the wiles of modern technology and convience. historically both china and its large dark skinned neighbor india have used gold to protect wealth, it be many years before they become sophisticated enough to appreciate the benefits of bonds, strips and zero's like their more knowledgable western counterparts. since most of the genuine new wealth being created in the world is being created in asia the bond salesmen at the us treasury have their work cut out for them and very very little time to effectuate a long term awakening on the benefits of debt ..
as in... see what's its done for us!

the west and particuliarly the united states is in a race against time, the cash flow is flowing towards asia tho it is being recycled for now anyway back into the treasuries of the west in the form of indebtedness. how much longer the asians will continue to amuse themselves as the west wriggles on the hook of their own design is anybodies guess. but at some point in time our technological prowess will count for nothing and at that moment asia will either cease to continue funding the yellow man's burden or they will conqueor us in fact as they are now doing in economics.

monetary policy, interest rates cuts or rises, inflation indexed bonds, nuclear submarines, new world order, digital money... pick a panacea or poison, none of it will ultimately make a difference as the fundmental laws of demographics as well as age old supply and demand reassert themselves.

all of you white males out there enjoy the show while it lasts and make sure you have a few pieces of whatever you best think will endure the changeover, within 20-25 years 'tops' it will all be over. much, much sooner however will arrive the moment of awareness. i have heard it said that clinton will be the last democrat ever elected president. my own thinking wonders sometimes in dark mood if clinton won't actually be the last president!

Lurking Goldbug - I call upon you to clarify your claim that
information has no value. To wit,

"forget historic waves and models, and 1987."


If, indeed, you believe that information has no value,
why are you NOT pursuing a strategy of "buy and hold"?

If, indeed, you DO believe that information has value,
why did you make the preceding statement?

I have a student. We have a joke between us. He often
gets the right answer. Using an incorrect method.

Please, tell me, because I actually have a job interview
tomorrow, which will probably go badly anyway, leaving me
STUCK in this job, marking as the loser weenie that I truly
am, so please, please answer this...

Why is it always DONALD, the retired old guy that seeks out
information constantly on the Net, and posts at all hours
beyond human comprehension... no, wait, that's a different
question, that one is not for you, sorry, I'm flipping out
tonight, my wife came and went like the wind, but our Scottish
fold still loves me...

Which is better? Getting the right answer ONCE, using an
incorrect method? Or getting the wrong answer several times,
using the best method available?

Buy and hold is a DIRECT contradiction to the idea that
information has value. Interesting collary, is it not?

I rarely find "Buy and Holders" that can muster an argument
to this. : )

Got a few responses to Deeps Mystery. Will answer
soon but want to make sure market goes as I suspect
it will. This morning Deeps bid/ask is 13/14 in line
with NY close. Buffels bid now 11 ( up from 9.6 two
days ago ) and ask is 12.3 ( up from 10.4 yesterday ) .
Merger is on track for Sept 15. Believe all hoopla
over ADR/SEC/Bank of NY is meaningless.
If you hold Buffels, I would hang on at least until
one share gets you the Deeps price. If you dont hold it,
and you like Deeps ( that part is not easy ) , I'd buy some.
Believe much of benefit in Blyvoor vanishing as we
approach $2.00 on the ADR. I'd personally take anything
like $2.00 for the Blyvoor ADR unless you thrive on
risk.
I personally played role in affecting the
elimination of the Buffels discount. The experience
points out to me how personal the market can get and
what a zero sum game it can be.
I hope my little drama does not turn into a financial
tragedy for yours truly. This kind of thing makes me
shaky. Very astute players like RJ seeing gold at
300 ish soon doesnt help my nerves.

Eliades. Eliades has been on the Net for several years. So
has Nick Chase. I like Nick Chase. I like his commentaries,
I like the price, I like ( what I perceive to be ) his objectivity.

Somebody posted Chase's URL a few days ago. Here it is again.

http://nick.assumption.edu/ContraView.html

Anyway. Eliades boned it a few months ago. Called the crash
too soon. Doesn't everyone? : ) For an interesting look
at a bull flame-fest, I suggest a visit to DejaNews -

http://www.dejanews.com

Select "search filter". Set the subject to "Eliades", set
the date range to "June 10 97" to "July 30 97", kick back
and read the postings of outrage. : )

Sorry, I'm just plain annoyed in general tonight.

You just... you just... I mean, what IS it with all these
other guys who miss the really big stuff, it's not like it's
hard to find? You stand alone in your monomanical, yet
curiously objective pursuit of information, gleaned, nay,
SCOURED from the very BOWELS of the Internet.

You posted a few minutes before I wake up. You post when
I leave for work. You post when I go to sleep. : ) Gad,
and I *hardly* sleep these days. You post on Sundays,
you post on holidays...

You are a crazed information machine. : ) You just CAN'T
be that old. : )

of

al: Have just read your post and it is what many of us have been thinking for some time and very well said. Are we ( and I will include all of the West - not just white males ) really on our last stand? I am not so sure. Maybe technology will save "us" one more time, just as it ended the Japanese part of WW II at least one year earlier than if we would have had to have a land invasion. The "bomb" may well have saved my life as I was in training for the air assault that would have accompanied the land invasion. After all "they" are sending all of their brightest youth to our universities. Most of their brightest ( and mostly male you might observe ) are in the sciences and engineering - smart they are in more ways than one. The trend for power is certainly to the west as you say. "We" certainly seem to be becoming decadent. Family breakdown, self reliance going by the boards, religion ( and following the Golden Rule and Ten Commandments ) becoming less significant, the enterprising spirit diminishing, inventiveness being made difficult, and the all pervasive governments regulating and taxing us to death may well end our "civilization". You would not like to call it civilization I suspect, but a study of history would show our "white man's" civilization was the best so far, that we know of anyway. Will the "new civilization approaching from the east be better? Only time will tell.
Sayonara

Stocks plunge; Nikkei slips below 18,500
The stock market fell back Wednesday, hit by a sell-off triggered by
mounting predictions of protracted economic sluggishness. The yield on
the No. 182 government bond hit a record low in the morning, adding to
pessimism over the economic outlook. The Nikkei Stock Average
ended at 18,441.94, down 373.04. The key index briefly reached the
high for the day of 18,755.38 at 9:01 a.m. and fell to the low of
18,432.34 at 2:56 p.m.

The pace of decline picked up when arbitrageurs began to unload
stocks after sporadic hedge selling by domestic financial institutions sent
the futures market lower. Electric machineries, precision machines and
automobiles failed to get a boost from the yen's downswing against the
dollar. Banks, chemicals and machineries fell victim to modest selling in
the afternoon to expand their losses.

Declining stocks swamped advancing issues by 834 to 244. Volume
totaled 320 million shares.

Sony, Kirin Brewery and Honda Motor declined. In contrast, Acom
and Japan Airlines gained.

WHO CARES: I am 63, get a nap everyday now that I'm retired, plus at least 6 hours every night. Also get a 5 mile bicycle ride when the weather permits. I do my best work in the early morning, usually up by 4AM. Its an old habit, I guess from having a morning paper route as a kid. I enjoy your posts, they are always top quality.

Auto Parts
Producers cut
Output By
50%

Business Day
Welcomes your opinions or
suggestions.


THE existing 140 automotive
parts and accessories producers
in the Thai Auto-Parts Ma
anufacturers Association have
reduced their production output
by an average of 50 percent as a
result of the sluggish automotive
market, the association's
Secretary General Warin
Rerkchavee told Business Day.

Warin, who is also General
Manager of Summit Steering
Wheel, said parts manufacturers,
particularly those producing for
the Original Equipment Market
( OEM ) , had been forced to
reduce output as several car
assemblers had already cut
down their output.

Automobiles are currently
considered luxury items which
consumers are expected to
delay purchasing due to the
unfavorable economic
conditions.

"Some car assemblers have
paused the production and
stopped purchasing new lots of
parts from their suppliers while
several reduced supply volume
by 50 percent or more," Warin
said.

Several OEM parts makers
have been forced to shut down
plants because they have not
received new orders from car
assemblers.

According to Warin, the Thai
automotive market has been in a
serious slowdown since the
suspension of 16 finance
companies on June 27.

Currently, only 10 percent of
domestic output was expected
to be carried on with.

"It is difficult to predict when it
will recover but surely it will take
more than a year to see an
improvement," he stated.

He said manufacturers who
supply their parts as
Replacement Equipment ( REM ) ,
spare parts, and accessories had
turned towards doing more
export as a way of relieving the
impact of the declining domestic
automotive market.

Meanwhile, automotive parts
exports are facing the problem
of competitiveness because
parts manufacturing, which
mostly depends on imported
raw materials, involves a higher
production cost, compared to
production in neighboring
countries, due to higher import
duties, particularly for plastic
and steel.

However, Thailand is one of the
two leading automotive parts
exporters in the Southeast Asian
region with approximately 30-40
percent of production output
exported to serve the regional
markets.

The major competitor, Malaysia,
receives full support from its
government.

Based on an information
provided by Toyota Motor
( Thailand ) , vehicle sales in
Thailand, excluding motorcycles,
declined 16.7 percent during the
first seven months of this year.

The total sedan market for next
year was expected to record
only 400,000 sales.








Copyright  Busine

Chicago Fed president sees inflation a larger problem than deflation.
http://biz.yahoo.com/finance/97/08/26/z0000_z00_15.html

Japanese Finance Minister "concerned" about economy.
http://biz.yahoo.com/finance/97/08/26/z0009_117.html

Good mornin Donald and ALL other Kitcoites....Dec. gold down .30 @ 328.70
Beautiful sunny morning.....

I was told to keep the powder dry, pass it on!!

ALFRED E: A dark mood indeed. What we see as civilizations are but tiny ripples on a gargantuan wave of human progression ( both up AND down, like a stock chart - even bull markets have their "corrections" ) . The race is to the human. It is the human race. You are correct about the assessment of the "east" and gold. When the Saudis, a traditionally gold-respecting people, found themselves with more paper dollars than they knew what to do with, the first thing they did was buy gold. So it will be with the Chinese, and the Indians. All there needs be is that ol' exogenous event to start it off. WHO CARES: You have your finger on the pulse of human failing. You are wise concerning our imperfections, and yet you are idealistic and noble in what you yearn for the race in your heart. You see what we all COULD be, and how far short we fall. Forgive us, for we know not what we do. You will one day sit at the right hand of the throne. Prepare yourself for THAT in utmost humility. You will then rule with true compassion and wisdom ( not like WW ) ( :- ) ) . RJ: I said a couple weeks ago October Platinum comes back to 406 to complete its ABC correction off the first leg up. If that's the case and we go from here, 500 is a layup, & very likely well beyond. Silver is VERY interesting now. On my long-term charts, if it gets thru 4.85ish ( allowing for long term time/space aberration on a mere mortal chart ) it will break out of the downtrend containment of the peaks of '83 and '87. NOT insignificant. If'n it don't, 4.09 might be in the offing. By the way, lovely and masterful discourse on the maple vs the VP. Saludo.

Good morning Ted. Temp & Humidity both 67, The sun is just getting started and Summer may be back today. Japan down to a level that impairs bank values last night.

Fidelity to Close Magellan Fund to New Investors

Fidelity Investments plans to close its flagship Magellan Fund, the world's biggest mutual
investment fund, to new investors at the end of next month, said a person familiar with the situation.
Boston-based Fidelity is closing the $62.9 billion fund to new investors just as it's stanching the
outflows of assets that the fund has seen for almost 1 1/2 years. The announcement of the closing
could come as soon as today, the person said. Fidelity officials declined to comment. ( 5079Z US
CN )

Kenya currency weakens further.
http://biz.yahoo.com/finance/97/08/26/z0009_44.html

U.S. economist says Brazilian devaluation not necessary.
http://biz.yahoo.com/finance/97/08/26/y0009_z00_1.html

"Official sign that the boom is over" and "what we have to fear is not inflation, but deflation"
http://washingtonpost.com:80/wp-srv/WPlate/1997-08/26/012l-082697-idx.html

Central Bank of Israel raises interest rates 0.7%
http://www.jpost.com:80/com/Archive/26.Aug.1997/Business/Article-0.html

DONALD: Don't sell til you see the whites of their thighs! Or, for persons of color, the appropriate hue. The real and only true indicator of a bull market top ( and this comes after years of technical research and fundamental experience ) is your head getting turned in the street by an outrageously short skirt. Anyone seen such indications lately? Perhaps we need six full weeks of head turning short skirts. But we need short skirts. Poll time at Kitco.

Mornin Mike!...Skirts down to their ankles here....Calm+ sunny on the ocean and time for a little seakayaking....Looks like many of the markets are on the "thin" side as many have started their long weekend...

U.S. credit card debt at 360 billion, 5%-7% of it uncollectable, Greenspan not worried.
http://www.newsday.com:80/mainnews/rnmi011a.htm

Who Cares: The Peter Eliades article is scary all right, but I have a problem with the whole enterprise of retrospective data analysis of infrequent events. When you are looking for what four or five things have in common and use ( probably ) hundreds of possible indicators, you are certain to find several "reliable" indicators. The crucial thing in modeling, of course, is to test in the future. When youre dealing with events that only happen a few times per century thats going to take a while. Earth quake prediction would be easier. Dont get me wrong, I believe its probable that a crash in coming. But my confidence in that belief is based on observation of everyday things - mainly my everyday observation that people think its easy to make money in the stock market and that they have formulas for doing it. There are always such manic people around, but we have millions today including government figures proposing -God help us - putting government money into the stock market. When everyone is a mark dont you think the con artists are multiplying like fruit flies? What remains to be seen is what the spark will be that will set off a wave of "I think Id like my money back." Carl

MIKE SHELLER: Then there is BIG trouble ahead for Mexico. I took a moonlight cruise up the Connecticut River the evening of the full moon. There was a young girl from Mexico who is here for college. Her skirt was sooooo short ( not covered by Fed margin requirements? ) . When I say short I mean short and I remember the sixties well. She was a very nice girl, staying with one of our neighbors, kept tugging at it to keep it down.

( Excerpt from the Sydney Morning Post of today )
China has been a magnet for foreign investment because it is seen as the largest
untapped market in the world. Just about every multinational manufacturer around the
globe has taken the view that it has to be in on the ground floor for China's economic
take-off in order to establish a market share. There are no first-movers in China.

Consequently, China literally has a glut of manufacturing capacity. As a result it is
now undercutting other developing economies not only in their export markets but
also in their domestic markets.

It has even been suggested that China's excess capacity could lead to deflation in its
own economy and those of the region. While disinflation - falling inflation - is
something to be welcomed, deflation is a dangerous economic beast. If it becomes
endemic then economic activity can slow down sharply as investment and
consumption decisions are postponed in the belief that prices will continue to fall.

Excess capacity is not limited to China; it is widespread through the region.

IT PAYS TO KEEP CURBING
PRICES

Even low-inflation areas see gains

After the experience of the 1970s, virtually all economists accept that high
inflation damages an economy's long-term growth potential. But with price
increases under a tight rein in the U.S. and other developed countries, debate
remains over whether further reductions in inflation will pay off. Two Spanish
economists examined 32 years' worth of data from the 24 largest developed
nations and concluded: Yes.

In the experience of the 24 member countries of the Organization for Economic
Cooperation & Development, cutting the inflation rate by one percentage
point--from, say, 6% to 5%--added an extra 0.5% to 2% to per-capita income
after a decade or so, say Javier Andres of the University of Valencia and Ignacio
Hernando of the Bank of Spain. Significantly, the economists found that the gains
were as large or larger when inflation dropped from 4% to 3% as when central
banks were reining in the double-digit price hikes of the late 1970s. The
economists didn't investigate what happens as inflation approaches zero.

By MIKE MCNAMEE

Donald, What do suppose is going to happen to the Japanese economy when the dumping starts in earnest over there? Their financial institutions? Their surplus of dollars? Their US Bonds?

DONALD: Tugging at it to keep it down will not do anything. You have to take a cold shower, my man.

Dr. Randel Burns provides an overview of building a COINS & precious metals collection. He gives useful tips & caveats for serious collectors. Interesting & potentially profitable read:
http://www.gold-eagle.com/gold_digest/burns806.html

CARL: I am certain it will be a replay of the 1931-1934 period of U.S. economic history. Pull out an old book, substitute the country names, and you have it.

I was just about to post a follow-up to your question of the other day. I took out my bb fisher chart Dow/Gold Ratio and marked it with historical events to match the dips. Here are the ones that stand out for the worst stock market ( bottom ) days in history. Remember, these are priced by ounces of gold, not dollars. Panic of 1907 ( RR bond problem ) , WW I in Europe, US enters WW I, Teapot Dome scandal, Post crash 1929, Citizens ordered to turn in gold, Hitler invades Czechoslovakia, Pearl Harbor, Nixon closes gold window, Gerald Ford Whip Inflation Now, T-Bond panic of 1980, Volker leaves Fed, Gulf War. The biggest drop by far was Nixon closing the gold window. That was a sudden and immediate dropoff that bottomed with his Watergate resignation. There was a sharp Gerald Ford rally that ended abruptly on the day he started the Whip Inflation Now campaign. The slide from that day didn't end until the exact day Paul Volker was appointed to the Fed.

Donald, Nice summary of things it takes to set off "I think I want my money back". I'm out of here for the day. I've got to see some people about their manias.

MIKE SHELLER: Thanks for the advice. Good thing you kept your old Boy Scout Handbook to look up the antidote. I couldn't remember what to do.

Gold's technical picture has deteriorated a lot of late. December gold off 60 cents so this morning despite further weakness in the dollar. This failure to respond to good news suggests more downside for both bullion and gold stocks this week. Reify's warnings of another shakeout in the gold complex are looking better every day.

To get a strong bull move going, we need to see spot gold break $330 decisively. We also need to see the gold stocks move up strongly on heavy volume for several days in a row.

THE APPROPRIATE HUE

To Neophyte, re: your 00:11

I'm very interested in your gold casting method. Do you do this as hobby, for profit ( a jeweler ) , a method of gold "storage", etc.? What do you do for arbitrage when you want to liquidate? Please send additional details to above E-mail address ( so as not to clutter the line... )

RJ: Send info on platinum, Eagles, etc....

Any & All: I've often wondered ( being the paranoid that I am ) about the gold products for sale on Kitco's ( & other's ) flea market: how one would protect oneself from gold counterfeiters selling their wares?

Thanks in advance.....

Donald - re: your earlier post ( US economist )
A follow up in Brazilian press ( O Globo ) - economist says currency is overvalued 15-20%. Strange that 'Reuters' didn't highlight that fact.
Real est sobrevalorizado de 15% a 20%

BRASLIA. O real est sobrevalorizado entre 15% e 20% em relao ao dlar, mas no 
preciso mudar o cmbio para corrigir esta distoro. Esta  a opinio do economista
americano Albert Fishlow, professor da Universidade de Berkeley, Califrnia, e velho
conhecido do ministro da Fazenda, Pedro Malan. Para Fishlow, o caminho  insistir nos
ganhos de produtividade para equilibrar a taxa cambial. O dficit em transaes correntes
( balana comercial e de servios ) e o aumento das exportaes foram considerados pelo
professor como os maiores desafios do Plano Real nos prximos anos
http://www.oglobo.com.br/

Donald -here's another story from O Globo
From what I can gather the Brazilian CB - sold US $ for the third straight day to keept the Real within 'range'.
How long before they take the 'hit' ?
RIO e BRASLIA. O Banco Central precisou ontem vender dlares, pelo terceiro dia
consecutivo, para manter a taxa de cmbio dentro dos limites da minibanda em vigor, de R$
1,0875 e R$ 1,0925. A moeda americana est escassa no mercado h dez dias, quando os
bancos venderam grandes lotes para o BC, e, com isso, a cotao chegou ontem a romper
o teto da minibanda logo pela manh, como nos dois dias anteriores. A conta j comea a
ficar salgada: o BC queimou US$ 300 milhes de suas reservas para defender a intrabanda.
http://www.oglobo.com.br/

To the extent that a longterm increase in gold prices depends upon gold demand in Asia, we may have longer to wait. Today's Wall Street Journal reports a stock speculation frenzy in China. Profits from the new free-market enterprises that might once have gone into the traditional gold are now going into the new Chinese stock market. Here is an excerpt from the article:

Stock Market Mania Is Sweeping China; Speculators Abound

With as many as 100 million farmers, housewives, barmaids and bureaucrats now investing in Chinese stocks through an estimated 30 million trading accounts, China is stock-market mad. . .

Shops can't stock enough market manuals. "The Secret of
Wall Street" is one of Shanghai's hottest titles. The local
telephone company now offers 100 pay-per-call hot lines
analyzing the market's daily performance. There also is a
separate hot line for each of 783 listed stocks. Investors
can use bank debit cards to place orders at automated
brokerage machines or trade using the keypad on their
mobile telephones. From faraway Tibet to the Gobi Desert
to the Yellow Sea, more than 30 Chinese cities have
trading terminals that link them instantly to China's two
exchanges, in Shanghai and in the southern city of Shenzhen...

Casting grain is,simply put,small pellets of gold about the size of a kitchen match head on down; gold in this form is more easiley "mixed" with alloys to form "karat gold casting grain" for the production of jewelry items.I've made my own casting shot ( grain ) for over 20 years now and it's really very simple: either pure gold or a mixture of fine ( pure ) gold grain and an alloy grain are put ina crucible and brought up past melting enough to mix the two very well with a carbon or quartz rod, then that "alloy", lets say it's now 14k, is poured into a bucket of water from a height of say four feet. the pellets become somewhat round as they fall tword the bucket and solidify upon impact with the water. Now this "new 14k alloy" is ready to re-melt and use for casting, I'm to do one today. I always start with fine gold and alloy it myself this saves money and is highly consistent in quality:you must choose alloys carefully. Incidetally, the reason it's sometimes called ( as I call it ) casting shot, is it's similarity in production tecnique to the manufacture of lead shot for shotgun shells; there, lead is poured through seives of varying calibers then drops close to eighty feet before hitting the water at the bottom:the further it falls,the rounder the shot.
Neophyte,casting grain is cool but not to those who arn't familiar with it. No way to know purity save someone's word,in short,no confidence. For most coins, recognizable ones,are the ticket,preception is everything when things go wrong and I don't like having to defend the quality of my holdings. And now good friends I'm off to my shop!

compliments and regards
badge

NOMERCY: I had fount this headline earlier this morning. When I click on the URL it brings up the wrong story so I didn't post it. Here is the headline: "Brazil's Central Bank sold a total face
value of one billion reais of a special series of dollar indexed Central Bank Notes ( NBC-E )
to calm dollar futures markets, dealers said. - Aug 26 2:27 PM EDT"
It is probably related to your post. I never learned Portugese but many of the words are the same or close. It says something about a problem for the past ten days with action over three days.

That WSJ article on the Chinese stock market sounds incredible.
Our equivalent to getting stock tips from the paper boy.
I hope the many investment newsletter analysts pick up on this
and give their take on it. Another sign of the mania and upcoming
bubble burst.

More on the Chinese stock market from an "official" publication, I think.
http://www.hongkong-window.com/shanghai/sstr/sst.html

Strad
- I'm thinking about attending your Sunday concert at the LA Museum of Art. I'm not sure if my girlfriend can make it, but I think I will be there. What kind of dress is appropriate? Will California Casual work? I hope this thing is not real formal, its to damn hot to put a tie on. Let me know, would you?

I wonder, is Fidelity's closing of new entries to the Magelan fund really a reverse-psychology ploy to sweep one last glob of investors & their dollars in, motivated by the old "I don't want to be left out" mentality?

Spud

ps - Arden - can you post warehouse numbers??

Donald & nomercy: The essence of the reports is: o BC queimou US$ 300 milhes de suas reservas para defender a intrabanda. Real est sobrevalorizado de 15% a 20% --- The Brazilian Central Bank burned up $300 miilion in reserves defending the Real within the official range - which is over-valued by 15% to 20%.

El Nino update. Climatologists say 1997 El Nino may be strongest ever. This article is the latest thinking on the El Nino of 1997. Good summary on possible coming effects. http://www.canoe.ca/WorldTicker/CANOE-wire.El-Nino.html

Comex: gold down .90; silver down 2.2 cents; PL down .60 and PA down 5.60

Back for a few days until next trip away. A good article from Bob Santamaria...
Greenspan throws fellow bankers a bone

After several warnings over the past three months that share prices on the New York Stock Exchange had reached unwarranted heights, the Chairman of the US Federal Reserve, Dr Alan Greenspan, raised the Reserve's interest rate to major banks by one-quarter of 1%. The long-awaited "correction" ( charming word! ) of inflated share values immediately set in. Whether the interest rate rise was meant as a "oncer" or, as in 1994, was the beginning of a series which inexorably
raised interest rates by approximately 3%, is anybody's guess. So there is as little use in pretending to foreknowledge which this columnist does not possess, as there is in listening to the habitual jargon of the spokesmen of the various banks and investment houses. The 1994 rise in interest rates was justified by the alleged need to ward off the threat of inflation -- of whose existence there was not the slightest evidence. This week, quite the reverse. In his Congress testimony Dr Greenspan had characterised the prospect of inflation as "benign", adding that "competitive pressures here and abroad should continue to act as a restraint on inflation in the months ahead". So, if it wasn't "broke", why fix it?

The question was answered by one real economist who knows his way
around Wall St. and who understands what is actually happening. He is Professor James K. Galbraith. "Why did Alan Greenspan just raise interest rates?" he asked, "Because he could," was his answer. He added that he could do so "because two of the more independent members of the Federal Reserve Board, the pro-growth conservative, Lawrence Lindsey, and the moderate, Janet Yellen, have departed. Because he has been under pressure from the banks and the bond traders for two years -- why not throw them a bone? Because he knows that the Clinton administration will say and do nothing in protest".

The reason for the President's anticipated silence is obviously not unconnected with the heavy financial contributions to Clinton's electoral campaign made by the interests most likely to benefit who contributed as well to that of his now-forgotten rival "Bob" Dole - a good each-way bet. With the former Chairman of Goldman Sachs ( Robert Rubin ) now Treasury Secretary, and the most important figure in the second Clinton Administration, they have got it made. To continue with Galbraith's ex-
planation: "Repressing wages is the essential thing, and the way to do so is to slow economic growth, raise unemployment, and make sure that the job insecurity that Mr Greenspan explicitly credits for suppressing wages growth does not diminish or disappear. But repressing wages is not the only thing.

"The Fed is also tax collector for the commercial banks, which instantly raised their prime rate and thus their revenue from every adjustable loan they make. ( Higher rates paid out for savings will be very slow to follow ) . Mr Greenspan has also hinted that he wants to deflate the stock market. Why? Not to protect middle-class families from a bursting bubble, but to scare them out of stocks and back to the banks and their measly money-market funds".

This week's "correction" needs to be understood as merely another chapter
in the long financial crisis through which the world is passing as a result of the policies of those who control credit supply.
As far back as 1985, Dr Albert Wojnilower, then chief economist of First
Boston, wrote that "Deregulation has allowed all institutions, instruments and markets to intermesh in such a way that a serious leak anywhere can threaten a system-wide failure".
The London Financial Times had foreseen as early as February 1987 what
was actually to happen during the following October: "Floating exchange rates, it is now clear, were sold on a false prospectus. They held out a quite illusory promise of greater national autonomy [but] where capital is globally mobile, floating rates cannot be relied on to keep the [national] current accounts roughly in balance".

Even its more robust free market competitor, the London Economist January
6, 1990 ) was to state that the 1980s would be noted as the decade in which "the experiment with floating currencies failed".
Dr Henry Kaufman, who at one stage of his career was President of Salomon Brothers, predicted the October 1987 collapse. After it, he said: "We got a warning this year. It's undeniable. We have moved into a more hazardous environment in which new financial excesses are practically unavoidable ... There is now a growing presence of 'high-octane' portfolio managers who are free to roam in and out of currencies, equities, bonds, commodities and derivatives with primarily a near-term focus, and no particular loyalty to any national market-place.

"Certain defects are already deeply embedded in the genes of our financial conditions. These defects will contribute to progressively greater fluctuations in the prices of stocks, bonds and currencies, to
bouts of petulance in the credit markets and possibly to a splurge in financial asset values that will dwarf those we have already experienced this year". All of this constituted pretty fair authority fully ten years ago. Yet despite this concurrence on the part of those who really knew, there has not been the slightest change in the received wisdom.
We are still regaled with the same intellectual garbage. Whether or not the current "correction" stops at this point, it is certain that in the not distant future the whole thing will "blow".

When that happens we should not forget either those whose greed was primarily responsible, or the "experts" who provided them with the intellectual rationalisations.

Avoid Debt & Margin Debt!
The next 6-12 months, will prove to me the most determining and challenging to world financial stability.
Economic
1.Overvalued & over-invested financial stock markets -led by the Dow...which are dependent on low interest rates & growth rates of 15-20% to maintain P/E multiples
2.High Debt Margin and consumer debt ( credit card, housing )
3.Currency turmoil in Asia, debt defaults, non-performing loans, and write-offs. Japan's economy, stock market are EXTREMELY vulnerable, as their exports to Asian countries will be seriously affected as will their loan losses ( or non-performing loans ) .
4.Possible currency spill over to South America ( Brazil & Mexico )
5.EMU mess and high risk as the politicians will try to forge ahead, even if common sense ( financial instability and high risk worldwide ) dictates CAUTION. Indecisions is what causes most problems.
6.Interest rates are unstable as the currencies & economics create havoc.Different problems are faced in each part of the world. Equilibrium will be difficult to be maintained.
7.Mutual fund & retail investor PANIC SELLING
POLITICAL
1.WhiteWater has not gone away, its simmering & could be explosive.
2.Clinton/Paula Jones - case scheduled for May '98
3.Al Gore caught lying - HE DID USE THE WHITEHOUSE FOR FUNDRAISING!
4.Kohl's re-election in '98 EMU , what to do? does he gamble?
MILITARY
1.Middle East 'kindling' fire
2.China-US relations ( Asians countries have been building up & stepping up their arms purchases ) .
3.North Korea
4.Russia is a wild card. Whose side are they on?
ENVIRONMENT
1.El Nino - what economic impact will it have? Can you IMAGINE if it is as powerful as it was in 1982-1983 the impact on food prices. How can JAPAN who is a major importer of food deal with this EXTREME ECONOMIC IMPACT on top of their existing economic problems?

Go Gold!

Options expiration may be responsible for some of today's weakness in the yellow according to a Yahoo story. If that is the case we should get a decent rebound soon. Comments?

Stocks down, Art up... ( again )
http://www.smh.com.au/daily/content/970828/national/national4.html

Contrary to his original assertion, Vice President Al Gore
did not use a Democratic Party telephone credit card for
as many as 20 fund-raising calls from the White House.
Without public notice the party recently reimbursed the
government $24.20.
http://www.washtimes.com/investiga/investiga1.html

Unless Greenspan quickly removes the punch bowl, the Wall Street
Party is going to get too rowdy...
http://www.smh.com.au/daily/content/970828/business/business11.html

Japan facing new recession. The recession you have when you are not having a recession!!
http://www.afr.com.au/content/970828/world/world1.html

The DJIA successfully bounced off of the 7700 area this morning -- when it was down 75 points. However, before the week is finished, I image that level will fail to hold. Look for the DJIA to significantly break below 7700 on one of the next tests of that important level.

Wage rises heading for Reserve Bank of Australia ceiling
http://www.afr.com.au/content/970828/news/news1.html

Nomercy: Could synopsis of the key indicators/events to watch on all fronts ( political, environmental, economic, monetary policy ) ...we should all be watching these events very closely!

Don't believe this has been posted before. It's the [official?] El Nio homepage at NOAA. http://www.pmel.noaa.gov/toga-tao/el-nino/home.html

Signs of Deflation...Nightly Business Report Transcript

Commentary On Deflation Concerns

JEFF YASTINE: In tonight's commentary, Kevin Phillips, editor and publisher of the American Political Report suggests instead of worrying about inflation, pay attention to deflation instead.

KEVIN PHILLIPS EDITOR AND PUBLISHER OF THE AMERICAN POLITICAL
REPORT: It's easy to spot the economic signs of deflation mixed with inflation. The Producer Price Index has been soft this year. Median family income has been stagnant for two decades and more and more industries show signs of over expansion and over production. It's the politics of deflation that makes investors scoff. The Federal Reserve will never let it happen. Capitol Hill and the President will never let it happen.

Maybe not, but in this country, the classic deflationary politics has involved a balanced budget, cut the debt craze that starts out disinflationary as in the decades after the Civil War and then again in
the 1920's and winds up more harsh. The rich/poor gap opens up. Ordinary families sink into debt. Financial assets boom and business over-investment slowly becomes a problem. The big time deflation comes when erosion of farm prices and real wages spill over into the stock market, into deflation of financial assets.

Obviously, some of this is relevant again today. Which brings us back to the obvious deflationary impossibility. Alan Greenspan won't let it happen. That was true enough back in 1987 after the crash, when he flooded the system with liquidity. But on the other hand a few years later, the bank of Japan, another monetary power house, couldn't prevent a stock market deflation. So who knows?

I'm Kevin Phillips.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc., Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice.

( c ) 1997 Community Television Foundation of South Florida, Inc.

All:

A few days back when we had a big up day in silver ( 17-18 cents ) the 'reason' was short covering by a single fund. A few things about this that are of interest. First off, that the market could move up 4% on short covering by a single fund is remarkable. It shows the thinness of the market and its suscepability to speculative attack. Secondly, open interest in the silver complex barely declined during that day, so that new shorts happily replaced the old shorts. Glenn reported that he got short silver on that day and so did probably many other locals. One of the income sources on the floor is to front run big fund orders and make them pay up. The game is to buy in front of them and then sell back to them at the highs and maybe even sell a little extra, knowing that when their appetite is whetted, a good pullback may ensue. ( Note the use of the word 'may' )

That the silver market has only pulled back slightly in the context of this event is very bullish. The new shorts in the market have far less staying power than the longs, who already have sizeable gains. Any drift to the upside here may inspire more buying and short covering as all sorts of 'major resistance' areas are within striking distance. Since the fund in question was only covering shorts, another rise which triggers a buy will again unleash a spike higher as they again head for the market.

Take all of this with the usual shaker of salt because I am talking my book, but another good rise ( 20 cents ) from these levels could well trigger a small buying panic. Throw in a good dollop of option convexity and we may be looking at an 'event'.

MIKE SHELLER and RJ: Out here in Los Angeles, skirts are definitely becoming micro-miniaturized. The other day I was at the gas station and noticed that there was some unusual activity near a car parked at the next pump. The attendant was hovering around talking to two girls in micro skirts and everyone was looking bemusedly at the car. I walked over and asked what was going on and the young ( 20ish ) driver of the car told me that it was her boyfriend's car and she had no idea how to pop the gas cap cover to gas up. She kept bending over to look into the drivers seat - searching for the pull lever ( to no avail ) .By then a few oter guys were hanging around but none seemed to be in a big rush to figure out the problem since every time this gal leaned over all of her lower anatomy was entirely exposed to view. She didn't seem to be particularly concerned about it although, I susupect her boyfriend, had he been there, would have thought otherwise. I didn't have time to stay to find out how the problem resolved but I'm sure someone helped her figure it out. Speaking of clothes: RJ - this is LA, bud! People go to funerals in shorts and sandals, leave aside a concert! Can't wait to meet you on Sunday.

I heard on the radio this morning a commentator saying Michael Jordan of the Chicago Bulls basketball team is "reportedly being offered" $36M ( no decimal point ) for a 1-year contract. Now where is my coffee ...................

DA - you said "open interest...barely declined during that day, so that new shorts happily replaced the old shorts" - why does open interest only reflect shorts? I thought a "trade" was composed of both a long and a short ( since it is a zero sum game ) - could you please explain this to me? Someone said the other day that open interest declined so this indicated that "they" were dropping their shorts - I should have asked then but was embarassed that I didn't know.

I just finished reading some *excellent* and mind bogling posts. This is why *I* am ADDICTED to Kitco...My printer is very HOT right now...cool down little buddy...

Badger - Thank-you much for the lesson. It goes without saying, in any business, that you must pick and trust your 'sources' with BOTH eyes open. "Once burned, twice shy".

