Greetings All,
1.
To Kuston at 17:23 thanks for your worthwhile reflections here at
Kitco. I just wanted to respectfully challenge one of your numbers.
In your point 2 you referred to :
" 2 ) The size of the gold reserves we are talking about are
HUGE . By my count, the US reserves alone are worth over 15
trillion dollars @ $300 gold. "
I looked at the World Gold Council site recently and they spoke of
total Central Bank Gold reserves of around 34,500 tonnes. This is
approx. 1,109 million troy ounces only ; and @ US$300 per oz is
only US$330 billion. At current market value of US$330 per oz this
is only $366 billion. NOTE this is ALL central bank Gold reserves;
not just the USA. Compare this with just the US Government Debt of
around US$ 5 trillion.
Kuston please accept my apology if I give any offence in this
correction but I think it essential that we all know HOW LITTLE
Gold there is relative to "paper" assets at the present time.

2. My second point is on one of the favourite Gold stocks for us
" Down-Unders " Normandy Mining Limited. As stated earlier they
traded 199 million shares on Friday, closing UP 4c at A$1.83.
Newcrest Mining could not sell on Wednesday at $1.72, but did sell
on Thursday night at $1.78. http://www.newcrest.com.au/press38.htm

I think what happened is Spot Gold fell US$6 , Spot Aussie
jumped a cent and the short A$ Gold/Long Normandy shares position they
( Newcrest ) had suddenly improved. They would have bought back
their 740,000 ounces of Gold at A$442 instead of the A$460
prevailing just 48 hours earlier. And along came Tiger Management
LLC with US$253 million burning a hole in their pockets just
looking for a quality Gold stock to get set in in some size.
DEAL DONE.

Normandy now has Tiger as it's largest shareholder with 11.81%.

To Nick@Aussie up in Cairns, I also noticed lots of Call sellers
on Friday afternoon, Nov175 calls in particular; closed at 13c,
and 8c in the money with about 7 weeks to expiry. Two cents of the
five cents time value is merely the cost of carry. ( Not that I am
saying they are a lower risk way of going long NDY or anything . )

It will be interesting to see NDY's trading level on Monday now
that the stock overhanging the market has been placed and the
buyer's identity is known. As always CAVEAT EMPTOR etc etc.

Happy trading ALL

Apologies to all if this has already been posted:

Greetings All,
1.
To Kuston at 17:23 thanks for your worthwhile reflections here at
Kitco. I just wanted to respectfully challenge one of your numbers.
In your point 2 you referred to :
" 2 ) The size of the gold reserves we are talking about are
HUGE . By my count, the US reserves alone are worth over 15
trillion dollars @ $300 gold. "
I looked at the World Gold Council site recently and they spoke of
total Central Bank Gold reserves of around 34,500 tonnes. This is
approx. 1,109 million troy ounces only ; and @ US$300 per oz is
only US$330 billion. At current market value of US$330 per oz this
is only $366 billion. NOTE this is ALL central bank Gold reserves;
not just the USA. Compare this with just the US Government Debt of
around US$ 5 trillion.
Kuston please accept my apology if I give any offence in this
correction but I think it essential that we all know HOW LITTLE
Gold there is relative to "paper" assets at the present time.

2. My second point is on one of the favourite Gold stocks for us
" Down-Unders " Normandy Mining Limited. As stated earlier they
traded 199 million shares on Friday, closing UP 4c at A$1.83.
Newcrest Mining could not sell on Wednesday at $1.72, but did sell
on Thursday night at $1.78. http://www.newcrest.com.au/press38.htm

I think what happened is Spot Gold fell US$6 , Spot Aussie
jumped a cent and the short A$ Gold/Long Normandy shares position they
( Newcrest ) had suddenly improved. They would have bought back
their 740,000 ounces of Gold at A$442 instead of the A$460
prevailing just 48 hours earlier. And along came Tiger Management
LLC with US$253 million burning a hole in their pockets just
looking for a quality Gold stock to get set in in some size.
DEAL DONE.

Normandy now has Tiger as it's largest shareholder with 11.81%.

To Nick@Aussie up in Cairns, I also noticed lots of Call sellers
on Friday afternoon, Nov175 calls in particular; closed at 13c,
and 8c in the money with about 7 weeks to expiry. Two cents of the
five cents time value is merely the cost of carry. ( Not that I am
saying they are a lower risk way of going long NDY or anything . )

It will be interesting to see NDY's trading level on Monday now
that the stock overhanging the market has been placed and the
buyer's identity is known. As always CAVEAT EMPTOR etc etc.

Happy trading ALL

hello everybody, my first time here. interest are metal stocks and all commodities. good luck investing.

So the Question becomes

"How will the Dollar die?"

Anyone?

Hello All, [have a feeling no-one else is out there this week-end!!]

Have you seen this?

http://www.gold-eagle.com/gold_digest/baron1007f.html

ALL,
DR.MICKEY SAID SOME SILLY THINGS AGAIN...THIS TIME..: http://www.scmp.com/news/template/templates.idc?artid=19971011004712038?=fp&template=Default.htx&maxfieldsize=2287
ANOTHER BIG SHAKE NEXT WEEK!I'll continue to buy more gold,once this guy start to speak out,THE MORE HE SPEAK,THE MORE I BUY!DON'T CARE BEAR OR BULL!I JUST THINK the nationS going peak into the corner and more isolated from the open coutRY!......

Panda,
Sleepless nite?This one for you.KUALA TRENGANNU supposed a very nice musliman fishing town.With beautiful islands,beaches and sea food.only 3 hours journey from me.UNFORTUNATELY,Our DR.MICKEY spoilt again with his big mouth!This time more seriouly hurt the RELATIONSHIP between the east and the west!More with the racist issue!
Yes,this will pressured ourself into dead corner and more isolated from the open-free market!
the story run as: http://www.scmp.com/news/template/templates.idc?artid=19971011004712038?=fp&template=Default.htx&maxfieldsize=2287
any comments,welcome!good nite and sleep well!!!

testing!

JohnC - Yes, 15 trillion is to much. Must of got happy with the
zero button somehow. This basically now is a game of billions
not trillions - alot of players can play in that game today. It totally
changes my thoughts.

I remember my first trip to Japan - I was on a tour bus visiting the palace.
The guide mentioned something about the history of the palace and how
it is one of few things that hasn't changed since WWII. He then went
on to say that today's war was fought with economics not bullets. He
tied it all together somehow - I forget. I remember this because I
have never thought of the US at war with Japan in my life! Yet here
was a common citizen talking like they were.

If we are still at war - the weak link in the armor is the currency.
Its a slow way of defeating a nation but it works - destroy the currency
and everything will follow.

This LBMA thing has got to me. If anyone sees a link or address or phone
number for LBMA please forward it. I'll be at the library monday - I
want to figure this out.

In referrence to Another's last paragraph - I'm pretty sure he was
talking about "way of life" at the least. Governments and countries
changing more then likely.

G'day all--pretty quiet today--everyone out enjoying the beautiful weather I hope. What El Nino??

John C. --good analysis of the Newcrest/Normandy sale. NDY is one of my top picks--if GSC and others are correct @ $400 gold in '98--I'll probably retire on the calls ( long range ) I bought in NDY when nobody wanted 'em.Everyone on this site has 20/20 vision after the fact--but in July they were giving Normandy/Acacia/Eagle/Wiluna/Newcrest etc. away. A few here have spoken about another excellent investment--notably Nick up in Cairns--put warrants--especially on the banks. I.M. not so very H.O. the banks were ALL badly overpriced. NAB for example has already come back a couple of bucks and my put warrants have nearly doubled with 1 1/2 years to go!!! They could easily go to 10-15 times purchase price in a moderate meltdown!! John C. -- keep posting. We need some new Aussie blood here and you obviously know what yer talkin' about!!

G'day aurator and colleen--I'm the meat in the a. & c. sandwich!!

Hi JIN !! I see Dr. Mickey is being "recalcitrant" again!! I don't like racism in any way, shape or form and for a world leader to start picking on one particular group ( Jews ) in order to curry favour with his Muslim mates in the Middle East and to take the blame away from his own disastrous policies ( not to mention his big mouth ) --reminds me of a certain Austrian with a little mustache in WW II. I can say what I like in this country--but you obviously have to be a little more careful. I enjoy your posts Jin-- keep them coming!! Sawadee Kop/ Salamat Datang??? mate.

G'day all--Welcome John C. Was beginning to think EVERYONE in Oz was named Nick! ( a nickname? ) Am off for a whole week now! That may or may not be good. I'll get to watch them HM Oct.'97 15 strikes crash and burn in REAL time, instead of coming home to read about it after the fact!

Jin--have borrowed this from your South China Morning Post.

Thailand--Soros Approached to Give Stock Boost...

Mahathir is trying to get rid of him and the Thais are begging him to come and bail them out!!!

http://www.scmp.com/news/template/templates.idc?artid=19971010233124044?=rel&template=related.htx&maxfieldsize=1853?evID=19971011004712038//?evTop=fp//?evTemp=Default.htx//?evMFS=2287//

Japan Office Rents Rebound...

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

Is it time to buy back into Japanese shares etc.??? As a contrarian I'm getting awfully tempted!!!

Warning to Soeharto: the future comes now.

... ancient prophecy by a Javanese king.

http://www.smh.com.au:80/daily/content/971011/world/world4.html

Coffee, tea or Hillareee???

Revealed : the tape they didn't let you hear.

http://www.smh.com.au:80/daily/content/971011/world/world11.html

Sorry Steve ( Perth ) --just realised that the last one was your post from last night!! A good yarn, none-the-less!! Who would wanna be a President? Gotta have an ego the size of the Dow Jones!!!

Bart--G'day mate. As usual--thanks for setting up this entire site just for me!!! I need the typing practice. BTW Bart--what do YOU get out of this site--other than a big bill from the server. Mate, I for one would be more than happy to help defray the costs with a subscription or whatever as this site is worth it's weight in gold, mate.

Howdy Nick of Canberra! Here's seconding your ideas about Kitco. There's no place like it, mate!

Hope these guys haven't got any of those missing Ruskie suitcase A-bombs!!!!

"... the satanic spirit of insolence and arrogance which flows in the blood of the American administration"

http://www.arabicnews.com:80/ansub/Daily/Day/971010/1997101015.html

G'day Auric--thought the Martians had landed ( or maybe the Kiwis ) and I was all alone!!!

How's things in I.........s, mate???

Nick--Beautiful Autumn weather here in Indy. Looking forward to being off, with perfect weather forecast for the next week. Leaves will be at the peak of splendor, as well. A Golden time that comes once a year.

Good action in Aussie gold shares, folks. Now they're fightin' over Wiluna.

http://www.australian.aust.com/business/business.htm

Auric--have never been to the mid-west. BTW--why do they call it that??? Should be mid-east!!! Can't anyone read a map over there??

To the markets, mate. Are you guys closed Monday?? What's your pick on the price of the yeller stuff?? I've looked at those charts--and if the bottom ain't in, mate--I'm gonna give it away.!!!! This market is like a bitch in heat, mate--just bustin' to get out. I'm gonna make a helluvalotta$$$ whichever way it goes--but jeez it sure looks ready to pop!!!

Nick--Midwest is a leftover term from the early 1800's when Indiana, Ohio, Kentucky, and I think Illinois, made up The Northwest Territory. Indiana attained statehood in 1816. Its first Capitol was in Corydon, near the Ohio River. -- Also.... been having a think on the post by "ANOTHER". My take is this--The Grand Secret of the Gold market is the TRUE amount of currency tied up in Gold. When that amount becomes known, the currency valuation of Gold will explode. Conversely, assumptions about currency itself will shift. That may be the part we don't like.

Nick and Auric:YOU ARE NOT ALONE
Here in Northern California, "el nino" provides consistently glorious balmy weather, punctuated by the occasional brief rainstorm. It is almost too good to be true. One finds oneself waiting for the other shoe to drop.
BTW:The current Gold situation gives me that "other shoe" sensation too. Maybe that's why those short term HM strike price gambles are beginning to look pretty good.

Aurator: How will the dollar die? Such a short question, such a long answer! If we look at recent history we might see an answer in the story of the British pound starting in 1931. The big difference between 1931 and today is the lack of any world class currency to take the place of the dollar. In 1931 a powerful, fully gold backed dollar was ready to assume the role. Today there is no such animal and the failure of the dollar would lead to world trade by barter.

As to how the dollar will die I would tend to think it would be in a derivative death frenzy. One significant failure would snap the confidence required to keep the illusion of strength that is currently the only thing backing the dollar.

Good Morning Auric: A footnote to your history lesson. You are sitting right on the Connecticut Western Reserve. We sold that land in the late 1700's I think, ( can't remember the date ) . Each of the 169 towns in Connecticut still have a public office called "Agent of the Town Deposit Fund" Money from the Western Reserve sale was invested for public education. The Agent is responsible for seeing to it that the dividends and interest still being earned is used for that purpose.

Donald,Aurator: What a question for a cool Saturday morning! How will the dollar die? Aurator -- wasn't there a famous poet that said: "How will the world end, not with a bang, but with a whimper"? TS Eliot? I still need my coffee!
I have been thinking about this now for a while, and am hoping for the "whimper", as long as our brilliant A Greenspan is on the watch. But watch out if we have an international crisis, or he steps down. Off to get my coffee!

Nick and Steve: Glad I'm not the only one on this thread who sees real value in Japan at this time mates! The Nikkei may still drop below 17,000, but the samll cap averages there are acting great. And if the dollar takes a big hit, that will add icing to the cake.

Another: Sounds like you are anticipating BIG trouble for the global financial markets. And a massacre of the gold shorts.

Quick!!! Sell your house and buy shares!!!!

http://canoe2.canoe.ca/BizTicker/CANOE-wire.Mortgage-Study.html

George Cole-- The Nikkei is about 55% down from the top of the bubble. About equal to a Dow 3600. Starting to look interesting, eh mate!!!

ANOTHER: I just want to say that I agree with your 10/10 post completely. I find the whole thing rather unsettling when I see it all spelled out in black and white like that, but, when you're right, you're right.

George Cole--If I understand ANOTHER's message, he is saying that, in addition to Gold Shorts, the Currencies themselves are going to be massacred. That is the inescapable consequence of a rise in the price of Gold.

Japanese fund investing in gold and other commodity futures is taking off!!! Guaranteed principal--sounds too good to be true!!!


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

That last post--go to Economy & Finance---BOT M'bishi Comm. Fund Sales

AURIC/GEORGE COLE: If I understand ANOTHER
correctly, ( as both of you seem to do ) it all comes
back to the fact that " nothing occurs in a vacuum."
Some of the potential consequences of the present situation he refers to will, therefore, inevitably be very hard for a lot of investors to deal with.

George Cole: Let's assume ANOTHER is giving us essentially accurate information, and we have a gold rally when the readily available gold runs out for the CB's.
At that time we probably risk a dollar crisis from the points that he/she outlines. What do you recommend the diehard investors like us follow, if we wish to go to the "brink"? US interest rates, Dollar index?, gold bullion price? What sort of early warning system would you use?

I'm hoping that our brilliant Alan Greenspan will prevent ANOTHER's predictions from coming true in a "bang", but rather with a "whimper". Interesting times - with many world-wide problems converging. As I recall, he was on the watch only a few months when Oct 87 hit, and he will be acutely aware of this scenario -- probably the one closest to what ANOTHER is predicting -- opportunity for a two month or so doubling in gold stocks when the dollar falters, if one is willing to risk a dramatic collapse of the market, and a subsequent gold stock wipeout.
Comments? Notice how ANOTHER has responded two days in a row? He may offer more clues if we pose the right questions! Like when, and how fast! Perhaps these questions noone can answer.

Good mornin all! First time we've seen the sun in a week and feel like a mole commin out of its hole...Where are the shades mon??...Off ta read Barrons...MGraves: where the hell are you??

http://www.theage.com.au:80/daily/971011/news/news20.html

Bart And Group- I recieved my daily copy of the Gartman Letter yesterday
morning and found some interesting comments. In his precious metals
section he made the following comments.
" During the day we monitor a web-page/chat line for gold trader's
( www.kitco.com, for those of you who are interested ) , and in the past
two weeks, the " volume" and excitement amongst the gold traders has
been more than palpable... it had become almost hysterical. We recalled
our old trading philosophy: when they're yelling were selling. The metals
traders were yellen yesterday morning following the Buba's decision.
their collective yelling was wrong."

It would seem to me that Another is referring to some type of possible confiscation in his post..that you will not like the outcome..any other reads?

JTF: There would be a significant difference in the reaction of gold mining companies who are hedged vs those who are not.

Central Fund of Canada is at a discount of 8.75% ( NAV = $4.35 )

Hey man, If you're collecting money from your subscribers to monitor what I say on Kitco, then I want a cut ! We weren't wrong, you were too short sighted !

TTFN

Nick: The Nikkei may be down 55% from its peak, but the Japan small stock averages are down 80% from their highs. Now that is what I call a real bear market mates. This Japan super-bear has been going on for 7 years and sentiment is extraordinarily depressed. Timing is always a question in gauging market turns, but the upside potential is enormous and downsidwe risk is minimal. Sort of like the gold shares, eh!

Nick: You've been busy this morning. At one time, it appears you were the Kitco world. Something's wrong with Kitco's posting system, so I'm reusing the page from my last post.
It seems like with the question of investing in Japan that one needs to get some idea of how large their debt is, versus the total savings of the Japanese. If their savings reserve is high enough to cover all of their debt, they may just be ready to pull themselves out of the slump. Like the US in the thirties. My main concern now is how much did Japan invest in mainland China? The votes not out on this.
How much is the actual mainland Chinese debt, and how is it to be restructured? That is the key question!

BOB: Look like some are using KITCO as a contrary indicator, Big mistake because sentiment on this site does not mirror the general gold trader sentiment at all. Sounds like that letter is focused on very short-term trading, not on catching a trend and sticking with it.

Trader commitments in Barrons this morning show commercial hedgers net short gold for the first time in months. Anybody follow this as an indicator?

THE WAY IT TREATS
WORKERS, CHINA DOESN'T
HAVE A CHANCE

Your frightening picture of Chinese steelworkers operating a hammer forge
without safety glasses speaks volumes about the challenges facing China ( ''Can
China reform its economy?'' Special Report, Sept. 29 ) . Until employees become
valued partners in enterprise, not disposable ''cogs in a wheel,'' ideological
fine-tuning and Jiang's reform package can never build an economy free of the
risk of labor unrest. Eventually, the basic need of any enterprise to respect people
and their ideas in order to succeed will collide with old-line goals of political
stability. If old-line political stability prevails, China's full economic potential can
never be attained.


James Donnelly
Albany, Ore.

After reading the article on China, I feel it is my duty to make potential foreign
investors who are lured by new financial opportunities in China aware of the high
risks involved.

The risks relate to problem-solving. If there is a problem, one would rightly
presume that it may be solved through the operation of the law. Yet our
experience has shown that there may be no way to obtain redress of one's torts in
the province of Shandong.

Foreign investors and companies seeking to invest and/or do business and
establish contractual ties with enterprises or co-venturers in China should be
aware of the behavior of the Chinese judicial system--which may be reluctant to
apply the sanctions of law to local parties.


Andre G. Gigon
Director
Tetras S.A.
Chardonne, Switzerland

RJ -- If 'Anothers' statement, "The CBs will have to sell outright now even as the currency price of gold starts to run away from them!", is correct, we very well may not see that 310 gold, though I think I might rather see that than the 'alternatives' happening! I do not believe there are enough 'foxholes' dug yet, and for many that are, they probably aren't 'deep' enough! And I'm not talking just metals in this regard!

Gold charts are interesting at this time. If this is indeed the beginning of the next wave up, one can expect little in the way of pullbacks in the midst of it. I'm viewing the Dec 329.0 area as the 'southward' breakpoint. The first resistance area is the Dec 333.4 area, which is also the 66% retracement of this last drop . I think if it blows through there, than it should be regarded as a 'done deal'! I.E. onward and upward! But still to be done is test resistance in the mid 340s, then make it support, if not even higher numbers. Of course, if all Hell breaks loose, then who'll care about old resistance and support areas anyway? They could wind up being so far south as to never be seen again anyway!

CARL I follow this indicator and I would consider the latest COT for Gold and Silver bearish. But then again the COT was bullish at 380 gold before it crashed to the 320s. Further the indicator has been bullish for a long time with no effect until two weeks ago. The PMs must overcome this matter on the upside just as they did on the downside. The problem IMHO is that the small traders and specs trade in a technical manner and will automatically buy and sell based on certain chart areas being broken. Assuming Wall St wants to keep the metals down it is much easier for them to do so in the current situation since all they need do is drive the metals to the technical stops and well you seen it before/ CRASH then sit for weeks. Who knows though the COT on gold may have improved dramatically with Thursdays sharp attack on the stops.In light of the latest COTif the PMs sustain a rally here we will know the Bull has begun. COMMENTS GSC. Anyone know the latest Comex warehouse stocks. The latter along with the lease rates appear to be supportive of the markets perhaps counterbalancing the COT.

http://www.lp-llc.com/cents/jones.shtml

JFT: Gold bullion is the key indicator to watch. Strong upward movement will signal looming troubles for currencies, bonds, stocks, and perceived CB control.

The markets know the western CBs and much of the financial establishment are striving mightily to keep the yellow at bay. Consequently, if the price takes off it can only be because they have lost control. And if they lose control here, their ability to keep juggling the global financial bubble will also be called into question.

I predict the CBs will soon rue the day they declared all out war on gold. By drawing a line in the sand and defending it fanatically they have greatly increased the risk to global financial markets and currencies when that line is breached. The gold war did help the financial bubble inflate beyond all reason, but is that in the best long-run interest of the system? I think not.

ElDOOOH: Thanks,has a nice ring to it,wouldn't you say but I thought I told you to get lost and stop boring us with the worthless drival that spews from your twisted mouth and STOP trying to suck up to RJ.

I do not believe CB selling has or ever will suppress gold. The threat of CB selling is used as a back drop for deriviative raids on gold by the Wall St boys who have an interest and inventory of financial products which would suffer in the perception and psychology of any PM Bull. The deriviative market discovers the gold price as it is much larger than the CB cash market. When a CB does sell it gets a price based on the derivitive market. Comments?

Donald: Reusing my old Kitco postpage again. Re: Gold stocks. I agree with you that last thing we want to do is buy a gold stock that sold all of its gold forward 10 years. It seems we have several things to to invest in gold stocks:
1 ) Invest during the "flight to safety" from non-precious metals stocks, re like during the two-three months before the 1987 market crash.
2 ) Sell precious metals investments ( except gold bullion ) on a warning indicator of some kind, like a 10% drop in the dollar over a week, or a dramatic rise in interest rates, or an x% drop in the markets. I'm not sure on how to handle the brinksmanship. George Cole? RJ? Oldman?
3 ) Buy gold stocks again after the correction ( or worse ) . This part might take as long as 6 months to a year, because the drop in gold mining costs would have to filter back to the gold mines, as well as the public recovering from the shock we are likely to have. Much less savings in the general us population than in 1929 -- so recovery likely to be longer and more painful.
I think I've covered the whole scenario -- we could be in for a wild ride, like one of RJ's surfers on a Tsunami!

Thanks WW for your nice summary.

Carl: The commercial hedgers have been long all the way down. They probably will be short all the way up. Remember these companies are dealing with gold the commodity, not gold the monetary asset. Just as booming physical ( jewelry ) demand was unable to prevent bullion from falling when monetary demand was lacking, reduced physical demand will not prevent the price from soaring when monetary and financial conditions warrant.

WW: Who is providing the cheap gold loans for these derivative traders? Your friendly neighborhood CB

When you believe that CB selling or the threat thereof will keep gold down you are adopting the psychology THEY want to infect everyone with. It doesnt stand up to analysis. Remember silver went down with gold but no news of CB silver selling. No folks the PM problems stem from Financial house raids. As the physical supply as indicated by the lease rates gets tight ( as with silver now even out a year ) the PMs rise as deriviative raids become less effective. Notice how there were rumors of Taiwan CB sales two weeks ago and no reaction/ this is when the rally started. At the time high lease rates ( this still exists ) and a bullish COT ( this has changed ) . They could have rumored that everyone was going to sell all their gold and the mkt would have held due to the factors mentioned above. Their fear is that investor demand might develop in one of these tight supply type situations concommitant with a problem in one of the financial markets.

WW: The CBs are indeed fighting a war against gold. But the main weapon is gold loans rather than outright sales.

George Cole: Thanks -- We watch for the rise in gold bullion as an early warning indicator. My bet is that our A. Greenspan knows this also, a la 1987 situation, and will do his darndest to prevent that gold bullion rally. Especially from now to December. How should we set up our early warning indictor, gold bullion rise as the warning indicator, and a sudden drop in the dollar or sudden rise in interest rates as the trigger to sell our precious metal stocks?
Gold bullion prices may be too volatile to be used directly as the trigger indicator. Comments?

A critical review of the recent 1,000 year Bond issued by the Republic National Bank of New York. Put in this light it demonstrates the loss of reason & common sense by investors and regulatory bodies.:
http://www.gold-eagle.com/editorials/tsung1010.html

GSC who makes the decision to borrow the gold and sell? Not the CBs but the deriviative borrowers who are the ACTIVE source in the selling. Further, there are the psychologically PM chilling Comex deriviative raids to hit technical stops and drive the prices down which dont require any borrowing just a huge margin account/ which the boys have.
The Wall St CB spin is to make everyone fear that some huge organization wants gold down so any demand for the yellow is suppressed. I do not deny that CB s sell gold but they also buy it. Those who believe CBs are the active sellers should ask why net CB holdings have actually changed very little over the last ten years. It is true though that they have less in relation to currency reserves and probably due to gold loans outstanding.

The reaction of the Aussie dollar after their big sale I think puts the cowbosh on any CB selling and may actually augur for CB buying. This I feel is not lost on a Europe which wants to have a strong EMU.

Read your post on Another's thinking; are you saying ( of gold stocks ) that if we have a substantial drop in the dollar, we could see a big ( double was your word ) in gold stocks but risk even a collapse in those shares in the event of a real meltdown?
I realize there'll be a "baby out with the bathwater" situation as people sell everything to cover this huge margin overhang, but I can't help but feel better off with the entities which hold the actual metal in the ground, especially at the prices I've been buying at since July.

WW I agree with your recent post and would like to add that the dirivitive players margin money belongs to other people i.e. pension funds, bank stockholders, etc.. If there are large losses in a trade the dirivitive trader will move to another institution and leave the loss he created with his former employer.

This I believe is one reason that the y2k problem is NOT being factored into risk premiums or implied volitilities in the dirivitive markets.

If these things were, the banks etc, I think, would find the transactions much to expensive to engage in.

GSC you state the gold loans by CBs make them gold sellers. Then, by analogy, could we say that it is the bank and not the credit card owner who is CONCIOUSLY purchasing goods at the store. My point is that the CB is only a facilitator and further the use of loans indicates they value gold as they want it back. Further the loan transaction is iniated by the borrower therefore if there was no loan demand there would be no CB loans. Then where would we be. I believe there is a high demand for loans because of the desire to lock in a price due to the weak price conditions in the market precipitated by Financial House Comex raids which create a sell ( or borrow ) any rally psychological attitude. Remember look at what is done not said/ the gold LOANS indicate CBs value gold and want it back. The Wall St financial press will not use this spin but rather constantly talks of threatened ( and now non occuring or denied ) CB sales to create the proper back drop for their raids in the psychologically important Comex.

HOW WILL THE DOLLAR DIE???

ask yourselves just what a dollar is? just what is a Federal reserve note?

My ans.? They are nothing but circular arguments.

Badger: Gold stocks doubled from their previous bottom in 1987, just before the market crashed. During the panic, all stocks were sold, even the gold stocks. You are right, in my opinion, about owning gold in the ground, but not necessarily gold stocks. If you actually own physical gold, that will easily weather what is coming, as Big Trader, and ANOTHER have said.
However, for those whose wish to ride the wave in gold stocks, the potential return on your investment might be 3-5x greater than investment in physical gold -- but the risk is much greater too. If you wish to be buy and hold, better buy physical gold. Have you read Pierre Lassonds's book on gold, called "The Gold Book"? A 1996 revised version just came out. This book is the most carefully written book I have seen on gold - from the up and down side. P.L. is the force behind Franco-Nevada and Euro Nevada, two of the world's best run ( and most profitable ) gold mines.

Thanks for the re; my son and I are to visit Barnes& Nobles today: he for a "Where's Waldo", and I for "The Gold Book",you can't own too much reference material.

If ANOTHER IS referring to a massive 'witch burning' of all paper financial instruments including PM-based derivatives, then not even gold stocks will be immune from the destruction even as gold rockets to uncharted new heights. Stocks like ABX, NEM, NGC, PDG, HM are now inseparably wedded to all other S&P 500 stocks through stock index mutual funds and will be sacrificed together with all other indexed stocks. BUT the junior gold stocks with excellent management and secure unhedged production will remain relatively unscathed from the irrational exhuberance to destroy ALL paper, and IMHO will be bid up to the same irrational levels as the S&P 500 index stocks! My advice BEFORE such a scenario unfolds is to SELL the INDEXED gold stocks short and BUY the aforementioned JR. gold stocks like their's no tommorrow! Because if ANOTHER is correct, there may not be! Especially since the war cycle is bottoming and everyone on the planet, except N.Korea and Castro are now capitalists just like us who are only interested in one thing--getting their legitimate piece of the world economic pie at whatever the cost! Sounds like the Y2K problem is the least of our worries!

Hi Donald--Can you point me to a site that lists the stocks comprising the AMEX Gold Bugs Index ( the HUI ) ? Muchas gracias.

To All-

Regarding the recent joke about the panda. In my
animals of the orient reference book it says "The
Panda eats roots shoots and leaves". There is a subtle
difference that Nick or Steve could enlighten you
on ( if that is needed ) .

Oh yes! One last thing! BEFORE you buy gold stocks you better buy your core survival physical gold FIRST. Because if I read Another's scenario correctly, once the witch burnin starts, the gold window will be closed and the supply will suddenly dry up perhaps forever! Let him that hath ears to hear, HEAR!

GSC, JTF: Before I would consider investing in Japan I would like to see a bb fisher type Nikkei/Gold Ratio chart. It seems to me it is much too soon, even at 55% down. SE Asia is still a new problem to Japan, China is a new and powerful low-cost competitor and, after the US and Euro stocks crash, they will lose their best customers. Japan needs customers and they are dropping like flies. I agree that Japan is a survivor and should be a "first buy" when the US bottoms.

As I look around the world I only see gold and silver as a suitable investment in the environment we face. Guess I am really a gloomer and doomer these days.

From www.amex.com ( url is too long to post )
Stock Index
Contract
Specifications

Options
The AMEX Gold
BUGS Index


Symbol: HUI


Description of Index
The AMEX Gold BUGS ( Basket of Unhedged Gold Stocks ) Index represents a portfolio of major gold
mining companies. The Index is designed to give investors significant exposure to near term movements in
gold prices - by including companies that do not hedge their gold production beyond 11/2 years.

Equal-Dollar Weighting
The Index is calculated using a modified equal-dollar weighting method designed to approximately reflect
each component's market capitalization ( i.e., shares outstanding times market price ) . Modified equal-dollar
weighting was established by designating the number of shares representing an investment of approximately
( 1 ) 17.5% in two Index components; ( 2 ) 14% in one Index component plus 2.4% in one gold-linked
preferred stock from the same issuer; and ( 3 ) 5.4% in each of the remaining nine components. Shares were
rounded to the nearest whole share and the aggregate value of the stocks was reduced by a divisor to
establish an Index benchmark value of 200.00 at the close of trading on March 15, 1996.

Adjustments, as necessary, are made quarterly after the close of trading on the third Friday of March, June,
September and December.


Index Components
The AMEX Gold BUGS Index is composed of shares of the following issues:

Agnico-Eagle Mines Ltd.
( AEM )
Freeport-McMoRan Copper & Gold,
Inc.
( FCX C pfd )

ASA Ltd.
( ASA )
Glamis Gold, Ltd.
( GLG )

Battle Mountain Gold Co.
( BMG )
Hecla Mining Co.
( HL )

Bema Gold Corp.
( BGO )
Homestake Mining Co.
( HM )

Coeur d'Alene Mines Corp.
( CDE )
Kinross Gold Corp.
( KGC )

Echo Bay Mines Ltd.
( ECO )
Newmont Mining Corp.
( NEM )

Freeport-McMoRan Copper & Gold,
Inc.
( FCX )
WMC Limited
( WMC )

Trading Unit
The minimum trade size is one option contract. The notional value underlying each contract equals $100
multiplied by the Index value.

Expiration Cycle
Three consecutive near-term expiration months plus two successive months from the March cycle.

Expiration
The Saturday following the third Friday of the expiration month.

Last Trading Day
Two business days prior to expiration ( normally a Thursday ) .

Limited Exercise of Options
European style. Options may be exercised only on the last business day prior to expiration ( normally a
Friday ) . Writers are subject to assignment only at expiration.

"Delivery" Method if Exercised
Cash settlement based on the dollar difference between the final settlement value of the Index and strike
price of the contract multiplied by $100. The settlement value is determined on the last business day prior
to expiration and is based on the first ( opening ) reported sale price for each component stock.

Exercise Price Intervals
Exercise ( strike ) prices are set at five-point intervals, bracketing the current Index value, when the Index is
above 200. If the Index is below 200, the interval will be 21/2 points.

Option Premium Quotations
Stated in points and fractions. One point equals $100. Minimum tick for series trading below 3 is 1/16
( $6.25 ) ; for all other series, 1/8 ( $12.50 ) .

Settlement
Next business day following expiration.

Position Limits
12,000 contracts on the same side of the market.

Minimum Customer Margin for
Uncovered Writers
Premium plus 20% of the aggregate Index value ( Index value x $100 ) minus the amount by which the
option is out-of-the-money, if any. The minimum margin is premium plus 1% of the aggregate Index
value.

Trading Hours
9:30 a.m. to 4:02 p.m., New York time.

Trading System
Specialist/Registered Options Trader.

CUSIP Number
001985100

Trading Symbol
HUI

Final Settlement

Value Symbol

HUV



"The AMEX Gold BUGS Index" is a service mark of the American Stock Exchange, Inc.

NEW YORK-- ( BUSINESS WIRE ) --S&P CreditWire 10/10/97-- Standard & Poor's today lowered its long-term foreign
currency rating on the Republic of Indonesia to triple-'B'-minus from triple-'B'.
http://biz.yahoo.com/bw/97/10/10/y0004_7.html

Donald: I agree with you about Japan. Their economic system is tightly integrated, not as flexible as ours, and their deflationary shakedown may not be complete. Futhermore, how much did they loan mainland China, and how much of that debt is bad? I think the key to that part of the world is: 1 ) Is China the low cost producer, with a good economic foundation, or 2 ) does China have the same problems as so many of the other SEAsia countries? How is China's debt restructuring going to occur? Since China's system is communist, news of bank runs or financial weakness may not be so readility available.
Donald- Re collapse of the Western markets. I am not so pessimistic as you. I think you, George Cole, ANOTHER, and Big Trader all agree on what will happen, but in my opinion, noone knows the when and how much! Never underestimate Alan Greenspan! My take on this is that we have the baby boom, and a sunspot economic surge over the next 1-2 years to hold up the US economy, if we weather the SE Asia crisis, and the rest of 1997. ( For the last 200 years, sunspot cycles have correlated with economic activity, probably because of the changes in the Solar constant -- I think this is why the farmer's almanac has been able to predict for generations the weather with better than random results ) . Other items that would accelerate the process that concerns you would be some unforseen economic or military calamity. If we can get through October, the Middle East may stay relatively quiet until January.

Regardless of the above -- I wish to hold on to what I have, so I'm going to be on full alert ( to the best of my ability ) for a gold rally, and a dollar crisis -- at least we at Kitco are informed and fully aware of what could happen. I am very disppointed in our establishment for allowing what will eventually wipeout or seriously damage our economic system. We ( as a world people ) apparently learned nothing from the US dollar crisis in the seventies or from the crisis in the British pound in the early thirties. We have enough just to worry about the stock market, because it works only on faith. It is too much to expect the dollar also to run on faith only, with no connection to a "hard" asset such as gold.

nomercy, S&P is right on top of things as usual, NOT!

nomercy: Indonesia is now on Double Secret Probation!

Carl: Perhaps the S&P has paying clients that learn about the downgrades months before the rest of the world, or perhaps they are just slow as molasses! Good thing I don't use their advice!

In taking aim at the Stock Market Greenspan warns against expecting the market rally to continue at the torrid pace seen in the last couple years:
http://www.gold-eagle.com/gold_digest/inger1009.html

I need the www address of the site wich lists daily physical inventories in the COMEX precious metals, any help?

See Steven Jon Kaplan's site at http://www.geocities.com/WallStreet/4915/index.html although he is out of commission until Monday. He reliably lists daily the Comex warehouse stocks for both gold and silver.

The FWN site also reports on warehouse stocks, delivery commitments and receipts, but only the last few hours of releases are posted. You have to catch it as it comes out. Try http://www.futuresource.com/metal.html

flux and chaos are currently visiting the
BAYOU city of metropolitan houston, texas.
been raining like hell for 3 days and is
just getting started good. birch-bark ( for canoes )
has bottomed and a trend change has occured.
calls, if you can get-em, will be worth
their weight in GOLD!

floods, droughts, temblors, or vulcan....take your
pick....equal and opposite reaction....ripple effect....
who said that? who said grains are going to the moon, this year??

physics ( nature ) has wrested the controls of the pendulum
from its' taskmasters. the hydraulics in floods is absolute
relative to mans influence. ditto the end results for drought,
earthquakes, and volcanic activity.

a life form riding on a chunk of rock, through a vacuum, with
a delicate sphere of life-giving gases protecting and nourishing
all aboard. look at the actions of the fractionated carbo/astro/nauts.
what does the 3rd person perspective "see?"

cherokee!; ) back-stroking-under-the-tree-pee........

sollog, the pope, and clinton............

do-do-dodo----do-do-dodo---do-do-dodo---------

Donald - This particular discussion interests me greatly. The dollar ( index ) seems certain to make some 'retracements'/corrections/falls ( my work shows low 90's ) . I have been following it closely from a technical picture and trying to learn about the fundamental aspect ( Wide-in-Scope and the reason I read Kitco ) . It should be ready to make some corrections but I see many technical indicators that say it is ready to continue it's upward go after this recent fall. It shows signs of being oversold and seems primed to make another move north. The more I see the more I am confused...I bet you know that one, eh? It IS irrational out there...to say the least...

to the point... and anyone can help here...

Can we assume ( and I know that we should not ever ASS-u-ME anything ) that the 'flight' from the dollar will be going to the Mark or the en? The charts show that it is the Mark, no? But as you have said, we should not count out the Japanese for the are survivors and they seem to be trying ( albiet on the slow side ) to improve their economic situation. The German economy is gearing up also. And there is a direct chart correlation between $/Mark. Will the flight be to both currencies, Mark/en? Or will the flight be to GOLD ( the 64k quest. ) . Gold has not shown this to be the case as of late. Or will the flight continue to be between stocks and US$. Ok...now I'm rambling...and thinking aloud...and confused again.

I guess my question would be: Will the US$ falling be good, in your opine, for both currencies? I can see more 'money' flowing to the Mark than the en and I will be 'weighted' more in the Mark. Another rambling idea. A strong en is good for Gold, yes? And a strong en is good for the ( US ) trade deficit/surplus situation. I don't think I have asked any questions that have not already been addressed at kitco but I thought maybe this could be a good weekend discussion ( because it is directly related to GOLD and PM's ) . And I am hot on the currencies right now ;- )

It truly is a time consuming riddle ( debate ) , this world economy...and it sure beats watching the grass grow. Thanks in advance.

btw, for all interested. Check this chart out.
http://router.minot.com/~bohl/display.pl

a breakOUT??

Maybe Panda can humor us with his Awesome Omega charts of en. I truly DIG your charts Panda. And I'm still chuckling about that joke.

away...to contemplate/wash thy navel...and golf...oh es!


http://router.minot.com/~bohl/
and choose Japanese en Dec. on the daily chart.

Eldo - and while you are here check out Dec. Corn. It made a great run but now it looks like a Classic 'Island-Reversal'. It may be a goooooood time to take some profits...first thing Mon. a.m., NO? You know what they say about too far too fast. btw, good call...

away...to pop the corn


October 11, 1997
French unions say work hours pledge just the start

PARIS, Oct 11 ( Reuter ) - French trade unions boasted on Saturday that a government promise to shorten the legal working week with no loss of pay was just the start of a campaign for higher pay and greater job security.

Socialist Prime Minister Lionel Jospin, who earlier unveiled plans to create 350,000 youth jobs with the help of state funds, pledged on Friday to honour a campaign promise and draft legislation to cut the working week to 35 hours from 39 by the year 2000.

The announcement, made at the end of the day-long jobs conference hosted by the government, delighted unions but outraged employers

"The time for the harvest has not yet arrived, and there will be a lot of twists and turns in the road before we can get past hostile employers," CGT secretary general Louis Viannet said in a statement.

Jean Gandois, head of the CNPF employers organisation, branded the programme a triumph of ideology. Employers had argued that the working week should be reduced only on a case-by-case basis through negotiations with each individual employer.

The unions had insisted on legislation setting a strict deadline for the reduction in working hours. They threatened labour unrest if their demands were not met.
http://canoe2.canoe.ca/ReutersNews/FRANCE-JOBS.html

I don't normally do this but this is for you Eldorado...

Short term IMMEDIATE target: 274...h M! ( 50% retrace of last move ) and than 269ish to fill the gap ( and62%fibo ) ...and after that I don't care/know...

away...to rub elbows with sollog the great ;-^ )


Questions for gurus... ( and other lesser observers )
In 1999, when the European Union consolidates their CB into a single unit to control the EMU, instead of the Bundesbank, French, Italian, etc, what will happen to the gold now held by the separate governments? Will the new CB have access to a pot of gold to back the EMU, and if so, where will it come from. Will the separate govts give up their gold or will there be a fair payout/credit as assets go into the new CB's vault. Where will this vault be and whose army will be protecting it? Will current govts be tempted to unload their present supply to get cash before entering into the final arrangement?

Next scenario. Assuming the EMU comes about, who will make decisions about interest rates, money supply, etc, and will the French agree with anyone? What happens when a country's unions ( more politically important in Europe ) strike about economic decisions and the local govt says its hands are tied. What will happen if policies enrich a hard-working country and hurt another?

Next Scenario. What will happen if some nation wants out and how will they extract their fair share? Will they be let out without conflict ( civil war ) , if the majority says no? How will gold enter into this situation before and after union.

Secondary question. What will happen to the Dmark, Ffranc, Pound, etc when the EMU is issued?

The latest issue of Jim Blanchards "Gold Newsletter" reveals an astonishing aspect about CB Gold loans which ( it claims ) has caused sleepless nights for Central Bankers. Research by Frank Verseno ( sp? )
revealed that outstanding gold loans are at 6500 tonnes and may be even 8000 tonnes. Earlier estimates were around 2000 tonnes. According to the newsletter this is the reason the gold lease rate jumped to 4% from below 2% a
few weeks ago.
It seems to me that the CB's cannot "con" the gold market for long because speculators are taking advantage of the low lease rate to borrow gold at 2% and invest in U.S treasuries returning 6%. This is the "Gold Carry Trade" similar to the "Yen Carry Trade".

Saturday, October 11, 1997
Weak job growth pressures Martin
By BUD JORGENSEN
Economics Reporter The Financial Post

Statistics Canada said Friday the economy created only 16,000 jobs in
September, a report that splashed cold water on bullish forecasts. But business economists say the broader range of economic signals suggests the economy still is on a solid growth path.

Those expectations mean Bay Street will be watching for hints it's payback time when Finance Minister Paul Martin delivers his mid-year fiscal message on Wednesday.
http://canoe2.canoe.ca/FP/eco_oct11_weakjobgro.html

Ranji

I think if interest rates rise, the gold carry trade will have to be unwound...ie Sell the bonds and buy the gold back

Saturday, October 11, 1997
Canadian 88 could face $15M securities fine

By DAN WESTELL
The Financial Post
Canadian 88 Energy Corp. of Calgary could face a penalty of $15 million if securities commissioners accept a proposed settlement in an insider trading case next week.

Commission staffs allege Canadian 88 and its president, Greg Noval, provided undisclosed information to West Central Capital Corp. and its owner, David DiPaolo, before Canadian 88's bid for Morrison was launched Jan 13.

Canadian 88 reported a $10.2-million profit on the trades. It made about $14.3 million before costs and a $1-million donation to charity on buying and selling 5.7 million Morrison shares.
http://canoe2.canoe.ca/MoneyNews/oct11_canadian88.html

Ranji: If Jim Blanchard is correct on the size of CB gold loans outstanding, that is very, very bullish for the yellow.

EB: For some time I have been answering this question ( so far correctly ) that the dollar is strong, and likely to remain strong, for the wrong reasons. Major debtors have contracted for dollar loans and until there is an acknowledgement of bankruptcy dollars are needed for repayment. Much of world trade, oil and gold for example, is conducted in dollars and this adds to dollar demand. Until there is an event that shakes the confidence in the dollar it should remain strong. I would be careful of the proposed IMF action on increasing SDR's. There could be a reaction to that.

WW: The fact that the CBs are providing CHEAP gold loans proves that they want the yellow kept in check. The CBs and the short sellers are two sides of the same coin.

If Ranji's post about 8000 tons of CB gold loans outstanding is correct, they have truly gone to extraordinary lengths to keep the yellow contained. In fact they may have expended the vast bulk of their ammunition.

Donald: The NIkkei down 55% is not cheap enough for me. But the Japan small caps -- off 80% -- are my kind of situation.

Goldfields and Gencor Merger.

News at http://www.yahoo.com/headlines/971011/business/stories/gold_1.html

http://quake.wr.usgs.gov/cgi-bin/quake/gldfs.cr.usgs.gov

Some problem with last URL. Trying again.
http://www.yahoo.com/headlines/971011/business/stories/gold_1.html

So there are five ways of knowing who will win.
Those who know when to fight and when not to fight are victorious.
Those who discern when to use many or few troops are victorious.
Those whose upper and lower ranks have the same desire are victorious
Those whose generals are able and are not constrained by their governments are victorious.

These five are ways to know who will win


When you do battle, even if you are winning, if you continue for a long time it will dull your forces and blunt your edge; if you besiege a citadel, your strength will be exhausted. If you keep your armies out in the field for a long time, your supplies will be insufficent.

Those who are first on the battlefield and await the opponents are at ease; those who are last on the battlefield and head into battle get worn out.

Therefore good warriors cause others to come to them, and do not go to others.

What causes opponents to come of their own accord is the prospects of gain what discourages opponents from coming is the pospect of harm.


Ahhh the wisdom of the ancient Tao.

So stand your ground gentlemen and be at ease.

Byron: Here is that post from another source.
Gold Fields of South Africa Ltd. and Gencor Ltd. agreed to combine all their gold interests in a
new, $3.6 billion company called Goldco that they say will rank first in world gold production. The
complex transaction, which involves more than 10 publicly traded companies, will consummate a
courtship that has been going on for almost a decade between Gencor and Gold Fields, South
Africa's oldest mining company. The latest talks began seven weeks ago when Gold Fields' chief
executive, Alan Wright, approached Gencor Chairman Brian Gilbertson.

Having trouble access the story directly from Kitco. Try clicking on the the Yahoo URL and then on Business ( headlines ) for the story. Sorry. : (

Byron: Have you had a chance to read Carl's warning about the Auger XAU chart?

Donald: No. What, When and Where????

Minneapolis Fed says if you have any cash you must be a crook.

The estimates implicitly assume that more
or less all U.S. currency is held by adult U.S. residents; these are
the people they assume would benefit from inflation's elimination.
According to a Federal Reserve study, however, adult U.S.
residents instead hold only about 12-14 percent of it ( Avery et
al. 1987 ) .6 Thus, the estimates of a transaction cost benefit from
a zero inflation policy must be reduced accordingly.

But these estimates must also be reduced because of an indirect
welfare effect, one that comes from inflation's effect on those
who do hold most of the U.S. currency. For the Fed study also
implies that over 80 percent of it is held by people who are
residents of other countries and people who are engaged in illegal
activities ( in the under-ground economy ) . These are people for
whom U.S. policy-makers may not want to eliminate the inflation
tax.

If the inflation tax were eliminated, resources would implicitly be
transferred from U.S. citizens, who don't use U.S. currency
much, to citizens of other countries, who do. This clearly implies
some welfare loss to U.S. citizens.

More will be lost, too, because of the drop in the inflation tax on
the activities of people in the underground economy, who also
use currency a lot. These activities have harmful side effects on
people in the legitimate economy ( aboveground ) . Illegal activities
generally in some way reduce the happiness, or satisfaction, or
economic welfare of individuals who obey the laws. Prostitution
and drug-dealing, for example, may profit the people involved,
but at the least, they lower the property values of others in the
neighborhood. ( Economists call these harmful side effects
negative externalities. ) Eliminating inflation may also encourage
cash transactions designed to evade taxes. So policymakers
likely would be concerned about these activities but almost surely
unable to tax them in any way other than inflation. After all, by
definition, illegal activities escape explicit forms of taxation. Thus,
eliminating inflation would reduce total economic welfare by
eliminating a beneficial tax.7 Taking account of this missed effect
of zero inflation would likely reduce the remaining transaction
cost benefit quite a bit. The remaining benefit was, at most, only
0.04 percent of GNP. Much of a reduction in a benefit of that
size would drop it below zero-or turn it into a cost.

Wisdom fine but practical knowledge very important.

Question

I would like opinons on the prospects of the Swiss Franc during stock market crashes and following currency melt downs. Gentlemen how do you rate its survival? It is still 40% or thereabouts gold backed the highest of any paper currency world wide I kmow and the decision to reduce backing to 20% appears unlikely to be passed by the national referendum.

master sun------

nostradamus predicted a collapse of the swiss currency
due to nefarious practices relating to same.

Byron: Here it is I carried it forward.
Date: Fri Oct 10 1997 13:54
Carl ( @properties of the Auger chart ) ID#333131:
Donald and all who are watching for the XAU to touch the Gold/XAU ratio on the Auger
chart: My post of a few days ago was apparently too garbled due, no doubt to my lame
attempt at irony. So I will be plain: WARNING, WARNING, WARNING!!!!! The way the
chart is set up, the blue ( XAU ) line will always touch the red ( Ratio ) line when the value of
the XAU is equal to 210- the Ratio times 25. You can see this as for example take XAU of
110, then the "equivalent" ratio would be 4.4 etc. Given this property of the way the chart is
set up, we can make the general statement that any "touching" of these two lines that will ever
take place on this chart will be when XAU=210- ( 25R ) . Given this truism, then we can
calculate the point on the chart which "touching" will take place for ANY VALUE OF
GOLD! This is the function that I so lamely referred to in my previous post as "truly weird". It
is, in fact, a parabola, with a vertex at Gold = 441.
Between Gold=0 and 441 it has two solutions and of course no solutions beyond 441 for
gold. But it gets worse! The "touchings" which show on the graph which you posted, Donald,
are on the upper limb of the parabola and they will, in fact, take place at LOWER XAU
values as gold approaches 441. For example, with gold at 330, they will touch if XAU gets
to 157. But with gold at 400, they will touch when XAU gets to only 137. ( Unless you
prefer the other possible touch "from above at 72.98. ) This is counter intuitive. At gold =
441, they will last touch at XAU of 110, which of course is silly. The point being, if there is
going to be a meaningful rally in gold and gold stocks, these lines will never give you any kind
of signal at all beyond gold of 441. By the way, if gold goes to 0, then the "touching" signal
will take place when XAU gets to 210. A little late don't you think?

Ranji, George Cole,all: I'm beginning to understand this gold/dollar business. If gold can be leased at 2%, and US treasuries give 6%, then there is a strong demand to borrow gold and buy US treasuries, or something with similar interest yield. If however, the Central Banks don't provide enough gold for these low interest loans, then noone will be interested in buying US treasuries "for free" so-to-speak. Drying up of the gold loan liquidity would cause the dollar to drop.
Do I have it right? Pretty ingenious, and the CB's make money on their "worthless" gold at the same time. I would guess the CB invoved would not declare this on their balance sheets, and everything is fine, unless the CB needs the gold back. Of course, these days, noone needs gold.
This only works until interest rates on gold loans rise. Just wait till that happens! Eventually, the CB's will be loaning gold they need back. Now all of the above has been around for hundreds of years, originating when gold was actually a currency ( of course, that is no longer! )
How about the modern stuff such as derivatives, options, etc? How much can the CB's leverage their gold now? What I'm really asking is, how much gold can they "sell" or "loan" using derivatives without this showing on their balance sheets? If we can unravel this, we will get some idea of how long before that "limitless" supply of gold runs out, and the US$ tanks.

Master Sun: First pay all debts in full. Why put all your eggs in a Swiss basket? Spread it around in a few easy to access safe places.

JTF: Did you see my morning post on the drop in Fed custodian accounts?

Donald: I sent an e-mail to Yauger and asked him to take a look at Carl's comments. Need to do some chart work at the computer here at the library. ( only have 10 -15 minutes of my 1 hr left at the graphics machine. Will try to get back to the question later at the text only machines.

Donald: I sent an e-mail to Yauger and asked him to take a look at Carl's comments. Need to do some chart work at the computer here at the library. ( only have 10 -15 minutes of my 1 hr left at the graphics machine. Will try to get back to the question later at the test only machines.

http://www.lp-llc.com/cents/frb.shtml

Ranji/others: Logic ( if that counts anymore ) suggests that the short interest must be supplied by gold loans from the CBs and banks.

The London physical market was reported to move ( trade ) annual "new" gold production every 1.5 days. This all adds-up to an exciting game played by deep pockets - who else could afford to play the risk/return at these prices ?

Something is brewing.

Cheers

Can anyone refer a good litigator in Boston area ? The email is correct. Thank you in advance.

Cheers

Did anyone catch Bill Buckner's comments about Greenspan requesting an opportunity to address Congress again on Octoober 28, l997. It's in hs Gold Commentary section of this weeks report. http://www.the-privateer.com

Donald: Thanks for the note on Fed custodial accounts. The key to this LBMA business and ANOTHER, Big Trader stuff is to learn just how gold is traded to manipulate purchases of dollar based financials such as treasuries. Simple gold loans ( I would assume ) have been around for hundreds of years, but not derivatives or options. This is what we need to understand to see how the dollar is now being manipulated by the CB's - using gold. My son wants the Net, so I'm signing off!

http://biz.yahoo.com/finance/97/10/06/z0009_27.html

GOLDEN CHEESEHEAD 11:08 - You got it. Not sure I agree with the junior
part, but it's possible. You going to the game tomorrow? Chi-town is
alot of fun. Coldest game I ever went to was there - a few years ago
we won 34-8 I think. Bought 50 yd line seats in the front of the stadium
for $10.

jgkda 14:38 - only if they plan on returning the gold.

Master Sun 15:10 - Excellent!!!

Donald 15:27 - I'm not surprised that came from Minneapolis.

http://biz.yahoo.com/finance/97/10/10/z0009_24.html

October 13, 1997

A Showdown's Coming for Japan's
Economy

If at First You Don't Succeed, Lie, Lie Again

Edward W. Desmond

When it comes to economics, the award for the biggest liar on the
planet ought to go to Japan's Ministry of Finance. For more than five
years the MOF's bureaucrats have blandly insisted that the economy
would soon be back on its feet, only to see it fall on its face time and
time again. More recently, the MOF told U.S. Treasury Secretary
Robert Rubin that sharp increases this year in Japan's trade surplus
were a temporary side effect of recovery, to be followed soon by a
strong pickup in Japan's domestic demand. Exporting our way out of
a slump? No way. Not us.

The numbers tell a different story. Just-released statistics show that
Japan's GDP actually shrank 2.9% in the second quarter this year, its
worst showing in 23 years. The only sector that did well was exports,
which grew 6.4%, and Japan's overall current account zoomed--up
from about 1.3% of GDP earlier this year to close to 2.6% in
August, a level Washington considers alarming.

It didn't take a crystal ball to see this coming. Last April, Prime
Minister Ryutaro Hashimoto declared war on Japan's huge budget
deficit by raising income and sales taxes while cutting government
spending. That helped suffocate growth at home, as did the
continuing shakeout in industries like finance and construction. At the
same time, Japan's export powerhouses like Sony and Honda are
soaring on the strength of a weak yen and their own restructuring
efforts. "These guys at the Ministry of Finance will fool, lie, do
anything until they are proven wrong, and then they just say 'sorry,'"
says Richard Koo, an economist at Nomura Research Institute.
"They told Rubin that the increase in the trade deficit was just
temporary, but that makes no sense at all."

They definitely owe Rubin an explanation. Back in late 1995 the
MOF promised to do the right thing--stimulate domestic demand,
deregulate, and stabilize Japan's troubled banks--in exchange for the
U.S. Treasury's help in managing the volatile and overvalued yen.
Since then there has been some deregulation at the margin and the
promise of more, but the tax increases and budget cuts earlier this
year left U.S. Treasury officials shaking their heads.

The Clinton administration and the governments of other large
industrialized nations in the G-7 want Tokyo to finally do its part to
help the world economy. That calls for deregulating, stoking
consumer demand, and soaking up more of the rest of the world's
output. Few doubt that such a program is the best strategy for Japan,
as well. Japan's budget deficit--7% of GDP--is less threatening than
it appears because of the nation's record-low interest rates and status
as the world's No. 1 creditor.

So what is Rubin to do? His deputy, Lawrence Summers, fired a
shot across the MOF's bow when he told the Financial Times that he
was "concerned" that Japan "achieve the domestic demand-led
growth to which it's committed and avoid export-led growth that has
been a hallmark of many Japanese recoveries." Diplomatically
put--but currency traders read Summers' comments, probably
correctly, as a threat to resume the Clinton administration's stealth
campaign to drive up the yen, which had been the single most
effective source of pressure on Tokyo until Rubin's deal in 1995.
Rubin is unlikely to push up the yen today, because Wall Street could
get nervous about the flight of Japanese funds from the U.S.

At the late-September G-7 meeting in Hong Kong, Rubin will
undoubtedly ask Japan's Minister of Finance, Hiroshi Mitsuzuka, to
prime the pump at home, and Mitsuzuka will do his best to say no.
Prime Minister Hashimoto has staked enormous political capital on
the fiscal rectitude campaign. And Japan has already set interest rates
at record lows, to no avail. Rubin has few options indeed.

Had Japan's bureaucrats been less timid, their economy would have
suffered a quicker, sharper recession years ago. Instead, only now
does Japan seem to be experiencing the domestic contraction that
has to precede a serious restructuring of the economy. The result:
The sustained economic growth that Rubin--and everyone else--so
fervently desires still hasn't begun. In the meantime, manufacturers
around the world should watch out: Japanese exporters like Toyota
and Canon will continue to come on strong. And that's no lie.

Korondy: Thank you for your 13:06 post of the url for COMEX stocks, I've been trying to get that one for a while.

To All: I don't see any nefarious deals behind the CB gold loans. Most CB's hands are tied from selling the metal by national laws. They are free to redirect these hard assets though.
If Blanchard's numbers are correct ( i.e. 8000 tonnes ) this would be an extremely bullish number for the market.. My question is though how much of that glittering hoard was loaned to primary producers as opposed to parties who are only making a short bet on the market. What happens if the price goes up substantially, and those short sellers do not have the capital to purchase enough gold in the marketplace to repay their loans. If these loans are defaulted on... watch out, the CB's could be in real trouble.

silver-bug@1704------

you have taken the pebble on your first try!
watch out for the grass,--hopper--------

!; )

http://www.herring.com:80/mag/issue47/angler.html

http://www.herring.com:80/mag/issue46/rap.html

SO! I root, shoot, and leave. :- ) )

EB -- Sorry, I don't have  data.

Auric -- Try http://www.amex.com/cgi-bin/WebObjects/AmexWeb.woa/3772200000591320000008261000005581/MainNavBar.wo/60262000006581/5/5/205.187.189.19?38,20

For the HUI contract specs.

Donald ( @Home ) YOUR "JTF: Did you see my morning post on the drop in Fed custodian accounts?" The GOLD-EAGLE has been charting this for some time - as it seems the Stock Bull has been feeding off this for a long time. During the last 3-4 weeks we have not had time to keep the chart up. And when I went to the old website for the data, the site was gone. Can you supply us the new URL, so we can show everyone the updated chart, and its relationship with the S&P500 Index? Much obliged partner.

http://www.herring.com:80/mag/issue41/forget.html

Auric -- Enter HUI in the option search window and when the HUI data comes up, click on 'specifications' under the fundamental data column. Just think, they actually paid someone to redesign that web page! Well, ... where is that finger gif???

http://www.arabicnews.com:80/ansub/Daily/Day/971006/1997100626.html

From my point of view, up here in Western Montana, people seem very reluctant to spend as just about every business is running sales right now. Is this scenario common around the nation at this time? It seems as if the consumer has become "tapped out" financially. My thoughts are that the stock market is literally sucking the life blood from the economy in everyones haste to invest as much as they possibly can in stocks and holding back on purchases, or making do with older items and not making new purchases. This could evolve into a disasterous situation because at some point the awakening has to come that higher stock prices MUST be supported by the earnings of a company. If companies are selling less..well you all know the rest of the story..When the realization of this becomes apparent, who will be there to buy the stocks of companies with sagging earnings? This appears to be a life or death game on Wall Street, with all the marbles on the line, they either keep this market going up or suffer the consequences of an economic catastrophe that the world has never seen the likes of...very, very dangerous game...whom of the main Wall Street players will have the courage to come forward and speak the truth? Do they dare?

http://www.lp-llc.com/cents/jones.shtml

http://www.rferl.org:80/nca/features/1997/10/F.RU.971008125200.html

http://www.irish-times.com:80/irish-times/paper/1997/1011/fin2.html

Donald:

I've gone back to review some of the postings regarding The XAU/Gold Ratio chart at Yauger's site. Wow, things have gotten more complex than I could ever image. Actually, the various explanations have gotten beyond my understanding.

First, my main interest in Yauger's site was the CYCLE charts which I had first used for my technical reading of the gold shares market. To me, the ratio was only a nice little supplement. When I looked at the Ratio chart, I was mostly interested in the "spread" between the two lines and the direction it was moving in. ( i.e. The amount of white space between the two ) . For example, when I check out the Investor's Business Daily newspaper, I like to look at the chart page with the Nasdaq, S&P 500, and the other charts and I make sure to observe, the white space between the various indexes and whatever comparison chart line which is usually shown below the major index. The wider the differences between the two lines the more likely for somekind of correction to take place. It would help to have a copy of the ID Business newspaper to get an understanding of what I am saying.

Finally, please note that on the XAU Ratio chart that the two lines did cross in early 1996 and eventually we had a failure, which lead to the beginning of the bear market in the gold shares on June 3, l996. ( Most feel that the bear market started at the end of the highs in Feb, l996. ) The point, the merging of the two lines does not always mean a sell off is coming as demonstrated in early 1996.

It will be interesting to see what comments Y.Auger has in response to my e-mail and offer to post on Kitco.

And, of course, I still look forward to the NEXT TIME the lines meet. :+ ) ) ) )

Bob M -- Tell the truth? ON WALL STREET??? It's called liars poker. :- ) )

Just out of curiosity, are you anywhere near Kalispell? I know in Montana they round the distance on the road signs to the nearest ten miles, so I realize that 'near' is a relative term.

Indonesia, recently caught in Asia's financial meltdown, is asking for
International Monetary Fund aid. With a sound economy and $30 billion in
foreign exchange, Indonesia doesn't fit the usual profile of supplicants. But since
June, currency markets have whacked the rupiah down nearly 40%, in what the
World Bank calls ''a total evaporation of confidence.''

Analysts say President Suharto is desperate to shore up his 32-year-old regime
and stave off a collapse. Suharto's family is starting to lose its grip on political
power and business. Because the regime's legitimacy is built on fast-paced
economic growth, that process could accelerate unless the government can
deliver at least 5% annual rates, they say.

Byron: I readily admit to being "mathematically challenged" "spelling challenged" and "other stuff challenged". Carl and JTF seem to have raised points that can best be responded to by Auger. I did not post our Friday XAU/Spot Ratio as I am frightful of someone thinking we have this all worked out. I am very comfortable with the new ratio in its ability to identify risk zones but I am holding up on using it for trading decisions.

http://www.flatoday.com:80/space/today/101197c.htm

October 13, 1997

Is It 1997 or 1929?

Ominous Echoes from the Great Crash

Herb Greenberg

If you've been feeling queasy about the stock market and want to feel
queasier still, dig up a copy of Security Analysis, the 1934 classic by
Benjamin Graham and David Dodd. ( Among other things, it's one of
Warren Buffett's favorite investment books. ) Their postmortem of the
1929 stock market crash ( chapter 27 ) could easily have been written
about the 1990s.

In the tail end of the 1920s bull market, wrote Graham and Dodd,
"the public acquired a completely different attitude toward the
investment merits of common stocks." Instead of focusing on
fundamentals like assets and capital, a "new-era theory" of investing
had taken hold, they reported, which held that the value of a common
stock "depends entirely upon what it will earn in the future." Historical
performance and underlying assets became irrelevant because "the
records of the past were proving an undependable guide to
investment and...the rewards offered by the future had become
irresistibly alluring." In addition, "there emerged a companion theory
that common stocks represented the most profitable and therefore
the most desirable media for long-term investment." Sound familiar?

Graham and Dodd concluded that those beliefs "concealed two
theoretical weaknesses which could and did result in untold mischief.
The first of these defects was that they abolished the fundamental
distinctions between investment and speculation. The second was
that they ignored the price [their italics] of a stock in determining
whether it was a desirable purchase." The authors didn't approve:
"The impressive new concept underlying the greatest stock-market
boom in history appears to be no more than a thinly disguised version
of the old cynical epigram: 'Investment is successful speculation.'"

They preached old-fashioned analysis and warned about losing sight
of a stock's value in volatile markets when "the attention is bound to
be diverted from the investment question...to the speculative question
whether the market is near its low or high point. This difficulty was so
overshadowing in the years between 1927 and 1933 that
common-stock investment virtually ceased to have any sound
practical significance during that period."

Economic conditions and the markets have changed vastly, of
course. But considering the source, this is one history lesson you may
not want to miss.

http://biz.yahoo.com/finance/97/10/08/y0004_y00_1.html

http://www.australian.aust.com/news/news.htm
Normandy stake sold:

Newcrest Mining sprang a surprise on the market yesterday when it announced the sale of its entire 11.8 per cent stake in Normandy Mining to large United States hedging fund Tiger Management Corp for $1.78 a share.

Normandy executive chairman Mr Robert de Crespigny, who is in Canada ahead of the listing of Normandy's shares on the Toronto and Montreal stock exchanges, described the news as "a marvellous development for our shareholders".

"It has ended a saga that damaged the Australian gold sector," he said.

Earlier this week Newcrest failed in its attempt to offload its Normandy stake via a book-build.

Newcrest executive general manager, finance, Mr Gary Scanlan, said Tiger Management had not been a participant in the book-build process and its approach on Thursday was a surprise.

At $1.78 a share Newcrest's sale of its 192.7 million Normandy share parcel would return $343 million, slightly above the parcel's book value of $336 million.

Mr Scanlan refused to say whether Newcrest would end up ahead on the deal, saying movements in the price of gold and the Australian dollar could affect the outcome.

The Normandy stake had been "parked" with the ANZ Bank following a gold-for-equity swap earlier this year. Newcrest had also written $130 million off the parcel's original cost of purchase.

Analysts saw the outcome as a reasonable one for Newcrest, with many saying its original book-build target of $1.81 a share was unrealistic.

Bell Securities gold analyst Mr Keith Goode said it was clear Newcrest had been "trying to clear the decks" ahead of the appointment of a permanent replacement for acting chief executive Mr Ian Johnson.

Coopers & Lybrand minerals partner Mr Tim Goldsmith described the sale as an "excellent outcome".

"The share overhang has been doing neither Newcrest nor Normandy any favors," Mr Goldsmith said."

Mr de Crespigny, who met senior Tiger Fund executives in New York yesterday, described the fund as "one of the most respected investors in the world".

He refused to speculate about whether Tiger Management would be a long-term Normandy investor, saying "I think that all institutions don't use that word any longer".

Taken from the article ( Banks lead retreat as rate cut hopes fade. ) in the same paper:


Normandy topped turnover, with 199 million shares traded as Newcrest finally sold its 11.8 per cent stake in the nation's largest gold miner.

Normandy shares rose 4c to $1.83, with Mr Catt predicting further rises to follow, while Newcrest fell 5c to $2.66.

The last paragraph if for Nick@C - just to make him smile. :- ) ) ) ) ) )

Donald: As it's been said before, diversify, diversify, diversify. I like to have several technical tools to use and the Ratio is just one of many. Whatever works in the end. If the Xau lines again starts to bounce off of the Ratio, and I am also getting sell signals from other indicators, you can bet I will NOT iqnore it. What is, is. : )

Fidelity Select American Gold & Precious metals Charts
5 Years, 120 day, 30 day and hourly charts at:
http://www.geocities.com/WallStreet/5969
Click on Gold Sectors

Donald and Panda--Thanks muchly for the HUI info. Looking to add AEM to my already lopsided portfolio! John Disney--Re: eats, roots, etc. Har, good one!

Bart
Now that we know this site is being observed by at least one commercial organisation and is being interpreted as an indicator, albeit a contrary one, is it at all possible to make available the statistics I referred to the other day, in all seriousness, as the Migration of the Golden Goose?

Hits/day@Kitoc ( historicals? )
No of Lurkers/day cf posts/day
Hits/country/day ( historicals? )


*Like liberty, gold never stays where it is undervalued*

JS Morril Speech to US Senate 25 Jan 1878

Panda- Im about 3 hours south of Kalispell in the Bitterroot Valley..beautiful country..it is a big state ..one of these days, someone on Wall Street is going to have to 'fess up to what is going on..some of the other posts refer to this from time to time..but there will be no such thing as a "soft landing" when this bull market comes to the end of the old trail..only a preciptous drop with no buyers in sight...I do not believe an orderly decline is possible at this stage..too many people have been suckered in most with little understanding of how much they have risked..once a significant decline begins..a whole lot of people are gonna want out..and who will be there buying?

http://www.theage.com.au:80/daily/971010/bus/bus14.html

Gentlemen, lets have a moment of silence for Reify and our other jewish friends. Its Yom Kippur ( day of atonement ) the most holy day of the year in Israel. "May your name be found in the book of life"

Three years ago, Vietnam appeared to be moving into the fast lane in the race
to catch up with its neighboring Tiger economies. But today, reforms have
sputtered to a halt, foreign investment is on the decline and shock waves from
wobbling currencies of those very same tigers threaten to throw Vietnam back
into low gear. So a change in the Communist Party leadership--the first in six
years--has been awaited with great anticipation. Yet if Vietnam is like a car
stalled on the side of the road, last week's moves amount to switching drivers
when what is really needed is a mechanic.

"The key word in Vietnam is continuity," said a newly elected youthful legislator
who sounds much like his elderly predecessors. "There won't ever be radical
change." Such talk diminishes hope that younger and better-educated leaders
will accelerate economic reforms. The technocrats promoted to the top
government jobs, Prime Minister Phan Van Khai and President Tran Duc
Luong, along with their deputies, are not military men like the leaders of the
previous regime, but their administrative abilities remain to be seen. Khai, 64,
was trained as an economist in the former Soviet Union; Luong, 60, is a
geologist. "Their legitimacy will have to be based on performance," said a
Western diplomat.

They will be graded on how they respond to what one senior government
economist calls "a stormy time for Vietnam." The banking system is in turmoil
over bad loans, corruption is widespread and unemployment is on the rise.
Currency devaluations in other Asian countries threaten to make Vietnam's
exports, from rice to TVs, too pricey. Overseas investment, which has pumped
$11 billion into the economy, is in the words of one normally chipper
government minister "at a standstill." "People are still here," said Harold Fiske,
an American lawyer in Hanoi. "But you don't see new projects or new
delegations coming to look things over." Frustrated with delays in reforms,
donors such as the World Bank and International Monetary Fund may impose
restrictions on future grants. "None of these problems is unsolvable," says a
government economist. "Vietnamese are clever enough to know what to do.
We just have to be allowed to do it."

In fact, successes from the first stabs at reform have increased people's
expectations. Simply having enough food to eat is no longer sufficient. "While
people's incomes were rising, they could accept some corruption," said a Hanoi
economist. But increasing aspirations, economic sluggishness and government
malfeasance have proved to be a combustible mix.

In Thai Binh province, 80 km southeast of Hanoi, thousands of farmers,
laborers, pensioners and war veterans protested for several weeks over taxes,
financial abuses and scandal among local officials. This rice-rich province in the
Red River delta, home to some of the country's staunchest socialists, has been
off limits to foreign journalists; time was denied permission to visit last week.
Dozens of provincial officials, including Communist Party members, have been
ousted; several have been arrested on corruption charges. One witness said
villagers marched to a government office and demanded to meet with officials:
"We were all poor five years ago. Now we notice you have become rich.
Teach us how you did it so we don't have to be poor anymore." After weeks
of silence, the official Party newspaper acknowledged the problems and said
poorly trained officials were to blame, some of whom "could not overcome the
temptation of money." The paper admitted that some homes had been burned
down, but blamed such violent activities on "bad elements," ex-convicts who
"took this opportunity to stir up the people."

Stirring the pot may be the catalyst Vietnam's leaders need to accelerate
administrative and legal reforms. "Change in Vietnam is crisis-driven," says a
Western diplomat. Indeed, the initial push to revamp the command economy
came after the Soviet Union's patronage, which accounted for nearly half of
Vietnam's gdp, disappeared in the late 1980s. There was unrest in rural
provinces and food riots in some cities. Now, reformers see good news in the
all the bad news: troubles, they think, will once again prod the government into
action.

But when? Waiting for political maneuvering to beget change has become a
sport in Vietnam. ( Promoters of a charity bicycle race waited months to get
permission for the event from a cabinet minister involved in a leadership
shuffle. ) The much-anticipated appointments won't end the waiting game,
however. For one thing, a government obsessed with consensus is in fact
increasing the number of political players at the top. One party official warned
that Prime Minister Khai, while considered a pragmatic reformer, "won't do
anything until he can consolidate his power." And the most important decision,
who will head the Communist Party, won't be made until at least the end of the
year. Which means? "The same old story," says a Western diplomat. "Wait six
months until there's a new Party leader. Then wait six more months until
something else has to be settled."

GSC Gold loans originate from the borrowers. Your misplaced belief in CB sales scheme is exactly what Ted Arnold and Andy Smith and their firms want everyone to believe. This CB sale spin is their last line of defense. Tell me that CBs go out and SOLICIT loans/ I think not. Get off the Ted Arnold Spin wagon!

To maintain freedom worldwide a victory for the Left is a blow for the people and for freedom. God Bless the European and Canadian examples of Capitalism. Ditto Japan/Taiwan Korea in Asia. The US should be shamed for not having Universal Health Care and Education. US should also be shamed for widest wealth disparity. These trends will be reversed when the next econ down trend occurs. Onward GOLD!!

Golden Cheesehead : It is difficult for me to accept that in the event of a market crash ( the index linked ) gold stocks will drop sympathetically on a long-term basis despite a soaring physical price. Perhaps George Cole could comment.

Bob M -- I've been up to Glacier National park and Waterton Park. It's real nice country out there! It's tough to come back to the home of Teddy Kennedy after seeing that it is different somewhere else! As to the liquidity issue, you are absolutely correct. The problem is that the boomers answer to that one is this, "I won't sell. That was the mistake in '87..." The truth of the matter is simple, fear knows no price!

Auric -- I've owned AEM on and off for the last several years. The problem with the stock is liquidity. I would place orders to sell at the market only to have them hangs for hours with no takers. No exageration. When the stock is in demand, it flies! BTW, I'm back in it again. I recently bought some VAALY for a quick trade. Now I'm begining to think that I should have hung on to it. It hasn't been this low since 1993, but then again, what isn't in the metals complex???

The Vietnamese communists suffer from the same problem that afflicts the Cubans. The price they paid to ward off the "Capitalist aggressor" was too high, and the confrontation too visible, for any flexibility to emerge. Add to that the purposeful and unrelenting isolation of these countries over the years from the greatest mass markets in history, and you have the recipe for national disasters and tragedies. Pride goeth...
As for the "Gartman Letter" using Kitco goldbugs "yelling" as a contrary indicator, this is utter nonsense. EVERYONE thinks they are a "contrarian" these days. It's laughable. Would Gartman have been shorting gold from '76 to '80 if Kitcoites continued to cheer? In the next bull market this chat group will be insufferable. As if we could be any ,more so than we are now, thrashing around in the gutter. Gartman ain't heard nuttin' yet.

Duncan, Golden Cheesehead -- Sometime back, that question was raised here. When I looked at it, the mining stocks in the S&P500 were AR,ABX, BMG, CYM, EC,, ECO, FCX, HM, N, and NEM. The percentages of the shares in the S&P are small, so I don't think that a major move in the Index would take out the the gold stocks in the index. The only way that I could see that happening, is if the selling became panic driven and mindless. But if gold is going up, say $20, while the Dow goes down 300 points, it's no contest, the gold stocks will rise.

WW -- Stay away from that bottle while posting at Kitco! :- ) )

BBL

Mining: South African merger to create
$3.6bn gold group

SATURDAY OCTOBER 11 1997

By Roger Matthews in Johannesburg and Kenneth Gooding in London

The transformation of South Africa's troubled gold mining industry took
another important step yesterday with the creation of a company that will rival
Anglo American as the world's largest producer.

Gold Fields of South Africa, the world's third-largest gold mining company,
announced it had agreed to merge its gold mining interests with those of
Gencor.

Gencor, the formerly diversified group based in South Africa, earlier this year
transferred its base metals interests to Billiton in the UK, which after listing
became a FTSE 100 company.

Alan Wright, chief executive of Gold Fields, said the new company, to be
known for the time being as Goldco, would produce 197 tonnes of gold a
year, compared with Anglo American's 226 tonnes, and would be capitalised
on the Johannesburg Stock Exchange at nearly R17bn ( $3.65bn ) .

Gold Fields, controlled by the Rembrandt group, will hold 35 per cent of
Goldco and Gencor will hold 20 per cent. The new company is estimated to
have gold reserves of 120m ounces.

New Africa Investments ( Nail ) , the largest black-owned group in South
Africa, is to hold talks with Gold Fields and Gencor about acquiring a 5 to 10
per cent stake in Goldco. The remainder of Goldco will be held by a variety of
shareholders.

"We can see great benefits in having Nail as part of the company," said Mr
Wright. "And we hope they will exercise the option they have."

Mr Cyril Ramaphosa, deputy chairman of Nail, was present at yesterday's
announcement. He had previously been disappointed at failing to gain control
of JCI from Anglo American. JCI became South Africa's first black-owned
mining house.

South Africa's gold mining industry, which has long been the republic's
principal earner of foreign currency, is in the throes of an upheaval. The
changes are needed if South African gold companies, which have low stock
market ratings, are to compete for capital with rivals in North America and
Australia.

The industry is being restructured via mergers, companies are exchanging
mineral rights to make mining areas more viable, management contracts
between mining companies and finance houses are being eliminated and, at the
gold mines, layers of management are being removed and more flexible
working practices introduced.

Brian Gilbertson, chairman of Billiton and non-executive chairman of Gencor,
who divides his time between London and Johannesburg, becomes chairman
of Goldco with Mr Wright his deputy. Because of his other commitments he
will chair the company for nine months.

Mr Gilbertson said the initiative for the deal, which has to win the support of
minority shareholders, had come from Mr Wright. "As an operating company
Goldco will be a completely autonomous gold producer," he said.

"This represents a complete break from the traditional South African structure.
And with Cyril Ramaphosa also coming on board this will represent a very
powerful company."

Mr Gilbertson stressed that, apart from its platinum interests, the deal with
Gold Fields would leave Gencor as essentially a holding company.

Re S&P & gold stocks -There have been two significant asset inversions in this century. In the Great Depression, common stocks as a class fell 90% in three years, while gold stocks rose in the hundreds percent. From '72 forward stocks declined by 50% while gold rose 2000% and gold stocks in the hundreds percent, if not more. One only has to look at the chart patterns of common stocks as a class and gold to see we are once again on the verge of another major asset inversion - one which will last well into the first decade of the coming new century.
S&P or no S&P, the major indexes will decline at some point, and the gold shares will rise. Simple.

Mike Sheller -- Regarding Gartman, :- ) ) You got the insufferable part right on! The hell with hitting $400, what do you think will happen here when we hit $350? :- ) )

You'll have to pratice your 'duck'n cover' due to the champagne corks that'll be flying!

That's right! Gartman will start buying at $1,500.

Peter Schick, certified financial planner, Moneta Group

I feel that we are long overdue for a market downturn, but always
remember that the "downs are only temporary but the ups are
permanent!" When will the downturn occur? Well, as of Aug. 28, 1997,
the Dow Jones Industrial Average has run for 2,500 days without a
correction of 12 percent. That makes this the longest bull market in
history by almost three years. I find it hard to believe it could last another
year.

http://www.abcnews.com:80/sections/business/corn1010/index.html

Donald,all: It is clear that foreign purchases of treasuries have peaked from your post on Fed custodial accounts. Perhaps the lure of US securities purchases using funds from low interest borrowed gold is wearing off! Since the growth of the money supply is presumably continuing, and since A Greenspan is now saying that inflation is returning, we should expect that he will soon raise interest rates, whether it is really returning or not. German rates just went up. This will put more pressure on the dollar, not good for us at Kitco. However, I doubt he would dare raise rates immediately -- this being the 10th anniversary of the 1987 crash.
As I have said before ( and others at Kitko ) , A Greenspan is a very resourceful individual, and knows gold as well as any of us. He knows how to stop inflation in its tracks. For that reason, we should be cautious regarding investing in precious metals, until we have a clear recession, such as the previous one that triggered the 1993 rally, when interest rates had been dropping. When there is a clear recession, Greenspan has no choice but to open the internal flood gates fully to stimulate the economy. What I suspect the Fed is doing now, inflationary as it is, is an expansion of the money supply outside the US. The talk of increasing SDR's and IMF central bank reserves fit with this scenario. Of course, all of these dollars still come out of our hides, and eventually they will come back to roost. The deflationary phenomena in SEAsia may also hold gold down, because of the reduced prices of foreign goods, and the fact that American goods are suddenly more expensive. The deflationary effect of SEAsia has apparently not yet been factored into the US economic indicators. What I conclude from all of this is that gold is likely not to have a significant rally for several months, barring a new foreign crisis or war as a trigger.

You obviously believe mind or perception alteration are involved if someone expresses a progressive viewpoint. This says alot. Thanks.

Donald: You must be clairvoyant -- non inflationary news about US crops! I don't understand it, but the El Nino has apparently not seriously affected US crops, though there are serious distortions elsewhere in the world! Perhaps next spring/summer, when the El Nino is more fully developed?

Market to wait and see:
http://www.theage.com.au/daily/971012/bus/bus2.html

Ten years on, market heads for another big dip:
HERE comes the stockmarket slide of October 1997. It might be a rout. It might be a heavy tumble. Expect at least one good bounce - then another slump.
http://www.theage.com.au/daily/971012/bus/bus8.html

Normandy could now be considered to be in "play":
http://www.theage.com.au/daily/971011/bus/bus6.html

Lesson well learnt from crash of '87:
Then the world was slowing and inflation and interest rates were starting to rise but the markets marched merrily on. Most of the major Western economies were running historically high budget and trade deficits and therefore were increasingly vulnerable to currency instability and sensitive to rate movements.
http://www.theage.com.au/daily/971011/bus/bus11.html

The crash 10 years on:
The shocks that did the job were unexceptional. Rates rose in Germany, forcing the US dollar lower, and adding to the pressure for US official rate increases.
http://www.theage.com.au/daily/971011/bus/bus9.html

Banks pay for jitters over rate cut:
Mr Rees said overseas equity markets were becoming increasingly hostile. It was also of concern that Germany's Bundesbank raised its repo rate - a rate that usually pre-empts interest rates - by 30 base points to 3.3 per cent. This was particularly troubling because 10 years ago a rise in German rates precipitated the October 1987 market crash.
http://www.theage.com.au/daily/971011/bus/bus3.html

It's only money, but it hurts:
"Tragedy can be quietly enjoyed when nothing is being lost but money."
http://www.theage.com.au/daily/971011/bus/bus10.html

It isn't 1987, but the similarities are there:
One common factor is that the chairman of the US Federal Reserve is now, as it was then, Alan Greenspan.
http://www.theage.com.au/daily/971010/bus/bus14.html

JTF: Thanks to Byron and Bill Buckler for pointing out that Greenspan had asked for an opportunity to speak to Congress again on October 28th. That is most unusual and he appears to have told no one the reason for the request. There is one thing missing from the present day replay of 1929. At that time the Fed was also concerned about excess speculation and shortly before the crash raised margin requirements. He has given two warnings and I wonder if that date has been set to explain the reason for something such as as new margin requirements.

To all: My gold rally or no post -- I'm still pro gold -- I just think all of the Big Trader and ANOTHER stuff may not be coming in the next three months, or maybe not until A Greenspan steps down! We have figured out much of the process in the dollar/gold/oil manipulation, but we still have no idea of when and how much! Something that is a hundred years in the making - or only the 54 years of the Kondratiev cycle between "paper" and "real" assets - doesn't have to happen tomorrow. We just know it is coming.

WW: What makes you think leftists and collectivists can own the word "progressive'? I am no defender of mixed economies, but it seems to any objective observer that the "purer" the socialism, collectivism, and repressive state apparatus to insure such slavery, the more REgressive the society. Vietnam and Cuba, for starters. Please call a spade a spade, and call your philosophy collectivism, or fascism, or statism, or dictatorship, but please do not try to pass it off as "progressive." I would think one would have to be on drugs to think THAT sort of society progressive. Thank you very much.

Donald: Good point - Greenspan is certainly up to something - he will do everything in his power to repeat what happened to him in 1987. Perhaps he is already thinking about 1999, the 60th anniversary of the big one!

Sorry about that! 1999-60= 1939 I can't subtract tonight. But if our stock market rally continues through 1988, I will really ( underline really ) be worried when 1999 and 2000 come around.

WW: You are way off base comparing me to Andy Smith and Ted Arnold. I am bullish and they are bearish. The only point on which I agree with them is that the western CBs and much of the financial establishment want to keep the yellow down. But I don't think they can pull this off much longer and when they lose control an explosive rally will develop.

Arnold and Smith argue that the CBs and financial establishment can keep gold down forever. Several of your posts have taken the same position. No my friend, you are much closer to the Arnold-Smith paradigm than I am

Y2K PROBLEM? ASK THE EXPERTS - compiled by Bill Schenker

"Computers in the future may weigh no more than 1.5 tons.
-- Popular Mechanics, forecasting the relentless march of science, 1949

I think there is a world market for maybe five computers.-- Thomas Watson, chairman of IBM, 1943

I have traveled the length and breadth of this country and talked
with the best people, and I can assure you that data processing is
a fad that won't last out the year.
-- The editor in charge of business books for Prentice Hall, 1957

But what...is it good for?
-- Engineer at the Advanced Computing Systems Division of IBM, 1968; commenting on the microchip.

There is no reason anyone would want a computer in their home.
-- Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977

This "telephone" has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.
-- Western Union internal memo, 1876.

The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?
-- David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s.

The concept is interesting and well-formed, but in order to earn
better than a "C," the idea must be feasible.
-- A Yale University management professor in response to
Fred Smith's paper proposing reliable overnight delivery service. ( Smith went on to found Federal Express Corp. )

Who the hell wants to hear actors talk?
-- H.M. Warner, Warner Brothers, 1927.

I'm just glad it'll be Clark Gable who's falling on his face and not
Gary Cooper.
-- Gary Cooper on his decision not to take the leading role in "Gone With The Wind."

A cookie store is a bad idea. Besides, the market research reports
say America likes crispy cookies, not soft and chewy cookies like you make.
-- Response to Debbi Fields' idea of starting Mrs. Fields' Cookies.

We don't like their sound, and guitar music is on the way out.
-- Decca Recording Co. rejecting the Beatles, 1962.

Heavier-than-air flying machines are impossible.
-- Lord Kelvin, president, Royal Society, 1895.

If I had thought about it, I wouldn't have done the experiment.
The literature was full of examples that said you can't do this.
-- Spencer Silver on the work that led to the unique adhesives for 3-M "Post-It" Notepads.

So we went to Atari and said, "Hey, we've got this amazing thing,
even built with some of your parts, and what do you think about
funding us? Or we'll give it to you. We just want to do it. Pay our
salary, we'll come work for you. "And they said, "No." So then
we went to Hewlett-Packard, and they said, "Hey, we don't need
you. You haven't got through college yet."
-- Apple Computer Inc. founder Steve Jobs on attempts to get Atari and H-P interested in his and Steve Wozniak's personal computer.

Professor Goddard does not know the relation between action and
reaction and the need to have something better than a vacuum against
which to react. He seems to lack the basic knowledge ladled out daily
in high schools.
-- 1921 New York Times editorial about Robert Goddard's revolutionary rocket work

You want to have consistent and uniform muscle development across
all of your muscles? It can't be done. It's just a fact of life. You
just have to accept inconsistent muscle development as an unalterable
condition of weight training.
-- Response to Arthur Jones, who solved the "unsolvable" problem by inventing Nautilus.

Drill for oil? You mean drill into the ground to try and find oil?
You're crazy.
-- Drillers who Edwin L. Drake tried to enlist to his project to drill for oil in 1859.

Stocks have reached what looks like a permanently high plateau.
-- Irving Fisher, Professor of Economics, Yale University, 1929.

Airplanes are interesting toys but of no military value.
-- Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre.

Everything that can be invented has been invented.
-- Charles H. Duell, Commissioner, U.S. Office of Patents,1899.

Louis Pasteur's theory of germs is ridiculous fiction"
-- Pierre Pachet, Professor of Physiology at Toulouse, 1872

The abdomen, the chest, and the brain will forever be shut from the intrusion of the wise and humane surgeon.
-- Sir John Eric Ericksen, British surgeon, appointed Surgeon-Extraordinary to Queen Victoria 1873.

640K ought to be enough for anybody.
-- Bill Gates, 1981

The Americans may have need of the telegraph. We, on the other
hand, have plenty of messenger boys.
-- a British Lord, dismissing telecommunications out of hand."

http://biz.yahoo.com/finance/97/10/05/y0004_y00_2.html

Mike I respect your opines but you are obviously caught up in the current hysteria which states that freedom of capital is true freedom and anything opposing it is socialism or misguided Liberalism. If you Think you may agree with my position. Labor is currently under attack by international Capital's desire for short term profit/ witness NAFTA et al. The freedom of capital is reducing living stds worldwide with the top maybe 1 percent benefiting inordinately in the 3rd world ( though not reported as such in our corporate press ) . Only by an increase in everyone's living std worldwide can DEMOCRATIC CAPITALISM flourish.This, the current Palladins of commerce do not want, moreover, they frantically favor third world dictatorial capitalism which provides for complete dominance over labor and the wanton abuse of children/women/men/ and the environment. They even Like a Communist Dictatorship like China if it MAY help profits. Their day of reckoning is coming ! Freedom wil prevail over capital!

George Cole: Any idea what the leverage gain the Central Banks get on their gold by using derivatives rather than gold loans? How far can they stretch things out before they have to raid Fort Knox? ( assuming Goldfinger didn't get there first! )
This will give us some idea of how far into the future the ultimate gold rally will begin -- perhaps we are actually talking about Mike Sheller's prediction of 2003-2007?

http://biz.yahoo.com/finance/97/10/09/z0000_z00_6.html

SHEK: Many thx for a very interesting historical post.

ATT'N: y2K Newbies: are you certain of what lies ahead?
by William J. Schenker, MD

This past winter when I received GN's 1st mention of the y2k problem I was into it approximately 35 seconds before the impact knocked me to the floor. In a daze I picked myself up & read thru the rest of the issue. "How could I have been so stupid as to not put it all together on my own?" "Where have I been these last 23 years ( since 1st getting involved with the technical side of computer hardware & software ) ?" A humbling experience.
When I went to the various web sites Gary pointed me to, I found confirmation after confirmation of what I had personally experienced time and time again, from 1975 through 1980. Based in good part on the subsequent RR issues and what I was digging up on the Web, we sold our present home, moved to an isolated section of the West ( with no glamour, no ski areas, no panoramic lakes, no bubbling brooks, just acres of sage brush, cactus & rattlesnakes -- where nobody who's anybody wants to go ) and are building an energy efficient home out in the boonies. Lining up sources for gardening, food, alternate energy, stockpiling toilet paper, soap, medical supplies, independent water supply & waste management, & all the other goodies you're reading about in the various forums.
Portrait of one with no reservations about the extent of what's coming, right?
NOT.
All it took to plant the seeds of doubt was hearing about Harry Browne's dissing of y2k in his farewell newsletter. Over the years he's been one of the stalwarts in the conservative newsletters subculture ( I've subscribed off & on to a dozen or so. ) So I ran out & bought the issue, read through it ( much of it vintage Browne - good, sober advice about the investment world ) . Also saw mention of possibly running for Pres on the Libertarian ticket. Then I got to why I bought the issue: "The Great
2000 Scare."
Sure I applied my scepticism to it. 1st of all he didn't mention what kind of programming he has done for the past 20 yrs. Next he didn't mention anything about embedded systems at all. Next he performed a superficial test on a 286 box & declared it healthy. Next he talked about modular programming as if all major systems & applications out in the field were designed and maintained modular-wise. Next he attributed Microsoft's success "to the quality of ... products, the company's
service policies, [and] levels of customer satisfaction." ( Is he talking about the same company in Redmond that we've come to learn to hate since the early '80s? ) He also mentioned their "extremely informative user manuals" ( I have never been able to use a MS product without first purchasing a 3d party manual. ) He ends up saying that MS "attract[s] the world's most talented software designers."
( Is he talking about the same people I know who ended up in Redmond? ) Lastly he described how he honestly believes that if he makes a rational presentation of the Libertarian Party to the American public they might rationally choose a rational Presidental candidate ( !!! ) All seven of these points are cause for major pause.
Nevertheless, his report shook me a little. And when you're shook a little you don't have quite the energy you did before you got shook, to do the following: continue trying to convince yourself that something bad really could happen bec of y2k, continue trying to convince your wife that something bad really could happen bec of y2k, quit your comfortable source of income relocate to where you know you'll never find the equivalent comfortable income leave the comforts of the city "waste"
money buying such things as
-- backup energy systems
non-hybrid seeds
long term food supplies
hand tools
home teaching supplies
convince yourself that in spite of the extremist positions many on the forum exhibit there is
much good advice they have to offer
Want more? You can think of plenty.
So there I was in major "pause mode." Knew it was time to switch to major "reflect, think, & analyze mode." Here's what I've come up with.
3 TOOLS TO GAIN CERTAINTY
1. Become an expert in writing software.
2. If you can't become that kind of expert become an expert in evaluating who IS an expert.
3. Become an expert in understanding the psychodynamics of
a. denial.
b. egotism.

Details:
1. Spend the next 3 years full-time learning to write code, preferably starting with assembly level,
proceeding to a high level language, probably a variant of C. Also become thoroughly grounded in COBOL, PL/1, FORTRAN, ADA, & a string of arcane languages nobody even has compilers for any more. You say that would bring u past the 1/1/00 deadline? Shucks I guess that takes care of
Tool #1 for you. 2. To the next person u meet who says, "Y2K? No PROBLEMO!!!", hand him the following 4-minute quiz ( But first confirm you are not an expert - take the quiz yourself ) :

a. What is spaghetti code?
b. What is a compiler?
c. What is a debugger?
d. What is a trap?
e. What is a linker?
f. What is machine language code?
g. What is assembly language code?
h. What is high level code?
i. What is binary code?
j. What is hex code?
k. What is octal code? ( He'll say that's not relevant. Ask him anyway -- it is. )
l. What is "single-stepping"?
m. What is a stack?
n. What is a register?
o. What is a flag?
p. What is a data type?
q. What is an offset?
r. What is indirect addressing?
s. What is a conditional jump?
t. What is an interrupt?

If he says any of the following:

a. I can't do it in 4 minutes --
b. I don't need to know those kinds of things when I program in BASIC --
c. I don't need to know those things -- that's why I've got an IS ( Informations Systems )
Department working for me ( especially if he works for a large corporation or the government )
-------- you've got your answer.

If he gets only 19 of the 20 right you've got your answer ( This is a minimalist quiz. ) . How do you
know if he's giving the right answers? I'm not going to publish the answers here, for obvious reasons. Email me the answers and I'll give you his score.

Now LISTEN UP! If he fails this quiz he has joined the ranks of YOU -- he will have to defer to an expert. Now LISTEN UP again! How in heaven's name is HE going to be able to evaluate the expert he has deferred to?
On the other hand, if he passes the quiz is he an expert? Not ecessarily, but most likely. Let's make that assumption. You ask this expert, "Is Y2K for real?" He answers, "Y2K? No PROBLEMO!!!"
Whoa, this is where I came in -- now what do I do?
3. You brush off your diploma entitled: "Qualified Expert in Human Nature," hang it on the wall, and
ask yourself these questions: Why would anybody deny there's a problem that could very well,
maybe even permanently ---
a. put him out of a job?
b. lose the electricity to warm his house in winter & cool it in summer, see by, cook by, watch
TV by?
c. lose the electricity that pumps the gasoline into his car down at Seven Eleven?
d. lose use of his telephone?
e. lose his connection to the Internet?
f. lose use of his computer?
g. lose access to his doctor ( who's also pondering points a. thru f. ) ?
h. ditto with his dentist?
i. separate him from the money in his bank account ( banks are on an extended "holiday" ) ?
j. lose access to his life-supporting prescription drugs?
k. lose access to what used to be on the shelves of his local supermarket?
l. lose his water supply ( no electricity= no pumps, no pumps= no flow ) ?
m. lose his sewage disposal ( no electricity=etc., etc. ) ?
n. lose his alternate modes of transportation: bus, subway, Metro line?
o. ---- You want more? No, you don't want more --- it's enough already.

But, you say, "He's a computer SCIENTIST -- scientists, well, they just don't get caught up in emotional fits. We should be able to count on them to keep their cool and stay in touch with reality." OK, we're getting closer to the the home stretch. Ready? I used to think just the same kinds of thoughts, before:
1. I became one of those scientists.
2. I became one of the doctors who used to treat them, wholesale, when my group contracted to take care of the Lawrence Livermore Lab ( California ) personnel back in the '60s into the '80s ( when I left the group. ) During that period "The Lab" had the largest concentration of
computers and computer scientists in the world. After seeing maybe 40 patients a week just from LLL, year in & year out, you got a good feel for how the computerniks function. My big discovery: they handle life's challenges almost the same as we humans. What a shock.
"But, Doc, I can understand that some of these scientists types can be off balance and unreliable in their judgment, but you can't tell me that leaders in society, people who have reached the executive
level in their chosen field, could be guilty of such immaturity." Here's my answer, and this is the home stretch: we've looked at all the tools in the toolbox to gain certainty, but for one: learn the psychodynamics of egotism. I close with a series of quotes ( from The Inner Game of Trading,
Koppel & Abell ) :
"We must not be misled to our own detriment to assume that the horseless carriage can displace the proved and tried horse." -- John K. Herr ( 1878-1955 ) , Major General, U.S. Army
"As far as sinking a ship with a bomb is concerned, it just can't be done." -- Clark Woodward ( 1877-1967 ) Rear Admiral, U.S. Army
"That is the biggest fool thing we have ever done ... The atomic bomb will never go off, and I speak as an expert in explosives." -- William Leahy ( 1875-1959 ) Admiral, U.S. Navy
"Rail travel at high speeds is not possible because passengers, unable to breathe, will die of asphyxia." -- Dionysius Lardner ( 1793-1859 ) English Scientist
"Radio has no future." -- William Thomson, President of the Royal Society of Science
"While theoretically and technically television may be feasible, commercially and financially I consider it an impossibility." -- Lee Deforest ( 1873-1961 ) American Inventor [in the electronics field]

Tying up a few loose ends:
1. I had ( note the verb tense ) many distant relatives in a certain mid-European nation in the '30s. Many of them were quite affluent, professionals, executives, high up in industrial circles,with influential government contacts. They knew that their nation, for whom many had fought in WWI, would come to its senses. They knew that a civilized people would eventually right major wrongs. They knew that certain ominous trends were of no lasting significance. They knew that for their nation to continue on the same course was impossible. ..... So they eventually participated in the impossible.
2. Wrong label. I've heard computers called "moronic." I've heard them called "increasingly intelligent." Actually, they are "idiot savants." That is, they can perform certain very narrowly prescribed functions in a most brilliant fashion --- in every other manner they are much worse than morons --- they are literally mindless.
3. Mistaken identity. There's a very basic difference between the way people and the way computers solve a problem. This is the very crux of the humans' devastatingly chronic misplaced confidence in the cream-colored cases with all the blinking lights. Humans solve their problems using their brains as ANALOG computers. That means, for example, Dad "ballparks" a figure to Mom from the office to tell her when she can expect him home for dinner, & Mom "ballparks" a time for when dinner will be ready. In a happy home that means both will be within 80% of their target. That's what we'd call "good enough for government work," eh?
Computers, on the other hand ( except for leading edge highly specialized neural network systems ) need very precise, DIGITAL input to avoid serious misunderstandings. That means, for example, if Dad tells the computer he'll be home at 6PM then the computer will dutifully and precisely pull the steak off the grill at 6PM, and the family scenario will unfold beautifully at precisely 6PM --- unless Dad gets caught in traffic and arrives at 6:10PM, in which case there's a smoke-filled kitchen matched by the flames shooting out of Mom's mouth. Or say, a computer is programmed to accept a date in the form of MMDDYY, like 101397 ( Oct. 13, 1997 ) . If instead it's handed the same date in the form DDMMYY ( 131097 ) , and unless specific input filters are designed in -- it gets sick, throws up all over the table, has diarrhea all over the floor, and then drops dead of a coronary. "What's the difference?" you ask. Not one whit of difference. Unless you're a computer. Or better yet, consider you've just written a ten-page letter to your grandmother. However, you've forgotten to sign it, so Granma can't tell it's the end of the letter, right? Yeah, sure ..when she gets the letter she reads all ten pages and says, "Ha, Billy forgot to sign his name again."
If you end that same letter on your computer, and it erroneously omits ONE BIT of the EOF End Of File ) character ( ASCII 26 ) , converting it to say ASCII 25, at the bottom of the last page -- goodbye Charlie -- you'll never see that file on your screen again -- it will disappear into the great Recycle Bin In The Sky. Oh yes, BTW, it will probably again do the puking and all the rest. Can you see now why most computer civilians can't understand what the big deal is about changing "just one small part of a program"?
4. Gary North has missed a few predictions here and there. I'd say he missed a lot: roughly speaking he has missed, yearly, for approximately 20 years, the prediction of the total demise of the American economy and along with it it's society. But the raw material he had to base his
predictions on have been to a great extent, economic data. Using the same data, a majority of all the conservative newsletter writers have come up with the same poor batting average. ( And ss my wife all too frequently reminds me, I, along with all my good right-of-center friends have been just as wrong, just as long. )
So what's different this time? If you have been a programmer ( the kind that depends on his programs to make him a living ) you can make your projections on PAST EXPERIENCE, rather than on statistically massaged strings of numbers. You can plant your feet, not on the softboiled eggs of economic data, but on the hard rock of what transistors do when switched on and off by computer instructions.
5. "But Gary's no programmer!!" Yes, I've been mulling that one over since I first read his writings quite a few years ago, on bringing personal computers into your life. I was impressed by how a computer newbie could come in cold on a subject and nail the essence of it, and do
that repeatedly. The same with the alternative medicine field. All I can say is: 1 ) he's smarter than a raccoon, 2 ) he's a brilliant student of history, and 3 ) maybe God has a special job for him.
Working on learning the difference between conviction and certainty ---
Bill Schenker

"Nonsense, man! They couldn't hit an elephant at this dist-"
Union Commander Gen Sedgewick, battle of Spotsylvania 1864

"Bullets have little stopping power against the horse."
BEF Commander in chief Earl Haig 1914


"When they're Yelling we're selling."
Gartman hawking *knowledge* to his clients..

"Make no mistake: this weapon will change absolutely nothing."

Director General of French Infantry brief's France's Parliament on the machine-gun 1910.

"Why on earth did I do that?"

Last words of Sir William Erskine, after he had thrown himself out of an upper story window, Lisbon 1813.

JFT: I vave no idea when the CBs will have to raid fort Knox. But if they have 8000 tons of gold loans outstanding, this may not be far off.

Seems to me the key to the inevitable explosive rally is not what the CBs do or don't do, but the revivial of private investment demand. I see that happening at about the same time the financial markets tank for real. The huge short position facilitated by CB gold lending will make the rally that much more explosive. But the cause will be the emergence of a brand new investment paradigm.

When Asia hurts, US 'hurts too':
Thousands of US companies are involved in the region and millions of American jobs depend on your well being.
http://www.scmp.com/news/template/templates.idc?artid=19971003233923026?=rel&template=archived.htx&maxfieldsize=1803?evID=19971011004712038//?evTop=fp//?evTemp=Default.htx//?evMFS=2287//

Greenspan: Ready credit may raise dangers
http://www.sjmercury.com/news/breaking/docs/041876.htm

Shek,Vronsky: What better trigger for the big crash if our market rally makes it to the year 2000! I would guess that the disruptions might actually begin before ( underline before ) 2000. With all the millions ( billions? ) of lines of computer code, many of it written and compiled years ago -- with the primary code lost ( or the computer programmer that wrote it long gone ) , that one piece of missing code that should have been back-engineered could very well be missed! Don't forget about that message from IBM regarding what systems they no longer support. Those of you who have worked with mainframes know how difficult it is to get quick support from IBM when they do support you! The user manuals now weigh more than many of these newer highspeed computers.
At the very least, we should all get copies of our Social Security contributions well before 2000. On the other hand, I don't care if the IRS loses my data!

China bans illegal currency trading


BEIJING, Oct 10 ( AFP ) - Institutions and individuals are
prohibited from dealing in Chinese currency in circulation, the
official Xinhua news agency said Friday.
However banknotes and coins withdrawn from circulation can be
traded on the market, it said, quoting a notice issued by the
People's Bank of China ( PBOC ) and the State Administration for
Industry and Commerce ( SAIC ) .
The notice calls for full implementation of a State Council
( cabinet ) General Office circular on halting illegal currency
transactions, Xinhua said.
Ordinary commemorative coins cannot be traded at prices higher
than face-value within the first year of issuance, it said.
However, commemorative gold and silver coins can be traded at
market prices, according to the notice.
A limited volume of ornamental banknotes and coins can be traded
on the market for cultural exchange purposes, it said.
All currency dealers are required to obtain approval from
provincial branches of the PBOC and register with local SAIC
offices. The China Gold Coin Company is the only authorized dealer
of China's commemorative gold and silver coins
The notice calls for strict scrutiny of the nation's coin
markets, and emphasizes that financial institutions and their staff
are prohibited from engaging in illegal currency transactions.

London Bullion Marketing Association is best described as "a riddle wrapped in a mystery inside an enigma." Daily gold trading NEARLY TWICE South Africa's annual Gold Mine production:
http://www.gold-eagle.com/gold_digest/baron1013.html

Thank you, Nick! Despite the lack of attention of the average newsmedia person in the US, the currency troubles in SE Asia will hurt the US economy. It is folly that in these times of NAFTA and GATT ( that did get attention in the US ) that this has happened. Fairly soon ( if not already ) , goods moving to the US will be at much lower prices, and American goods will be much less popular in SE Asia.
Do you have any idea how serious the debt situation is in China? I think this is the wild card not fully played out: China the low cost producer, or China the big time debtor? Any news on debt restructuring, bad debts, and which country China owes them to. Even a fraction of the quoted several hundred billion $US would dwarf all previous currency crises dating all the way back to Mexico in 1995.

Panda 20:27 - Thanks - hope your'e right !

Vronsky - