Gold Discussion for Investors and Market Analysts

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(Sat Sep 06 1997 00:00)

Eldorado--The Privateer is a very informative site. I just subscribed a week ago to the e mail edition. The Cap'n has it together!

(Sat Sep 06 1997 00:10)
@the scene
Auric -- How do you know that it isn't already popped? Perhaps it is more of a question of thine own beliefs. Big expanded balloons don't collapse immediately upon gaining a hole. They do tend to buzz about a bit before falling to the ground. Up, down, and all around, then phssst! That 'phssst' is when most of us here will recognize it for what it is. Most others will recognize it after that! Some won't recognize it until it lays on the ground.

(Sat Sep 06 1997 00:16)

Eldorado--Agree that the bubble HAS popped. The balloon analogy is quite fitting. Just seems like it's taking its time expiring!

(Sat Sep 06 1997 00:19)
@the scene
Auric -- Yes indeed! The Cap'n does have it together! I like his site 'cause He's not feeding any kind of BS. Just telling it like it is; Good, bad, or ugly, if I might borrow a line.

(Sat Sep 06 1997 00:20)
@...not encouraging to BGO shareholders

If the value of the company ( currently U.S. $5 per share ) were oversold and undervalued BGO would or should not have redeemed unsecured debentures at the conversion price of U.S. $2.00.

(Sat Sep 06 1997 00:21)
On the Beach

KITCOITES: I sincerely reccomend you check out this ULTRA COOL web site. It will help you to center your chakras before making major financial in these unsettling times.

(Sat Sep 06 1997 00:24)
On the Beach

KITCOITES: I sincerely reccomend you check out this
ULTRA COOL web site. It will help you to center your
chakras before making major financial in these
unsettling times.

(Sat Sep 06 1997 00:29)
@the scene
Auric -- It's a BIG balloon! But the more it collapses, the faster it collapses! Just don't be on it or under it!

(Sat Sep 06 1997 00:31)
@.. US$ and fundamental demand no longer important in this new age
Sometime ago I suggested that gold price would be a prisoner of the US$ and Indian jewelry demand. I now think we are in a new era where astute market professionals attack vulnerable assets and manage price through market tactics in the absence of retail mania.

I now believe that gold price will be doomed unless the retail investor over-rides the power of professional short masters. The shorts stayed away from the S+P in the face of a retail driven extended stock BULL mania. The shorts 'safely' attacked gold since the trend was their friend and the CBs could be counted on to keep a lid on price in the absence of retail maniacs who are preoccupied with a stock market BULL.

I now believe there needs to be a seminal counterpoint media spin of the value of gold as an alternative to stocks in context of a long-toothed stock BULL market, Asean currency boomerang, and an uncertain Euro currency deadline.

I hope that we see at least $340 gold before the end of the year but I don't think we can rely on the Big Boys to cooperate to counter-attack the professional shorts in the absence of a retail rediscovery og gold as an alternative safe investment harbour.

Any thoughts ?

(Sat Sep 06 1997 00:40)

Bob-- My thought--What you say regarding weak or vulnerable assets is true and insightful. I say Gold has ALREADY taken the brunt of such assault. Hard for me to see what bad news HASN'T been factored into the price.

Kahunna Grande
(Sat Sep 06 1997 00:48)
Permain Basin, Texas
For Gold to go up there will have to be a jolt of the markets. I cannot see anything except for the North Koreans attacking the south and routing the US defense forces. Other than that in the near term I don't see anything that will change the trend of gold down. IMHO The history of gold is the currency of last resort. Right now there are too many other safe havens for people to put their money into. A sound defeat of US troops to me would be somthing for people to loose confidence on the USA.

(Sat Sep 06 1997 01:06)
@Been There

Kahunna Grande: N.Korea is not suicidal. Yes, they could inflict damage in an all out surprise attack. If they did that, their country would be devastated, just like Iraq.

Kahunna Grande
(Sat Sep 06 1997 01:17)
PB texas
Sergent I am not saying they would attack but this is the only hot spot where a suprise could occur. I have read several articles that the NK could blitz overwhelm the troops in three days. Casulities of 70% on ROK side 80 to 90% on PRK. Scary thought as I have a future son-in-law headed to Okanawa sept 20th.

(Sat Sep 06 1997 01:31)
Ted: It was a good night for football. West Lafayette won. They are now 2-1. Luke had a 30 yard run for a touchdown. However, it was called back because of a penalty. He did make good decisions, and he completed 3 passes. Maybe I can concentrate on the markets tomorrow. How's the weather in New England?

(Sat Sep 06 1997 01:47)
@the scene
Kahunna -- Perhaps the 'jolt' has already happened and is only now just beginning to arrive here! A paper jolt. Or is that 'jilt'! Perhaps the gilt-edged paper isn't so 'fine' after all. The debt problem will be alleviated. How the 'solution' to the debt takes form is another matter! will it start with war, or end in war? Perhaps neither. Perhaps just in abject poverty and civil 'discontent'. There is nothing like it to bring on the Nazi Jack-boot so easily! And all for some 'scrip' of paper! Marvelous!

(Sat Sep 06 1997 02:01)

Steve Puetz--Gotta admire your "cajones". Your unhedged, clear predictions are appreciated. I am not sure if the Dow will crash as drastically as you say, but I agree paper has seen its best days.

(Sat Sep 06 1997 02:03)
@the scene
Sergeant -- I'm not so sure about that. After all, we wouldn't do it during the police action called the Korean war because 'we' didn't want to mix it up with the Chinese. So what makes it any different now? Perhaps we might need Chinese 'authorization' to go in. I think that they are thinking of that whole hemispere as theirs now. I think that will become most apparent with any show of force.

(Sat Sep 06 1997 02:10)

Surfer Girl--Thanks for site on Fractals. Have you seen Mike Sheller's piece at the Gold-Eagle Forum on Fractals?

(Sat Sep 06 1997 02:12)
@the scene
Sergeant -- One more thing against our potential involvement there. TRADE! Or lack of!! I suspect that South Korea and Taiwan better start seeing the writin' on the wall!!!!! Perhaps the Phillipines too! And then a few other 'regimes'. WE are the paper tiger over there anymore. At least until the 'bottom line' on the not-so-almighty-buck is discovered, recognized, and rectified! Bad news in between!

(Sat Sep 06 1997 02:16)

Either the U.S. Military devastates N. Korea under such circumstances, or we pull out of Asia, including Japan, and draw a new line in the Pacific.

(Sat Sep 06 1997 02:31)
Jolt of the Markets @ Not unless the Federal Reserve Demands such.
All of these central banks have the power of issuing currency in their
respective countries. Thus, the people do not own their own money in
Europe, nor do they own it here ( Canada & USofA ) It is privately printed
for private profit.

The people have no sovereignty over their money, and it has developed
that they have no sovereignty over other major political issues as
foreign policy.

As a central bank of issue, the Federal Reserve System had behind it all
the enormous wealth of the American people. When it began operations in
1913, it created a serious threat to the central banks of the impover-
ished countries of Europe. Because it represented this great wealth, it
attracted far more gold than was desirable in the 1920s, and it was
apparent that soon all of the world's gold would be piled up in this
country. ( USofA )

This would make the gold standard a joke in Europe, because they would
have no gold over there to back their issue of money and credit.

It was the Federal Reserve's avowed aim in 1927, after the secret meeting
with the heads of the foreign central banks, to get large quantities of
that gold sent back to Europe, and its methods of doing so, the low
interest rate and heavy purchases of Government securities, which created
vast sums of new money, intensified the stock market speculation and
made the stock market crash and resultant depression a national

R.G. Hawtrey, the English economist, said, in the March, 1926 American
Economic Review:
"When external investment outstrips the supply of general savings the
investment market must carry the excess with money borrowed from the
banks. A remedy is control of credit by a rise in bank rate."

Lord Maynard Keynes pointed out that most theories of the business cycle
failed to relate their analysis adequately to the money mechanism. Any
survey or study of a depression which failed to list such factors as
gold movements and pressures on foreign exchange would be worthless, yet
American economists have always dodged this issue.

The League of Nations had achieved its goal of getting the nations of
Europe back on the gold standard by 1928, but three-fourths of the
world's gold was in France and the United States.

The problem was how to get that gold to countries which needed it as a
basis for money and credit. The answer was action by the Federal System.

Following the secret meeting of the Federal Reserve Board and the heads
of the foreign central banks in 1927, the Federal Reserve Banks in a few
months doubled their holdings of Government securities and acceptances,
which resulted in the exportation of five hundred million dollars in
gold in that year.

The System's market activities forced the rates of call money down on
the Stock Exchange, and forced gold out of the country. Foreigners also
took this opportunity to purchase heavily in Government securities
because of the low call money rate.

Paul Warburg gave the official warning to the traders to get out of the
Market. In his annual report to the stockholders of his International
Acceptance Bank, in March 1929, Mr. Warburg said:
" If the orgies of unrestrained speculation are permitted to spread, the
ultimate collapse is certain not only to affect the speculators
themselves, but to bring about a general depression involving the entire

"unrestrained speculation" ( March 1929 )
*Irrational exuberance* ( sound familiar )

(Sat Sep 06 1997 02:41)

6pak--What did the price of Gold ( in $ ) and Gold Stocks do during this period? The situation you describe has similarities to the present.

(Sat Sep 06 1997 02:48)
Auric @ 02:41
Gold had a fixed rate, Like three-two-five eh!: ) : ) : ) ) . The gold stock,
I do not have at hand, sorry. Yes, the market has a similiar feel eh!

(Sat Sep 06 1997 02:57)

DOH! There's that CURSED number again! I swear that number will KILL me yet! :- )

(Sat Sep 06 1997 03:11)
@long bond
panda..ur charts are my standard! An alternative construction
to triangles with the long bond is a channel 6.3 to 7.2

EB a currency trader? am in $us to yen, think about the
pound occasionally...maybe one day.

goldbugs...people buy gold but have to register the purchase??????????????????? why waste ur breathe complaining
about the gold price when it is discriminated against by law.
no hope there until the law changes.

can't work gold out at the moment, maybe higher lease rates
for precious metals will become the norm. what would that mean?
???????? figure figure....

if US banks would give interest on gold deposits then i would buy
gold... WELL? think a little and save Bart disk space and me eye strain.

(Sat Sep 06 1997 03:15)
Auric @ 02:57
Free Market eh! Dah! number can remind a person. The control system
works very well. That's OK, many others have no idea, what is happening.
Gone now, to watch funeral. Take care.

(Sat Sep 06 1997 03:16)

I went to the store today. I bought a magazine and a pack of gum.. The cashier said, "That'll be 3-2-5 sir." Of course, I dropped everything and ran out screaming!

(Sat Sep 06 1997 03:29)
Hah Hah, a cursd number that three two five. But watch out below.

(Sat Sep 06 1997 03:49)
Hope this link not previously posted. Info on Oak Island the Treasure Pit near ( ? ) TED. It's that thumb thing with a map.

If anyone goes, don't forget metal detectors, home brew and portables. Portabless to keep us antipodeans posted. Wuz a brewer meself years ago. Ultimately hardness of water dictates best type of brew eh?

(Sat Sep 06 1997 04:27)
@ wee small hours of your morning
Auric, you asked what bad news has not been factored into gold prices, Hmmmmm

Perhaps we could also ask what news would further depress gold??

1 ) Any CB announces the sale of 200 oz of ol yella

2 ) An International Economists Symposium deifies Aus Treasurer Costello

3 ) Hashimota attempts to make private holding of Au & Pa illegal in Japan

4 ) There is a bad harvest in India

5 ) No one buys a "Golden Di"

6 ) Son of Bre-X. once bitten twice shy, not. We've had many mining scams down under most famously Poseidon, always another gold bug to fleece. me fr'instance.

It's all in the way the news is perceived.

(Sat Sep 06 1997 04:47)

Aurator--I just can't help thinking that Australia, by selling two thirds of their Gold and pouring PAPER into SE Asia, threw GOOD money after BAD. They may yet regret that move.

(Sat Sep 06 1997 05:00)

My 04:47--Just saying if I were an Aussie citizen, I would feel betrayed.

(Sat Sep 06 1997 05:16)
Speculation about Greenspan speech. Has anyone seen the Text?

(Sat Sep 06 1997 05:19)
OK, which one of you Goldbugs did it!; ) ) EB, eh?

(Sat Sep 06 1997 05:21)
@ Gresham's Law
Auric, for sure......Australia throwing good money after bad...

Although it pains many to admit, there is a navet in political acumen in the antipodes. Remember NZ grovelling to France expecting an apology for the rainbow Warrior bombing?. To some this navet is quaintly charming, however it means that taxpayers ( and there ain't too many of dem/us ) have to bear the burden of the nave and not at all charming mistakes of our temporarily elected leaders.

Costello is just one case in point. I believe that the *NZ Experiment* has achieved a certain free market following in northern climes. As usual, the free-booting economic laiss faire dominant ethos is being paid for by the ordinary bloke, the taxpayer. Don get me wrong, Isa believa in *no go'ment*, but this was economic rape.

I've listened to much American political rhetoric on this Canadian thread, perhaps you could all do well to listen to the advice of Nick from across the ditch and focus a little more on whas goin on down here. We don' rule the worl' like you North Americans assume you's do, but you may be suprised to discover the incredible similarities in our histories and therefore our destinies.

The answer is in the detail. Who said dat?

Art Dealer
(Sat Sep 06 1997 05:24)
@Honest Art's Art Gallery

Any one interested in a Presidential Portrait I have? On sale for THREE TWO FIVE.

(Sat Sep 06 1997 05:24)
Greenspan: Fed Must Remain on Alert

WASHINGTON ( AP ) -- Federal Reserve Chairman Alan
Greenspan said Friday the central bank must ``remain on alert''
to the possibility that inflation-inducing decline in the
unemployment rate. The comments come a little more than
three weeks before the Fed's next policy meeting on Sept. 30.
In a speech at Stanford University near San Francisco, he gave
no clear hint of the Fed's future course. But he defended the
March increase in short-term interest rates. The unemployment
rate inched to 4.9 percent in August, up from July's 24-year
low of 4.8 percent.

(Sat Sep 06 1997 05:26)
Israel Drops Palestinian Peace Deal

JERUSALEM ( AP ) -- Prime Minister Benjamin Netanyahu
declared Friday that in the wake of a triple suicide bombing,
Israel will not abide by peace accords with the Palestinians.
Israel had been scheduled to hand over large tracts of the West
Bank by mid-1998. ``We decided that the process ... in which
Israel, time after time, hands land to the Palestinian Authority,
and then murderers use these territories as their launching
ground, shall not continue,'' Netanyahu said. Thursday's
bombing killed four bystanders and wounded more than 190.

(Sat Sep 06 1997 05:26)
Roebear - Where Dit Go?
Is it like the Picture of Dorian Grey?

(Sat Sep 06 1997 05:32)
Greenspan says high Japanese stock prices undermined the Japanese economy. He means 1989 not now )

(Sat Sep 06 1997 05:35)

Aurator--@05:21--Agree that the idea of North American economic hegemony is very much in question.And I also agree we take for granted our Canadian and Oceanian brethren. Well, since I have been here at Kitco, I have been fortunate to enough to hear from such "Down Unders" as Bill Buckler, Nick, Steve Perth, etc. Just one of the blessings from this Forum.

(Sat Sep 06 1997 05:38)
Policy holders worry about the health of Japanese insurers as companies face decision about full disclosure.

(Sat Sep 06 1997 05:42)
Karburator repairs completed. Platinum reaches Japan.

(Sat Sep 06 1997 05:49)
fallen angels
Auric, the other event to disrupt gold may appear as a Fortean Phenomena, like maybe Pluto's moon Charon turns out to be made of Pa and Au or a huge deposit found just beside Bre-x's claim in Busang.

Am watching Di's funeral along with the largest audience in the history of the universe. Will be a watershed in Brit history anyway. Dang celts sure can turn on the mawkish emotions eh? When combined with dat weerd chrstan 'ligion stuff it is a potent brew. Know i's offended sum of ya churchy types. Apologgies. But De Brits are an island nation. Many would gladly blow up the Channel Tunnel. In Angleland there is a great tradition of being separated from Europe, that tradition has its expression in coarse colloquiallisms that are not shared with outsiders. The people of England will resist the EMU. This will be very bullish for gold.

(Sat Sep 06 1997 05:55)

aurator 05:49--Bingo! The Brits will NEVER give up the Pound-Sterling! And that's THAT!

(Sat Sep 06 1997 06:07)
@Fort Charles Forteanna

aurator--Here is the web site for the Fortean Times

(Sat Sep 06 1997 06:19)
I love Irony.
Perhaps god is an iron.
The Sterling, that which the Angles, bless 'em, will never give up, is named, at least according to one of my forgotten sources after the Easterlings, who were merchants and jewellers from ( help someone ) Alsace way? The European Low Countries. Mainland Europe!

Charles Fort was one reason I joined the net. Thanks, already have link, free thinkers everywhere can do worse than read Charles Fort's The Book of The Damned.

(Sat Sep 06 1997 06:31)

Well how 'bout that. You find Forteans in the oddest places--Favorite quote: "To explain a thing is not the same as explaining AWAY a thing,"

(Sat Sep 06 1997 06:36)
@6Pak,Who Cares,Puetz,Auric, Aurator,Tort
Mornin everyone! 6Pak:Wonder if good old boy Felderof ( from Nova Scotia ) has somethin ta hide??? Who Cares ( 23:08 ) I am THE expert on rebellion and discipline problems...could be a result of #1- unusual upbringing;#2-Attending the strictest Church school in New England for 4 long years; #3-bein at Kent State on May 4th 1970 and #4-never having ANY respect for authority!...Puetz ( 1:31 ) Glad your son Luke's team won! but fer christ sakes,I don't live in New England....Live in Cape Breton,Nova Scotia ( left the country when Clintok was elected ) and the weather is spectacular today! Auric ( 3:16 ) Good one....brought out a chuckle ( and that takes alot for me ) ..Aurator ( 3:49 ) Re- Oak Island and your THUMB...what big thumbs you have my lad...Oak Island is about a 5.5 hour drive south of me...Nearest town ( ? ) to me is Port Morien....Tort: thankx again for taking time out from your BUSY schedule to be of help...much appreciated!
Has the "latest JERK" gotten bored and left us????

(Sat Sep 06 1997 06:38)
Mornin dude!....smoke signals seen on horizon....

(Sat Sep 06 1997 06:44)
@ garrulous tonight
Lissenin to Elton John singing the New Candle in the Wind live ovver side of da worl'. Move over MM. A new star is rising in da firmament eh Mike Sheller?
Cast your bones lad. Put dem raho on the griller.

Here is a taste of Fort, that should be studiously avoided by those who believe in some stuff an not other stuff. Like, y' know, chartists, fundamentalists, chicken-entrail readers, astrologers, religionists, solopsists, onanists, analysts... all those who KNOW, beware of Fort.

"A procession of the damned.
By the damned, I mean the excluded.
We shall have a procession of data that Science has excluded. Battalions of the accursed, captained by pallid data that I have exhumed, will march.
You'll read them--or they'll march.

Some of them livid and some of them fiery and some of them rotten. Some of them are corpses, skeletons, mummies, twitching, tottering, animated by companions that have been damned alive. There are giants that will walk by, though sound asleep. There are things that are theorems and things that are rags; they'll go by lik e Euclid, arm in arm with the spirit of anarchy. Here and there will flit little harlots. Many are clowns. But many are of the highest respectability. Some are assassins. There are pale stenches and gaunt superstitions and mere shadows and lively malices: whims and amiabilities. The naive and the pedantic and the bizarre and the grotesque and the sincere and the insincere, the profound and the puerile. "

(Sat Sep 06 1997 06:52)
Barron's cover story: Tick tick tick ....sounds like some kinda time BOMB ta me....better DUCK!

(Sat Sep 06 1997 06:55)
TED G'Day... is late here
I got fat fums

(Sat Sep 06 1997 07:12)
Auric ....Fort.... A Fortean Mind-Feck to keep me awake tonight
One of my favourite Forteanisms:

It is not possible to define.
Nothing has ever been finally found out.
Because there is nothing final to find out.
( The Book Of The Damned, p. 14 )

(Sat Sep 06 1997 07:25)

Must go to bed. Am working night shift for the next few days, so I stayed up to get my bio-clock reset. Most enjoyable exchange last night! TED--I am SURE I will have "daymeres" involving 3-2-5! :- ) Night all....You too Senator, wherever you are.

Mike Sheller
(Sat Sep 06 1997 07:56)
Half a dozen, you said a wide-mouthful
6PAK: Your posts of late have been the kind with shoulders one may stand upon to see great vistas. This quote from your 2:31 bears repeating:
It was the Federal Reserve's avowed aim in 1927, after the secret meeting
with the heads of the foreign central banks, to get large quantities of
that gold sent back to Europe, and its methods of doing so, the low
interest rate and heavy purchases of Government securities, which created
vast sums of new money, intensified the stock market speculation and
made the stock market crash and resultant depression a national disaster.

Well done!

Mike Sheller
(Sat Sep 06 1997 07:59)
Move over Isaiah
AURATOR: Did you ever consider taking a job writing scripture? 0 ( :- )

George Cole
(Sat Sep 06 1997 08:16)
market outlook
Despite last week's rebound the Dow has almost certainly peaked. But small caps may have another 5% or so on the upside. Strength in this sector provides still more evidence that we are in the VERY LATE stages of this bull. When the small caps roll over, the entire market will be ready for a big decline.

Gold stock action remains very bad. Sell all low volume and average volume rallies. But when we get a strong and sustained rally on VERY HEAVY VOLUME in all the majors and many of the minors -- that will be the time to take the big plunge.

(Sat Sep 06 1997 08:23)
Am off ta get my weekly "fix" of the Globe and Mail ( Otherwise known as The grope and Flail ) as on Saturday they have a good business section...
Weather: 66 degrees and not a cloud in the sky!...Whatta day...BBL dudes!
Hi Novice+Liz.........

(Sat Sep 06 1997 08:26)
@ Mainlander
M.Graves: Will be seein "the captain" today and will give em me best...and tell em ya said hello.....outta here...bye!

(Sat Sep 06 1997 08:29)
George S. Cole, I believe you are right. The DOW is showing every sign of being an old flatulently bloated market where the right pin prick will bring it back to a reasonable level. I don't think the other markets will be far behind. I think the other markets will dovetail given the dependence of the country on those commodities produced by those corporation comprising the DOW.

(Sat Sep 06 1997 08:32)
Morning Ted. I'm at the office trying to get a day's worth of work done before breakfast. I better get off here if I am going to do that. Hey, Surfer Girl, I note that you are at the beach, just as Blonde posted in past days--Surfer Girl=Blonde?? or do you hang out together?

(Sat Sep 06 1997 08:49)
@Sunday morning, waiting for my darlin' to get back from Oz
Mike Sheller:
Don't get me on scripture... Writing scripture, heh, i thought that was your vocation.

I have a wonderful iconoclastic book in my library ( love de books, heh Byron, hope you enjoy your hols, but get back in de stacks mon, Kitco need ya ) called:

"Jesus lived in India,, his unknown life *Before and After* the Crucifiction"

by Holger Kersten, Tr.from German 1986.{Element Books Ltd Dorset Uk. )

I make no bones, "fiction".

Said tome has a Fortean legion of datum to support itself, and to damn orthodox j c worship.

Road to Damascus, I think not, Jupiter aligning with Mars, who cares.

The last millenium was 1558, not 1000 AD all you internet geniuses///

{Read *"The Defeat of the Spanish Armada"* Garret Mattingly 1959 Richard Clay} ( anyone who says otherwise is to be avoided like those analysts who say gold is a good hedge against inflation ) bollocks on the facile millenium 2000 dippers.Gold, and golden Mountains, Gum Sarn will be manifest before you know it.

How do you know that what you know is not what you believe?

There, Mike, is that scriptorial enough?? : ) )

(Sat Sep 06 1997 08:50)
@George S.
There have been very few times I've disagreed with you George but the following is one of them--"Gold stock action remains very bad. Sell all low volume and average volume rallies. But when we get a
strong and sustained rally on VERY HEAVY VOLUME in all the majors and many of the minors -- that will
be the time to take the big plunge."

The way I see it the golds are going up from here WITH the small caps and any rally lasting more than a month or two should be sold into, for traders, and bought back on a pull back. Heavy volume will come in, when it's time to sell.
I see a run up of about 20-25% from here in gold stocks and bullion. Once that happens we can review the situation from a more advantageous level.
This is also true for PL and Silver.

(Sat Sep 06 1997 08:59)
I believe the Gold market had a short term low on Friday. I went long yesterday and took home the position. I wish the stock market hadn't sut it's lossing going into the close but ... I other piece of slightly bullish news, someone sold 8,000 Gold puts and bought 2,000 calls. I'll find out on monday if it was short covering or new positions.

(Sat Sep 06 1997 09:09)

I bought more BGO ( bema gold ) under $5.00usd yesterday. Now they are isueing more stock? What will happen to price on Monday? any guesses?

(Sat Sep 06 1997 09:25)
For those who asked-----more to come---
Royal Oak Mines up to 2 1/4 ( up 1/2 on the week, on heavy volume, over 2m for the week on Amex.
Asia Minerals ( 44% ) owned by RYO reported complete feasibility study on the expansion of the Yingezhuang gold mine in Shandong, China. The report concludes that a three stage expansion of the mining capacity from 400 tonnes per day to 2,550 tpd is technically and economically viable.
The proposed mine expansion will increase annual gold production to 91,000 oz at an estimated total cash production cost of US$142 per oz. The capital cost of the 2,550 tpd mine expansion is US$28.7 million. The project rate of return is 22% over an 11 year mine life. Total net cash flow over the mine life is US$146 million.
All drill core was fire assayed at an independent laboratory in Beijing and check assaying was conducted at Bondar Clegg in Vancouver.
The capital cost of the 1,800 tpd mine expansion is US$22 million. An
additional US$6.7 million is required to expand the capacity to 2,550 tpd.
Operating costs for the 2,550 tpd mine are forecast to be US$15.12 per
tonne of ore. A cash flow model for the mine expansion assumes a gold price
of US$330 per oz until June 1999 and US$375 per oz until year 2009. At a
2,550 tpd production capacity the Yingezhuang mine will generate annual
after tax cash flow of US$15 million.
AMC will receive a 50% profit share in the joint venture from the start of the expansion period. Capital payback is projected at 3.9 years from completion of the expansion. The forecast project rate of return is 22% and the net present value is US$50 million at a 5% discount.

Mike Sheller
(Sat Sep 06 1997 09:29)
25% and wait...sounds ok to me
REIFY: I tend to agree with you that the goldstocks will be putting on some fat from here, to the tune of around 25% at least. If there is one more break down, I am watching HM to hit 13 ( not very much of a decline from here, where it will make the right shoulder on an inverse Head and Shoulders formation. That would be a buy as far as I can tell, with some dry powder kept for the upside breakout from this pattern above 14 1/2. Then the 20- 25% rally would unfold, with a likely return move down into winter to test that breakout level ( 14-15 ) . After the test, I think the gold bull will start to build our "stairway to paradise!" If HM breaks down much below 13, I think I will just pack it in and take up etching or something.

(Sat Sep 06 1997 09:30)
Goldbug is the effect of Asia Minerals mateerial for RYO and if so how?

(Sat Sep 06 1997 09:31)
Hello Glenn:

Any interesting Pit chatter? Heating oils rally friday?

(Sat Sep 06 1997 09:34)
I own alot of RYO so I follow the stock closely. Believe it or not it usually leads the gold stocks. It has done well in the last week and means the rest of the gold stocks should follow soon. Check this out, I think Goldbug99 will concur.

Mike Sheller
(Sat Sep 06 1997 09:35)
Sayeth Aurator...
AURATOR: All we have are our beliefs. We cannot even expect that "reality" or "objectivity" will vindicate our beliefs in any given situation, or even liftetime. But we can only be as true as we can to what we believe, and be ready to amend those beliefs as we see fit. But not as others would force us to by THEIR beliefs. Do you believe that?

aura tora
(Sat Sep 06 1997 09:36)
@ me bed/

Grope & Flail

Heh, is a OK publisher, wuz pretty impressed when I wus up your way.
Alsoo G & M published ": :The Gold Book" By Pierre Lassande,which is none too shabby;

aurator. too much to drink, not enough to sleep; bye ;- ) )
Where dat girl?

(Sat Sep 06 1997 10:02)
@esoteric and silly stuff!
This is a silly chart. I have made the background color and the price indidcator color the same, so that you can't see the price action. What I have done, is to make a paint bar study for Fridays. If the 'paint bar' is RED, then gold closed down from Thursdays' close. I.e. Thursday = 500 and Friday = 400 then the paint bar will be red. It will be green if the opposite occurs. The idea was to see if I could determine if traders were willing to 'take home' their positions over the weekend. This is just an experiment, nothing else. Draw your own conclusions, if any can be drawn from this chart! BBL...

(Sat Sep 06 1997 10:03)
Goldbug99: The Asia minerals news on RYO does not seem material enough to move the stock. Agree?

Mike Sheller
(Sat Sep 06 1997 10:13)
My eyes are crossing now
PANDA: There's no such thing as a silly chart far as I'm concerned. I think there's something to what you've done. Looks like a string ( 2-3 ) green fridays are a set up for shorting in a flat to down market. But lo and behold, that recent bottom seems very emboldening to the weekend warriors. Could the concentration of green hue be a cry that a reversal in sentiment be brewing? Keep up the creativity. I love it.

(Sat Sep 06 1997 10:17)
Sept S&P - Following the script from previous posts ( 9/1 9:30 ) the SPU7 hit the first objective of 940. The area of a possible high for this rally has narrowed to 953 - 958. The ideal time frame is the end of next week or early the following week. If you plan on buying puts scale in over 950, buying enough time to last thru 10/27 which has been a low 12 out of 14 years.
XAU - The price pattern of the XAU is very postive. A slow, low volume, narrow daily price range, drift down leads to a sharp rally. The drift down could end suddenly at anytime and the rally last into the end of the year. The gold and silver both look like they are ready to break out of their recent down trends. Head and Shoulder patterns have the least predictive value of any pattern on a chart, mainly because they can't be called a head & shoulder until after the event is over.

(Sat Sep 06 1997 10:28)
the winds of war are blowing a gale
across the middle east. islam knows
klintons' regime will be in-effective
when push comes to shove. they know
this window of vulnerability will be
short lived, as it took 40 plus years
to develop. the guns are aimed, their
breeches brimming, the fodder in place.

enough men and material have been committed
to make for a different scenario when the
next round commences. the recent debacle
with israel being blasted whilst using
their elite commando force is indicative
of the preparedness of their long-time
militarily inferior foes. syria, iran, iraq,
and the other islamic power brokers of this
region, are ready to carry their jihad to
prophetic proportions. lower head and run
to oblivion, martyrdom awaits. what more
incentive do they need? prophecy?

organization and cooperation between the
arabs is the key to this round of hostilities.

we can expect an exponential increase in
hostilities and terrorism relative to the
time klinton has left in office. our mettle
will be tested in short order.

a headlong rush to oblivion that is dileneated
in the book of books. how rash of the brash to
even consider or support such goals, as the outcome
is a worldwide diaspora for all.

cherokee!; ) dotssmfatimm-----friend-of-the-wind@the-lake!!

(Sat Sep 06 1997 10:31)
Asia Minerals ( AMP ) Vancouver, is the icing on the cake for RYO. Effectively RYO owns 22% of the Yingezhuang gold mine in Shandong, China.
Cash flow from above mine, should be able to help other projects with their Joint Venture partner.
Global Gold Stock Report, August's 15th issue says:
AMP has a Chinese conscessions, one which covers over 9000 sq.miles is strategically located on mineral belts. The second is located, Altay Shan mineral belt ( large deposits have been found ei ) 140,000,000 Muruntao deposit in Kirghistan and Kalmakyr ( 25,800,000 oz ) .
AMP is right in the thick of it with crews scheduled to spend August, Sept & Oct following up on regional geochem anomalies, discoveries made by Chinese geological teams.
Also the company is exploring a 55,000 hectare concession in the Philippines, on Luzon, an area which which is prospective for epithermal gold, massive sulfide and porphyry copper deposits.
Asia Minerals has all the elements of a long-ball homer. Based solely in the Yingezuang gold mine in China the company should be trading around $2.
Goldbug99 comments:
I believe that it is a better play through Royal Oak Mines, as the downside is minimal ( provided of course you buy in on RYO's management delivering on Kewmess ) .

Ms. Witte has been challenged recently by the 'market' and is determined. She's had an excellent track record delivering ( cashflow ) . The market has 'punished' her & RYO's stock price during the last 9 months, ( a $50 drop in gold prices have taken $258M market cap. or 60% of the company's Dec.96 value, due primarily to euphoric production estimates ( unmet ) & the Colomac open pit mine, which has now been written off, and market killers who continued a 'margin squeeze'.
Recently RYO announced that underground mining potential has been identified at its Colomac minesite & that drill results from various exploration programs indicate that there is excellent potential for future underground mining at Colomac. A joint venture partner is being pursued.
Ed Szol, new COO has been making a very POSITIVE major impact and has allowed Ms. Witte to concentrate at what she does best, wheeling and dealing ) her forte'.
The 'margin squeeze' is over, as the stock is in strong hands.

I won't say more----but 'heard' very reliable & primary source, that stock will be 'pushed' in the 'fall.'
FYI - goldbug99 has a SUBSTANTIAL position and adding. At $2 bucks or so the downside is negligible ( unless Kewmess is a complete bust!----the upside enormous-----
Note: To all perform your own diligence.

(Sat Sep 06 1997 10:46)
RIEFY: I agree, stock movements more often have heavy volume at the end of the move, not at the beginning.

(Sat Sep 06 1997 10:52)
Cherokee: It doesn't matter whether we help Israel or not, once there is an outbreak of major hostilities, the oil supplies to the west will be interrupted, disrupted and/or sharply reduced. I don't know how gold will be affected, but I am buying into small cap domestic exploration and production companies which should show the best returns. Take a look at the last 3 days of volume on TMR! Any thoughts?

(Sat Sep 06 1997 10:57)
Goldbug99: The China JV is old news, and in any event, would not seem to have a direct and immediate impact on RYO and thus is deemed not material. The question not answered with respect to Asian Minerals is whether it will be allowed to expatriate all or part of the cash flow. RYO is substantially undervalued if Kemess is developed into a successful mine under the pro-forma criteria and is substantially leveraged to gold. Thus the closer the mine comes to completion in the spring and the more convinced the investment community becomes that the mine will be completed on time without substantial overruns, the greater will be the possibility of RYO increasing in price. Therefore, any "push" in price in the fall is dependent on these factors. I would agree on a risk/reward basis, RYO is a good play.

(Sat Sep 06 1997 11:05)
Kestas: The BGO issuance of shares to recall the convertible should not have a material impact on price as these shares have already been factored into price and could have been obtained in any event by the holders. What it does do is improve the balance sheet and release the shares when the common is at a low point in the cycle.

(Sat Sep 06 1997 11:07)

the arab opec countries have ALREADY
agreed to embargo the west if/when
war breaks-out and the west tries
to assist israel. the west WILL try
to assist, and we will see another oil
embargo. this time will be different
however, escalation and new players
will see to that. the entire middle east
is being swept by fundamentalism and the
liberal countries ( saudi, kuwait, etc.. )
are terrified of the coming internal
upheavels that have already begun.

the next middle east war is already behind
schedule according to leading prognosticators.
our senate expected an outbreak of war before
dec '96.

gotta go--------------the wind calls-----------

(Sat Sep 06 1997 11:13)
Speed -- I was surprised to read, if I recall correctly, that the
majority of imported oil now comes from the Western Hemisphere,
particularly Venezuala. The middle east comprises 18% of imported oil
supplies, 14% from the Saudis and the remainder elsewheres. Of course,
a major supply disruption in the Middle East would impact prices

But I do think that the shift in origin of imported oil, besides
reducing OPEC's clout and maneuvering room, would ameliorate the effects
of a disruption in the Mideast pipeline relative to say some years ago
when things were marketly different than today.

(Sat Sep 06 1997 12:06)
2BRO2B: A sudden 18% cut in supply would be traumatic. I wish I owned a couple of oil wells! : ) Japan and Western Europe would be hurt much more than 18%. The EMU might happen out of necessity, instead of by design. Just fodder for cogitation. BBL

Kahunna Grande
(Sat Sep 06 1997 12:07)
Crude Oil Disruptions
If the mideast would blow up as our the problem would be the delivery of refined products. As refinery expansions in the US are restricted by environmental regulations the delivery of crude oil and our dependence on it is moot. The refineries are running flat out. The crude oil that comes out of the permain basin once went to the gulf coast for refining. Now the majority goes to Cushing and is then sent to the midwest refineries. It now takes over three weeks from the field to the refinery where it used to take seven to ten days. Hopefully if the arabs embargo us and IMHO they will not, the South American and North Sea producers will be able to ramp up production. The exploration companys are finding crude oil out here left and right. Using 3D sisemic and new completion techniques, the old fields are revealing production that was overlooked. The companys are making money at 20 dollar oil. The biggest problem here is finding people to work on the drilling rigs. 86 to 92 starved a lot of people out.

George Cole
(Sat Sep 06 1997 12:10)
Reify: I have learned through experience that low volume gold stock rallies are not to be trusted. They do not go far and do not last long. The 1993 gold bull had very heavy volume most of the way up.

(Sat Sep 06 1997 12:28)
Nicest ( weather-wise ) day of the year! 73 degrees, crystal clear blue skies, no humidity and approx. 15 MPH sea breeze...Just back from stimulating seakayaking "trip"....Aura Tora ( 9:36 ) the nature experience of Cape Breton is something you can't buy in the states...the people: well that's another story!

(Sat Sep 06 1997 12:33)
Cherokee ( 10:28+ 11:07 ) It's only a matter of time as the next Middle East war IS overdue....Tort: Get the hell out of that office....and kick back to some football er somethin....Too nice ta be in front of this damn machine....time fer a ocean walk with the wife + Willy....P.S. Cherokee: Willy says arf...arf...BBL dudes....AraFAT sucks!

(Sat Sep 06 1997 13:06)
Mike Sheller: Your point on HM is well taken, the majors are all looking on the chart as if they want to come down to test support. The fly in the ointment is ASA which is close to its lows and would seemingly break its lows with conviction if the other majors retrench to support. I view ASA as a key stock which if broke down would lead the whole complex to lower lows which I do not believe is in the cards, at least not until a significant rally. Thus, I do not believe the majors will move significantly lower from their present price, notwithstanding the chart patterns.

(Sat Sep 06 1997 13:09)

You will recognize this as a "type one" trade setup for "Advanced Get"
users.. Looks positive for XAU, short term.


(Sat Sep 06 1997 13:20)
SKYLARK: Another benefit ( BGO ) is the $1.7 million annual interest bill that does not have to be paid ( if I did the math right ) .

(Sat Sep 06 1997 13:26)
DONALD: I presume that is the major reason for the redemption. But another more sutle reason is that the bond holders were probably contributing to the decline in BGO by shorting the stock as a hedge. Thus, the redemption removes this technical negative factor. BGO would appear to be a good buy at this level if there is any truth to the CC venture, which I find difficult not to believe in light of cumulative facts.

(Sat Sep 06 1997 13:31)

Thanks to all BGO comments. I already feel better about my friday purchase. If anyone has more to add keep it up and thanks again.

(Sat Sep 06 1997 13:36)
RYO may be upgraded to a buy by LeeAnn Baker of Solomon Bros. if Kemess comes on properly. She is thick with CEO and resident genius Peggy Witte. Kemess is only part of the story the other high quality properties they have rights to are impressive. LeeAnn is calling for 9US nex year if all goes well. Peggy Witte is one of the smartest executives in the industry and her hedging program is nothing short of phenomenal.

(Sat Sep 06 1997 13:43)
APH: I'm with ya' on your time-frame to short stocks and buy puts.

(Sat Sep 06 1997 13:43)
TW: Peggy is a two-edged sword. She has been good at the hedging but not in delivering what she has promised to the investment community - thus the wait and see attitude with the stock. Moreover, she is a one-woman show with the company, and installing a COO with a background in human-resources does not instill confidence in mine management - which has consistently been the achilles heel of this company.

(Sat Sep 06 1997 13:47)
Random thoughts on Di funeral:

I turned on the TV to network CBS,
There was Dan Rather giving his usual BS.
He was comparing Di to Mother Theresa,
( I prefer the jokes of a man called Tortfeasor. )
There was Charles faking he was mourning,
What a way to spend Saturday morning.
I guess I've had enough of this trash,
I'm going back to analyzing the crash.

Hey, EB, I'm AWAAAAAAAY ( to read Barron's ) .

(Sat Sep 06 1997 13:50)
Heard from reliable source that at these levels RYO is takeover bait. Thanks for info on the stock GB99 I own some. Thinking of buying alot more. Still a little nervous about gold.

(Sat Sep 06 1997 13:51)
APH: Thanks for your comments. I am also in agreement with your thinking. It is hard to see the XAU, or gold for that matter, breakdown with the recent price action and volume - unless of course a major negative news announcement like the Australian report is made. I would also think that year end tax-selling of depressed gold issues may not be as a significant factor as some contend in view that weak hands should have already left the market.

Who Cares
(Sat Sep 06 1997 13:53)
What Good Is A Clinton Painting?

For those of you who might be wondering WHY anyone would steal
a painting of our beloved President, or has been wondering
HOW to get in the plundering of the country ( if ONLY I had
memorized the Redeye missile frequencies. : ) ) ....

Company Accused of Defrauding Thousands with Help of Clinton Photo


MIAMI ( AP ) The government calls it a multimillion-dollar pyramid
scheme, while attorneys for a Miami jewelry company say the firm was
victimized by overzealous law enforcement.

Both sides agree that using pictures of President Clinton with company
executives to lure investors was a bad idea.

Investigators said Unique Gems International Corp. used the photos to
help defraud 15,000 investors of almost $40 million in a pyramid scheme
using cheap necklace kits.

Richard Sharpstein, attorney for company president Enrique Pirela, said
using Clinton's photo on brochures was ill-advised but "has been blown
out of proportion."

The executives fled overseas before the collapse of the fraud, one of
the costliest credit-card scams in U.S. history, according to

The cost of the collapse to almost a dozen banks and financial service
institutions could reach $20 million; many investors tried to issue
"charge-backs" to stop credit-card payments to Unique Gems.

A judge shut down the company in March after authorities decided it was
an illegal "Ponzi scheme," in which early investors are paid off not
through legitimate profits but with money from more recent investors.

Sharpstein said the company was not a pyramid scheme but was hurt by
premature enforcement efforts of Florida's attorney general.

"We say Unique Gems was a well-intentioned business, not a fraud,"
Sharpstein said Monday. "The attorney general jumped in far too quickly
to shut it down."

Early investors would give the company $3,000 for a kit worth about
$100 to make necklaces out of beads and thread and return them to
Unique Gems for up to $4,800 per kit.

Those who charged the initial investment to credit cards could make
$1,800 without spending a dime. Some invested more than $100,000 for
the quick profits that were available at first.

The attorney general's office determined the necklaces were virtually
worthless, assistant Attorney General Jody Collins said.

A court-appointed investigator, Lewis Freeman, said about 30 Unique
Gems executives and workers attended a Democratic National Committee
fund raiser at the Biltmore Hotel in Coral Gables last fall, buying
their seats with $85,000 contributed to the DNC by others.

Investigators were trying to determine whether such donations by third
parties violated federal law.

During the event, Freeman said, the executives posed for photos with
Clinton and later reproduced the pictures in newsletters mailed out to
potential investors.

The fliers showing a smiling Clinton with a company executive and said:
"The company has been honored by President Clinton for its role in
helping many people with real opportunities to earn a well
above-average income."

DNC spokesman Steve Langdon said the Democrats have no record of
contributions from Unique Gems and "to the best of our ability, we'll
be assisting ( Freeman ) to determine whose names are connected with the
donations. The DNC will refund the appropriate amount of money."

Copyright  1997 Cable News Network, Inc. A Time Warner Company

Who Cares
(Sat Sep 06 1997 13:57)

So. Greenspan sez that the Nikkei "affected" the real economy. : )

A gratifying admission. Sounds like interest rate hike to me, pals.

Maybe he's hoping the market will crash on its own and save him
the trouble. : )

Who Cares
(Sat Sep 06 1997 14:15)
Internet Dead - Film at 11

If you believe that high-tech in general, and the Internet in
specific, are prime drivers of the current economy, here's the
latest in Doom & Gloom -


"For years, studies have shown skyrocketing Internet growth, but a
new survey suggests the number of U.S. households with on-line
access has dropped by more than 5 million since early last year.

The Net "could be the CB radio of the '90s," said Gary Gabelhouse
of Fairfield Research, Lincoln, Neb. "This decline does not bode
well for Internet advertising nor entertainment content providers.""

Okay, Gary. How much did Greenspan pay you, pal? I want some
of that action. For $25K, I will happily "confirm" your findings. : )

(Sat Sep 06 1997 14:15)
@Princess Di
You have to wonder about the Royals when three of the Queen's Kids divorce and the last is considered a little light in the feet. This makes me think Dianna must have been close to the good person they are portraying. She took up causes and ACTUALLY got her hands dirty. Bully for her. The Windsor's record makes it look as though they are the disfunctional group having three divorces and one light in the feet. Hoprfully Di's kids will get past the apparent disfunctional Windsor influence. I think Di must have been a good person to put up with Charles, Camilla and the House of Windsor.

Who Cares
(Sat Sep 06 1997 14:21)
Princess Di

Yes, Ted, but what is our MOTIVATION? Why do we CARE about
Princess Di? I mean, I could handle it as a NEWS STORY, but
Jesus Christ, the television last night was laughable.

On the other hand, it can only be good for gold. The rush
for the Princess Di coin will be phenomenal. Now, the ultimate -

The Princess Di PLATINUM PROOF coin! Man. How HARD could it
be to stamp a bunch of these out?

(Sat Sep 06 1997 14:28)
Peutz: You can't get away from trash. What are your views on Mother Teresa or dare we ask?

(Sat Sep 06 1997 14:32)
@Princess Di
My wife and some of her friends are using our TV to tape the whole thing soup to nuts. Arent I lucky that I get to watch all again. They all went crazy over Elton John's rendition of his famous yellow rose song or English rose. Whatever. Would any of you like me to run you a copy of the tape FREE.

Who Cares
(Sat Sep 06 1997 14:38)
Oligopolies, Depressions, Internet

Rambling thoughts - Yes, 6Pak's posting have been interesting. I'm
not agree with the premise that depressions exacerbate oligopolies.
It's sure an interesting idea, though.

I'm watching a PBS show about the Internet. I think it's clear that
the Internet represents a free market, while CBS, ABC, and NBC
represent the Royal Family, oops, I mean, represent an oligopoly,
and I think the difference is CRYSTAL CLEAR.

I've got a model in my head of how the Internet/information should
alter the general economic structure over time, but I can't figure
out a way to USE it for anything. I used a similar model for software
that I designed for the Feds, and it worked extremely well. We had
a problem where we need a COMMON CORE set of elements, but we also
need to allow each State to differentiate the software, i.e. FIFTY
additional DIFFERENT, INDEPENDENT sets of elements. I could draw
it on a Venn diagram if I had videoconferencing stuff. Imagine as
a set of overlapping circles, like a bunch of hula-hoops thrown over
a pole ( pole being the common elements contained in EACH State ) .

Anyway. This PBS show was about soap-operas on the Net.
Essentially, you get a diffraction and diffusion of information.
Ergo, a breakdown in a common belief system.

How can this bode well for large, central structures like the
Federal government, or central banks? I just don't see how it can.

I can see electronic money, that's okay, but there has to be a
common REFERENCE to all of them. For the life of me, I just can't
see GOVERNMENT, or PAPER, doing this in a trustworthy fashion.

I can't take this idea anywhere. I mean, it's obvious that it
requires gold as a independent reference standard. Or something
similar, like a marketbasket of commodities, etc.

I just can't figure out how to EXTRAPOLATE anything from it, to
make predictions from it.

Who Cares
(Sat Sep 06 1997 14:42)
Tw - Eh?

No, I don't want a tape of PRINCESS DI! I want your wife and
friends to go buy a commemrative coin. Each. : )

Mike Sheller
(Sat Sep 06 1997 15:06)
Gnashing Rambler
WHO CARES! : re rambling thoughts and hula hoops ( rainy days and sundays get me down ) - the net will support communication and reformation of the pieces of society as it breaks down. ( See my essay "The Aquarian Imperative" on Gold Eagle - early July I think ) ( ( sorry for the plug, but it's a long story ) ) . The internet will facilitate the seperation of realities and their concretization through communication. Security and encryption will tend toward underground societies proliferating with less and less government control, awareness, or power. Transactions will take on a new, free character once internet and electronic institutions bold enough ( or off-shore enuf ) to circumvent government awareness prevail.
Then government will shrivel through being AVOIDED, SIDESTEPPED, and, finally, simply IGNORED. Any and all factors which facilitate this through the internet will be appreciated by those who are tired of carrying the burden and are seeking relief. Those who provide this function will prosper, and be the keepers of the net. To date, early efforts are mere seeds. The cyber world is itself a mere seed. The future will be awesome. The government will try to monopolize the ether as it has before, but at some point there will be a breakthrough in transmission which will require no measurable or apportionable frrequencies, lines, or conduits. There will be no interception, no prevention, no censorship. What do you think?

Mike Sheller
(Sat Sep 06 1997 15:10)
ASA man thinks...
SKYLARK: Your comments are sharper than a Sykes-Fairburn commando dagger! I own some ECO, and this too would make ugly new lows should HM & others complete that bottom. I was not saying the H&S had to complete necessarily ( I know you knew that ) - I just think it gives us one last technical clue/hope/potential if there's further erosion from here.

bb fisher
(Sat Sep 06 1997 15:11)
this article by harry rood at:

says it all. the chart below is extracted from his thorough piece.

Mike Sheller
(Sat Sep 06 1997 15:17)
Rally round the flag pole
WHO CARES!: Perhaps I'm saying that the pole the hula hoops will spin around is a net that is freed from the threat or possibility of control ( save what adjustments owners of hard or software might chooset to enforce in their own homes or businesses. Unimpeded, totally secure use of a total communication system ( written, seen, heard, and eventually, thru VR, touched ) will be man's physical replication of so-called psychic communication. When they perfect the thought and dream police, then we can worry. If you can find a way to throw up the invisible sheild around net users, you will have a commercial concept for the future.

Mike Sheller
(Sat Sep 06 1997 15:27)
Rood Awakening
BB FISHER: I think Rood's chart of the Dow in constant '97 dollars was the real eye-opener. From memory, I'd say it looks a lot like a long term view of the XAU.

(Sat Sep 06 1997 15:34)
Fundy: I'm not gonna' touch the Mother Theresa issue. I'm already in enough hot water over other issues that I have stated an opinion on.

(Sat Sep 06 1997 15:35)
Ted: Regarding location of Cape Bretton? I never was very good at geography.

(Sat Sep 06 1997 15:36)
SKYLARK, KEISTUTIS: BGO is due for a quarterly report soon. Last report was July? and book value was about US$6.00 which seems to good to be true in this market. I think the CC find is very real and they are a takeover target because. Converting the converts could be a way to remove an obstacle to a takeover. Si?

(Sat Sep 06 1997 15:37)
TW@Princes Di: Thanks for the tape offer but you would have to pay me to take it. I think the media is trying to make up for killing her by awarding sainthood. Now you know what I think of the media.

(Sat Sep 06 1997 15:45)
Quote from this week's Barron's: "BEAR SIGHTINGS AT JACKSON HOLE GIVE BOND INVESTORS HIGH ANXIETY -- Bear sightings in Yellowstone National Park are common this time of year. Bond Investors won't be happy to know that a few were also spotted at a Federal Reserve gathering in the region recently. The Kansas City Fed's annual symposium in Jackson Hole, Wyoming is renowned for generating market-shaking news about interest-rate policy and trends in the economy........"


1 ) Ted, Donald, Who Cares, Eldorado, or anyone else been in Wyoming this Week?

2 ) Donald, Who Cares, or anyone else: Do you suppose Greenspan's comments last night about the Japanese stock market in 1989 was an indirect reference about the condition of our stock market in the US in 1997? If so, how do you suppose the markets will react monday?

(Sat Sep 06 1997 15:53)
Princess Di and Mother Theresa
Just a few days ago we had some heated exchanges due to the Oldmans post
on Di,, some posts claiming her being the greatest human being, etc. and
somebody saying ( maybe it was Oldman ) that the way we approach the whole
event is just another proof of the western civilization decline.

Suddenly Mother Teresa passed away and I was really interested how will
the people and media react. Sure enough, Mother Theresas death is
greatly overshadowed by the Royalty. I dont see millions of people
having the great feeling of loss, I dont see the media flying to
Calcutta, or thousands laying flowers at cathedral steps.

What a difference. One worked most of 87 years quietly, out of the media
spotlight, helping people, the other was in the media spotlight half of
her 36 years and by our reaction the later one is the bigger loss to the
human race.

India declared the day of national mourning while the western world was
glued to TV sets to watch the royal funeral. I am not overly religious
but somehow it made me think .. maybe it happened by a design from the
Higher Power .. to let us think about humanity and to react. Well, if
that was the case, the western civilization failed the test miserably.
One could say "God help us" - maybe he tried by sending us Mother

(Sat Sep 06 1997 15:54)
STEVE PUETZ: Your 13:47. Couldn't agree more. We are seeing crowd behavior at its best if I ever saw it. A close study of her would hardly make her saint material. A quote of hers from the L. A. Times about all she did for the royal family using the F word was rather reveling. She sure did know how to play the media however. If she didn't know about Camille beforehand she should have. The press covered that often. Lets give her A+ for acting.

(Sat Sep 06 1997 15:58)
Mike Sheller: Thanks for the reply. I have not been encouraged by the price action the last few days in the majors. Although I recognize that this is not necessarily material as it is hard to tell from one day to the next the future price action of a gold equity, as one day they will look positive and the next negative. However, I was disappointed to see the sell-off in NEM and ABX Friday, even though minor, in view of a positive movement in gold. But conversely, they are doing remarkably well considering where they were when gold was at this level previously. Thus, like you, I believe that even if gold were to make new lows, the XAU has plenty of room to maneuver before violating its lows - and this could set the stage for a false break-down and bear trap in gold. But as mentioned, ASA is on very important LT support which should not be violated, and any breakdown would greatly concern me over the prospect of the entire complex.

George Cole
(Sat Sep 06 1997 16:10)
Puetz: Greenspan has become a negative stock market indicator. The market dropped briefly after his "irrational exuberance speech in December, but then soared. Stocks rallied for a few days in the wake of this summer's "rationale exuberance remarks, but then dropped sharply. If this pattern repeats, the markets will slide Monday, but then rebound strongly the rest of the week.

Mike Sheller: This Monday is the date your recent interviewee expects the market to plunge 300-500 points. Should be an interesting day.

(Sat Sep 06 1997 16:15)
DONALD: I thought of this also, it cleans up the Bal. Sht. But BGO management contends it does not intend to sell the complete deposit. The fall-off in the price of BGO is indeed perplexing, particularly as at this stage the suitors should have by now had a good look and rumours of any take-out would be expected to be in circulation. Trying to make sense of this, I believe the resource is there - but the knock from the street may have validity - that is that when considering grade, content, cost and time, the resource may not be as valuable as BGO contends. Also, the copper content does not demand the premium as would a pure gold play and any acquiring gold major may be concerned how that would affect its equity valuation. Further, there are a lot of new large copper deposits competing for development money which may detrimentally affect the price of the CC deposit, and copper is expected to weaken in price due to new projects coming on. Consider how poorly FCX is doing despite high gold content in its resource and the cash flow it is throwing off. If you have any ideas on BGO and its relatively low price, I would welcome reading them.

(Sat Sep 06 1997 16:20)
SKYLARK: I think the correlation between the majors and the SAs at this point is weak. When the turn around comes the majors will be the first to take off, followed by the juniors and then the SAs IMHO. ASA of course acts before the actual individual mines in SA I believe. When the turn comes we can hope the level of the water will raise all ships. It is going to take some major event it would appear. War somewhere? Middle East? Korea? Civil War in SA?

(Sat Sep 06 1997 16:29)
PUETZ: No I was not in Wyoming last week. I didn't want to scare any of the tourists. When they see me they throw sandwiches at me, roll up the car windows and speed off. Yes I do think he was saying that "we are going to take the market down for a spell" and he was using Japan and the 1989-90 experience as an excuse. I read recently ( Kitco? ) that the stock market speculation is drawing too many of those delicious 1.5% passbook deposits from the banks. They want to scare some of that money out of the market back into the banks so they can lend it out at prime +2.

Greenspan and the Fed think they are omnipotent and can tank the market now and let the dipsters back when it is convenient. One false move and it will be over for good; but I think they are going to try. I have been expecting them to do something with margin requirements any day now.

(Sat Sep 06 1997 16:31)
Goldbug23: ASA is more than just a proxy for RSA stocks. I consider it a good indicator for the future direction of gold as it follows the performance of gold more directly than any of the other equities. You will notice that it is on its low when gold made its low in 92-93, unlike the XAU which is substantially higher. Unfortunately your comment with regard to gold not changing its trend until a major event dictates it to do so is probably valid. But by following charts, hopefully, one can receive an insight in regard to this before the event occurs.

(Sat Sep 06 1997 16:32)
MIRO: @Mother Theresa and Princess Di ) I believe the "silent majority" of the world are more saddened by the death of Mother Theresa than Princess Di. Regardless of how the press plays it. As to who made the greatest contribution - no question in my book.

(Sat Sep 06 1997 16:36)
Mike Sheller - your 15:06 post

"Transactions will take on a new, free character once
internet and electronic institutions bold enough ( or
off-shore enuf ) to circumvent government awareness

Mike - Are you assuming the IRS who has their nose in
all financial transactions is simply going to give up
and turn in their guns and badges?
Then government will shrivel through being AVOIDED, SIDESTEPPED, and, finally, simply

(Sat Sep 06 1997 16:40)
SKYLARK: You are right on ASA being a lightning bug ;- ) re the gold price which is interesting and tells us the short and intermediate buyers really often do not understand what they are buying I suspect. ASA gets a good following from the financial press but we know how much they really know about gold don't we? In the long run I have stuck with the majors and it has worked out best for me - a long term investor.

(Sat Sep 06 1997 16:41)
Is it possie that majors interested in BGO acquisition had early news of BGO 2mil share dilution and have used this as as opportunity for pre-emptive stock attack by selling down BGO? Doesn't lower stock price make BGO more vulnerable in negotations with major ( s ) . Just another conspiracy theory...

Mike Sheller
(Sat Sep 06 1997 16:44)
MIRO: God does send folks by now and then to wake us up. Usually we murder or ignore them. The spectacle of the world is what we come here for. Is it any wonder that the spirit suffers. Even Di, for all the adultation, was crucified needlessly and gratuitously by some "intelligent" men at Kitco. It is the human condition. Forgive them, Miro, they know not what they do.

(Sat Sep 06 1997 16:46)
SKYLARK: I would think the whole company is for sale, not just the CC deposit. The Refugio mine was shut down for 12 days due to heavy snows, also, two Chliean senators have been pushing legislation to impose an extraction tax. That could hurt all miners in Chile.

(Sat Sep 06 1997 16:51)
( Let me try again. )

Mike Sheller - your 15:06 post

"Transactions will take on a new, free character once
internet and electronic institutions bold enough ( or
off-shore enuf ) to circumvent government awareness
prevail. Then government will shrivel through being
AVOIDED, SIDESTEPPED, and, finally, simply IGNORED."

Mike - Are you assuming the IRS who has their nose in
all financial transactions is simply going to give up
and turn in their guns and badges?

(Sat Sep 06 1997 16:51)
Goldbug23: I believe you are right on the majors. Mining is a risky business, requires large capital and a spreading of risk. Unlike a junior, a major can hide all sorts of problems as not being material for disclosure. And it can spread the risk over a plurality of mines. In addition, one can always be assured that if gold goes up, a major will participate in the movement. With a junior, one incurs risk not only in the mining play but in participating fully with gold in any rally. And a junior often has a world of hurt when it finds a large deposit requiring substantial capital and management to develop.

(Sat Sep 06 1997 16:53)
This will bring you up to date on the Chilean Extraction Tax.

(Sat Sep 06 1997 16:55)
Donald: I thought you ment that in your earlier comments - but BGO management has not favored a complete sell-out in public statements. It also has, I believe, a poison pill provision. But of course that can change.

(Sat Sep 06 1997 17:00)
Environmental issues in Chile. The "Green Bench". Secret gold mine.

Mike Sheller
(Sat Sep 06 1997 17:01)
Shrivel Shrivel, toil & trouble...
LURKER: Not without a fight, certainly. But what I am seeing is a losing fight as technology frees us more and more, and government is effective less and less. I am talking, of course, about transactions much easier to affect in the GREY MARKET, out of sight and out of mind of IRS, or ANY government agency. Government is overextended even now - the IRS cannot keep up with its mandate or its technological needs. If there is a financial implosion for government, and the institutions we know are shaken any further, government will have to loosen its grasp on everything it has commandeered to date. First pockets, then regions and large factions of private citizens, will take back their right to live, feed themselves, work, protect themselves, and guarantee the transactions of their choice, without censorship or manipulation by "representatives." They will do this because government will have defaulted on its promise and mandate to do so. The handwriting is on the wall as many social and financial instutions are now approaching the brink, and must be dissolved or privatized. What I am talking about will come to full fruition years, perhaps decades from now. But it will come. And technology that guarantees privacy and anonymity will make it happen. Along with the gradual movement of productive, aggressive citizens into such a mode. Then who will stop it? Government paperpushers three steps behind technologically? What do you think, lurker? Is there a limit to technology? Is there a limit to human ideas? Would like your thoughts.

(Sat Sep 06 1997 17:03)
DONALD: Thanks for the comments on the royalty tax. It always seems to be the case that an under-developed country first encourages mining to gain revenue and then after it sees the profits being made by "successful" companies, and ignoring the cost and risk associated with exploration, attempts to gain a portion of the proceeds on the basis that it is entitled to its share of proceeds from its natural resource. The same thing is now happening in Argentina. I wonder if the tax will be retroactive. It may give BGO cause to sell - it may be another reason why the stock is low.

(Sat Sep 06 1997 17:08)
Cherokee: Your 10:28. You did not comment on what the Ruskies will do if the Middle East blows up. I suspect they will be there with the Arabs and I agree with you as to where we will probably be. I say probably because I have read that Hillary has a thing for the Arabs and I wonder how often she is calling the shots for the Administration. The whole thing has the potential for WW III. And you know how we have cut our defenses! But then, what do the Russians have other than missiles? And that may be enough for a lot of damage. You know who has fought our getting an adequate missile defense!

(Sat Sep 06 1997 17:17)
Its been seen the prez for Flag Resources has been escorted around the Wanapeti Park surface showing by none other than the Wanapeti First Nation. News is still coming in but its only days until the a publicized
final to this long awaited conclusion on this spectacular surface showing is announced. Inco to the left, Falconbridge to the right and Flag is stuck in the middle. The surface showing contains massive amounts of gold/quartz rock and it proceedes from one side of a small lake over to the other side and is visual to the naked eye. Who could be the the cheapest Gold company in North America, stock price vs. reserves,
you know it fgr.a:ase!! We'll walk over you to see The Who!! The Mining

(Sat Sep 06 1997 17:20)
My wife is watching CNN news and says that the attorneys representing Paula Jones are going to withdraw from the case.

(Sat Sep 06 1997 17:36)
Extract from a USA Today article about Balanced Mutual Funds.....Deflation. The USA flirted with deflation - when prices fall broadly - in the 1990 recession
and its aftermath, but deflation hasn't been a major concern since the 1930s. Nevertheless,
deflation hasn't been eradicated in the modern world, as investors in Japan could tell you.
Should the economy tumble into deflation, bonds are the ideal antidote: Interest rates plunge
and bond prices soar when deflation strikes.

(Sat Sep 06 1997 17:36)
Re: your 15:53. I agree with you 100%!

George Cole
(Sat Sep 06 1997 17:39)
gold outlook
Goldbug 23: Gold could well start its next bull move for no apparent reason except that some big players finally conclude the paper markets are going to blow up, gold is cheap, and the time is ripe to massacre the shorts. The gold market is tiny compared to stocks, bonds, foreign exchange, and global money supply. It wouldn't take much of a portfolio reallocation among a few big players to send the yellow through the roof no matter how much the CBs sell.

(Sat Sep 06 1997 17:45)
@Jose Cuervo
Jose Cuervo lives......will I????? Whatta day...spectacular....Go gold!

(Sat Sep 06 1997 17:50)
Cherokee your 10:28 and Goldbug23 your 17:08. I think the U.S. Government has a few "surprises" in their weapons arsenal. Heard of the HAARP project? Interesting "research" project which I believe is based on the work of Nikolai Tesla. Check out the following pages.

1 )
2 ) Most interesting are the
"Vandalism in the Sky" and "Ground Based Star Wars" links. This site
is accessible through the first link.
3 ) ( The
Official HAARP web page ) .

Question is, will the U.S. use HAARP for defensive or offensive purposes? It's probably a sure bet that the Russians also have also been working on their version of something like HAARP. Wonder if the U.S. or Russia will use their "research" projects in the next Arab-Israeli war.

(Sat Sep 06 1997 17:56)
Re: your comments about RYO new COO with a background in human-resources does not instill confidence in mine management - which has consistently been the achilles heel of this company" are very harsh. Royal Oak Mines, management, has had a stellar performance keeping in mind that they turned a positive cashflow from high cost producing mines, where others failed . Peggy operated these high cost mines when gold was priced in the low $320's in early 90's efficiently and capably, which should put her ability to manage to rest.
Perhaps the market was let down on the misfiring of Lac and subsequent lull prior to the acquisition of Kemess.
The non-delivery of production/cost estimates were due to poorer & unpredictable grades out of Colomac.
I would rather suggest that her tough no holds barred negotiating attitude has turned a few noses out of joint but not her ability to lead.
Comparatively speaking, RYO, is tremendously undervalued. I've done comparisons with the likes of Eco, Kinross, TVX, and on a reserve and cashflow performance basis and RYO compares favorably.
The new COO Ed Szol has more than Human Resources background. ( this is from RYO appointment release ) Prior to joining Royal Oak, Mr. Szol was a vice president of Nerco
Inc., a Fortune 500 natural resource company which had annual
revenues in excess of $900 million from business units in coal,
natural gas, gold and silver. Mr. Szol also served in a similar
executive position at Bell Helicopter, a worldwide manufacturer of
helicopters with revenues in excess of one billion dollars.
Skylark, your point earlier point that investors are waiting to jump in as Kewmess target date ( April 98 ) is well taken, however, my knowledge indicates that an AGGRESSIVE promotional campaign will be ( is ) undertaken in the fall, and that 'specific' strategy is in place to enhance shareholder's value. Keep in mind that the present two operating mines have an estimated cash operating cost, which is under today's gold prices, and fully hedged at $395 U.S. ; and WHEN gold moves up a bit, ( 340-350 ) you can be sure Peggy's hedging expertise, are going to put to rest the uncertainties of future cashflows, as RYO costs next year should be around $250-285 ( managment thinks it'll be lower ) however they should be allowed at least a 10-15% margin of error.

Who Cares
(Sat Sep 06 1997 18:03)
Greenspan & Nikkei

I pretty much agree with Donald. Greenspan is either planning,
or hoping, for the market to pop. I consider the comments about
the Nikkei to be ominous, at best. : )

I would be surprised if he tried direct action, like raising
short rates. He's already got the precedents of Japan 90 and
USA 29 to work with. : ) I doubt he wants to go down in history
as the guy who "caused the Crash and Greatest Depression in History".

And I hope he isn't using the Nikkei bubble pop as a working
model to emulate. It looks successful now for the past seven years,
but I have real doubts about another year or two from now.

Greenspan NEEDS markers to disappear somehow. A crash would
be good. If the Powers That Be can scare money back into bonds,
drive rates down BELOW 5.7%, then re-inflate and destroy that
money, they can run the game for, gosh, 2, 3, maybe four more
years before they need another fix. A repeat of 93-94. Maybe
he find enough suckers for it again.

If I were Greenspan, that is what I would try to do. Of course,
I don't have fifty years of experience, and unlimited data and
computer power available to me.

Who Cares
(Sat Sep 06 1997 18:20)
What is going on?

As of today, I have now received over $92K in "home equity"
loans/checks in the past 40 days. Maybe this normal. I have
*never* received anything remotely like this before. We did
purchase and paid down a lot on the house in April. But...

this seems kind of excessive.

Mike Sheller
(Sat Sep 06 1997 18:24)
TO ALL ARMAGEDDONITES: And WHY, pray tell, would Russia, basket case that it is, want to, need to, be beholdin' to, support ANYONE in the Middle East if a Buzzard F*ck erupts out there ( which it very well might ) ???????

(Sat Sep 06 1997 18:39)
Shriveled up to nothing
Mike and Lurker: The shriveling process has already started. Both Canadian and US secessionist movements have taken root, nourished by hard money sympathisers. A brief news release about the present status of the Canadian movement: And a website about the US neoconfederacy:

Who Cares
(Sat Sep 06 1997 18:42)

Re: Secession in the United States. I will make no claims here,
I will only post a link. : )

Look closely and ponder the two Roman empires. : )

Sheller: Later on your article. I need to think.

(Sat Sep 06 1997 18:43)
Mike Sheller: Agreed, Russia should be in no hurry to show its impotency.

Who Cares
(Sat Sep 06 1997 18:45)

Think about what a national government DOES, and then check
this link: : )

(Sat Sep 06 1997 18:47)
Goldbug99: I like Peggy and her pizzaz and for that reason as well as the current low valuation of the company and its potential is why I have a large position in the company. But my prior comments stand.

(Sat Sep 06 1997 18:47)
MIKE SHELLER: No leaves turned here yet except the dogwood but that seems to be from the heavy salty rain during a storm two weeks ago.

Russia and Islam. For sure I agree with you. They are at odds over Afghanistan and Chechna during recent times and conflict since 1000 AD all along the southern borders. The old Soviet Union was never a "union" by choice.

(Sat Sep 06 1997 18:54)
@...retraction of my earlier BGO comment
I have now reviewed the Bema Gold 1996 Annual Report, note 10, Convertible Debentures. The long and short of it is that BGO made the correct decision to redeem the convertible debentures for stock at U.S. $2.05 strike. If BGO management had not redeemed the convertible, given the specific terms of the debenture, BGO would have to add an additional $25 "prepayment charge" per $100 of debenture outstanding.
In other words, BGO would have to "give" another 2.7 Million convertible BGO stock to debenture owners if it did not redeem the debentures on October 3, 1997, according to the specific terms of the debenture deed.

Debenture holders have a vested right to exchange the convertible debenture for BGO common at U.S. $2.05 strike up to February 28, 2000.

The convertible debentures are carried in the shareholders equity section and financial results and expectations are deemed to be priced ( fully diluted ) in the market accordingly.

It was an intelligent move by BGO in the best interests of shareholders.


(Sat Sep 06 1997 19:22)
The media did not murder 'Diana'. I believe the cause was known as DRUNK DRIVING and EXCESSIVE SPEED. Here's a question to ponder; How many SOBER people would let a DRUNK person ( with a blood alcohol at 4 times the legal limit! ) drive them around?

And yes, I could 'trash' a 'Benz like that one a thirty miles an hour, NOT!

Notice how there is no mention of anyone elses blood alcohol levels? Curious, no? Let's face it. It was a drunk driving accident due to excessive partying.
End of comment.

(Sat Sep 06 1997 19:27)
The Coming Collapse by Lance Owen.

(Sat Sep 06 1997 19:31)
The Lance Owen URL doesn't seem to work so i am posting the entire piece.
Debt, Deflation, and Hyperinflation

The Coming Economic Collapse

6-Dec-1996 by Lance Owen

The economies of the U.S. and the world are about to go through a deflationary collapse similar to
the deflation precipitated by the the crash of the U.S. stock market in 1929. The upcoming collapse
will hit the stock, bond and real estate markets. Ordinary people must protect their investments if
they are to survive the disaster that is about to hit them.

The reason for the upcoming disaster is the growth of debt for all sectors. The U.S. Federal
Government debt grew at least 500% in just 15 years. This is far greater than the growth in
productivity which averaged perhaps 1% per year. Productivity is a measure of growth in the
production of goods and services, and one could argue that the growth in debt should match this
number if inflation was zero. But the growth in total debt is perhaps 10 times the growth in goods
and services which is what people will want to spend their money on.

There can be no doubt that this debt is overvalued. This debt is listed as an asset in pension and
mutual funds. There will soon be a recognition by the markets that the value of debt or bonds is too
high and there will be more sellers than buyers and the bond market will crash. The stock and real
estate markets will soon follow as the value of so many stocks came about because corporations
borrowed heavily thanks to favourable tax laws. The same thing is true of real estate. The value of
real estate depends on buyers being able to get low interest rates. But when the bond market
collapses interest rates must rise and soon after the value of real estate will fall.

For decades there have been more buyers than sellers of paper assets as a young population saved
for retirement. But now the aging population is cashing in its paper, so prices must come down as
there are more sellers than buyers. Because of the fact that there were more buyers than sellers for
so long, the government could have a string of deficits that grew in size much faster than the
economy. The excessive amount of debt was not a problem as people were willing buyers of
government bonds. If they didn't buy bonds they would use their cash to buy goods and services
causing a horrible inflation, for the the growth in the money supply must lead to higher prices. The
Government passed favourable tax laws to make it desirable for people to hold their assets as
bonds rather than cash, to avoid an inflation.

The coming collapse will happen because of a combination of excessive debt and an aging
population which is the demographic disaster. The U.S. will probably have a panic situation as
people dump paper assets and buy anything tangible. Prices will rise and the U.S. will be lucky to
avoid a hyperinflation.

In my book you can read about the history of the U.S. economy since 1933 when the U.S. went
off of the gold standard and went on the paper standard, where money was now backed by paper,
and how the banks and the government conspire to create money out of nothing. I also look at the
numbers, using government statistics to show that the U.S. is bankrupt. Also, I compare the present
situation with the pre-1929 crash situation which are essentially the same. Also, I suggest what will
happen, using historical precedents and make some suggestions as to what ordinary people can do
to protect themselves.

If you are interested in this topic I will send you a copy of my book ( 30,000 words ) for $10. Send
a postal money order to me at the address below :

Lance Owen
PO Box # 19147
4th Ave. Postal Outlet
Vancouver BC Canada
V6K 4R8

Send comments via email to:

If you are reading a hardcopy of this page, you can find the original on the web at:

(Sat Sep 06 1997 19:47)
Some thoughts on disinflation and deflation.

(Sat Sep 06 1997 19:53)
@...McLuhan, Media, Di, Mother, and Gold
Marshal McLuhan, the late esoteric English professor at University of Toronto, became a pop culture philosopher after publishing "Mechanical Bride" and, particularly, "Understanding Media" in the 1960s. He even made a cameo appearance 'as himself' in a Woody Allen flick - some of you may remember the title.

McLuhan's thesis was that culture was being transformed by media. Content was playing second fiddle to form, or more precisely, the message that media carried. The McLuhanesque slogan 'the media IS the message' rings well when we consider the media treatment of Diana and Mother Teresa's deaths this past week.

We need not go into detail but it is clear that Mother had earned her special place in the 'good book' for trading her privileged childhood for the lifelong dedication of a religious missionary treating societies outcasts.

Mother had the misfortune of being ethically consistent and a politically incorrect piriah to feminist liturgy - a pro-life advocate who remained a servant to a patriarchal Church while serving the worlds poorest of the poor.

It is written, 'To those who have much, much is required'. Mother certainly gave up a wealthy status at age 18 to serve her God and the poor of Calcutta - a christian angel in a predominantly Hindu society.

In this Age of Aquarius notoriety, star-power, photogenic appeal and media attention is in great demand. More so than a call to selfless duty to God and mankind.

There is no question that Diana was a great woman who loaned her name, and hence money appeal, to many charitable endeavours. Diana's media attention also brought the camers to bear on the plight of the victims in society. However, Diana's funeral has been clearly orchestrated to serve the demands of a conditioned audience. An audience conditioned by the media who created the Diana mistique and was, ironically, a protagonist at her death scene - if not directly certainly indirectly. ( Notic how much concern was made that the Union Jack was not flown at half mast at Buckingham Palace - as if a sacrilege and great disrespect was planned by the x-inlaws. The crowd was disappointed that Charles was not photographed in some painfull way as he arranged to bring the coffin from Paris to London. The media carried the message and the audience responded like leemings rushing over the cliff. )

The current gold market can be evaluated in similar terms. We have seen much political and economic turmoil in the Asean currency and stock markets and yet gold price didn't bat an eye.

We have posted here many times about crowd manias and media spins and stock market bubbles - somehow, someday, waiting for the house to fold or ( at least ) correct and for gold to retain its glitter as the time- tested and proven 'safe' haven for scared money.

Perhaps it is just a reflection of this Age of Aquarius and 'the media IS the message' atmosphere that we have not properly judged the current investment climate. A new generation of investors has risen.

As a point of reference I point to the divergent investment styles of Buffet and Soros. Buffet tends to favour the Graham and Dodd or conventional value approach while Soros has crafted a market alchemist New Age investment approach looking equally for weakness in global assets with weak score-keepers.

A few years back Soros called the Bank of England's bluff and made a Billion or so on sterling and now he is reported to have been making money on the demise of Asean currencies and stocks - according to the victims.

As I said earlier, I don't think it is as simple as we may have thought to get gold prices back. The US dollar tanking will not be enough, by itself, to resurrect gold price. The Indian subcontinent demand for marriage/wedding season gold and Western Xmas jewelry trade may not, in itself, be suffient to allow gold to recover.

Following my comments about McLuhan, Di, and Mother, I believe that gold price needs to have a definitive media spin behind it to condition the audience ( retail investors ) to allocate sufficient assets from stocks into gold as a 'safe harbour' in context of the US stock overbought conditions.

The media can push the 'little Soros', or, the professional shorts, who are profiting from the weak market dynamics and weak score-keepers ( CBs and XAU Big Boys ) of the gold market in the absence of a retail mania.

In short, we need a gold mania. We need ordinary folks to buy gold stocks or gold mutual funds to turn this Mama Gold Bear around. Given the recent currency problems in Asia and CB selling ( real or perceived ) and gold stuck in the mud price at historically low levels we need a major media blitz to turn the market around.

Auric: I hear ya. We been saying that all the bad news is in gold but we still haven't seen it turn in light of Asean currency problems and more acceptance that the Euro will be late.



Mike Sheller
(Sat Sep 06 1997 19:59)
@THE Donald
First off, you are a veritable Fountainhead of information. I can't keep up with you ( but that's not saying much, as there isn't much I can keep up with these days ) . Next, re Owen, I just can't reconcile a drop in Real Estate, yet a rise in hard asset prices. Yes, RE depends to some degreee on comfortable rates, but my darling wife is a corporate broker in Real Estate and she has always remarked how sales pick up when rates rise. This is because people rush to lock in the "low" rates of the moment once they perceive that rates will be higher tommorrow. As Elliott Janeway once said about RE during an inflation - "buy it, they can't print more of it." Owen has accounted for DEflation and INflation. I have maintained, and willcontinue to do so, that if there IS a DEflation, it will be followed quite rapidly with an INflation. We are headed for a FLATION, that's for sure ( :- ) )

(Sat Sep 06 1997 20:05)
George Cole re: your 17:39 about volumes increasing on gold shares. I can't speak for the lack of significant activity in the XAU and N.American markets, but I feel that their is signicant accumulation going on "down under" of the top Au companies. Shares like Lihir, Normandy, Acasia etc.-- all top line outfits with $ in the bank and huge, cheaply minable reserves, have all made signicant gains in the last couple of weeks. Why not. After the July shock by our incredibly intelligent and far-seeing politicians the shares in these companies were at bargain basement prices and a few saavy folks out there have just made the purchases of their lives. As for the penny dreadful golds--in the last week many of them have reacted like they had firecrackers up their backsides. Could be a spin off from the huuuuuge nickel discovery by Jubilee, but the chart patterns indicate to me that something is definitely afoot. Lots of nice little bowl shaped patterns on the upslope. Anyway, I have put my money where my mouth is and am either going to be drinking Grange Hermitage ( '59 ) or may have to eat my words and buy a 6pak of Bud ( camel's p that it is! ) .

Who Cares
(Sat Sep 06 1997 20:07)
Real Estate

Real estate prices are highly leveraged, as are government bonds.

Here's a scenario - divide the population into two groups - Group A
is highly leveraged, has no excess income or savings. Group B is
rich, has paper wealth.

Given a downturn, what happens to the real estate owned by Group A?

Given a probable default in debt holdings, will Group B purchased
Group A's real estate, knowing there will be no Group A buyers,
or shift paper assets into precious metals?

Mike Sheller
(Sat Sep 06 1997 20:11)
BOB: A moving, universal, monster insightful post. I have attempted in my own meager, pitiful way as The Astrological Investor to open the minds and hearts of the Aquarian metaphysical community to gold. Indeed, anyone who works hard for a living, or works at all, or has millions they want to keep. Perhaps it is a failure on the part of organizations like the World Gold Council to let slip from their grasp the promotional and educational opportunities they could be exploiting. My profession, among others, is advertising and marketing. I salivate at what the WGC has been throwing away. And I have pitched them to do a campaign in the past, but they did not see the battle they are in. I wonder if they do now.

Mike Sheller
(Sat Sep 06 1997 20:17)
@Who Cares!
Group B will jump out the window. They will not THINK of gold. Nobody thinks of gold. Perhaps nobody ever will. People will only buy gold if it is rising. If nobody buys gold, it will not rise, and thus nobody more will buy gold. Gold will just lie there, forever. Am I being more cynical than thou? ( :+0$

(Sat Sep 06 1997 20:18)
Bob: Although certainly important, as someone else posted here weeks back, fabrication demand from India and elsewhere will not make the difference to have a meaningful increase in the price of gold. For this to happen, investment interest must be attracted to gold because of a change in economic or other conditions favorable to gold. Why should anyone invest in gold w/o conditions favorable for gold to increase in price or an expectation that such conditions will occur.

I. Joel Kane
(Sat Sep 06 1997 20:24)
I am new to gold stocks but would like to find one that produces gold from alluvials using free gold recovery not leaching etc.and produces a
cash dividend for investors. I am not interested in large companies promoting unrecovered assets to build up stock prices.

(Sat Sep 06 1997 20:29)
A change in fundamentals
Mike Sheller: I have read on posts such statements as "gold will go up because there is no reason for it to do so", " or becuse it is in the 5th wave of an alternate wave affected by a flat wave", "there has been a selling climax", "shorts will be forced to cover" etc. All of this is merely wishful thinking. Gold will not go up until there is a change in fundamental conditions and once this happens, then these factors may come into play. Reify may be right in his recent postings that a change in trend is occurring in the dollar and other matters affecting economic conditions and the recent apparent basing action in gold and gold equities may be merely reflective of this change, which will become more apparent as time goes on.

(Sat Sep 06 1997 20:34)
Miro ( 15:53 ) : Mother Theresa v Princess Diana??

1. The way things appear is always more important than the way they really are.

2. The superficial is, often wrong, but always easier to grasp and therefore more meaningful.

3. Diana was physically more appealling, than Mother Theresa.

4. Perception is reality. ( trite but true )

5. Diana was well compensated for her tribulations. Such as they were.

6. Mother Theresa was not commonly known to be fixated on the operation of her bowel.

Could go on but what purpose would it serve? Fairy tales are inexorable.

(Sat Sep 06 1997 20:41)
CITIZEN KANE: Take a look at Siskon Gold which attempted to mine placer gold underground from an ancient stream bed by gravity processing, that is until the mining stopes started to squeeze in like a tightly gripped banana, as should be expected from a poorly-fused body, and the company is on the verge of collapse as well notwithstanding all that gold in its mine.

(Sat Sep 06 1997 20:41)
Panda ( 19:22 ) : More ghastly Diana stuff. .... With all due respect, I submit that everyone who ever purchased a tabloid to read the latest lurid details of her life and times while viewing, telephoto, images of her mammaries flopping in the Riviera sun, contributed directly and materially to her demise.

(Sat Sep 06 1997 20:50)
Real estate...future inflation or deflation ?

I see that the topic has returned once again to the after-crash question of inflation or deflation. Being that this is such a slow evening, following are some repostings regarding this same topic, from a couple of months ago....

Date: Sun Jul 20 1997 22:06
Cmax ( Deflation? I think not. ) : 0
It seems to me that most are missing some key points that should be
considered, for those that feel we are headed for deflation. The principal
catalyst for the deflation event would be the inability of the general public to
pay realestate loans. These properties would
obviously go to forclusure, but that does not necessarily mean that they will
be auctioned off at 50% or less of their value.

Lets consider the worst....stock market crashes.....millions of people lose
their jobs......massive amounts of mortgages go unpaid......banks go belly
up......boom!, we have a supposed deflation scenario as contended by its

but lets not stop just there.......... the banks that are belly up will be taken over by the varios
institutions designed for this event, like the FDIC. The realestate mortgages
are then channelled back into the fannie maes/macs, and they in turn channel
the liquidation of these debts back to the retail level ( Im not exactly up on
the names of the varios gov departments involved, but this would be the
general idea ) .

*IF* they were to allow a huge volume of properties to be sold substantially
under the owed amount, two things would happen:
1. This difference in price ultimately must be compensated by the printing of
more paper ( inflationary ) . The morgagee sure wont have any more to
2. Each and every property liquidated below present market values, will
only add to possible deflation of the market and need for printing even more
paper, thus creating the proverbial vicious circle.

It seems to me that the gov will be forced to NOT liquidate these properties
too low, and will try to prop them up by papering and printing everything
over, such as offering certain incentives and
deferences for buyers to purchase at present levels, thus avoiding our
dreaded deflation. In Venezuela I witnessed a total monetary collapse, as
95% of all banks were taken over by the goverment, who were
simultaneously printing UNGODLY amounts of money. In a year, the
exchange shot from 90:1 to 500:1.....but none of the banks
properties were liquidated at cheap prices. The goverment just sat on
them....creating in itself a massive inflation. And the real estate market
STOPPED dead in the water for 2 years, but no deflation ( not even after
the devalued exchange compared to the dollar ) .

As with the U.S. goverment, nothing short of a total monetary collapse will
change this course of events. Whether they liquidate at prices
much lower than todays market, or sit and wait, of give incentives and
deferences......ALL of these tactics spell hyper-inflation..

Something else that most deflationists like to banty around, is the example
set in the 1930s. Todays world has NOTHING in common with the
1930s, which were on the gold standard, which prevented a goverment to
inject liquidity ( print cash fast ) into the economy, until that fatefull day
when gold possesion was outlawed. Today, they can and
do print at will, without restraints and in a manner unprecedented, and they
WILL again, because this time they don't have their "meaningless" golden
chaparone to restrict them. This time, they will "give" out welfare benefits to
quite down an incredibly large and hungry mob, so they can fill their bellies.
There will simply be no other choice. They will again law the possesion of
gold, out of logical expedience. But this time, I believe it will be too late, as
the mainstream thought ( with events running their course up to this point )
will reject the confiscation of their gold, which will boomerang and create a
black market that will send the price even higher. As they said in that
dinosaur movie: Life will always find a way". Free markets are as natural as
life itself.

No matter how you cut it, I seems to me that, in the event of a real market
crash, hyper-inflation will take over this time.....not deflation. Those who
want to use the deflation Tokyo properties as an example, must also bear in
mind that the game is not over until its over, meaning that a provincial
example is not comparable to an implosion of the worlds reserve
currency.....the U.S. dollar. As long as there is a stable reserve currency to
fall back on ( in todays political mindset ) we can have some
deflation......but without this stable reserve currency ( or when it implodes ) ,
HYPER-INFLATION will definitely take the helm.

An opinion from a connesuier of common sense; rock throwing by rational
thinkers solicited.

Thanks for the first rock....but it missed.
Your response: .......the housing market shuts down. You say the government will issue
bonds and the Fed will print the money. Who will buy the bonds? Where in this world
are you going to find a voluntary customer under those circumstances?

My response: After the stock crash and subsequent real estate forclosures......who says
that the Fed will need to sell bonds to print money, even if no one will by it?????? The
Feds will simply print the money ANYWAY. Inflation.

Can money be printed outside the authority of a Central Bank? Of course they
can...they can, and will, and HAVE.

But no, the gov would not force persons from their homes in a mass forclosure
situation.....this too would be very control the raging masses.
Remember that the base root of all taxation and re-distribution of wealth is to appease
and control the masses, no more, no less.

Aurophile and Vronsky: thans for the support.

Date: Sun Jul 27 1997 02:17
Milhouse ( @Deflation ) :

To : Donald, CMAX, Aurophile

Just finished reading your excellent discussion regarding deflation/inflation.
Although many of the arguments put forward by the deflationists are logical,
the key point is that there is no limit to the amount of money which could be
created within today's monetary system. No regulatory changes or
presidential decrees are necessary. Donald posed the question - if the
government issued bonds, who will by the bonds ? The answer is that the
bonds would be purchased by the monetary agents ( banks + Fed ) with
newly created dollars. If they desired to do so, the US govt could inject 1
trillion dollars into the economy tomorrow through the sale of bonds to the
monetary agents.

At moment the govt and the Fed are playing a minor role in the expansion of
the monetary base as most new money is arising from the monetisation of
private debt by the banks. However, at the first sign of a slow down in the
supply of new money as a result of debt defaults or other deflationary
forces, the Fed will take matters into its own hands. Failure to do so would
lead to mass discontent as Aurophile has opined and consequently a failure
to maintain political power.

The more signs of deflation which become evident over the next few
months, the greater the resultant inflation will be as the monetary authorities

Regards, Milhouse

(Sat Sep 06 1997 20:54)
Needed: One Bonds Salesman.
A repeating story I have seen as to what might be going on below the surface, is now that China and Japan are selling their U.S. Treasury Bonds ( and this has been confirmed ) the U.S. Government Treasury Dept. need to find substitute buyers.

What better way then to bring down the equities markets just enough to "push" investors over into the Bond and Tresuries markets to take up the slack from diminished buying by the Central Bankers of Japan and China, etc.

Looks pretty simple and an ideal way to keep the Bond market from falling out of bed.

Library is closing. Have a good weekend. : )

(Sat Sep 06 1997 20:55)
@Tools for Kitcoistes
Here are two interesting sites with Asia and the World Global Picture,graphs and commentaries.


Who Cares
(Sat Sep 06 1997 20:59)
Gold Demand

Sheller - Am I cynical? I thought I had avoided that on this site. : )

Bob's post - I think the idea of "marketing" gold is a pursuit of
dying paradigm, per se. I *could* make a case -

a ) Assume 50 years of ABC, CBS and NBC have conditioned the entire
( or most ) of the population to think in certain ways.

b ) Assume that this conditioning coincides with the belief that
"risk has been abolished", "government will save us", and
"stocks always rise". That's good for the establishment.

c ) Assume that the peak of this brainwashing has passed. What is
the ONLY possible result?

As the dominant paradigm breaks up, more individuals will buy gold. : )

Also, think about the idea of a secession. If you checked out that
link ( ) , you might have noticed that TWO
major policy issues are missing - Treasury and Defense. Think about
what might be needed to create a Treasury for a break-away government.

There is a GREAT DEAL of potential there, in many ways. From
policy creation, financing, consulting, currency backing, etc.

Re: I doubt Group B would jump out a window. An overdose is better,
but revenge is best. : )

(Sat Sep 06 1997 21:06)
Donald. Are you the same Millhouse interviewed on ABC this AM regarding Oz ideas and Asian money? If so, well done.
Also Nick in Canberra. I have also noticed gold stocks on move again. Dominion / Goldstream and rest of Gawler Craton stocks going ahead as assay results prove very promising.
Thanks for all Kitco comments.
Hi Ho

Who Cares
(Sat Sep 06 1997 21:10)
Real Estate

I listened, during the late 80s, to many similar arguments as to
how and why California real estate would cotinue doubling, year
after year. "They're not making anymore", etc. Almost bought it. : )

Does anyone have any data on real estate prices in the Soviet
Union over the past ten years?

I might also mention that real estate is worthless unless you
have a reason to own it. A great number of people own real
estate in expectations of further rises, not because they have
a use for it.

Besides, real estate ties me to a particular area. Gold does not.
Real estate is easier to confiscate. : ) Ask the Yakuza. : )

I'm much rather bet on "a change in status quo", be it inflation or
deflation. I think gold is better bet to cover both directions.

(Sat Sep 06 1997 21:15)
Panda ( 19:22 ) I've been thinking EXACTLY the same thing!

Who Cares
(Sat Sep 06 1997 21:16)
Chinese / Japanese bond sell-off??!!

Where has it been confirmed that the Chinese and Japanese are
selling off U.S. bonds?!

You know, hyperinflation of the U.S. dollar would GUARANTEE that
the world will dump the dollar as a "reserve currency". The only
alternates that I can think of would be Mark, Yen, or gold.

Would the losses incurred by dethronement, and due to hyperinflation,
be made up by real estate investments, versus the same investments
put into Marks?

(Sat Sep 06 1997 21:23)
@Gold Graph from the previous URL
Here is an exemple of what we can find:


(Sat Sep 06 1997 21:23)
Fidelity Select American Gold & Precious metals Charts
5 Years, 120 day, 30 day and hourly charts at:
Click on Gold Sectors

(Sat Sep 06 1997 21:37)
Holding real estate would be a lot less advantageous w/o tax breaks.Most citizens are conned into buying property because they generally don't have the expertise to make $ any other investment...They sure freak when selling and the taxman shows up! Not sure what effect new tax laws will have.

Some commercial property does have income and potential to rise in price beyond inflation.

Gole is portable? Yes, if your'e not flying somewhere or crossing a border. When's the last time they took gold down at the Safeway!?

Hey, I know a good deal on a cabin in was only used for a little while as a hideout from the Feds. It's a good deal because they won't raid twice in the same place in a decade...

Back to Real estate though...not only can it be happens more than you think...

(Sat Sep 06 1997 21:39)
Miles: No, I am a different Donald.
Bob: Media and the message. Well thought out and well said. But at some point the reality must kick in. I can take some video footage of colorful hot air balloons beautifully drifting along the picture perfect landscape and run them day after day to give the illusion that balloons always fly. When you first climb in the gondola and cut the tether however the media image quickly fades as you confront high tension wires and unpredictable wind gusts. Shortly, the fuel runs low, the hot air is not quite so hot any more and you run up against the unrepealable law of gravity. If you survive the crash your anger is directed at the messenger who foisted the hot air balloon media illusion on you. That is why there were Congressional hearings after 1929 and 1987, and next year. That is the anger part and it will get messy. Ask some Malaysian short sellers.

(Sat Sep 06 1997 21:42)
Diana v. Theresa
From my vantage point Diana v. Mother Theresa = Iron Pyrite v. Gold
Lets get the hysteria behind us--one Elvis who refuses to die is too many.

(Sat Sep 06 1997 21:51)
My work computer shows the "reiew only new comments" link just above the latest post but my home computer doesn't...any solutions out there?

I enjoyed all the talk of BGO and RYO earlier. Does anyone have any opinions on FN ( Franco Nevada )

(Sat Sep 06 1997 21:56)
One hundred million unemployed Chinese crowd their cities, looking for work at less than a dollar a

And, in an updated version of the domino effect, that eventually means US homebuyers pay lower
rates when they secure a mortgage; businesses in Germany can find cheap money when they
expand; and US computermakers can keep prices low.

In a global economy, cheap labor in one part of the world helps explain why wealthy countries of
the West no longer struggle with inflation. Low inflation is now so widespread around the world, in
fact, that some economists are raising concerns about its opposite - deflation.

Inflation occurs when prices rise too fast; deflation - a rare event - describes an economy where
prices actually fall.

That's already happening in some parts of the world, notably Japan and Switzerland, and last week
the US Labor Department reported a drop in wholesale prices for the seventh consecutive month,
down 0.1 percent in July.

That's the first time wholesale prices have fallen for that long in 66 years. During the Great
Depression, they dropped for nine months.

Few, if any, mainstream economists are suggesting such a calamity. The benign hallmark of the
prosperous 1990s remains declining inflation - "disinflation" not deflation.

But the trend of wholesale-prices in the US and Japan leads some analysts to wonder whether the
downward spiral has more momentum than policymakers realize.

"There are gluts and overproduction everywhere," says Merrill Lynch strategist Charles Clough.
"Inflation is not the threat. Deflation is."

In the US, economists are baffled by the combination of low unemployment, low wages, and stable
consumer prices.

Federal Reserve Chairman Alan Greenspan tells Congress he is "puzzled." Fed Vice Chairman
Alice Rivlin calls it a "mystery."

According to popular economic theory, inflation should pick up when unemployment falls below 5
or 6 percent.

But the jobless rate seems stuck near 4.8 percent, and inflation is still stable - a modest 0.2 percent
in July and 2.2 percent in the last 12 months.

Part of the mystery can be explained by China. US companies can build products cheaply in China
- and Thailand and Mexico - and keep the brakes on wages paid US workers.

Economist Philip Braverman says a Chinese trade official recently told him that when 100 million
unemployed Chinese in the cities find work, 100 million in the countryside will take their place.

The entire American labor force, by contrast, is not much more than 100 million, Mr. Braverman

When wages and prices remain stable, the Fed feels comfortable keeping rates low.

Peace also helps explain low inflation, he says. Wars generally bring inflation, with their high demand
for workers and goods. When war ends, prices should decline.

That, he says, happened after the American Revolutionary War, the War of 1812, the Civil War,
and World War I. It didn't happen after World War II because of the cold war, the Korean War,
the Vietnam War, and the Gulf War.

Now, peace has returned and deflationary forces are in control, reinforced by growing world trade
and investment.

Economist Mickey Levy of NationsBanc Capital Markets in New York says the US economy is
able to grow at a 3 percent real rate - a bit higher than many economists believe possible. With the
Fed keeping growth in current dollars to 5 percent, there is only room left for 2 percent inflation ( 5
percent nominal growth minus 3 percent real growth ) .

Under these conditions, business has little capacity to boost prices and must hold back wage costs,
Mr. Levy argues. Levy expects inflation to remain modest, even when the economic pace picks up
in the second half of this year. This combination of low inflation and a solid economy should be a
"healthy foundation" for stock prices," he says.

Who Wins and Loses When Inflation Falls

Periods of disinflation - when inflation rates decline dramatically - have the following winners and
losers, according to A. Gary Shilling, an economic consultant in Springfield, N.J.


* Savers.

* Pensioners and others on fixed incomes.

* High-quality stocks and bonds.

* Low-cost producers.

* The US dollar ( if disinflation is very strong in America ) . Favors importers and tourists abroad.


* Heavily indebted individuals and companies.

* Owners of real estate, art, and collectibles.

* Commodity producers.

* Unionized labor in once-regulated industries.

* Indebted federal and city governments.

* Oil exporters.


* If there's no inflation, there's a problem, argues George Perry of the Brookings Institution in
Washington. Business needs a little inflation to smooth wage adjustments. Some industries and
companies are thriving and must hike wages to attract new workers. Other businesses are in trouble
or shrinking, and must trim wage costs to stay sound.

But it is extremely difficult to cut wages in current dollars. American workers usually revolt. It is
possible, though, to let inflation trim real wages, Mr. Perry says. Management gives workers no
wage hike or a small one that is eaten by inflation.

If there is zero inflation, unemployment will rise, not fall, Perry says. Since companies won't be able
to lower wage costs through inflation, they will cut staff instead. Unemployment would rise quickly.

So the Federal Reserve should not aim for zero inflation, he holds.

Who Cares
(Sat Sep 06 1997 21:56)
Cabin in Idaho

Watcher - you're darn tootin' that cabin won't be raided again. : )
Try to see some of the unedited footage sometime. It
*almost* didn't get raided the FIRST time. : )

A model for secession - when the Federal Government was borrowing
money and distributing it to the various States, there was a Net
Positive reason to stay in the game. Now, with the cutbacks and
"unfunded mandates", we're probably in neutral territory. Given
a real recession, reduction in tax revenues, increase in SS and
Medicare payments, it *might* become a Net Negative to be in the
Union. : )

Do metal detectors pick up gold? : )

(Sat Sep 06 1997 21:56)
Tort ( 21:42 ) AMEN! sucked in this by JFK death....but was idealistic ( naive ) .....and 14 years old!!! Enuf!!!!

(Sat Sep 06 1997 22:00)
@ Who Cares
evenin Who far as I know ( which ain't much ) metal detectors do pick up gold....

(Sat Sep 06 1997 22:00)
One of my wife's friends believes that the closeness of Dianna's and Therea's death is more than coincidental A rich compassionate person dies when the comparable poor religious compassionate person dies. Is God acting in congruity to take saints home at the same time. It kinda struck me.

(Sat Sep 06 1997 22:07)
Inflation, while the US economy's main event for two decades, is actually a rare phenomenon.
Charles Clough, chief investment strategist at Merrill Lynch, sees it going away, perhaps replaced
by deflation. That would help push long-term interest rates down, boosting prices of long-term
bonds but not necessarily stocks. Excerpts from his television interview on CNBC, with anchor Ron
Insana on Aug. 12,. follow:

We've all learned to identify [economic] growth with inflation. That is something we learned to do in
the 1970s and the 1980s.

But inflation is a very rare phenomenon. If you look back over economic history it is usually
associated with wars. And the inflation we had in the 1970s and '80s was a very unusual event.

It took decades of bad monetary policy to create it.

Our sense in this expansion is that things are quite different. The longer the economy expands, the
more deflationary things become.

In other words, there is more likelihood that prices will start to go down. And the reason is, this
expansion is investment-led. We have a pile of excess savings ... going into investment. And there
are gluts and overproduction everywhere.

The Thais [for example, in devaluing their currency] have just decreased the price of their exports
by 25 percent because there is too much excess capacity there.

So our sense is inflation is not the threat. Deflation is.

[Despite its negative impact in the Depression of the 1930s], deflation can be a very positive
source of growth.... Perhaps there is no period in history that is quite the same, but the most
comparative would be the period between 1869 and 1913. Industrial prices fell at a 1 percent
annual rate, and for most of those periods we had pretty good growth....

We are seeing capacity build faster than demand can keep up....

We think stock prices are high. We are at 22 or 23 times [annual] earnings. You don't get up that
high very often. I think we are beginning to see some companies struggle to maintain the kind of
earnings we have seen. So our sense in stocks is they are not really cheap. We were much more
enthusiastic about stocks when prices were lower. We are very price-sensitive here, and we are
more cautious about the downside [of the stock market].

I do think there are areas of the stock market that still provide good value, and will do very well in
our environment, if we are right about interest rates - that they will eventually fall, perhaps

Financials [such as banks] would do well. REITs [real estate investment trusts] would do well.
Some building products industries that do have shortages of supply, like cements, would do very

We like the [long-term Treasury] bond a lot in this environment.

(Sat Sep 06 1997 22:11)
Inflation has been the great villain of the American economy for decades - wreaking havoc on family
budgets and challenging businesses large and small.

But despite more than six years of economic expansion, there are signs that inflation in the United
States- already historically low - continues to fall, prompting economists to wonder: Is the Darth
Vader of finances dead - or merely in deep hibernation?

Prices on food, used cars, and energy are dropping. Overall, retail store prices have slipped by 0.5
percent so far this year. The trend has some economists talking about zero inflation and even
"deflation." If this happens, interest rates on everything from mortgages to auto loans will fall.
Prices of existing bonds will rise. And an employee's wage hike would be "real," not just a catch-up
increase to offset the inflation rate.

Some observers already see a change in public psychology in regard to inflation. "The only thing
Americans believe is going up today is the price of common stocks," says Paul Kasriel, chief
economist, Northern Trust Company, Chicago.

Economist Lawrence Kudlow says there's a "good chance" that inflation will fall to a 1 percent
annual rate in the next 12 months.

The consumer price index ( CPI ) , the most common inflation gauge, has risen at only a 1.4 percent
annual rate this year, versus 3.3 percent for all of 1996.

If the CPI overstates actual inflation by 1.1 percentage points, as a Senate study found last year,
then zero inflation is a possibility.

Nor, apparently, does the Federal Reserve regard inflation as an immediate threat. It did not raise
interest rates at a policymaking meeting last week.

DESPITE such trends, most economists - including Mr. Kasriel - have been expecting rising

Only 3 percent of a panel of 36 corporate economists agreed last winter with the statement,
"Inflation is dead."

The consensus of these National Association of Business Economists' forecasters called for 2.9
percent inflation in consumer prices this year, 3 percent next year.

Low unemployment ( 5 percent in June ) and rapid economic growth ( a 5.9 percent annual rate in the
first quarter ) are commonly regarded as two ingredients in the recipe for accelerating inflation.

But the CPI hasn't been following traditional wisdom. Even the prices of services, usually tagged as
the "bad boys" on the price scene, have climbed at only a 2.7 percent annual rate, notes Richard
Hokenson, economist for the New York investment firm Donaldson, Lufkin & Jenrette Securities
Corp. He sees deflation as "increasingly a reality."

Producer prices have been declining at an annual rate of 3.9 percent so far this year.

The primary reason for low inflation, according to Mr. Kudlow, of American Skandia Life
Assurance Corp., Shelton, Conn., is that the Fed has done "a good job." It has not fed the
economy more money than people want to spend or put into savings, thereby restraining prices.

Also, international competition has helped keep US prices down, other economists say.

Michael Calabrese, an economist at the Center for National Policy, a Washington think tank, sees a
favorable demographic factor behind today's benign inflation: The crest of the baby boomer wave is
reaching an age when its members are saving more, and they are entering their most productive
work years.

Employers have also been able to bring more people into the labor force, Mr. Calabrese says. This
keeps down bidding wars between companies for workers.

Early retirees and welfare recipients have been getting jobs. The percentage of men age 25 to 54 in
the labor force has risen. Men age 55 to 64 have been postponing retirement. Overall, 67 percent
of adults are participating in the labor force, an all-time record.

"Inflation will stay fairly stable and not accelerate even if unemployment goes down further," says

But that is not a universally held view. Inflation is "starting to creep up, much as it did in the
mid-1960s," Mr. Kasriel says. As evidence, he notes that the "core" CPI - consumer prices minus
food and energy - is moving up faster than the index itself. "We have reached the trough" on prices,
he says.

"The issue of inflation is far from dead," maintains Stephen Roach, chief economist of Morgan
Stanley & Co., a Wall Street brokerage house.

Economic history, he says, shows that when an "inflationary threshold" is broken, inflation
accelerates after a five-quarter lag. That threshold was passed in the last quarter of 1996, he says.

Economist Joel Prakken notes that employee compensation per hour began picking up 2-1/2 years
ago, just as his mathematical model of the economy predicted. But so far business has not passed
as much of this extra cost on to consumers in the form of higher prices as he had figured.

To some extent, the inflation controversy reflects a broader debate about change in the economy.

Kudlow sees the nation in a "new era" as a result of the end of the cold war, smaller government,
lower taxes, less regulation, freer trade, and new technology.

Calabrese suspects the economy is in a "virtuous cycle." Low unemployment prompts employers to
train more workers. This, in turn, means a more-skilled work force that helps keep productivity up
and inflation down.

But other economists are skeptical that change is so fundamental. "The jury is still out," says Mr.
Roach. "I have been through a lot of new eras," adds Kasriel.

(Sat Sep 06 1997 22:12)
@moral of story
Don't drink and drive,and certainly not without wearin a seatbelt.. And
not With a worthless "playboy"....Not quite on Mother Therea's level....Jack Kennedy is a saint too!! har har....what about the conflict with the damn nanny or all people....Saint Diana....Saint Elvis....This is like a "flashback" to October 1963....If someone got lucky and shot Clintok...they'd make em ( Clintok,that is ) a Saint too...Media amuck...

(Sat Sep 06 1997 22:12)
Who Cares: It's another interesting Saturday night. You win the prize for best commentary, tonight. Your comments about the portability of gold ( and, I might add, silver ) give it a tremendous advantage over real estate during a financial crisis.

I believe Milhouse made a comment about a financial crisis in South America, in which the country ( was it Venezuela? ) printed boat-loads of currency to bail out the housing market. Milhouse noted that housing prices did not go down. Milhouse, during the same time period, how did gold behave in the local currency?

(Sat Sep 06 1997 22:12)
Princess Di is to be revered throughout history as a champion of the down trodden and the progressive working people. May her soul rest in peace and her spirit flourish in its new surroundings. Elton John is one of the humanist/spiritualist greats. A great performance by a friend for a friend. Tony Blair's Labor govt has it right "the "peoples" Prncess"!

(Sat Sep 06 1997 22:16)
WW: I see you're back again on Saturday night creating controversy. You like Elton John, eh? You are weird if you like his kind.

(Sat Sep 06 1997 22:17)
Ted @ geography lesson: How's the weather on the Cape in New England?

(Sat Sep 06 1997 22:21)
@ Tony Blair
Tony Blair was quoted as sayin Bubba ( Gag...rech.... ) Clintok was one of his role models in life ( ? ) .....He greatly admired em ( ...puke... ) ...he's got "high" standards.....he da man.....just like dickie ( the fool ) Gephardt.....Al, he's really da man....BOYCOTT Ben+ Jerry's Ice cream!

Who Cares
(Sat Sep 06 1997 22:23)
I win the Puetz Prize

Well, thanks. I feel pretty good tonight. I've decided to get
back on my feet. Maybe it was the graduation. Probably my damn
wife, too. : ) I can do it. I can get back up.

I hope *somebody* ( Sheller? ) appreciated the hula-hoop analogy. I've
been tossing that idea around for over two years now. The Feds saw
it right away. It's object-oriented paradigm. That's what is
driving everything.

I mean, everyone looks back on Henry Ford, and talks about the
"assembly line". In forty or fifty years, it will be the O-O
paradigm for the Millenium. The more I work with, the more I
realize how potent it is.

Usually, you have two poles to work within. For instance, ability
to act versus innovation. The military is on one end of that axis,
universities and think tanks on the other. You almost inevitably
have to lose something to get something else. O-O paradigm short-
circuits the existing poles, it allows you to get more of each
thing. To an extent. That's why it's a superior model for
programming, business processes, organizations, etc. Most of the
time. If it's done right.

In my class, I did a lecture on this subject. Someone pointed out
that O-O is particularly well-suited for implementing the
Consitution and three-tier model of Federal, State and local
government. Very interesting analogy. I was pleasantly suprised.

(Sat Sep 06 1997 22:24)
Donald and Who Cares: You are correct. Deflation is the threat now. I believe we could see a deflation in consumer prices as large as 10% to 20% ( within 1 year ) once the stock market crashes.

(Sat Sep 06 1997 22:24)
@less government? Is he serious...?
Donald...I think Calabrese was referring to the resignation of Arizona's most highest! Reminds me of that joke about 500 attorneys in the middle of the ocean surrounded by sharks....

(Sat Sep 06 1997 22:25)
Puetz: Weather in Cape COD,Massahusettes: Overcast + fog.....

(Sat Sep 06 1997 22:30)
Who Cares: Do you teach economics? And where do you teach? I'm surprised that any US institution would hire a person as knowledgeble ( and as anti-government ) as you to teach.

(Sat Sep 06 1997 22:32)
Harry Motlaanme grips a piece of paper spelling out the end of his 20 years as a gold miner, a
victim of the vagaries of a glinting piece of metal.

The union office at the Randfontein Estates Gold Mine is streaming with hundreds of bewildered
miners like Mr. Motlaanme, who after years in one of the world's most dangerous jobs is left with a
family to support and unlikely prospects for another job.

With a mere 15,000 rand ( $3,100 ) as a layoff payment, Motlaanme is still in shock.

"What can I do? I'll join the end of the unemployment queue for jobs which don't exist," he says.

Motlaanme is the human face of the recent fall in global gold prices, which have jolted South Africa,
the world's biggest gold producer and Africa's strongest economy.

Since June 30, the price has slipped to a 12-year low of $320 an ounce - a critical point in terms of

"At these levels we're looking at losing 55 percent of profitability and at least 50,000 jobs over the
next six to 12 months. This has a major impact on the economy," says Leon Esterhuizen, a
gold-mining analyst with stockbrokers Societ Gneral Frankel Pollak in Johannesburg.

The recent drop in the price adds to a decade-long decline in South Africa's key industry, and is
most inconvenient for the black-led government, which has failed to deliver on promises for jobs to
alleviate the 45 percent unemployment rate.

The effects of the gold slump are dire for the poor black men who make up most of the mining
work force, which has shriveled to 350,000 from 530,000 a decade ago.

Other gold-producing countries are suffering from the low prices, but perhaps none more so than
South Africa, which holds 40 percent of the world's reserves.

Since gold was first discovered there in 1886, 47,000 tons have been mined, or half its reserves.
But the other half is costly to extract, encased in hard rock in some of the deepest mines on Earth.
Low gold prices make it less viable to dig out.

This is not good news for an economy that depends on gold for 20 percent of its exports. During
the second quarter, gold mines expected to report combined losses of at least $22 million.

Fears that prices will slip further have shaken confidence, eroding the Johannesburg Stock
Exchange index by nearly 40 percent this year.

The worst news is for the miners who are losing their jobs. Randfontein's owners, Johannesburg
Consolidated Investments Ltd., say there is no alternative but to sack 2,600 workers of the 12,776
total employed to ensure the future viability of the mine.

Less sanguine are the miners who expected that after harsh conditions under apartheid - the black
unions were only legalized in the late 1980s - life under the new government would mean a far
better life.

The irony of this particular case is that the company now has black management, to the irritation of
the National Union of Mineworkers, which believed it would have more sympathy to their plight.
"We thought it would highlight our needs to the management. But it didn't," says NUM shop
steward Phillemon Mohlala.

The problem of layoffs spreads beyond South Africa to its impoverished neighbors, Mozambique
and Lesotho, whose citizens make up a large proportion of the mining work force here. Some
70,000 Lesotho miners here have been fired over the past 10 years.

One of those laid off is Mozambican Domingos Jose Ngoveni, who worked for 10 years at
Randfontein. Returning home to Maputo is no enticing prospect. He has a wife and five kids to
support and little hope of earning an income. "Going home holds no joy without work," he says.

The layoffs also affect local commerce. At least four shops across from the hostel where the miners
live have shut, and the fifth will probably fold soon, too.

Analysts say that, on the bright side, the price drop has forced a restructuring of the gold industry,
cutting out dead wood. The employers' association and NUM recently reached a landmark
agreement linking wage increases to greater productivity. Mines are likely to switch to
seven-day-a-week production, as in other countries.

Mr. Esterhuizen says the picture is not entirely gloomy and that prices may rebound in the coming
year. "Every time we come out of a slump, the industry emerges stronger," he says.

(Sat Sep 06 1997 22:35)
Shoe me da Money! It's great to have a billion Chinese workers ready slave away to cause our deflation. What happens when they get TV and ake up to the fact that they want what we have. Talk about volatility in Oil! that should give a boost to gold. Same to the early posts about russia and Islam. What can bring them together? Anwer: ( IMHO ) Oil for Russia and hatred of Israel.

Seriously...what will happen if China reverts back to anti-Yankee state of mind...and don't say it can't happen...

(Sat Sep 06 1997 22:36)
WHO CARES: If you and I can figure it out for free why can't Alan Greenspan? He gets paid to do it.

(Sat Sep 06 1997 22:37)
PEUTZ: Elton John is A great musician and I think everyone overlooks his sexual preferences. I still think he is a great and compassionate entertainer who obviously cares about causes related to the unfortunate just as Mother Theresa. Two Great lovers of humanity died this week and all people of good will mourn.

(Sat Sep 06 1997 22:37)
You said that Japanese and Chinese bond selling has been confirmed - I and I am sure other would love to see some hard evidence. Thanks.

(Sat Sep 06 1997 22:37)
Ted: I don't know if I heard Dan Rather correctly or not. But I think he said that Hillary interupted her vacation ( from some place where the Kennedy's used to vacation ) to fly to England for Diana's funeral. Was she vacationing in Hyannis Port or Chapiquidic ( I know the spelling is wrong ) or some place like that?

Mike Sheller
(Sat Sep 06 1997 22:38)
TW: God is merely testing us. We failed again. Besides, the funeral plans had already been made. DONALD: ( 21:56 ) The other 954 words to the contrary notwithstanding, There you go again ( :+ ) ) "Inflation occurs when prices rise too fast." How about the price of the Dow, or S&P? Inflation is an increase in the stock of money beyond specie to back it up. Prices of goods, wholsesale, retail, or any tail, don't have to rise. They will eventually, though. Remember the purpose of an inflation is always to favor a particular group, interest, or end. The favored target of the inflation receives the initial benefit of the new, cheap money. That has been the paper markets. In order to keep the deficit/debt-haunted, US treasury and fictional reserve banking system afloat. The inflation has proceeded, and is proceeding now. The question you are asking ( rhetorically ) is: Will the system survive long enough to allow that inflation to work its way out in higher prices in many real sectors, or will the money just implode in deflation and disappear
( after which we will have the mother of all hyperinflations ) ? You seem to answer that with deflation. I think when the crisis hits, the fingers on the inflation trigger will just squeeze that much harder.

(Sat Sep 06 1997 22:40)
Puetz: Clinton is staying at Martha's Vineyard, at Ted Danson's place. It is an island off the coast of Massachusetts about 10 miles south of Wood's Hole.

(Sat Sep 06 1997 22:42)
Evenin Puetz! Martha's Vineyard.....home of James Taylor...."Sweet baby James"....

(Sat Sep 06 1997 22:43)
DONALD: It is my understanding that the FED uses current bond yields as a factor in determining whether the Stock Market is correctly valued. Thus if yields drop as many predict with deflation, then the stock market, even though it would remain at the same level, becomes cheaper in valuation. Which of course is bullish for the market. But if deflation is indeed on the table, as many contend, then why is the bond market not reflecting this, and in particular, why is the real rate of interest continuing to remain exceptionally high. The bond market Friday had a good excuse to rally, but failed to do so. Moreover, at any other business cycle, excess capacity usually comes about after an increased consumer demand leads to inflation and then recession. Thus to have an excess capacity buildup arising from a fall off in demand without demand-induced inflation would seemingly be a very unusual event and an omen for continued low inflation for years to come - as Baverman and many other economists predict. Which should be bullish for the market and bearish for gold - nes pas. Of course, Metz and the others in his economic camp believe that an improving global economy will result in a greater demand for industrial raw materials leading to inflation for such materials with gold being a beneficiary. Moreover, those countries which have had their currecies devalued will have higher import costs of oil and other raw materials - thus their ability to produce substantially lower-priced exports to the US may not be as prominent as some now expect.

(Sat Sep 06 1997 22:43)
Donald: You make a good point. Why can't Greenspan figure it out? His early writings ( in association with Ayn Rand ) would suggest that he knows that any financial bubble always has its days numbered. Maybe he now believes ( like any bureaucrat ) that he can overcome the power of free-market forces.

(Sat Sep 06 1997 22:44)
Donald: ya scooped me!

(Sat Sep 06 1997 22:47)
Puetz: It was Chappaquidic. Hillary left abruptly, aboard the helicopter, when Ted Kennedy offered to drive her to the airport. ..... : )

Mike Sheller
(Sat Sep 06 1997 22:49)
Yes you do win the Puetz prize. You are also looking quite bright eyed and bushy tailed lately. I'm proud of you. I also did like the hula hoop analogy. PUETZ: Where you been? Elton John is a talented artist. He's also very mainstream.

(Sat Sep 06 1997 22:49)
WW: Actually, I like some of Elton John's music. I just cannot understand how anyone could be homosexual. Recent newspaper stories suggest that homosexuality is genetic. If so, I'm glad I don't have that gene, and I feel sorry for those that do.

(Sat Sep 06 1997 22:51)
PUETZ: During my last post to Donald, I mentioned that if there is deflation, then bond yields should come down which should be supportive of the market and a counter-balance to those forces to which you attribute a crash. What is your response to this? I gather it is that any counter-force resulting from the reduction in bond yields will be more than off-set by margin calls and a reduction in liquidity which will draw funds from the market.

simple thought
(Sat Sep 06 1997 22:51)
After a night of too much to eat and too much to drink I have a very simple thought. Forget analysis and deep thinking it's actually very easy - the direction of the stock market can be summarized very simply. PIGS CAN'T FLY!! It's like the Zen story about the river - after going around and around in circles, a river is in fact a river.

(Sat Sep 06 1997 22:51)
MIKE SHELLER: We have had inflation. It is over, or about to be over. It started in 1933. Monetary and credit inflations are voluntary. Deflations are involuntary and always follow inflations. A involuntary deflation will start when stocks crash. Then there will be an election ( hopefully ) . During that election the campaign will be about should we force a new inflation but you will have to read between the lines to understand that. After the returns are in we will get the answer about the future, about whether the deflation continues or whether we return to a new inflation

(Sat Sep 06 1997 22:52)
Earl: Who Cares won the prize for best analytical report tonight. You win the prize for most amusing commentary. Congratulations!! ( I take it you're a big Ted Kennedy fan!!! )

(Sat Sep 06 1997 22:53)
I think we have to give credit to BC for the compassionate way he responded to Diana and Mother Theresa. Hilliary going to London is admirable. Clinton understands the people's pain with respect to Di and Mother Theresa.

We need Leaders who understand what people go thru during an emotional crisis. Clinton has done his best, given the circumstances, to protect working people. Family Med Leave Act and the like with respect to other Legislation plus Tax rise on the wealthy in 1993 which is helping to balance the budget now. Clinton has proven in the last 4 years that raising taxes on high earners is definitively good for the economy. Who can argue with the facts. Go Gephardt/ Things will only get better!!!

Mike Sheller
(Sat Sep 06 1997 22:53)
I quote: "HAR!"

(Sat Sep 06 1997 22:54)
@ Teddy Kennedy
I admire your driving skills...and courage....Most over-rated "family" in the history of the United States....Media will try and make john john President....qualifications: # 1 father...#2 mother....#3 took three tries ta pass the bar exam....

Mike Sheller
(Sat Sep 06 1997 22:56)
@ THE Donald
DONALD: Inflation is about as voluntary as a heroin jones. Try telling the Fed to "just say NO."

(Sat Sep 06 1997 22:56)
@it's true!
Elton will be here shortly...he heard about the situation at Kitco and in keeping with his humanitarian efforts will be singing a revised version of "Goodbye Yellow Brick Road'...stay tuned as you won't want to miss it...

(Sat Sep 06 1997 22:57)
WW: Do you really believe what you post? Or is it all tongue in cheek. Or what you want to believe.

Mike Sheller
(Sat Sep 06 1997 23:00)
WW: I'll say "we need leaders who understand what people go through in an emotional crisis." That's just what I say every year on April 15th!!!

(Sat Sep 06 1997 23:00)
@ most unionized area in Canada
Is THIS the future...hahaha...Time for some HBO boxing!!! beat-up liberals-socialists....and blood-sukin unionists....Yeah, I can see it workin like a charm here.....hahaha...

Mike Sheller
(Sat Sep 06 1997 23:03)
and a sigh is still a sigh.

(Sat Sep 06 1997 23:03)
SKYLARK I am dead serious ARE YOU? Clinton while not perfect does appear compassionate to the problems of people!

(Sat Sep 06 1997 23:04)
Skylark: Most people assume that bond yields will decline during a deflation. However, that's not a given. During the severe 1929-1932 deflation, bond yield rose in every sector of the bond market. In US Treasury Bonds, yields rose the least -- from 3.35% during November 1929 to 4.26% during January 1932. Among Baa bonds ( equivalent to A bonds today ) , yields rose from 6.03% during November 1929 to 11.63% during May 1932.

The restraining factor ( to lower bond yields ) during a deflation is credit-worthiness. If investors believe they will not get repaid, they will not pay anything for a bond. It's credit-worthiness concerns that will cause bonds to plummet during the coming deflation. Uncle Sam is at the top of the list.

Mike Sheller
(Sat Sep 06 1997 23:06)
WW: I'll tell you how Clinton appears to ME. Take the word COMPASSIONATE, and just get rid of the COMP and the IONATE!

(Sat Sep 06 1997 23:07)
Puetz: Thanks. WW: No offense intended, you are entitled to your opinion.

(Sat Sep 06 1997 23:08)
@ Bill takes lessons from Ted Danson
WW: Your'e exactly right. He does "appear" to care......Not!

(Sat Sep 06 1997 23:08)
SKYLARK: Yes, we learned last week that they use the yield on the 10 year Treasury. Bond yields dropped in 1929 but the dollar was still backed by gold and the future of the US was not in doubt. In 1987 bond yields rose during most of the year from 7% to over 10% in October. At those rates bondholders seem to be wondering if the country going to make it. I would not count on bonds yields dropping this time. If the world looks like Asia looked last week folks will get pretty gloomy and have doubts about the survival of the country itself.

(Sat Sep 06 1997 23:09)

DONALD : Your recent post regarding the supposed decline in inflation falls into the common trap of using the heavily manipulated CPI as a meaure of inflation. The irrefutable fact is that inflation is now at its highest level in over a decade. However, irrespective of how high the growth rate in money supply becomes, we will probably never see a double digit CPI again. The amount of "adjustments" which have been made to this index over the past 15 years and the amount of "fine tuning" which continues to happen, will make sure of this. In addition to the problems involved in using the CPI, the last 2 years have seen an inordinate amount of money poured into the US stock market and an insatiable demand for dollars. These conditions have prevented the large increase in money supply from having a significant impact on the price of the things which are measured by the CPI.

STEVE PUETZ : I think it was probably CMAX who mentioned the bucket loads of money which were created by the Venezuelan Govt in order to prevent asset deflation in that country. I suspect that the price of gold did quite well in terms of the Venezuelan currency.

DONALD, PUETZ, WHO CARES : You clearly believe that we are headed for deflation in the not too distant future. If you are reasonable men, and based on your posts I am certain you are, then your conclusions are based on the logical consideration of a wide range of data. If this is the case, and assuming that you are constantly weighing the evidence to re-confirm your conclusions, then if the evidence/facts change you must be prepared to change your forecasted outcome. My question is : what changes in the observable economic and financial situation would have to occur for you to be disuaded from a belief in near term deflation ? ( eg, escalating CRB index, no major shakeout in the US stock market, increasing money supply growth rates, increasing interest rates, etc ) .

Cheers, Milhouse

Mike Sheller
(Sat Sep 06 1997 23:09)
Steve, in the Great Depression I believe bonds declined, but so did yields. How does that square?

(Sat Sep 06 1997 23:09)
WW: Ah feel you're pain!

(Sat Sep 06 1997 23:15)
WW -- Who paid for Hillaries 'plane ticket' to England? Before you respond, everyone pick up a mirror, look in to it, and the answer is...
:- ) )

(Sat Sep 06 1997 23:16)
and the cow jumped over the moon.
Simple Thought

Perhaps Pigs cannot fly ( although after reading the following, we cannot be quite so certain that we know for sure ) but how's about these cows?

"A Japanese fishing boat had been sunk by a falling cow in the Sea of Okhotsk off the Eastern coast of Siberia. The shipwrecked crew were plucked from the sea, claiming that cows had fallen from the sky and one of them had gone straight through the deck and hull, capsizing the vessel.

Mike Sheller
(Sat Sep 06 1997 23:16)
So lemme get this straight ( no offense Elton ) if I was living in Venezuela I would be cleaning up on gold right now? ( :- )

Mike Sheller
(Sat Sep 06 1997 23:18)
I'm just having a little fun tonite, but that mirror trick was really CRUEL.

(Sat Sep 06 1997 23:19)
DONALD: Thanks for the reply.

(Sat Sep 06 1997 23:20)
MILHOUSE: I would have to see several municipal and large corporate bankruptcies ( which I fully expect to see ) and I would have to see congress vote the funds to bail them out and follow through on that vote in spite of the adverse bond market reaction. It would have to be a larger event than a single New York City and a single Chrysler in 1974. Several cities and several corporations are likely candidates. I am sure they will discuss a bailout. I don't know how the vote will go. I think it would fail a vote now but might pass after a new election.

(Sat Sep 06 1997 23:21)
PUETZ: If you answered this in an earlier post, I apologize - but is not the signficantly expanding monetary base in the US at odds with your prediction of substantial deflation.

(Sat Sep 06 1997 23:22)
Mike Sheller: Yields on the long-end of the market ROSE from 1929 to 1932. You might be thinking about the short-end of the market, which did decline. The Federal Reserve did pump massive amounts of reserves into the commercial banks during 1929-32. However, that pumping didn't help the long-end of the bond market. Liquidity concerns and credit concerns caused yields on long-term bonds to rise while short-term rates were declining. This is one of the few instances ( this century ) when long-term rates moved opposite to short-term rates.

In another deflation, the same is likely to happen.

(Sat Sep 06 1997 23:23)
Scuttlebut is that Princess Di will Grace the New Euro Coins and Bills. It has only just begun. We may include her visage here as others want in our Northern Neighbours. I cant really disagree.

(Sat Sep 06 1997 23:28)
Earl -- It seems to me, the folks who bought the tabloids are guilty of being accomplices after the fact. ( This is current lawyer thinking, BTW )

No Earl, they were drunk. It wasn't the media hounds. Besides, if you're being followed, why not call the police from the car phone?

Now, how could we focus 10% of the 'D' attention on to gold? That could easily push gold to $700 - $800 / oz. overnight!

Mike Sheller
(Sat Sep 06 1997 23:33)
In lieu of the TORT
The following is a joke, as written, that was the last message emailed to me by a very beloved and long-time friend just a few days before he was killed in an auto accident.I faxed it to his brother so it could be read at his funeral. This is for you Lawrence. I love you.

Three health professionals arrive at the "Pearly Gates". St. Peter addresses the first
one, "and what did you do below to deserve to come up here?"
"I was a physician," the man replied. "I'm sure that over the years I made some bad
calls but on the whole I feel that I been of some help to humanity."
Saint Peter reaches out for his hand and says, "you sound like just the right person for
this place. Come right in." He turns to the second person and asks the same question.
"I was a nurse,"she replied. "I spent my life trying to give relief to other people's
suffering even though at times I was overwhelmed by the task."
St. Peter smiles and says "you sound just like the person we need. Welcome
to Heaven." He then turns to the third person and asks the same question again.
"I Managed an HMO," the man replied,stepping forward. "I had to make a lot of tough
decisions, money being tight and all those indigent people, you know. But on the whole I
provided some decent care."
St Peter stroked his beard then began entering data into his computer. After a few
minutes he turns to the man and says, "Okay, you've been approved for five days in Heaven."

(Sat Sep 06 1997 23:33)
Skylark: Good question. The monetary-base is but a small part of our financial system. The monetary base ( = to reserve balances at member banks + currency in circulation is just $.48 trillion ) is but a small fraction of the total credit supply in the United States. Total credit is about $15 trillion -- 30 times greater than the monetary base.

If the monetary base became became closer to total credit within our monetary system ( say, a $10 trillion monetary base versus $15 trillion in total credit ) , then changes in the monetary base would be of major concern to inflation watchers. I believe this also answers Milhouses's question.

(Sat Sep 06 1997 23:34)
SKYLARK: I am about to get some zzzzzzz's ( if you are a Canadian that's zedzedzedzed's ) but let me offer an opinion on the Monetary Base and deflation. First, with the collapse of eastern Europe 233 billion of the base went overseas from 1989 to 1994. No one knows exactly the amount, that is the Fed's number. I suspect that a good chunk of the base went to Asia during recent weeks. So, from a domestic standpoint, the Monetary Base could actually be shrinking. Secondly, it is the M1, M2 and M3, the credit portion of the M's that disappears during bankruptcy. The base stays the same. It was M1, M2, M3 that caused the inflation. The base is only a small factor. It is the seed only.

(Sat Sep 06 1997 23:36)
I dont think anyone was listening to the PreZ today. He was admiring two women who cared about helping the disabled, elderly and children. You here on Kitco can tongue and cheek it all you want but two great ladies passed away this week. Peutz you should not criticize Elton John for his situation given he probably can not help it. And if thats the case we should avoid open disparagement while we personally disagree.
We should celebrate diversity as a way of ending crippling prejudice no matter our personal opines!

(Sat Sep 06 1997 23:38)
TED -- I've never let a drunk drive me around, unless it was me. :- ) )

Just kidding folks...

Time to hit the hay, good night all.

Mike Sheller
(Sat Sep 06 1997 23:42)
@ Puetz, & ALL
Steve: I will have to go back to Milton Friedman's "Monetary History of the United States" and reread his critique of the Fed for allowing the money stock to decline by a full third from 29 - 33 ( Despite, as you indicate, attempts to "add liquidity." ) It will be interesting to see where uncle Miltie sees the failure. After all, what's a Fed for?
Good nite all. It was really fun tonite. And I'll remember you PANDA if I have bad dreams.

Mike Sheller
(Sat Sep 06 1997 23:45)
Could you keep it down? Your sanctimony is keeping me awake.

(Sat Sep 06 1997 23:46)
DONALD, PUETZ: Thank you for your comments and for the enlightenment. I understand your position, still, whatever is the monetary base in consideration of the total scope of "money" when credit is included, or its global distribution, the important aspect of it is that it is expanding and not contracting - which seemingly is at odds with deflation. No need to respond. I am hitting the sack also. Oh one other comment, regarding Milhouse's theory on the CPI manipulation, conversely to what he has expressed, from what I read, the reported consensus is that the CPI index overstates rather than understates inflation; and the rate of change is at historic lows - as it is in most countries.

(Sat Sep 06 1997 23:47)

WW : Comparing Mother Theresa with Princess Di is like comparing Albert Einstein with the village idiot. This is not meant to be an insult to Di, but you simply can't really compare a woman who devoted her entire life to helping the abject poor in the slums of India to a woman who devoted a significant amount of her time and millions of dollars to the fashion industry.

PUETZ : Your 22:49 was ill-considered. Homosexuality is not a choice and it is not a disease. Enough said on this topic.

M SHELLER : I suspect that the Venezuelans who held gold were still able to purchase the same quantity of tomatoes and the same quantity of CMAX's fast boats.

Cheers, Milhouse

(Sat Sep 06 1997 23:48)
Ted: My fondest memories of Ted Kennedy were at the Clarance Thomas versus Anita Hill sexual hassasment hearings. Old Ted was completely silent during that time. He knew he couldn't touch that subject with a ten-foot pole.

(Sat Sep 06 1997 23:53)
If Mother Theresa had been born into Royalty she would not have been working in the slums of Calcutta. Point is we are all viewed on where we begin and where we are at. As a Royal PD did her best and she could not possibly be spiritually compared to Mother Theresa because of her spritually challenged birth among the rich and famous. In a spiritual sense she has had to overcome alot because of her privileged background.

(Sat Sep 06 1997 23:56)
in sack-o-tomatoes
WW: How do you do it -- post political commentary with a straight face, that is? Clinton was just "admiring two women," was he? HAR! If I were family to either of them, and Bubba came around . . . I'd get me one of those BIG OL' BULLET PROOF MASTER LOCKS for the coffin!