Sheller ( the non-mortal ) - What timing! On both the Platinum AND the short skirt. I too beleive that we are bottoming and ready for wave three...four...five???? I have been quietly ( as quiet as I can be ) buying the PL. We are 'locked and loaded'. Anyone care to squeeze the trigger?? RJ?? Put on the BIG buy?? Now, to the short skirt...My neighbors, who live directly accross the street have had their house for sale for a few months. Well just last Friday a BMW ( one should always buy a Mercedes instead, but that's a different story ) pulled up in front of their house. From my vantage point ( as all the neighbors jokingly and lovingly refer to my 'office' as the 'crows nest' ) , upstairs and Looking Down I watched this GODDESS step out of the car. ( My timing and view was impeccable for I got the Sharon Stone view here ) . And what was she wearing but a VERY short purple skirt...WHOA! Picking my jaw off the keyboard I just shook my head went to the fridge for something COLD and then thought about the meaning of it all...NOW I KNOW. Thank-you brother. Incidentally, she ( and her husband, god I hope he plays golf ) made an offer on the house and they will be my new neighbors. I am going to need some help...I'll keep the crew here informed as to the 'wardrobe of the day'. OUCH!

Who Cares - I've been printing alot of good stuff from you lately. You are on a roll...and You Too ( like Donald ) are on-line quite a bit at odd hours. Don't you sleep? Maybe the wife should 'pass through' more often ;- ) It seems to boil the intellectual blood as well :- ) ) Thanks Bro!

RJ - I will look for a pub with dart boards for this Sunday. Bring your favorite darts. And I too was wondering about dress too. My Led Zeppelen t-shirt is moth-ridden and it still stinks of sweat, smoke, and vomit. ;- ) And will you step on that Platinum Friday? We need a GOOOOOD Friday run-up...thanks in advance.

Alfred E. Newman - or should i say bbfisher?? If not then you two have the same style and perceptions...thanks for the deep and thought provoking post. What, did you roll over in your grave and have to respond to the madness??

PUETZ - you're either gonna make a ton-o-money or become another doomsayer-come-lately. Time will tell...I do tend to think we are due for a healthy 'CORRECTION', but not a crash. And when it occurs it will recover to make new highs...call me a naive...call me silly...but don't call me late to dinner... ;- )

ALL -- Happy trading and GET IT ON!!

AWAY...to make a few bucks at the 'other job'

EB

sorry for any spelling or typo errors, i did not have time to preview ;-$ )

OK Im nosey, but just what the heck do you guys do for a living, that you can be on here all the time? EB? Puetz? Ron? Mike? Earl? Ray? Mooney?

CARL:
I was a little too flip when I answered earlier "get out an old book and substitute country names" because when you get to the part about going off the gold standard the old book no longer applies.

We are repeating devaluations for export trade advantages exactly as in the 30's. That is a poor substitute for a better product or for a more productive way of making it but it is quick and easy. Already we are beginning to hear American manufacturers complain and ask for dollar devaluation. If they don't get it they will threaten to move the manufacturing offshore, neither the Democrats or the Republicans will turn them down. Politics being the reality, it is likely an attempt will be made to devalue the dollar. As gold is no longer fixed to the dollar it can not be devalued as it was done in 1933. Any attempt to devalue, by lowering interest rates, by printing, by selling Fed gold, will only cause the countries who recently devalued to do it again, and again. The chaos we have seen in Asia in recent weeks will spread around the world, I think in very short order. Both the stock market and the bond market will plunge. I do not think there is any way out except to create a strong tamper proof currency in a major country or group of countries. I have been ridiculed when I suggested it at this site earlier but I think we are closer to it than anyone realizes. All debtors will experience a depression equal to their level of debt. The alternative is the Dark Ages.

I suspect that all the more intelligent Central Bankers already know that it has to be done. They also know that it can only be done during a crisis. They may just be treading water until one severe enough comes along and their respective governments order them to start the job.

EB: Short skirt? Bottoming? Is there a connection?

Nosey, re you question as to what they do for a living, some of them make a living selling bad advice via newsletters, to suckers taken in by charts, graphs, analyses, and outdated economic cycle flat earth theories which have now cost those listening to their advice, 300% to 500% in investment gains in the past 12 to 15 years.

Donald: I truly believe that a "tamper proof currency" is antithetical to all that modern governments stand for. If they stand for anything at all. The selling of political influence is the one hallmark that characterizes political institutions of today. A currency that is beyond political gerrymandering would suddenly and effectively diminish the amount of influence available for public sale.

IMO, it is impossible to conceive of change eminating from the halls of political power. Power structures will never reform themselves without extreme pressure from an independent, outside/external agency. The natural hubris of those in power will always mitigate against such reform.

A touch of the dark ages is the only element that will sway outside opinion enough to effect the change. Unpleasant but necessary. Unfortunately, it will take longer than our remaining span of years to accomplish it. ...... Even then it will only be temporary respite from the age old desire to gain personal advantage at the expense of others. Politics is the process of providing that advantage. Ad infinitum, ad nauseum.

Inquisitive: I'm an independent statistical consultant working out of my house. That means that for a huge fee, what I do is help researchers understand that the humongous data set they have painstakingly spent the last twenty-five years of their life collecting is really a lot of garbage. And the next time they want to know the answer to Life, the Universe, and Everything, they should call in a statistician before and not after they have collected all the data. Got one knocking on the door right now . . . Poor fellow!

StradMaster:

Oh my friend, You missed your chance .....

You should have demanded "black tie" for both RJ and EB

You sure would have been able to pick them out of the crowd with everyone else in shorts and sneakers eh!

Ah well, maybe next time .... You just gotta get a little more devious my friend or else you'll miss all the fun things of life !!!! Couldn't you just imagine RJand EB in a tux ( instead of a Lead Zeplin T-shirt and shorts !!!!!!!!!! HAHAHA warms my mind !! Oh Earl, I'm hurting myself here!

TTFN

TTFN

Lurking Gbug ( 13:34 ) : You're totally out of line. Speaking for myself, I have no interest in offering anything to anyone. Especially, to sheep who pander after ever guru in sight and then complain when they have been led astray, as you have candidly admitted to doing. Given your self admitted inability to distinguish between fact and opinion, you would do well by following the herd. Please continue to do so. After all, the past is nothing but prologue. Eh? ..... In the meantime, stuff it.

I've been following most of the stocks recommended by Puetz and others in this group. As of 2:45 PM EST, today, they are ALL down the following amounts from yesterdays close. Siver Std. Reserve -8.6%, Sunshine Mining -7.7%, Placer Dome-1.8%, Newmont -1.5%, Echo Bay-1.2%, Couerd'alene - -1.3%, Int Precious metals -.9%, Sillwater -1.2%, Pan American -.9%, Barrick -.5%. All of them tending to average a 15% to 30% drop in past 1 to 2 years as the Equities market skyrocketed 3000 points, Meanwhile the "prof. analysts" that hang out here were urging everyone to bail from the stock market before the "bubble bursts" ( as they have been doing since DOW 3000 or so ) . Don't you guy's get tired of being right all the time?
Don't worry, eventually metals stocks will rise and DOW will see a correction and then all those following your advice will only be out 300% instead of the 400 to 500% they're out now. Keep up the great advice and analysis guys.....

LurkingGbug: I second Earl's comments. I'm not in the newsletter business. I'm not a professional trader. And I do not give market advice. Bite me.

Excuse me Earl, I LOVE being a sheep if it means making huge gains in the market while flat Earth theorists continue to lose their behinds. My comments were directed to folks who do in fact lead many others to financial ruin, myself, luckily, not one of them. I "got smart" and quit listening to Gloom and Doomers in 1989, and made myself a 200+ % gain the the market by doing so. ( Instead of the enormous losses I would have incurred had I continued to listen to the likes of most of the "expert" analysts I read here ) . AS I said yersterday, I have no bias against the metals, love them, just bought some Platinum coins in fact, BUT I have a great respect for the facts and for REALITY.

Da - ( 11:53 ) Re: Silver - I covered my short yesterday in Silver. Some people think I'm Too short term. When I shorted the market I really was thinking of taking profits no higher than 4.30, but I came to realize the market was not going to give me that as fast as I wanted. As far as getting overly bullish at this point forget it. What is happening in the stock market may have some more to the downside but it is still a correction to the downside and what is going on in gold and silver is also a correction to the upside. It may have some more to go and there will no doupt be one or two days when you'll feel like it's really. But at some point in the next couple weeks when your heart is in overdrive as you watch the ticker, feeling like your going to miss the boat if you don't "Buy right now at the market". At that point I'll be shorting the metals again. good luck with your silver in the mean time, it looks like another dime is safe from here.

Lurking Gbug,
Congratulations on your 200% gain over 8 years. The 200% does not materialize until someone is willing to buy it from you at your asking price. I would like you to educate/inform me when to get out and REALIZE your gains. Do you feel that current market valuation justifies the risk?
Do you feel that there is any risk? What is your exit strategy? Thank you for your reply.

"We have never observed such high ocean temperatures in July in 150 years," said climatologist Jagadish Shukla. "And the only
reason we say it will be the largest in 150 years is because we don't have any data from before then."
http://www.usatoday.com/news/world/nws2.htm

My total gain in 8 years of 236% on original monies invested, which doesn't count the much higher gains made by added monies, was ALREADY realized when I started taking my funds out at DOW 8100 a few weeks ago and completed the final dollar cost averaging out yesterday at approx. 4% below that level. It always makes me laugh when people call this a "paper" or "unrealized" gain. Some of the GAINS ( not the original prinicpal mind you ) will be paying off my small mortgage, some went to purchase PLatinum Proof coin sets, some will be for a vacation we'll be taking to Hawaii, some will be going to an education savinfs fund for my children, and the rest will be finding it's way BACK into the market via dollar cost averaging when I decide it's time to move back in. A nice 15% correction is probably in order, when that occurs, I'm BACK IN. Meanwhile I'll be enjoying a nicely enhanced lifestyle thanks to my phony, paper, "unrealized" gains...

EARL: Firstly, I am looking out my window and THE EARTH IS FLAT. Now that we have that out of the way, a "touch of the Dark Ages" is like that economist in Barron's two weeks ago, thinking you can get the inflation rate down to zero by fine tuning. Can't do that. Markets move to extremes. Even gold didn't get Spain zero inflation when Columbus sailed off the edge and landed on San Salvador. Too much gold gave them inflation. The same with the U.S. and Sutter in California, and with silver in the Comstock lode. As I said to someone here at Kitco I expect a crash followed by deflation for about two years of hard times. In order to make a better prediction I need to see at least one Congressional election after a crash. I want to hear the campaign promises and see what the public decides during the hard times period. After I know the election results I will be able better decide on a strategy for the next few years.

G.S.C. - Are volumes heavy enough this week to justify pessimism in the metals complex? Homestake has been heavy, but several others have been lighter than normal. This is the last week of the "summer" and volumes are light. Many "Big Traders" are on vacation.

Lurking Gbug: Critical thinking is not the same as criticizing others. . I try to follow the thinking of several here and have made money. One example will have to suffice: I moved from Fidelity Select Electronics in July after a runup of over 10% , into Fidelity Select American Gold ( which George Cole and Mr. Schippi follow and analyse ) , and it has proceeded to move up another 10%. That's 20% in about two months which ain't too shabby. ( I haven't quit my day job! ) I spent a great deal of time thinking through the numbers and reading the various thoughts here, but always the responsibility for decisions rests with me. This is a GREAT site.

So what's your point? You seem to agree that stocks are headed down and gold up.

Inflation/Deflation: Gas prices are up significantly here and Cole-Haan is dumping inventory at fire sale prices ( from its outlets ) . It all depends upon what is under what kind of pressure. Excess inventory in face of weak demand = price reductions. Yet next month a lack of inventory in the same product could create price increases. In a 'one country economy' things seem easier to read. But considering the inter-dependencies of today's marketplaces ...

Chaotic fluctuations in supply and demand will play havoc with futures markets, the role of which is to stablize those markets. I'm recalling Russia's experience with state stores where one week there was no meat but shelves full of toilet paper. The next week to much chicken, but no vegitables, etc. Chaos creates its own rules as investors' horizons shrink from months to weeks to days.

nomercy - I believe you are right about big money storms. Your post a good one in my op. ( What does your handle reflect? ) Hope there is charity for all of us at the needed time.

Glad you made a gain Speed on one of the recommendations, but taken as a whole, the recommendations here over the past 2 years would cause most to miss the most impressive bull market in history. More "conventional" market analysts recommending tech stocks like Intel and Microsoft have made their clients over 100% in a roughly a years time. My criticisms are not of this site ( which I enjoy and lurked for quite awhile before posting ) , but of the "professionals" who have caused so many to lose so much in the past few years. Critical thinking means looking at ALL the information we have available, and I see a pretty narrow focus with some of the "analysts" here. Guy's like Puetz ought to be held acountable for their wild, speculative, irresponsible recommendations. Such as his current "Crash in 5 weeks" scenario. We've been hearing this kind of nonsense since DOW 3000. I'm here not to harshly critisize, but to add some balancing comments. I'm not a basher, but I do feel a level of irritation towards "analysts" like Puetz because there was a time in my young and impressionable 20's when I listened to folks like him and Cole, with similar market theories, and lost a bundle. Fortunately since then, I've forsaken such Luddites and made very nice gains in the market, as many others here, have missed the most incredible bull market in history. I don't intend to jump off any cliffs with Lemmings mind you, I'm OUT of the market at the moment, but as I said, I respect TRUTH and FACTS and would hate to see some new young fresh faced Lurkers with money to invest, get led astray by some of the "analysts" I read here. Even a clock that's stooped is right twice a day, but on balance, the Puetz's of the world have cost investors who listen to them, BILLIONS in the past few years, and they'll NEVER make up those billions even WHEN the market inevitably corrects, and the metals turn up.

Last Updated: 6:34cet 27/8/97


BoJ's Matsushita says modest recovery continuing

TOKYO ( AFX ) - Bank of Japan governor Yasuo Matsushita said Japan's economy "is continuing
its modest recovery" on the back of rises in net exports and firm growth of private sector capital
spending. He added, however, that the negative impact of the consumption tax hike "is lingering."
Matsushita told a news conference: "Some indicators, such as department store sales, continue to
show year-on-year falls, due to the ( consumption ) tax hike and unseasonable summer weather
conditions." "But as labour and wage conditions continue to improve steadily, the trend of the
recovery of consumer spending has not been lost."

Matsushita said continued growth of net exports and steady growth of private sector capital
spending is expected to support the modest recovery in the near term. "The underlying cyclical
mechanism is working progressively and sufficiently, so there is a high possibility that the economy
will extend the recovery, although the pace is expected to remain moderate," he said. Matsushita
said inventory levels remain "in an appropriate range overall, although rises in inventories have been
seen in some sectors, such as autos." He said the central bank will continue to put priority on
enhancing conditions for the recovery and monitor developments in the economy and financial
markets. "Movements of bond yields is one of the important indicators which we should consult
when making monetary policy, and we will continue to monitor the movement with great concern,
but it is not appropriate to comment on market levels themselves," Matsushita said.

Matsushita said the recent failure of a series of construction companies is unlikely to undermine the
recovery or the soundness of the financial system. "Under present economic conditions, Japan has
sufficient strength to absorb the ( negative ) impact of collapses in the construction sector, and I think
their impact on the financial system is not likely to be severe," he said. Matsushita said he "strongly
hopes" efforts by Asian countries, including Thailand, the Philippines and South Korea, will help to
stabilise the volatility of Asian currencies. He said he "strongly hopes" the planned merger of
Hokkaido Takushoku Bank with Hokkaido Bank will proceed as scheduled.

To Techkies:

The opening gap up on the XAU for August 21st has now been closed. Now the question is when will today's gap down be closed? : (

1997, To answer you, my point is to other Lurkers out there on the fence, DON'T put much if any stock ( no pun intended ) in analysts like Puetz. In the long run, you're better off in the Equities market than in the precious metals. And yes I agree the market will likely head down in the near term, but I see it as a BUYING opportunity. No I didn't say I thought gold would be going up..maybe...it's a nice buy opportunity for gold coins I think and I'll be getting some St. Gaudens soon, and also a substantial quantity of BU silver coin, but as a SMALL percentage of my portfolio, not my ENTIRE portfolio!! Long term, I think 20% of a portfolio in metals are a good hedge against disastors, and right now we have a nice "buy" opportunity. Personally I havn't held ANY metals for years ( thank God ) and only now have decided to protect some of my massive stock market profits with physical metal. OK, sorry to be so prolific today, but it seems that anyone posting "contrary" politically incorrect opinions in this group comes under massive attack and has to justify each and every comment, whereas guy's like Puetz who make outrageously irresponsible recommendations time after time, ( and have a terrible long term track record compared to "conventional" analysts ) come under little or no scrutiny.

Have others been struck by the apparent contradiction or irony in CNN's news headlines re: 1 ) gold is dead and 2 ) Soloman Brothers call for 20% decline in DOW. In the spirit of Noam Chomsky and mass psychology, I'd bet my last shorted dime that the Soloman brothers and other astute big boys have already been shorting the market, have positioned themselves in gold ( for months now....indeed the missing question in all news reports about gold is if everyone is selling, "who is buying"...this is afterall a market, is it not, with buyers and sellers ) , and now are influencing the market in their interests through the media to benefit from the mass psychology that will take hold tomorrow as Soloman brother prophesies make headlines in leading financial papers. To think that the masses won't listen and act accordingly is naiive; oh they will and they will play right into the game plan. Fortunately, goldbugs, although still in the wilderness and still chastised, should be seeing through this game and will benefit when the spike comes.

Thoughts?

hey buddy; i'm confused. Should we sell dow stocks and sit
on the sidelines or reinvest in gold at this historic low
levels? Should we maybe dollar cost average into gold or
maybe even the dow ( say 10% of salary into a equity mutual
fund every month ) ? The doom and gloomers make sense but like
you say they have been wrong for years. What to do?

If you have a beef about irrational analsysts, you should aim your frustrations and anger toward the paper bulls. They're still advocating for people to buy or hold ( you seem to agree that stocks are headed down ) . Your efforts appear to misdirected.

I hate to fuel the flames on the debate fueled by lurker's comments, however, he does make some valid points. Unfortunately with gold, when she moves, the move will take everyone by surprise...people will watch in awe ( as they did in the past when she rose to $850 ) ...like watching a UFO streek across the sky....but it will be too late. Investing is certainly a wildcard gamble, but for my money, it is the only "buy" in town in this irrational market with such an unstable globabl monetary system that is built on a house of cards...on pure faith....think about what gives fiat currencies their psychological power...its faith in the economic power, future production, military might, political clout of a nation...in my simplistic economic analysis, as per nomercy's previous post of 11:08, there are many variables that are forming to suggest the potential for a massive crisis in confidence in THE major fiat currency...the U.S. dollar. When that happens ( and it will, despite all the valiant efforts of the Fed to save the bacon and dampen the fall ) gold will indeed soar...because as with faith in the U.S. dollar, the masses will look for an alternative currency...and there will be none ( neither Yen nor Deutschmark ) ....the world will turn to the ancient form of money...gold. And why....because gold has always been that hoardible commodity which people have used for centuries as a medium of exchange, anywhere in the world.

We are in a serious shell game folks...we are definitely small fry....but hopefully we are on the side of the angels on this one. I betting the farm that we are intuitively correct and the statements of Soloman Brothers and the explicit actions of N.M. Rothschild suggests that maybe, just maybe we are playing this one correctly.

FRONT: You don't give me enough credit!!! Everyone there will be in suits and ties, of course, so EB and RJ will be the ONLY ones in Lead Zeppelin t-shirts, shorts, and sneakers! HaHaHa!!!

Lurking GBug - In the long run its just a person's opinion, even if from an authoritative voice. Everyone at some point learns to balance and part of that is going through youth when everything is important. There is no sparing the young their lessons. With regard to "accountability" who really is these days? No one in the mutual fund industry will get kicked in the shins when things fall. They will blame the market, not their own excess enthusiasm. There are SO MANY voices yelling about how wonderful things are and how there is no problem and up, up, up. So few voices are challenging this. I am glad to hear extreme points of view on either side without assurances from either side.

To all young investors: take the long view - never lose your capital in attempting to gain rewards. Its better to miss a market move or two as you learn the ropes, than it is to get wiped out and never get to play again. To miss an opportunity is not the same thing as losing your money.
Possibly consider working for the mutual fund industry and lose other people's money as you learn. Then stike out on your own. If you have an inheritance consider it a sober responsibility because you are really managing the labor of you parents and the prosperity of your children. You are a steward.

Re: last night's q's about coinage
Who ever posted notes regarding sales and reporting SSN's, etc. Thanks. I was not aware of the requirement. I have known tax evaders. I'd rather be up front about the sale of a coin or two, to have a clear paper trail than to be unable to convince an IRS agent that I have paid my fair share or NOT gotten these gains illegally. If you can show where your money came from and where it went then there's little basis for building a case against you. If you can't show this to them when they ask they will take you to the cleaners. I feel that government has its place and part of that is to assure peace and justice. Part of that means taxation. We are the goverment.

LurkingGbug: Lemme see . . . as late as your 20's you really believed people could reliably predict the future, lost a lot of money as a result, and now are complaining about those who express what can clearly only be understood as an opinion regarding future developments? I hope you will understand that a certain level of sophistication and maturity can be assumed here and that we should not have to dumb-down the site with warning labels everywhere for the sake of those who are not sensibly cautious.

Analysts recommending "buy and hold" may be wrong short term, but will be correct long term. Far more so than the "Puetze's" out there. To answer the other question about averaging in. If you have access to a 401K plan, it's virtually mandatory that you participate. You get tax free contributions, ( here in CA that means you've already made a gain of roughly 50% by saving Fed, state, SSI tax ) , usually a company match of 30 to 40% added, and a variety of funds to invest in plus usually a safe place to park the money if you don't want to be in the market. Personally, my 401 contributions have averaged well over 100% gains for three straight years ( that's 300% +++ gain in 3 years ) when tax savings, company contributions, and market gains are all considered. This is a "paper" gain since it's retirement money, however, it's all in a money market fund at the moment so relatively "safe". If you don't have access to a 401 K, you might consider dollar cost averaging into the market now AND purchasing a few gold amd silver coins at their currently bargian levels. ( I like silver better than gold personally because above ground reserves are disappearing fast, there's a strong floor under the bottom, and it's undervalued relative to the other metals ) .Once and for all folks, the Equities investors over the past 25 years have BURIED the metals investors by a HUGE margin and will continue to do so IN THE LONG RUN. Right now we have a short term "sell market, buy gold" window, but it may or may not pan out for the Goldbugs. Even now, I'd be WAY more comfortable telling a new investor to buy the market long term than to recommend playing around in any commodity, metals included.

Dow crashin.....up 14....Lurking Gbug:I echo your sentiments exactly...
I think MUCH of this HOPING the Dow will crash is just folks who missed out on a 15 year BULL MARKET in stox....they can say it's only paper profits but like you said,that PAPER can and has bought THINGS....like the oceanfront house I'm in....is this a mirage????....Puetz: One day you will be right ( to a small degree ) but in the meantime.....look at all the money you COULD have made!....

If you want to see a true feeling on how the paper bulls react when the market goes from down to up just watch the market anchors on the SquawkBox, its quite entertaining.. They've been quite somber all week until about 1/2 hour ago when the Dow broke to the uptick..

Markus - Everytime a statement is made in the media by the great ones it is fair to ask who they are addressing and what questions they are responding to. If the media talk gold down it means they are addressing questions about gold interest ( which is being talked about enough by some people to get their attention ) . Someone has been talking gold, which means capital flight from the paper market. This is an attempt to dampen this trend. Solomn Bros. report expecting 20% drop is another "broadcast" aimed at an audience ( investors who are in paper ) in an attempt to prepare people for the crash, to keep them in their seats as long as possible. Those who have been around the block a few times will immediately exit from this burning theater ( albeit in an quiet, orderly manner ) . Just like the Titanic. Only nervous, insecure people got in the boats.. everyone else just died.

don't listen to 'em; you will be vindicated some day.
you too george cole.

EB: Casting grain is just metal shot which is made in a convenient size for measuring, mixing with alloys and deoxidizers, melting and casting. Looking back in Kitco's catalog section, they sell it just like they sell bullion coins or bars. Its advantage over bars is entirely in the ease of melting and mixing so as to gain a uniform casting alloy. Ready mixed gold casting grain for instance comes in 24k, 18k, 14k white, red, green, yellow and red, 10k yellow and white. Silver is commonly bought in .999 and .925. Casting grain might be an investment ( no pun! ) option for persons who see a need to either make their own jewelry or art objects or who are afraid for one reason or another of more traditional ways of maintaining their wealth.

For zee Stradmaster and monsiour Donald

Ah luv zoze stoRIES about zee gels in the teeny
skairts. Ah luv zee one about zee gel in zee car by dam.
Zee mexican gel story ees OK but not so titilaTING.
Please tell more stories like zat - particularlee
when zee gold market ees zo Boring

Ron, not trying to "dumb down" the site, exactly the opposite. Trying to bring a little truth, reality, and experience learned to bear. I don't blame you guy's for being touchy after the horrible beating you've taken the past 15 years or so, but for you to imply that someone is an ignorant, easily swayed, naive sheep for making a killing in the best bull market we're likely to ever see in our lifetimes, is perhaps a little arrogant on your part. I learned from my early mistakes, and wouldn't have it any other way, just trying to add balance so someone else out there may benifit from my experience. Not exactly a terrible thing to do. wouldn't you agree?

( ..Past performance is no garranty of future performance.. ) X 1,000,000,000 iterations = noise, no one listeaning.

To whoever out there is interested in Madison.
I saw the results on tests on Mt Kare in Papua New Guinea. They
seemed extremely impressive. Email direct if you want more info. I got
the reports emailed from Australia. Im interested via Ramsgate. Some of
the gm/ton results were in a different ball park from what Im used to.

Isn't it ironic, that the U.S. mint is now promoting a new GOLD commemorative coin for Roosevelt...the president who confiscated gold from honest Americans!!?

sacrid-tomatos, sacro-momento, etc.

Buy and hold strategy doesn't always pay. Past performance means little in an ever changing environment.
The Japanese had a bull market too. They too had a 'new paradigm' .What happened? It has been a few years already and they're still going down. The trend has changed. Earlier this morning I posted, economic, political military and envirnomental reasons that ought to be taken in consideration when making investments for the future.
Things are not like they were in 1992. Discount Interest rate were at 13% then , now it is 5.5%. I doubt it will go down before it goes up.
Investors have been pouring money in stocks 'mutual fund mania' due to the unusual high returns in the last few years.
How will they react to adverse conditions? Will they keep on pouring money in to support the market if their expected returns do not materialize? There's a lot of 'first time' investors in the current market that haven't experienced a downturn. How will they react?
This is not a gloom and doom scenario. The probability of a severe correction in the next 12 months is high. If Greenspan & Rubin are unable to handle this 'soft landing', things WILL BE as frightning as some of this sites gurus are saying.
Remember Japan couldn't 'soft land' their stock bubble and our North, Central & South American economies are WORSE now than the Japanese were. They were DEBT HOLDERS we are DEBT OWERS.
Our fall would/could be harder.
Each one of us should perform DUE DILIGENCE to fully assess the risks of investing.
I'll leave you with one thought, it is not your streak of successes that count but to AVOID the one crippling misadventure or accident that ultimately determines your success and the rest of your life.
Good luck!

LurkingGBug - Belated thanks for your comments and provocation. Please stay around and keep things mixin'. I'm sure everyone's out there now getting the latest 'facts'n'figures' to make their case. Newsclippings, et al. We all need this tension to keep sharp. I believe that most here do what you do. This is one of the few places that true contrarians have to converse. I'm not sure anyone here has been 100% metal for very long. Just keep moving those assets to where they will do the most good.

ADD Year 2000 Bug to your list.
I work in the industry and I am seeing many danger signs, such as large corporations puting this off to 98 and 99, in the belief that they will be able to meet the deadline. Good Luck -- NOT.
I am seeing estimates now of 2 Trillion and up for programming costs and litigation - they are now training lawyers in the the specialty of year 2000 lawsuits. Numerous cases are already headed for the courts.
I have seen estimates of up to $2500. per day consultants fees in 1999, when the real crunch will hit. Companies will have no choice but to pay, or face huge shareholders lawsuits.
My company will be offering special cash bonuses to employees who
will sign on to stay with the firm for three years - past the Y2K.
Talk about job security.
Add the EMU changes that will be required and voila.
All the ingredients are in place.

Notsojustadummy & Glenn:

You are absolutely correct that the futures are a zero sum game. It is usually of little value to look at the open interest because one can never tell whether the players making the moves are instituting new positions or covering old ones.

In this case, we have a bit of information garnered from the grapevine that a large fund was covering their shorts. If this was the only activity of the day then we should have seen a large decline in open interest. The fact that we did not means that new short sales had to be placed so that there was no loss of outstanding contracts. Basically all that happened is that the fund that covered handed over thier short position to a new bunch of players.

Glenn: I sure hope we get one of those heart pounding rallies that just forces one to chase. Since we are already long a bundle my heart will indeed be pounding. I am curious as to why you are so dogmatic in your contention that silver is only having an upward correction. Everything I see and hear leads me to believe that the risk here is very much to the upside. Best of luck.

LurkerGbug - your 13:34 post

If things are so bad here, why are you hanging around?
You have my permission to leave NOW.

Good comments but I have to question a couple of points. Firstly, Japanese market is simply NOT comparable in any way to the U.S. Their P/E's were multiples of ours, and their market mania based on ZERO fundamentals Second, while a great correction may certainly be due ( as many of us believe and have taken all our funds in anticipation of ) a genuine crash in the near future is so improbable as to be almost a ludicrous proposition. Most of the "new money" that fuels the market comes from 401 K retirement plans, which add billions every week to the mutual funds market and will continue to do so even in a market downturn. The tax incentives and company match are so favorable that "Boomers" will stick with their 401 K's no matter what. ( How can you beat a close to 90% annual return BEFORE any market gains?? Who would be crazy enough NOT to invest in 401K if available? ) A study last week stated that close to 80% of all full time employee's that make $30K or more, contribute to offered 401K plans. Then, as I said yesterday, we have a booming economy, low commodity and energy prices, low interest rates, low unemployment, high profitability and high productivity virtually unrivaled throughout the world, as well as the most respected currency. From whence can a crash arise here in the near term? Let's be reasonable and logical about it folks. The sky is most certainly NOT falling.

Then again, what do I know. Puetz said yesterday that a solar eclipse was going to cause a market crash. Obviously he's a lot smarter than most analysts. Gee, I didn't even factor the solar exclipse into my investment strategy ( small brained creature that I am )

The sky is falling the sky is falling the sky is falling

Ouch!

Inquisitive---Re: your 12:47 post. I am retired and have all the time in the world to do any thing I want to.

Bart--Like the new format. It is very good of you to host this site. THANK YOU. By the way, what happened to hepcat???? The site is a lot calmer since he is not posting.

Hello Reify

GOLD! GOLD! YELLOW GOLD!
There are those that have it, Those that don't, and those who want to buy.

Speed: My caution on gold and gold stocks is strictly short-term. When the gold complex could not rally on a lower dollar yesterday, a drop was virtually certain to follow. With stocks poised to rally back to 8000, some further weakness in the yellow is to be expected. Next week should be different.

Puetz: Stock bears should not expect too much too soon. With only 13 new lows yesterday and gold soft, a near-term crash is very unlikely There will be a selling climax AFTER the market has dropped 20-30% over a period of 6-12 months

The market will do what it must to prove the greatest number of investors wrong. Both the bulls -- who thinks this is just another correction -- and the grizzly bears looking for a crash will be disappointed.

Don't worry Bill, I'm here as a "kinder gentler" version of Hepcat in his unfortunate absence. HepCat was Squelched by the site NAZI's who don't believe in allowing free speech to interfere with their precious ( almost always wrong ) theories. Hepcat was right on target about 99.999 higher percent of the time than most of the anti-market, pro metals & mining stock, doom and gloom, "expert" analysts that hang out here.

Has anyone ( in their spare time ) checked for any consistent market ( equity or PM )
correlations with the following data set?

65/66 estd peak Jun - Aug 65
72/73 estd peak Jun - Dec 72
82/83 estd peak Jan - Mar 83
86/87 estd peak Apr - Aug 87
91/92 estd peak Mar - Jun 92

These were El Nio events - info found at:
http://www.cdc.noaa.gov/ENSO/enso.current.html

LurkingGbug: I dont have a problem with your investment approach but do
object to some sweeping generalizations about participants on this forum.
You imply that most of the people here invest mostly in gold/PM and do
not consider stocks in their portfolio. This forum and its participants
are much more diverse than that. It is ( as stated in the header ) "Gold
discussion for Investors and analysts". For that reason most of the
discussion is focused on gold, analysis of events which will make gold
to move up or down, and stock market is discussed mostly from the view
of how it will effect gold. That is the reason for not propagating "buy
buy buy stocks". This does not mean that we dont invest in stocks.
I had most of my money in mutual funds but lately due to my own decision
( not because Steve Putz or anybody else told me ) I pulled out of the
stock market and moved money into gold stocks, cash and some bonds. I
try to employ good old proven strategy "buy low sell high" and this
requires to move out/in of markets ( out of stocks and in PM at this
time ) . I will also go back to stocks, though 10% correction is not
convincing for me that the stock are OK again. I joined the forum
because I hate to put money into some investment vehicle without knowing
anything about it. I learned a lot on this forum and this knowledge
gives me better understanding of timing and general trends.

I believe that you would find many people like that on this forum. Than
you have a number of traders who make living on trading commodities, PM,
etc. I dont think that they "lost" money because they are not in a
stock market. They trade short and long, making money whichever way
market moves. Their input is valuable because again it gives you better
understanding how the market operates.

Your generalization, implying that we just follow local gold analysts and
gurus without any thinking, and loosing money for not being in stocks, is
insulting. It must be also insulting and laughable for traders who make
living in PM market. I believe that is the main reason why you are
getting so much resistence to your posts.

JMHO

Firstly lets put things in perspective.
1 ) The present market valuation is overvalued at least by 20% according to A. Greenspan
2 ) The 'market hype' is equivalent to the Japanese hype during the late 80's
3 ) Your fundamentals and valuations are based on FUTURE and not present conditions.
4 ) You may have cashed out - but SOMEBODY is holding these stocks and bought at these new prices. Inflows are slowing, that's why the market is going lower. No buyers or lack of interest. Too much risk with lower return.
5 ) Pension Fund Managers are fully investment to the max. allowable or close to it. That's a problem if the market sours. How will they able redemptions/retirements/transfers?
6 ) Foreign investors are not going to be patient. Money travels in areas where they can obtain a higher return ( Japan and Asian tigers in a few months? )
7 ) Margin Debt is at historic highs as is consumer& credit cards debt. Personal bankrupties are skyrocketing. Can you imagine if interest rates rise? Is it possible?
8 ) If interest rates rise ( won't they? ) bonds will be attractive, yielding anywhere of 7% and up with no LOOSE YOUR MONEY RISK! Money is not going to go in falling stocks. People usually invest WHEN it's going higher not headed lower.
9 ) North America is not an island. We're affted by globalization. Notice how interest rates scare in Germany affected the Dow yesterday?
10 ) The RISKS of a World financial crisis has risen considerably since a ) Greenspan doesn't understand the 'new paradigm' in the US b ) external factors such currencies, and collateral effect such as debt defaults and recessions, curtailing US exports c ) EMU and currency gyrations d ) El Nino
11 ) Few were able to see Market crashes previously and fewer can see them today. Try and look ahead not in the mirror.
12 ) Sharks are going to feast.

LurkingGbug: Nice to see some knowledgeable challenges to the orthodoxy here. But be aware that you likely be attacked personally soon so please try to ignore such taunts and invitations to leave or you run the risk of falling into similar retorts. Its always interesting and takes little time to scan the posts of exactly 1 year ago and read those of current posters to obtain a perceptive.

Does anyone have the list of takeover candidates from the Wall Street Journal ( 7/9/97 ) ?

Lurkinggbug- do not most 401K's have non-market options? Is the tax deferment realy that great, considering that by the White House's own numbers we will face a 80% or so marginal tax rate? Will these die-hard contributors continue if they don't have jobs? Remember, most countries out there are in a race to devalue their currancies to zero to gain competitive advantage. Then we'll have to rely on McDonald's workers to prop up the market. And one last thing, the Nazis didn't remove hepcat, WE did. Not because he was right, but because he was unpleasant. Like you are starting to become. And one last, last thing. I think most here are interested not so much in Puetz's forecast, but his methodology. You see, the reason does matter. And Puetz has much more going for him in the way of analysis than you do, at least based on your 'I don't care why the markets rise...' type comments.

Wednesday's auction was the fifth time this month the bank has nudged the mini-band lower, and represents a 0.14 percent
decline from the previous mini-band. So far this month, the Central Bank has shifted the mini-band 0.55 percent lower.
http://biz.yahoo.com/finance/97/08/27/z0009_116.html

Goldman Sach's recently recommended diversification into commodities on the grounds that the bull market may be
``wounded''.
http://biz.yahoo.com/finance/97/08/27/y0023_z00_24.html

NOMERCY: I like your post at 17:23. Item 7, credit card debt. Did you see my post today that it totals 360 billion? Estimated 5-7% in default? People are taking the full deduction from their pay checks and puting the money into stocks, by direct purchase or 401K deduction. Then they find they don't have enough for groceries so the put the groceries on the card. They don't seem to get the connection that they are borrowing money at 15-20% to buy stocks. I saw a piece on TV this week about a "couple in their late 40's" who knew what they were doing but as they expect to make 30% on the stocks they think the 20% on the card is ok.

All on this site should read the 8 page publication GOLD IN THE OFFICIAL SECTOR available on the World Gold Council Web site. Adobe Acrobat is needed to download this report

http://www.gold.org/Pages/Home1.htm

The print is very small and I could not read it on my screen. But it was very legible after I printed it out. This is MUST READING for gold investors and traders.

BEMA GOLD? But sell or hold. anyone out there own it or recently traded? Buy more now? - or get out ????? Rumors of buy-out-merger-spin-off.......any substance? thanks in advance for any input.

LurkingGBug- I think some defense of Puetz is in order. As has been pointed out already, he is offering his opinion. I think the true villians are the brokerages which offer their 'objective' opinions with a clear conflict of interest. And a political system which would make Russia at her height envious.
IMO, Puetz's failing, if he is wrong, is that he doesn't understand the rules of the game. None of us do. The fact that Clinton is still Pres. demonstrates that I don't understand the rules.
I think a lot of what I'm trying to get from this forum is a better understanding of the rules. They clearly aren't what I learned in graduate ecomonics.

Glad you have so much respect for Puetze's brilliant methodology. Investment strategy based on Solar Eclipses and such. Charts and graphs based on nonsense mean Zero, what counts is results. I've been hearing the same tired theories as "No Mercy" just listed in his post, since DOW 3000. As to whether I'm being "pleasant", how "pleasant" can it be for people who follow analysts like Puetz to lose out on the greatest financial market we've seen in our lifetimes, and lose their Arses to boot? Respect the methodology of faulty whacko theories if you like, I prefer to respect my investment funds and the gains made thereof.

THEY ARE STARTING TO LOSE IT. The market is finally starting to react to 7 yrs of control.

BILL BUCKLER: Re the Op-Ed piece in your August 26th issue. As I posted to you on that date I think it is superb. I would like to comment on the portion about the United States being the ultimate "big bank" and "to big to fail". In 476 AD Rome was one of those banks too...but it failed anyway. Luckily a branch office had been opened by former directors of the Bank of Rome, named the "Bank of Constantinople". They issued a gold coin nicknamed the Bezant and stayed in business for 800 years. There was also a new upstart bank, the "Bank of Mohammed" with some nice gold dinar's that was in business for a thousand years. Alas, the Bank of Rome never reopened, seems no one wanted its gold plated coins. My point is that banks "to big to fail" sometimes do fail.

Debt is the achilli.
I've been unable to find new info. on Thailand today. They're supposed to update their foreign reserves. SCP comes out in about 1 hr.
I believe the Asian crisis is bigger than they believe. Japan is nervous, as their 'spin doctors' are holding more news reassuring conferences.
The consequences on Japan are immense. They can't afford a devalued Yen, as it feeds lower currency valuations on the Tiger countries, though advantageus with the US , but complicating their balance of trade.
The debt defaults and bankrupties in Thailand, S.Korea, Indonesia and Malaysia is going to hurt Japanese banks and companies operating in those countries and subsequently their stock market.
Also, their exports to those areas are going to be curtailed, which once again will lower corporate earnings and LOWER stock market.
I still believe that things are going to get worse before they get better ( at least another few weeks or so ) and then the REST of the world, will have to compete with these Asian countries devalued currencies.
The impact on the US is mimimal at first glance, but there's a lot of Japanese funds in the US bond and stock markets.
Once this 'shake' is over and the Japanese market lower I can see a new oppurtunity for funds to flow from the US to Tokyo and other Asian countries.

Thank you Fundy, kind sir. I believe you are correct. The personal insults are indeed beginning to flow my way. I believe I would remain "unmolested" if only I would be a "good boy" and promote sound financial wisdom based on the "Illuminati", Tri-lateral commission, El Nino, Solar Eclipses, Evil Central bank conspirators, the Rockafellers, Black Helicopters, Elliot waves ( or Sports stadium waves ) , charts and graphs based on totally irrelevant events from obsolete economic models of yesteryear, etc. etc. ad nauseum.

Strad Master: FWIW, I think Pretcher had a bit in his book about the "short skirt" / stock market correlation. He is big on social attitude peaks and valleys as they relate to the highs and lows of stocks. It seems there is a definate historical correlation between the two....stocks peak as the hemlines rise. In bear markets, hemlines get longer.

nomercy ( 17:46 ) -Re: Goldman Sach's bullish on Gold. - Goldman Sach's bought thousands of COMEX Gold contracts about two or three weeks ago between 322 and 331 basis Dec, so there stance on Gold has been well known. I do believe that they have already sold some of there longs but not yet.

Today's action in the XAU was disappointing. Both Gold and the Stock Market were basically flat today so today's decline can not be pined on either.

For the first time in awhile I actually feel like this move up today in crude is for real. Having crude get back to it's bullish mode would get me more bullish on the metals. AH! all we need now is a good war in the middle east. Now wouldn't that be nice. ( Well maybe not everyone would think that would be nice, but you can't please everyone anyway. )

One of the reason's I'm forcing myself to stay with the current trend is, what is everyone going to do when Gold hits $1,200?? Are you all going to SELL and then when it hits $1,500 are you going to go SHORT?? If you do you will be no better off then, then you are now. You'll just say how over-bought Gold is as it rallies year after year.

LurkingGbug: Balance is great. I'd be sorry to see it go. Nobody wants to see Kitco become a "Pepsi-Pepsi-No-Coke" kind of diner. But going into attack mode will just get you into trouble. Ask Hepcat. Soooooo . . . instead of attacking Puetz, or Earl, or George, etc., as some kind of nefarious clique -- how did I ever get mixed up in a discussion whose subject is that seminal group of market wizards?! -- for not appending an 'IMHO' to their every utterance, why don't you post something like the following every once in a while?:

"All: Paper's great, IMHO, because ______________. Why, in the last _____ ( years/months/weeks/days/hours/minutes/seconds/tics ) I raked in 200 bazillion percent profit ( my success is no guarantee that you will have a similar experience ) by buying and later selling _____ shares of _______. Paper will continue its journey to the moon, IMHO, and gold will soon be declared hazardous waste, also IMHO. All of you many, many, many stupido dummies out there who thought that Mr. ________________ can actually see into the future when he said in his last posting that the stock market would crash within the next ________________ ( years/months/weeks ) should realize that he was actually only expressing his honest opinion. His opinion, got it? It's just his opinion. He can't actually predict the future. Good thing I'm real smart and caught on to that fact just now, 'cause, I swear, I was on the verge of selling the kids to raise some money so I could buy gold. Boy, you fools out there can sure count your lucky stars that I'm here 'ta warn 'ya that it was only his opinion he was expressing and a crash may not happen at all."

See how much nicer that sounds? It allows you to express your own opinion about the market ( I've even put in plenty of qualifiers so nobody will accuse you of being a hypocrit ) . Furthermore, it doesn't attack anyone. And it lets everyone know that you're really a nice guy who just wants to save the world from its own stupidity. It might even earn you a spot in the Bleeding Heart Hall of Fame.

To LurkingGbug:

Thank you for your "rational" thoughts!!

All views are welcome. Sweeping attacks with sharp and offensive wording are not. Most of us here enjoy well-thought out analysis. "I did this, and it worked" is not analysis, it is crowing, which has its place only if expressed humbly. I am weary of crowers who lambast the regular contributors and then defend their lack of decency and grace with charges of discrimination. Your views are not what makes you unwelcome here, it is your tone, and the lack of substance - insight, market understanding, useful information, etc. - that you provide. Most of us here realize that noone knows the future. Join us, be one of us: working together to enjoy ourselves and gain more understanding about the how and why of gold investing. Tell us something we did not know, something factual, something that sheds light, an insight that enlightens all. Unfortunately, this is after all a site about gold investing: the message "get out of gold at all times from henceforth and forever", if that is your message, once delivered doesn't need much follow-up.

small investors may be more wary than first imagined

Money Small Investor Index: Small Investors Seek Safety in Money Funds

/CAUTION -- ADVANCE FOR AYEMS MONDAY, AUGUST 18/

/ADVANCE/ NEW YORK, Aug. 17 /PRNewswire/ -- Spooked by continuing declines in the stock and bond markets last week, small investors shifted $8.9 billion into low-risk money-market funds, according to data gathered for Money magazine's Small Investor Index.

Meanwhile, over the 14-day period starting on July 30, the Dow Jones industrial average slid 327 points to 7928.32, and money fund assets grew $25 billion to a record of $1 trillion, according to AMG Data Services of Arcata, Calif. ( www.amgdata.com ) . In the same period, equity funds attracted just $5 billion, resulting in a three-week fall-off of fresh cash.

Money funds owe some of their allure to their 5.1 percent average yield, compared to bank money-market accounts' 2.6 percent. But analysts believe the inflows are chiefly a response to the teetering stock market. ``Investors are sweeping profits out of equity funds and parking them in money funds for fear of a sharper correction,'' says Charles Mayer, senior vice president of Invesco, a mutual fund company in Denver. In the past week, for example, a record 83 percent of the assets transferred among Invesco's funds came out of equity portfolios and went into money funds.

Investment strategists recommend that individuals allocate at least 10 percent of their portfolios to money funds now. ``Investors can do almost as well with them as they can with bond funds, but without the risk,'' says Peter Crane, managing editor of the newsletter Mutual Fund Report. ``And they'll have cash to invest in stocks when they get cheap.''

STRADMASTER :I went to USC as I understand you have concerts on KUSC.Please elaborate.

Let's be clear and Ron: Well said! Do we have Hepcat back in disguise?

Lurking Gbug: There is nothing like a little house painting to wet the appetite for a little intramural combat. Per yours: "Guy's like Puetz ought to be held acountable for their wild, speculative, irresponsible recommendations. Such as his current "Crash in 5 weeks" scenario."

Sir, I, and I'm sure many others, stand in awe of your remarkable expressions of fair play, justice and the American/Canadian way. Your sense of compassion is seldom seen in today's world. Marked as it is, by a self effacing posture, exceeded only by a deep seated sense of humility over your remarkably good fortune. Many detractors, of course, would be inclined to attribute your remarkable success to guessing correctly in a bull market. That is to say, there would be some question of "brains versus a bull market". But that would be quibbling over mere details. We are an 'outcomes' based society and the end result is all that is important.

Historically, our great land has, frequently, been lent its operational compass by those whose fortunes have exceeeded our own. It is a supreme pleasure to see that you are able to maintain that proud tradition. You are not the first at Kitco.com to offer us poor benighted beggars, superior insight. Merely the latest. And certainly not the last. It goes without saying that we are all grateful for the detailed accounting of your investment track record. Not to mention the minutae associated with distribution and consumption of proceeds. Perfection is a rare commodity in this world. Little appreciated and therefore deserving of its reward. ..... BTW, the Lord did make note that nothing was specifically dedicated to the alms box. An oversight to be soon rectified. No doubt.

Some rewards are obviously psychic. Not the least of which is the aforementioned, operational compass. Obviously it would do little good to speak of such things in a more personal atmosphere, such as the "Club". Where, of course, stock market gains of 200%+ are commonplace and of little merit. Indeed the first liar probably wouldn't have much of a chance in such an atmosphere.

The question then becomes one of where to expound one's new found sense of empowerment. Well of course, the question serves up the answer. A place where everyone has been publicly wrong for so very long. Who better to provide with newly aquired wisdom than the Goldbugs. No one on the face of this earth has been more consistently wrong than the goldbugs. No one is more deserving of a "Messiah". Someone to deliver them from the wilderness. Seventeen years, have they tilled that infertile soil in search of, not the grail. Certainly not the Ark. Not even understanding on the part of others. And yet they continue to toil on.

Occasionally, they are rewarded with glimpses of what could have been, had they embraced the "true light and wisdom". You have given us the latest version. I'm sure I speak for many of my misguided brethern, when I say: We cannot thank you enough for the insight and guidance you so condescendingly provided. How, ever, shall we convey our heart felt gratitude? .... Recognising, of course, that gratitude last only 7 minutes.

At the same time, I am also puzzled why a man who has been so consistently misguided by "gloom and doomers" in the past would pay any attention to our opinions now? It would seem to me to constitute the height of abject stupidity to do so. And yet you prevail. Why???

On the one hand, the expression of a perfectly formed messiah complex desires some outlet. That is understandable. Yet, even a Messiah is seldom in the mood for losing additional sums on the opinions of such losers as goldbugs. If your intent is evangelism, it should come as no surprise that this is infertile soil for the sowing of such seed as that.

If on the other hand, if you wish to appear, with silken robes on your front ...... and your ass hanging out the back, you have succeeded magnificently.

Merrill Lynch was bearish on gold from $35 to $850 - turned bullish at all-time high of $850 in 1980! As usual Dines provides well-written insights on Gold & Silver:
http://www.gold-eagle.com/editorials/dines818.html

Ron et al. OK boys, May I meekly sumit that IMHO, myself and approximately 100 million other naive, uneducated, unwashed, Proletariat, sheep like, U.S. citizens have been OH SO INCREDIBLY lucky as to follow the conventional wisdom of certain market analysts. Those who told us that Equities and 401K plans, and mutual funds, etc. give the biggest bang for the long term investment buck in today's economy. We've made enormous paper profits in the past few years, that ( this is just my VERY humble opinion ) have in many cases been converted into tangible commodities and benefits. Fortunately for us though, most of us have not been smart enough or financially "sophisticated" enough to read or understand charts and graphs, research, etc. by expert "Doom and Gloom" analysts ( who I will humbly decline to name in the interest of propriety and kindness ) and we have therefore in our lucky ignorance, managed to avoid total financial disastor that would have occurred had we listened to said brilliant analysts. I will now, in deference to said analysts, and their superior methodologies, reconsider my position and think about investing based on planetary cycles, El Nino, phases of the moon, skirt lengths ( I intend a DETAILED study of this indicator ) , and other important market cycle indicators I've been missing all this time. In this way perhaps I too can join the elite club of those who have been smart enough to lose out one of the biggest "phony, hyped, paper, bubble" gains in history, and become one of the genuises who have been preaching crash for ten years.....

HK Nervous
on Red Chips,
But Keen to
Have More

Business Day
Welcomes your opinions or
suggestions.


Surges in red chip prices in
Hong Kong have rung alarm
bells with stock regulators but
the former British colony is keen
to continue attracting Chinese
share listings, market regulators
said yesterday.

"What causes us concern in
recent months is that red chips
have exhibited some unusual
behavior," said Laura Cha,
executive director of the
Securities and Futures
Commission, Hong Kong's
market watchdog.

Red chips, shares of companies
incorporated in Hong Kong but
with mainland Chinese backing,
earlier this year soared on
expectations of asset injections
by their corporate parents.

Their unusual behavior included
what Cha called an "irrational
upsurge in prices on heavy,
rumor-driven trading.

But listings of Chinese
companies in Hong Kong have
added diversity to the stock
market, which is traditionally
dominated by property firms and
banks.

"These red chips and H shares
have added diversity to the base
of our market, Cha told a
capital markets conference in
Shanghai.

H shares, or those of companies
registered in mainland China and
listed in Hong Kong, have risen
sharply in recent weeks upon
rumors about restructuring.

The upsurge in red chips caused
China to unveil strict rules on
asset injection in June while
Hong Kong regulators moved to
tighten rules on suspending
trading for companies whose
shares showed volatile price
movements.

"The challenge for us is to make
sure red chip companies are
held to the same standard [as
before Hong Kong returned to
Chinese rule on July 1]," Cha
said.

Upsurges in share prices would
be met with queries about
trading as well as questioning of
the individual company that
would send a message to
speculators and market
manipulators, she said.

But Hong Kong wants to
shepherd more mainland
Chinese firms to its stock market
in a bid to diversify and help
enhance the standards of
Chinese companies, which have
traditionally suffered from poor
management and lack of
transparency.

"The stock market reflects the
economy, Alec Tsui, chief
executive of the Stock Exchange
of Hong Kong told reporters.

"Hong Kong's economy is
getting more integrated with
Chinas, he said. From the
exchanges point of view, we're
creating a market place."

The Hong Kong Futures
Exchange has taken advantage
of the hot demand for red chips
to introduce new futures and
options contracts on a
32-company red chip index on
September 12, said futures
exchange chief executive Ivers
Riley.

"Interest in the Chinese-oriented
stocks has greatly increased and
its a much bigger part of the
market," he said. The futures
exchange was also considering
introducing futures and options
on Hong Kong's H share index
as early as mid-October, he
said.








Copyright  Business Day C

Lurking Goldbug: Regarding your 13:55 posting -- you haven't been following any of my stock recommendation, because I haven't made any. That includes gold shares. My only recommendations have been to buy gold and silver coins, and buy S&P puts with money that you can afford to lose. Owning gold stocks during a stock market crash has been dangerous in the past. That's why I'm not recommending them now. If you're going re-state my views, please re-state them correctly.

By the way, your investment strategy is nearly identical to RJ's. Are you sure you're not a Lurking RJ? What's you e-mail address?

LGB ( LurkingGbug ) - I didn't say I bought his methodology- I'm interested in the thought process, and I don't think your 'method' constitutes one at all. Except that 401k's are the key to everything. This is why most here are probably not interested in what you have to say.

Bernatz: Where in 'e hell you been???? Missed you greatly. .... If it takes tales .... tails?? ... of skirts and such, to keep your interest, just say so. Hell, I'm sure we could find some pictures to post as well.

BTW, how are things progressing on the "Amazing Dirt Machine"? We have not had a recent update. I assume the natives have settled down and work has resumed in a more civilized atmosphere.

Earl- I am in awe of your prose. Thanks.

U.S. equity funds see $606 mln outflow in two days

NEW YORK, Aug 27 ( Reuter ) - U.S. equity funds had estimated outflows of $606 million in the two days ended August 25, compared
to inflows of $6.35 billion in the prior period ended August 21, Mutual Fund Trim Tabs reported.

Aggressive growth funds saw outflows of $801 million compared to inflows of $2.59 billion in the prior three-day period, the fund
tracking service said.

Growth funds had outflows of $584 million versus inflows of $2.31 billion, it said. Growth and income funds saw $255 million in
inflows, down from $1.85 billion of inflows in the previous period, Trim Tabs said.

An estimated total of $2.02 billion flowed out of international funds versus $2.28 billion in inflows, it said.

All equity funds saw $2.63 billion in outflows compared to inflows of $8.63 billion, Trim Tabs said.

Bond funds also saw outflows totalling an estimated $484 million versus inflows of $675 million. High-yield bond funds saw $5
million in outflows compared to $228 million in inflows, the tracking service said.

Dow/Gold Ratio 23.94 Still in the 23's ( 2 days in a row ) Thankfully, we still do not have a reversal but are far short of our first harbor of refuge at 23.22.
( For British, OZ, NZ and Canadians that is Harbour of Refuge )

Earl, I'll answer your final query momentarily, but since you're obviously a spiritually minded man, here's a scriptural phrase I'm sure you are well familiar with and appreciate like no other. "When they are saying PEACE AND SAFETY, then head for the hills for your destruction is surely at hand" . Believe it or not I think that phrase will be relevant SOME day, just not today! And BTW, I did in fact contribute 8% of my gains ( I won't lie and say 10% ) to my place of worship. Now as to why I feel compelled to share my NeverToBeHumble opinion so stridently. I know QUITE a few persons, inluding a much younger brother currently in the military, who have been BADLY hurt financially by "analysts" with exotic ( but flawed ) theories, spouting nonsense about why the market will soon crash, etc. etc. for the past 10 years or so. It's not "crowing" for me to say "I was an idiot when I was in my 20's and lost money to the same tired Market crash / metals boom theories being spouted today". As I have said so MANY times, I love Gold, Platinum, silver coins... and I think we have a good "buy" opportunity right now, but I think an added voice of contrarian reason in this wilderness of "Sky is Falling" folks, just MAY lead someone to think twice before wasting too much time ( and investment money ) chasing phantoms that will inevitably lead them to huge financial losses. As the diehard GoldBugs have been doing for 15 years. Yep, I'm just a poor hick country boy who got "lucky", but this naive, unsophisticated, sheep like voice ( Baaa Baaaa ) , will continue to bleat a WARNING sound to those who just might put a little too much credence in the spoutings of the "Crash" theorists.

Inquisitive: I'm a jack-of-all-trades. I write a newsletter, I've authored a book -- Total Collapse, I'm a financial consultant, and I'm a grain traders -- buying and selling in the cash market. When things get slow, I jump on Kitco for a few minutes.

"Hail Mary Pass" rebound from first low expected in vicinity of Dow 7665 ... after which we would proceed to further downside targets of Dow 7200, with possibilities of 5700-6400:
http://www.gold-eagle.com/gold_digest/inger827.html

Lurking Goldbug: I'll let the markets be my judge and jury. We will know for sure which of the two of us is correct -- in 6 weeks. If I'm wrong, I'll still be here, and you can hold my feet to the fire. If you're wrong, I image you will have been long gone from this site. As far as I'm concerned, everything is still go for a stock market crash. However, a rally by the DJIA above 8050 would abort the present crash pattern -- only delaying it until another time.

This is a site for discussion of gold investing, n'est-ce pas? Do teetotalers post on the Jim Beam site? Do the NOW ladies post on the Male Chauvinist Pig site? Do dog-lovers post on the cat site? If you don't invest in, or have any intention of investing in, gold-related investments, why do you post here? Go to the Fidelity Magellan discussion group, while you still can, if there is such a thing. Then, drop by and see us biannually or so, remind us of our folly ( ever so gently ) , provide some constructive information, and we will thank you for your contribution. Otherwise, you risk hearing that maxim, A fool is wiser in his own conceits than ten men who can render a reason. If you can "render a reason" then, by all means, write on.

Earl - youdaman, buddy.

You said "I havn't been following your recommendations re..." OK. Can we have an honest answer to this question. At what DOW level and time frame have you been recommending investors to be OUT of the market and INTO metals? Going back 15 years, where did you stand throughout the majority of each year at DOW 2000, 3000, 4000, 5000, 6000, 7000 ??? Also going back 10 years, what were your predictions for target metals prices of those years in say, January of each year?? I'm humbly waiting to learn at the feet of the master.

Signed, Grasshopper

Lurking Goldbug: I will answer your questions as soon as you give me an e-mail address. I like to know who it is I'm communicating with. I'm waiting for your reply.

ie 15:40 post - you using the new new math or what? ( 100% a year for 3 years equals 300%? ) Also, what other handles have you used at this site?

BERNATZ and GVC: The short skirt story I posted was in response to Mike Shellers query and observation ( probabaly related to Prechter's observation ) that at market tops hemlines top as well. If he's right, the market has certainly topped - at least here in LA! I'm glad that it brought dear Bernatz out of hiding, as his inspired postings have been sorely missed of late. Now, Bernatz, when you've been away for awhile, I know that a nice provocative story will insure your return. Of course, I know about zee French and zee wiMEN so I am not surprised.

Earl ( Aug 27: 19:11 ) A TREMENDOUS piece of writing - Well done, sir! Donald ( 18:07 ) I thank you, and If I may, I would like to clear up two possible misunderstandings. First, the Op Ed piece of Aug 26 http://www.the-privateer.com/corresp.html is not "my latest issue". The Op Ed pieces are entirely separate from The Privateer itself.

Second, I fully agree that no bank is "too big to fail" - in the long run. I used the phrase simply to make a point. The rest of the world has had a vested interest in the U.S. and its Dollar for more than 50 years. They have paid for it. I have had numerous e-mails which ask me if I am forecasting the "end of civilisation", equating such an event with the eventual and inevitable downturn of the U.S. stock market.

The end of the bull market, and the diminution of the U.S. Dollar's role as the world's Reserve Currency, will not constitute the end of civilisation. What it will constitute is an inevitable shrinking of the role of the U.S. in the world. That, in the long run, is in the best interests of the U.S.. They have been over-extended for at least thirty years now.

Earl ( Aug 27: 19:11 ) A TREMENDOUS piece of writing - Well done, sir! Donald ( 18:07 ) I thank you, and If I may, I would like to clear up two possible misunderstandings. First, the Op Ed piece of Aug 26 http://www.the-privateer.com/corresp.html is not "my latest issue". The Op Ed pieces are entirely separate from The Privateer itself.

Second, I fully agree that no bank is "too big to fail" - in the long run. I used the phrase simply to make a point. The rest of the world has had a vested interest in the U.S. and its Dollar for more than 50 years. They have paid for it. I have had numerous e-mails which ask me if I am forecasting the "end of civilisation", equating such an event with the eventual and inevitable downturn of the U.S. stock market.

The end of the bull market, and the diminution of the U.S. Dollar's role as the world's Reserve Currency, will not constitute the end of civilisation. What it will constitute is an inevitable shrinking of the role of the U.S. in the world. That, in the long run, is in the best interests of the U.S.. They have been over-extended for at least thirty years now.

Does Gbug stand for Goverment bugger? Or are you a mutated form of HEP-CAT? It's OK to give your opinion, but don't degrade. Chest pounding of ones purported good fortunes is for baboons and not appreciated here.
One last question; what happens to your high premium platinum coins when they start using ceramics in catalytic converters and go for gold jewelry in Japan?

Southeast Asian currencies hit new lows yesterday,
as persistent gloom in regional markets spurred
fresh buying of the US dollar.

Dollar demand from companies needing to hedge
positions in the middle of increased currency
volatility also weighed on the currencies, dealers
said.
http://www.scmp.com/news/template/templates.idc?artid=19970828005114080?=mar&template=Default.htx&maxfieldsize=2658

To Puetz:

You said,
"However, a rally by the DJIA above 8050 would abort the present crash pattern -- only delaying it until another time."

So your a "long term" crash advocate.. Would the year 1998 and Dow 10,000
prove your investment strategy ( buying puts! ) prove you wrong.. I guess, if we
live long enough, you may be right... You just lost "creditability".. Puetz, if
your wrong, your wrong.. And I'm betting you will be... Good luck!!

Never try to paint more than a few with the same brush,I mostly just watch on this forum but have in the past 9 months made a bunch on precious metals, how, long 20 pl short 10 gm. These positions rolled month to month until liquidated at + 110 per spread and this was not the high.

South Korean stocks declined yesterday, led by
Pohang Iron & Steel and Haitai Group companies,
on concern growing bankruptcies would knock
financial markets.

On Monday, the government revealed a set of
measures to improve finances at banks reeling
under mounting bad loans. Even so, interest rates
rose and the won's value against the US dollar fell
to a record low before the central bank intervened
to bolster the currency.
http://www.scmp.com/news/template/templates.idc?artid=19970828005114113?=mar&template=DNoCommas.htx&maxfieldsize=779

Not sure what my e mail address has to do with the stock market, metals market, past history, or predictions. Another important factor I left out of my investment strategy no doubt? As to 100% x 3 years, I said 300% +++ if you read it carefully. It's quite simple, actually. For every $100 I invested, I saved Fed 28% tax, state 9% tax, SSI/medicare approx. 8% tax, company added contribution was 40%, and I averaged approx. 25% gains each year in the funds in which I was invested. Yes I know, this all equals closer to 400% in three years but I was trying to keep it simple. OK? Lest I sound like I'm crowing, millions of other worker bees did as well as I have or better, many a LOT better. PS Puetz, I didn't think I'd get an answer....now or ever... An interesting exercise for any author/analyst/Newsletter seller would be to forego their predictive models for a week or so and go back and chart their overall accuracy on their MAJOR market calls. Like Bob Brinker does for example. When will we have the benefit of this research? Market crashed UP today BTW as you predicted it would.

Earlier, Finance Minister Anwar Ibrahim said
Malaysia would unveil "tough measures" to stem the
widening current account deficit.
http://www.scmp.com/news/template/templates.idc?artid=19970828005114107?=mar&template=DNoCommas.htx&maxfieldsize=1237

TW: Perhaps some missed it due to its being posted right in the middle of the site changes so I hope Bart will indulge me posting this again, since you asked: The concert is this Sunday at 4:00 PM in the Bing Auditorium of the Los Angeles County Museum of Art on Wilshire Blvd in Los Angeles. Admission is free. It is part of the ongoing radio series "Sundays at 4" broadcast over KUSC ( 91.5 ) FM ( 91.1 in Thousand Oaks, 88.5 in Palm Springs, and 88.7 in Santa Barbara ) . If you want to attend it is best to arrive well before 4 as 1. ) the place usually fills up and 2. ) they shut the doors before 4 due to the radio broadcast. I am playing a 1 hour duo concert with a guitarist colleague of mine. Works ranging from Bach and Paganini all the way through Bartk, Cole Porter and Hoagy Carmichael. Much of the music is arranged for this combination and some of it is unique to the two of us. Hope you get to listen or if you come please, visit backstage afterwards!

EMERGING-MARKET DERIVATIVES

Engineering in the dark

There are risks that financial engineering cannot overcome, especially in emerging markets. These
markets are typically illiquid, volatile and lacking in transparency. If new derivative and structured
instruments further obscure pricing and market intelligence, they may hasten rather than prevent crashes.

An example is the packaging of direct investments for portfolio investors. A large holding in a Malaysian
or Thai company could be split between many investors, in packages that perhaps offer capital gains or
dividend income. This enables investors who want to get out to sell their shares back to the bank,
therefore avoiding the problems of illiquidity involved in dealing directly in the local market. But, if all the
investors wanted to sell at once, either the investment bank would have to take a hit or it would have to
try to unload, say, half a company into a tiny, illiquid stock market.

Systemic risk is heightened because the local governments are unaware of what is happening. On their
books, such capital inflows look like long-term direct investment. In reality, they are short-term portfolio
flows. Their economies are more exposed to capital flight  and Mexico-style crashes  than they realize.

"Derivatives in emerging markets can affect capital-flow accounting," says an IMF official. "What looks
like foreign direct investment can be portfolio investment but won't be accounted as short-term liabilities."
The source notes that since derivatives written on emerging markets are often over-the-counter
instruments, local governments are more than likely unaware of them, making economic management
more difficult.

Wall Street bankers reckon OTC derivatives contracts on the dollar/peso exacerbated the peso's fall
during the 1994-95 Mexican crisis. Structured-note contracts worth $20 billion were taken out between
Mexican banks and US banks on behalf of Mexican customers, say market participants. When the peso
moved down, margin calls drained close to $4 billion from Mexican coffers in mid-December 1994.

As long as relatively opaque OTC instruments dominate relatively transparent exchange-traded ones and
underlying markets are illiquid, the shocks will continue.

US: House of Cards

As we near the 10th anniversary of the Crash of 1987, bullish investors have been quick to assemble a
long list of reasons as to why it's so different this time. While many of these points are well taken --
especially the good news on inflation and budget deficits -- there is one striking similarity that I believe
bears special note: US capital markets are extremely vulnerable to potential gyrations in foreign
exchange markets and related shifts in cross-border capital flows. And just as the crash in October of
1987 was triggered by the interplay of dollar- and trade-related concerns, I believe a similar dynamic
is entirely possible today.

The vulnerability of our capital markets to "external" shocks is underscored by the enormous surge of
foreign buying of US Treasuries that has occurred in recent years. According to recently revised US
Commerce Department balance-of-payments statistics, net foreign purchases of US Treasury
securities surged to a record $284.1 billion in 1996, up 57% from the previous record of $180.8
billion hit in 1995. The foreign inflows of the past two years dwarf anything we have seen in the past;
indeed, the cumulative foreign buying of Treasuries over the 1995-96 interval ( $465 billion ) was more
than two and a half times the previous two-year record ( $180.6 billion hit in 1993-94 ) . By way of
comparison, foreign purchases of Treasuries totaled just $309 billion over the entire decade of the
1980s and ran at just a $41 billion annual rate in the crash year of 1987. In short, never before has the
Treasury market been so dependent on the good graces of foreign investors. In the absence of the
massive inflows in recent years, we believe that yields on intermediate to long-term Treasuries would
be as much as 50 basis point higher than they are today.

Two key factors appear to have accounted for these outsized inflows -- the first being a significant
widening of America's trade and current account deficits that has prompted a recycling of foreign
dollar holdings back into dollar-denominated assets. However, foreign buying of Treasuries over the
past two years was more than double the average trade deficits over that same period ( -$106 billion ) ,
suggesting that there's another important factor at work. That factor, in my view, is the cross-border
arbitrage presented by the confluence of low foreign interest rates and a strong dollar; as long as those
conditions hold, there is ample incentive for foreign investors to play the currency-adjusted spread and
buy Treasuries. This voracious foreign appetite for Treasuries has undoubtedly been augmented by the
seemingly chronic under-weighting of global investors in US equities. The "yen-carry-trade" has also
played a role, spurred by near costless financing of overnight money in Japan. And aggressive foreign
central bank buying of dollars also accounted for a significant portion of the capital inflows from
abroad in 1995-96, as the world's major monetary authorities made a concerted effort to bid up the
dollar and cut the value of the yen and Deutsche mark in order to stimulate a lagging global economy.

I've said it before, and I'll say it again: In my view, there is a growing risk, that this cross-border
arbitrage is about to go the other way. Three factors might prompt such an outcome -- the first being a
hike in foreign interest rates; currently, such risks are particularly acute in Europe, where the Bank of
England has led the way and the German Bundesbank now seems increasingly likely to follow.
Second, there is the related risk of an unexpected weakening in the dollar -- a development that seems
all the more possible as the recent bounceback of the German economy has prompted the $/DM
cross-rate to test the key 1.80 threshold; by contrast, recent weakness in the Japanese economy
poses little threat to the yen/ dollar exchange rate at this point in time -- although that could well
change, if and when the Japanese economy begins to rebound. Third, there is the risk of repatriation of
Asian-based holdings of dollars back into local currencies in order to shore up the balance sheets of
weakened Asian financial institutions; such trends have been evident in Japan and Thailand and there is
reason to believe they could occur elsewhere in the region if currency contagion spreads.

All this is another way of saying that as the risk of diminished foreign capital inflows begins to rise, the
US bond market could find itself on increasingly shaky ground. To be sure, the potential for any
disruptions might be limited by the likelihood of persistently low levels of Japanese interest rates and
by the limited upside to German interest rates in light of EMU-related political concerns. But make no
mistake -- all it would take is a diminished appetite of foreign demand for Treasuries and
reverberations could quickly spread across the bond and stock markets. This is the house of cards
that is strikingly reminiscent of that which brought the bull markets of 1987 to a sickening climax. And
given the massive and unprecedented infusion of foreign inflows into US Treasury markets in recent
years, there can be no mistaking the heightened vulnerability of our capital markets to just such a
possibility.

Stephen Roach ( New York )

Gbug stand for "Gold Bug" which I am at heart, but fortunately, I don't make my investment decisions with my heart. ( That's right boys, it makes me "heartless" when it comes to investments ) . As to the PLatinum coins, I paid a premium because they are extremely low mintage, first of a series PROOFS, which were a quick sellout and already have an aftermarket higher than the purchase price. They will always be in demand by collectors regardless of the bullion price. If you watch coins closely, you see these things coming. The mint sold "Botanic Sets" a few months ago for $36 ( I bought 5 of them ) , and they now trade around $250 because of a low 25,000 mintage and a greatly in demand Matte Proof Jefferson nickel. Yes, thye amde an 800% gain overnight. Not bad. Those who say Numismatic considerations should never influence coin purchases are ( In my never to be humble opinion ) missing some incredible opportunities.

FLASH, FLASH. Tequila anyone? Mexico: Roadbuilder defaults on payment

THURSDAY AUGUST 28 1997

By Daniel Dombey in Mexico City

Grupo Mexicano de Desarrollo ( GMD ) , one of Mexico's largest
construction companies, yesterday faced the threat of bankruptcy after
defaulting on a $10.4m interest payment on an outstanding eurobond.

It was one of Mexico's biggest corporate defaults since the peso crisis of
1995.

GMD's failure to meet payments on the $250m eurobond followed a
$7.6bn government plan to rescue the country's failing toll roads, a scheme
that obliges construction companies to write off billions of dollars of
investment in the roads.

GMD also announced it would seek to renegotiate $256m of debt with
Mexican banks and would sack 80 per cent of its workforce.

The GMD crisis is the most spectacular corporate backlash to date from
the 1980's toll road scheme, introduced to attract private investment to
infrastructure projects. The scheme has been plagued by poor financing,
low traffic flows and ballooning construction costs. Today most of the toll
roads are empty and poorly maintained.

GMD's shares were suspended on the Mexican stock exchange yesterday
after falling 25 per cent the previous day. Shares in Mexico's two other big
road construction companies, ICA and Tribasa, also suffered and were
down by 2 per cent and 5 per cent respectively midway through trading
yesterday.

ICA and Tribasa are not thought to run any risk of insolvency as roads
represent a minority of their assets. They are expected to benefit from the
government scheme.

Under the rescue scheme, announced last week, the Mexican government
will assume some 60bn pesos ( $7.6bn ) of debt owed by 23 of the toll
roads and take possession of the roads.

The construction companies that built the roads will have to write off their
equity investment in the failed projects. But they will receive 22.3bn pesos
in government bonds in recompense for unpaid fees owed to them by the
road operators. Most of the rest of the debt taken on by the government is
due to commercial banks.

The government hopes to recoup 40.8bn pesos in income from tolls,
although the construction companies will operate the roads on the state's
behalf for at least the next two years.

GDM is thought to have a struggle on its hands to avoid bankruptcy.
Private toll road projects represented three-quarters of its assets.

The company calculates that it will have to write off 7.5bn pesos in road
investments, but will receive only 2.5bn pesos in government bonds. It will
thus have to register a charge of more than 5bn pesos.

"We are only getting back 33 per cent of our total road investment of
$934m. We think we deserve $130m more," said David Rangel, chief
financial officer.

"We think we will make it if we are given time and understanding. The
company's owners will almost certainly contribute more capital. I do not
think people will be interested in seeing GMD go belly up."

Bonds: Ratings put to the test

MONDAY AUGUST 25 1997

By Peter Martin

Fifteen years is a long time in the life of a corporate bond. If you have any
doubt about that, look at the chart alongside, which is a snapshot of data*
produced by Moody's Investors Service, the bond-rating agency.

If you look at all the corporate bonds issued between 1920 and the
present over any 15-year period, only 1.1 per cent of the issuers originally
rated Aaa - Moody's top rating - went into default. By contrast, 41.1 per
cent of the issuers initially rated Caa or poorer were in default by the end
of 15 years.

The high default rate for such junk bond issuers slightly exaggerates the
case. In practice, it has been hard for such low-rated issuers to obtain
15-year money. So the 15-year rating history largely reflects the progress
of formerly highly-rated companies that were on the skids at the time the
measurement began. But the 10-year pattern is only slightly more
favourable. Over this period, 36.9 per cent of the issuers originally rated
Caa or lower went into default.

Default is a wide-ranging term - it could indicate anything from missing a
payment to bankruptcy. The figures are none the less enough to give any
but the most enthusiastic junk-bond advocate a moment's pause.

The fundamental question they raise is whether the higher yields of
low-rated paper compensate for the higher risks. Moody's Lea Carty, who
wrote the study, is sanguine: "The evidence I have seen," he says, "is that
the spreads do compensate an investor with a diversified portfolio".

He sounds one word of caution, however. The evidence he is referring to
is based on 1980s data, when spreads were significantly wider than today.
The median spread on junk bonds is now 303 basis points ( 3.03
percentage points ) , compared with 360-370 basis points in the late 1980s.
"The spread has tightened by between 15 and 20 per cent," says Mr
Carty.

Huge quantities of low-rated debt are being issued at these narrow
spreads. This year has seen more than $20bn of Caa-rated debt brought
to market. Such issues - from issuers such as grocery stores,
cable-television systems or casinos - are extraordinarily vulnerable. "If you
see a stock market drop or financial market conditions deteriorate," says
Mr Carty, "you will see a lot of Caa issuers in default within a year."

A related point is the extent to which it is possible to obtain genuinely
diversified portfolios of junk debt. If the securities in your portfolio are
highly correlated, in terms of rating quality, they will all move together in
response to external stimuli.

This is a controversial issue on which it has previously been hard to obtain
good data. The Moody's study provides an insight. It suggests that
companies in the same industry, or in the same country, are more likely to
undergo similar movements in credit quality than those that do not have
these factors in common. To build a robust portfolio, says Mr Carty, "it's
not enough to have a lot of assets - you have to have a lot of uncorrelated
assets."

There is one other lesson in the Moody's study for anyone building a big
portfolio of high-yield, low-rated bonds. It reveals a striking historical
pattern: there were huge numbers of bond issuers in the 1920s and to
some extent in the 1930s, followed by a 50-year slump. "It was not until
1994 that Moody's again rated as many corporate issues as it did in
1920," says the study. In fact, the number of US issuers of corporate
bonds rated by Moody's is still well below the figure for 1920; only a surge
in the number of international issuers pushes the overall total above the
level of 77 years ago.

In the intervening period, tight regulation of the sort of securities investment
institutions could buy pushed low-rated borrowers out of the public debt
markets, and into the hands of the banks. Only in the last couple of
decades has this trend been reversed, leading to the explosion of junk
borrowing. Arguably, that healthy: perhaps the past approach stifled too
many potentially fruitful businesses.

The change is a dramatic one, however. It means that the credit-quality
lessons of the period from 1930-1980 are only partly relevant to investors
buying today's junk bonds. Everyone knows that, above 8,000, the Dow
Jones Industrial Average is in uncharted territory. Not everyone perhaps
realises that the corporate bond market is also in terra incognita.

*Moody's rating migration and credit quality correlation 1920-1996.
By Lea V. Carty. Global Credit Research Special Comment, Moody's
Investors Service, New York, July 1997

Email: peter.martin@FT.com

D.A. Your comments at 11:53 are deeply appreciated. Please keep us silverbugs posted.

George Cole- I tried to download that World Gold Council info and damn near mented my computer. If anybody has access to that info yould you post it or send me an e-mail. Thanks!

Had a long talk with Jim Blanchard today on the SA situation. He is planning on featuring the SA golds and political situation in comming issues of "Gold Newsletter".

Tally Ho

Car sales: Toyota says Thai sales could fall
by 20-30%

THURSDAY AUGUST 28 1997

By Michiyo Nakamoto in Tokyo

Toyota, Japan's leading carmaker, warned yesterday that sales in Thailand
could fall by between 20 and 30 per cent this year because of the
economic turmoil caused by the devaluation of the baht.

Hiroshi Okuda, president of Toyota, said the company was likely to revise
downward its sales and production in Thailand, a market dominated by
Japanese manufacturers. Other Japanese car companies are also reviewing
short-term plans for the market in an effort to deal with the weak Thai
economy.

The predicted cut in Toyota's sales is part of a continuing fall-out from the
devaluation of the baht in early July. The currency has fallen by about 30
per cent against the US dollar since then, affecting other Asian currencies.

Siam Cement, the Thai conglomerate, yesterday became the latest
domestic company to be affected by the devaluation, disclosing heavy
foreign exchange losses that pushed it to second-quarter losses of
Bt5.51bn ( $163m ) .

Mr Okuda said it would take one to two years for the Thai market to
recover. However, he emphasised Toyota remained confident about the
long-term high-growth potential of Thailand and other south-east Asian
countries.

The situation in Thailand contrasts with the recent experience of Japan's
carmakers in other overseas markets. Exports have risen for five
consecutive months on the back of a weaker yen and the introduction of
new models. Strong car exports, which rose by 32 per cent last month,
helped increase production in Japan by 8.2 per cent.

Thailand's currency crisis has come at a particularly difficult time for
Japanese carmakers. They have invested heavily in Thailand, which they
have identified as a base for their Asian ambitions.

This year Toyota opened a second factory, costing 37bn ( $315m ) , to
manufacture its so-called "Asia car". Honda opened a 12bn factory in
March 1996. Several Japanese parts makers have set up as well.

Toyota's Thai sales dropped by 7per cent in the seven months to July. The
overall market fell by 17 per cent in the same period.

Nissan, Japan's second-largest carmaker, had already laid off 200
seasonal workers due to sluggish sales before the baht's depreciation on
July 2. Since then it has closed a commercial-vehicle factory for August
and reduced production at another plant.

Nissan is reviewing plans to expand its Thai output to 140,000 units, as the
weak economy has left production stagnant at about 90,000 units across
its two factories. "We have been hit very hard by the economic weakness.
We need to watch and see when and how the market recovers," the
company said.

Honda, which launched its Asian car in Thailand last spring, has so far
escaped any downward impact on vehicle sales. However, the company,
whose largest motorcycle manufacturing plant is located in Thailand, has
suffered a sharp decline in motorcycle sales.

Jerry Favors argues that we are near a "crash" or at the least a "mini-crash"

( Special post for sugar traders )
Bonds: Ratings put to the test

MONDAY AUGUST 25 1997

By Peter Martin

Fifteen years is a long time in the life of a corporate bond. If you have any
doubt about that, look at the chart alongside, which is a snapshot of data*
produced by Moody's Investors Service, the bond-rating agency.

If you look at all the corporate bonds issued between 1920 and the
present over any 15-year period, only 1.1 per cent of the issuers originally
rated Aaa - Moody's top rating - went into default. By contrast, 41.1 per
cent of the issuers initially rated Caa or poorer were in default by the end
of 15 years.

The high default rate for such junk bond issuers slightly exaggerates the
case. In practice, it has been hard for such low-rated issuers to obtain
15-year money. So the 15-year rating history largely reflects the progress
of formerly highly-rated companies that were on the skids at the time the
measurement began. But the 10-year pattern is only slightly more
favourable. Over this period, 36.9 per cent of the issuers originally rated
Caa or lower went into default.

Default is a wide-ranging term - it could indicate anything from missing a
payment to bankruptcy. The figures are none the less enough to give any
but the most enthusiastic junk-bond advocate a moment's pause.

The fundamental question they raise is whether the higher yields of
low-rated paper compensate for the higher risks. Moody's Lea Carty, who
wrote the study, is sanguine: "The evidence I have seen," he says, "is that
the spreads do compensate an investor with a diversified portfolio".

He sounds one word of caution, however. The evidence he is referring to
is based on 1980s data, when spreads were significantly wider than today.
The median spread on junk bonds is now 303 basis points ( 3.03
percentage points ) , compared with 360-370 basis points in the late 1980s.
"The spread has tightened by between 15 and 20 per cent," says Mr
Carty.

Huge quantities of low-rated debt are being issued at these narrow
spreads. This year has seen more than $20bn of Caa-rated debt brought
to market. Such issues - from issuers such as grocery stores,
cable-television systems or casinos - are extraordinarily vulnerable. "If you
see a stock market drop or financial market conditions deteriorate," says
Mr Carty, "you will see a lot of Caa issuers in default within a year."

A related point is the extent to which it is possible to obtain genuinely
diversified portfolios of junk debt. If the securities in your portfolio are
highly correlated, in terms of rating quality, they will all move together in
response to external stimuli.

This is a controversial issue on which it has previously been hard to obtain
good data. The Moody's study provides an insight. It suggests that
companies in the same industry, or in the same country, are more likely to
undergo similar movements in credit quality than those that do not have
these factors in common. To build a robust portfolio, says Mr Carty, "it's
not enough to have a lot of assets - you have to have a lot of uncorrelated
assets."

There is one other lesson in the Moody's study for anyone building a big
portfolio of high-yield, low-rated bonds. It reveals a striking historical
pattern: there were huge numbers of bond issuers in the 1920s and to
some extent in the 1930s, followed by a 50-year slump. "It was not until
1994 that Moody's again rated as many corporate issues as it did in
1920," says the study. In fact, the number of US issuers of corporate
bonds rated by Moody's is still well below the figure for 1920; only a surge
in the number of international issuers pushes the overall total above the
level of 77 years ago.

In the intervening period, tight regulation of the sort of securities investment
institutions could buy pushed low-rated borrowers out of the public debt
markets, and into the hands of the banks. Only in the last couple of
decades has this trend been reversed, leading to the explosion of junk
borrowing. Arguably, that healthy: perhaps the past approach stifled too
many potentially fruitful businesses.

The change is a dramatic one, however. It means that the credit-quality
lessons of the period from 1930-1980 are only partly relevant to investors
buying today's junk bonds. Everyone knows that, above 8,000, the Dow
Jones Industrial Average is in uncharted territory. Not everyone perhaps
realises that the corporate bond market is also in terra incognita.

*Moody's rating migration and credit quality correlation 1920-1996.
By Lea V. Carty. Global Credit Research Special Comment, Moody's
Investors Service, New York, July 1997

Email: peter.martin@FT.com

Sorry, url for Jerry Favors is http://www.marketweb.com/commentary/

Donald ( 18:07 ) : Banks too big too fail??? Fer shame. Relying on history that way. Don't you know; this is a new era? The laws of economics have been rescinded by new technology and such. All producing infinite improvements in human productive capacity. ....... And all based on: "Trust me, the check's in the mail".

Donald your earlier post with comments about the Roman empire stirred a never satisfied old interest of mine in the monetary affairs of the Roman Empire. As an obviously well read ( and Informed! ) man, could you name any pertinent reference works? Any responses from you or this anyone in this august body would greatly contribute to my edification in this regard.

Re your 19:50 post, You can be sure I'll be here in 5 or 6 weeks, no matter who is correct. If the market crashes, I will personally shine all the shoes in your closet and FED EX them back to you as well as doing a mea culpa on this site daily for a year. I'd say probability of this happening is approx, same as winning CA LOTTO, 19 million to 1.

NONERCY: Does this mean that Bruce Wayne will not buy a new Bahtmobile this year?

"Someone always seems to figure out a way to turn disaster into riches.
This month it was Sandra Doyle of Lendrum Liquor Merchants in Edmonton,
Canada. She's happily making some fast bucks with a play on the
multi-billion dollar Bre-X gold mine fraud in Indonesia. Doyle is
offering an ale with a "Brew-X Gold" label that shows a mountain of
gold and a body falling from a helicopter. Brew-X is said to be a cream
ale with a rich golden color. A six-pack sells for Canadian $8.45."

- from a bullish article on gold by John Tompkins at
http://www.talks.com/library/jt081597.html

Steve Puetz and all - I've been lurking for about a month now. Really enjoy this site.

On Wed Aug 20 1997 19:54 Steve Puetz said "Buy that S&P December 850 put immediately."

Can anyone tell me what the price of ONE S&P December 850 put was on August 21, 1997?

Thanks in advance.

Earl ( Aug 27: 19:11 ) - a masterpiece.

Has anyone wondered why these dippies even visit Kitco? What draws
them here?

I've been studing Ann Rand lately, I can't even find the words to
express my thoughts. I'm sure everyone who has read her know
what it's like.

I'm sold on the OJ/El Nino play. May 10500 for $660 seem pricey to
me. The straight May Future for 79 pennies seem like a better play.
Am I right?

Anyone planning a vaca to Phoenix this winter - Karsten ( ASU ) course will
be reopening in a couple of weeks with all new greens. I played on
a test green before they shutdown a couple of months ago and it was
great. This already was one of my favorite courses in the valley, with
the new greens I'm expecting great things. Make sure you give it a
shot if you're here.

From Grants Interest Rate Observer 8/15/97: "The 125% loan-to-value mortgage, the brainchild of Master Financial Inc., a closely held Orange County ( Calif. ) sub-prime lender, is available on closing. The mortgage has free use of the proceeds. Buy a house and simultaneously - this is only one possibility - buy common stocks. If the price of the stocks should happen to fall, buy another house, take out another 125% loan and double up in the stock market; repeat as necessary. Do not become discouraged."

ROEBEAR: Hobson & Burns will be hard to find.

Historic Gold Coins of the World, ( Hobson ) Doubleday ( 1971 )
History of Money from Ancient Times to the Present Day ( Cardiff ) 1994
Money and Monetary Policy in Early Times ( Burns ) 1927

LurkingGBug: 100% annual return in 401K. - I do not believe your
arithmetic. Here is why:
I dont know your specific situation, but for the illustration lets use
generic John Dow ( formula would work for anybody else in 401K )
Lets say your current accumulation in your 401K is $400K. Lets say you
are making $80K and can contribute 10% of your salary = $8K. You are in
32% tax bracket + 5% state tax = 37% tax gives you tax saving of $3K.
Typical company contribution is 50-100% of your contribution, lets say
it is 75% or $6K
Lets say that your good mutual fund gave you annual return of 30%.
Your Investment of 400K + $7K (  of you annual contribution ) would
yield $122K that year.

Total gain is $131K - Sum of $122 ( fund annual return ) + $3K ( tax
advantage ) + $6K company contribution

131K on 400K is only 32.75% annual return

To get 100% return, you would have to get $400K gain ( or $391K fund
annual return )
Your mutual fund would have to have annual return of 96%. Please show
me which mutual fund had such annual return. Does not have to be even
consistent in multiple years just ONE YEAR with 96%

Now, as far as outflow of money from equity mutual funds goes I can
confirm it based on my personal "survey" of my coworkers. There are
about three categories:
1 - people who never entered equity market. They stayed in "guaranteed
return" funds giving them safety of about 8% annual return
2 - people who did not even know where they have their money - some of
them know that it is somewhere in default investment which is
"guaranteed return" funds ( mostly invested in insurance companies ) .
3 - people who monitor their investments and move money around. Most of
the people in this category moved money into money market funds. As far
as for new contributions, some of them keep contributing to equity funds
with assumption that they will dollar average market movement, some of
them changed new contributions to MM funds.

This means that inflow of money into equity funds through 401K money is
not guaranteed.

Anyone:

I'm sorry to ask this as it's not directly related to gold however, perhaps someone from the USA who has a 401K plan might be able to help me out.

When money is invested inside a 401K plan, what are the rules for withdrawl earlier than normal retirement and what are the tax consequences of that withdrawl ( early ) . What are the tax consequences after regular retirement? Are there limits to totals available? Are there time limits?

Is it also possible not only to have mutual funds but to do all regular activities ( long, short, margins etc ) that one can do outside of a 401K. Thanks in advance ...

TTFN

LurkingGoldBug- If you put the pr ( crash ) at 19 mm:1, I'll give you a great deal and put up 1 of my dollars to 1 million of yours. Deal?

Raymond

Dec S&P500 850 PUT was 15.50 at close on 8-21-97

Raymond

Sorry, that should have read at close 8-20-97

I expect a choppy market ahead in the stock, bond and commodities markets. However, I suggest that the long term trend in gold and the xau is now up with the result that all long positions in the same, except very short term ones, should be held on to. If we have a significant rise in the crb tomorrow, we may have reached a significant short term and long term low in the same. Any short term rise in the stock market within the next several days should probably be looked at as shorting opportunities for the same as I expect the long term trend of interest rates to be up.

FRONT: I can answer only part of your question. Withdrawal prior to age 59 1/2 from a 401K plan has a 10% tax penalty on top of your regular tax. You can rollover to another plan into another plan without penalty. There is an exception to the penalty for physical disability, etc.

Is Castro dead? http://biz.yahoo.com/upi/97/08/27/international_news/cubacastro_2.html

From the Drudge Report 8/27/97:

LONDON TELEGRAPH THURSDAY: An Earth-orbiting satellite has veered out of control 330 miles above the planet and could crash through the atmosphere within three weeks, Nasa said yesterday. The Lewis satellite was launched last Friday from Vandenberg Air Force in California but went into an uncontrolled spin early on Tuesday morning, rotating twice every minute, and cutting off contact with the space agency's control centre at Chantilly, Virginia. A Nasa spokesman described the loss of contact with the 40 million spacecraft as "a serious crisis"...

LurkingGBug: OK, you posted more details about your situation so lets
calculate your return again!
alternative 1: your accumulation is $400K
your contribution = $8K
tax saving of 47% = $3.76K
company contribution = 40% or $3.2K
annual fund return 25% = $100K
total annual gain = $106.96K which is 26.3%
alternative 2. - your total accumulation is $200K
total annual gain = $56.96K which is 27.6%

You see flat statements of 100% return in 401K without full
understanding what is your real return are not really credible.

Ron, OK I'll be the one to say it. Told you there was going to be a crash.

Japan says Korean bailout not on the agenda.

Front, as Donald said, early withdrawal ( before 59 and 1/2 ) carries 10%
penalty plus full tax on your withdrawal amount ( lets say 32% federal +
5% state + social security tax )

There is no limit on amount you can withdraw. On the other hand, you
have to start withdrawing your money at age of 70, or you will pay
penalty ( not sure what is penalty amount for not withdrawing starting
at that age )
As Donald said, you can rollover 401K to IRA account ( if you quit your
job ) and when you want to withdraw from IRA, the same rules apply
( penalty, etc.. )

Japan/Korea Story. Sorry.
http://biz.yahoo.com/finance/97/08/27/z0009_45.html

Lurker - Do you have fire insurance on your home? Why? You could have gotten a much better return putting that money in the stock market.
Odds are your house won't ever burn down. Why buy insurance you'll probably never need? I buy metals for the same reason you buy fire insurance on your home. You buy fire insurance "just in case of a fire". I buy economic insurance ( gold ) just in case the economy falls apart.

There is, however, a big difference between fire insurance and economic insurance ( gold ) . 30 years from now, if you never have a fire, your return on your fire insurance is zero. 30 years from now, even if the economy never falls apart, my gold will still be worth at least a portion of it's original cost and possibly more.

Keep in mind that the percentage of the population that owns any real quantity of gold is very small. I would guess less than 1%. So if things really went to crap, the few who did own real quantities of gold would be rich compared to 99% of the population who did not.

You never know, one day many years from now, after the Chinese have taken over the US, rounded up us "capitalist types", and have us all standing before a firing squad, I'll whisper something in the guards ear as he's blindfolding me, something like "I have gold", what will you use to buy your life? Worthless stocks? Worthless US currency?

After retirement, you pay just a regular tax on amount you take out
( state and federal ) There is no limit - you can take it out all in one
chunk, however, that will put you into bigger tax bracket.
Yes, you can have any additional investments outside 401K - you can
even put it on your credit card ;- )

LurkingGbug - your 18:04 post
I repeat, If things are so bad on this site, why don't you
simply leave. Or, perhaps you, like hepcat, will stay as long
as you can with the aim ( like hepcat ) to disrupt this site.

I notice that Fundy is glad you're here, but then he also loved
and supported hepcat.

SILVERBEAR: Well said.

Excuse me Miro, but you lost me when your 401 K numbers left our planet. Ironically, $8 K is about what I contributed. Let's look at the SIMPLE math once again shall we? I am in a 32% Fed, 9% State ( CA ) , 8% SSI/DI bracket. For every dollar I invest, I save about 49 cents in tax for the year. With me so far? My company matches my annual $8 K with another $3.2 K. I made approx. 25% on that TOTAL of that $11.2 K when averaged over 3 years. That means I made another $2.8 K per year average on the original 8K invested. Now then to sum up, for my $8K contribution, I made $4.9 K in tax savings + $3.2 K in company contributions + $2,8 K in gains for a total of $10.9K on the 8K invested. This means a return WELL in excess of 100%. Now if I'd have taken that same $8K as income, paid my taxes on it, bought gold and silver, just where do you think I'd be?? About 400% behind is where. And this is only the past THREE YEARS we're talking about!!! 401K plans are simply not beatable by ANY investment in the long run. I have also been fortunate enough to have substantial holdings outside the plan, which have also made fantastic gains but subject to nasty taxes as we all know. I'm no genious for maxing my 401K. Only a complete moron would miss the opportunity to do the same, as millions of other Amercian employee's will attest, most of whom have probably done even better than I have..... and we will all continue to expand the weekly billions of capitol flowing into these plans unless and until congress changes the rules drastically REGARDLESS of what the market does.

Aucontrair Lurker, I greatly enjoy this site, It provides great comic relief to my stressful work day, plus several of the posters contribute interesting and informative market news, their investment philosophies notwithstanding, and I happen to have a "soft spot" for gold & coins as I have mentioned only 15 times today. However, that "soft spot" does not affect my judgement in matters financial, excpet when I see a reasonable opportunity to buy a small position in gold/silver/Plat such as what we are experiencing at the moment. Sorry if you don't appreciate views which do not match your own, however, you just MIGHT learn something, you never know...furthermore I may just be able to reach ONE poor fool who buys into the "Market crash" nonsense and rescue him/her from the clutches of the "Doom and Gloom" crowd. You want my Gold comment for the day so I'll be on topic? OK, buy St, Gaudens, they are minimally priced above bullion coins, appreciate further in "bull" metal markets, and are a lot more fun to own..

Miro:

1 ) re your response at 21:41, you forgot to include the inflation losses over the 15 years. ( :- ) )

2 ) What's the highest tax rate in the USA? 50%? Over what amount does it take effect.

Also, Is there a minimum amount one must withdraw?

Sorry again about this, I'm just trying to put myself in the place of a boomer who has a lot of money in the market and to see the effect if he/she takes it out quickly to use in the real world.

Thanks Again

( Thanks Donald )

TTFN

Lurking Goldbug: I've suddenly taken a liking to you. I'll provide the shoe-polish for that October shoe-shine.

Front -- Take money out of the market quickly???? I tried to sell 900 shares of a gold mining stock today. The order was placed at the 'market' at 9:34 A.M. I came home two hours later expecting a 'filled order'. Guess what? I cancelled the order at 11:38 A.M., because the MARKET order was not filled in two hours! No, this was not a penny stock either! Nobody wants these things. My question is, where are the market makers??? Are they backing away from the market? If they are.......!

Sorry, but this has to be said. I totally disagree with your attitude and must say so. I've heard it so often from people without strong arguments I cannot let it pass. I'll probably get hell for this but here goes.

What gives you the right to say to someone "If you don't like it you can always leave" ? Who made you God here? Some of the participants may be idiots, some may even just be stiring the pot, but for you to take the right from me to listen and participate with them just because YOU don't like them is ridiculous and beyond reason.

The reason this site is as wonderful as it is, is exactly because we can have intelligent discussions between opposing views and not tell anyone to get lost because we finally can't win. If someone's right then damn it, give them credit in an adult way. You may not like it but it sure is being an adult in an adult situation. Enough already. Let the man speak. It's his and MY right to hear him, and not yours to take away ever! I'll decide whether he's an idiot in my own way.

TTFN

Puetz: What kind of coins do you own? Do you favor any of the numismatic variety or just bullion?

LurkingGbug: Do you buy slabbed Saints? What grade? What is a "good" premium?

Are you STILL trying to get rid of that damn Bre-X stock ?

TTFN

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

I like both slabbed Saints at MS 62 or 63, NGC / PCGS of course ( which carry less than a $175 and $235 premium respectively ) and BU raw Saints which can be had for about $ 130 to $150 over spot. Watch out for phony BU coins, ( not counterfeit but overgraded ) there are plenty, if you want to be safe buy slabs.

Lurker@home: What I said was that Hepcat had predicted the future price of gold and was the target of many attacks. That is not support as you seem to think for his annoying antics. I just wish we knew how he did it.

For the 10 millionth time today, I DO believe in having a minor position in gold and silver, just bought some Proof Platinum, and love the metals and coins. HOWever, this doesn't change the fact that the folks who have been crying "crash" for ten years, have cost anyone follwoing their advice, more than they'll EVER recoup even if AMRGAGEDDON comes next week! Futhermore, gold is no great financial meltdown insurance, the Govt. confiscated it once and they can certainly do it again. As I said earlier today, ironic that the US mint is pushing a new GOLD COmmem. coin of Teddy Roosevelt, our Pres. pal who stole the nations gold from individuals.

Lurking GBug: I just logged in and followed the posts back... Good grief!! I too have just completed "parking" my bull market gains, and I too think that not all analysis posted at this site is for me, but I do not think that belittling the opinions of others is necessary in order to show disagreement. While I don't agree with a lot of what's posted here, I appreciate every word, avidly read the most interesting posts, and tuck away any information I consider useful. That's the beauty of this site ( Thanks, Bart!!! ) . I use what I want, and discard the rest. Regarding recommendations, we ALL have brains, despite what you may think. You mention that the recommendations here will ruin everyone, but the only one who will be ruined is the one who chooses to blindly follow everything they see or hear, whether here, in the WSJ, or from the mouth of Louis Rukeyser. Prudent technical and fundamental analysis can yield good results even in the face of slight declines in gold shares. I didn't pick my recently acquired gold stocks in a vacuum and my ( small but growing ) portfolio is up 10% overall since I started three weeks ago. The point is, this site is valuable, and all participants should be treated with respect. Disagreement, stridence, bitching and moaning, why not? Derision, gloating, personal attacks, I hope not!

LurkingGbug: Thanks. I'm outta here 'til dawn. Later!

I appreciate and respect ALL opinions at the site, including yours. Good night...and don't let the goldbugs bite.

Damn Front I think I'm gonna faint!! I knew there was intelligent life down here! Never mind Scotty, you don't need to beam me up yet. Glad someone understands that honest dialogue such as you might see on any of the good dabte programs on PBS and such is not a threat to anyone's peace and safety ( just their cherished financial/religous beliefs )

The Growing Cybercash Threat to Governments:

There is a good article on the future threat to big government by the development of strong encryption software on the internet in the Sept. 8 issue of Forbes magazine. The title is "Politics For The Really Cool".
Go to the Forbes Web page, http://www.forbes.com/, and select the Sept 8 table of contents. Then click on the article. There are no passwords. According to Walter Wriston, the internet fortified with strong cryptogrophy, will irrevocably weaken governments and "they haven't got a chance in hell with that thing, there's no way anybody can control it."
At this time, Greenspan says we should not attempt to impede "unduly" our newest innovation, electronic money. I wonder how "unduly" will be interpreted if this system begins to replace Fed paper IOU's in a big way.

LurkingGBug: Sorry, but I don't want to go into detailed table and
calculation. You are forgetting that you get your tax advantage and
company contribution only for the amount you contribute in that year.
After that just your contribution + company contribution is moved into
fund accumulation and gains just 25% return. For that reason your return
declines from 100% to 25 % and after lets say 10 years it will be just
26% as I tried explain in my previous post!
I don't want to go through more detailed explanation - go and buy a book.
You also have a tendency to compare apples and oranges. Why are you using
401K scenario for stocks but for gold a fully taxable scenario without
company contribution?

Don't disagree with your overall concepts. However, I don't characterize spirited contentious debate to be derisive, attacking, etc. You'll notice I havn't asked anyone to leave the site, requested their personal E mail address, accused them of being naive with no basis for my views ( except the annoying honest facts of the past 10 years of course ) , etc etc. As to all the wonderful analysis, some of it is useful, but I'm suspicious of investment models that include solar eclipses for obvious reasons and I think that folks who are selling Newsletters, Books, etc. deserve MUCH more critical scrutiny, than the "regular Joes" posting opinions don't you agree? When someone puts a veneer of expertise on their "analysis, theories, predictions" etc. and is selling the same, they ought to be looked at with a Scientifically ULTRA critical eye....and their theories and models should be checked and tested for outcomes. If Puetz for example would be so kind as to forward his last 100 Newsletters to me, I'd be happy to compile meaningful data as to how well his predictions and models have held up in comparison to all those boring "Dollar cost average into stocks" analysts. Now THERE would be a piece of useful information for someone who may be influenced by his "Market crashing in 5 weeks" scenario. Sure we're all responsible for our own investment choices, that's why we NEED opposing views in forums like this being read by who know who....

Geez Front, yeah I think max tax is close to 50% ( I would not know -
never made so much money ;- ) ) But if you are making money in $100 - 300K
per year you would be paying around 40% tax ( state and federal combined )
Minimum amount you have to withdraw applies only after you are over 70.
Before that you can withdraw any amount ( with penalty before you are 59
and 1/2 )

( :- ) )

Don't smile too bright yet, I'm still in the cognitative phase of finding out who the "idiots" are ....

TTFN

LurkingGB- Treating the tax deferral as a return is not correct. True, you earn investment returns ( maybe! ) on the portion which would have gone to taxes, but the liability still exists, and at what will probably be much higher rates. But your analysis, which is not unsimilar to how the government treats SS accounting, may explain the manic masses mindset. For that insight, I thank you.

Miro, how can I say this kindly? ( in deference to Yellowjackets comments ) Starting from zero, I have well in excess of $32.9 K MORE money TOTAL in 3 years, on $24 K in CONTRIBUTIONS, than I WOULD HAVE HAD if I'd taken that same $24 K money as pay, paid taxes on it, and bought metals. ( Not counting what I would have LOST in the metals ) It's just NOT that complicated my friend. Is that what everyone means when they keep telling me I should respect all these convulted analysis? SHeesh!!

Yes WSF, you're correct that I remain liable "someday" for the tax liability. What also must be remembered is that the capitol gains rate was just lowered, and that when I retire I will be taking the funds at much reduced tax rates, remember we're talking long term here. Furthermore, I have access to the money NOW via loans for any purpose and the interest I pay accrues to MY OWN ACCOUNT. More liquid than certain GOLD STOCKS I've been hearing about!!

what a night ;- )

LurkingGbug: you just said it $39.2K on $24K investment in three years.
In my calculation it is about 38% return per year. Stretch it to 10 years
and you'll drop to 26-27%. I am not saying it's bad return - but it is
just not 100%

Panda: That must be an OTC gold stock you are talking about. Market orders on listed securities are ALWAYS filled, although perhaps not at one's preferred price. But aren't OTC market makers required to purchase 100 shares of a stock at their bid price?

If I am correct that the looming stock bear will be long and slow, the coming gold bull should have similar characteristics.

December gold off a thin dime so far. But after yesterday's sick gold stock action, further declines are probably in store. But the basic theme continues to be building a launching pad for much higher prices in 1998.

Stock market may rally nicely the rest of the week. The market will be O.K. as long as the number of new lows remains minuscule on declines. But watch out when new lows start to expand rapidly.

I don't disaggree that 401Ks are a great deal. And the younger you are the greater the value of the deferral, ceteris paribus. The caveat is that there is a good chance we will face much higher taxes in 30 years when I retire.
BTW- you on for your million against my dollar, market crashes within 5 weeks?

OK!, I'm TO'D! RJ, get your butt back here pronto! I'm tired of the Hepcats and the Gbugs! Rationality is required. You at least know how to express the gloom and doom in gold. Supplant these imposters!

Hey Miro- I'm on HaleBopp, where are you?

russian nuclear technicians are protesting
for not being paid in months. their civil
servants have not been paid in months. they
have been issued cards that allow for food
and some transportation. the russians finally
admitted they will not be able to meet their
obligations for the new space station due to
delays in production of key components.

russia is in a position that many nations around the
world are in. their debt is so great that cash flow has
become one way street. the available funds are used to
pay interest and the elite, while the rest suffer and
muse better times.

mexico and canada have massive problems with their debt also.
any one of these short fuses, or another, in an obscure part of
the world, will catalyze the whole process into a flood of ink
that will rend asunder, attempts to stop the inevitable financial
diaspora. the cracks exist, the trickle started; when the dam
breaks, the diaspora has started.

hi earl, you too ted.

cherokee!; ) rider-of-the-ether, mouth-monitor, and friend-of-the-wind!

George Cole -- NYSE listed! Try AEM, Agnico Eagle Mines. I've tried selling in various lot sizes, but.... Buying dried up for several stocks, among them GGO, CDE, AEM. GGO is Amex listed and CDE, AEM are NYSE listed. You tell me, who failed to make the market? From the recent experiences I've had, I suspect the liquidity just isn't there. Whether this is peculiar to the gold stocks at this time, I can't answer. One thing that I can say is this; This does not leave me with a warm feeling. How are the prices being set? If they're ignoring market orders now, what does this bode for the future??? No need to answer that one, I KNOW the answer.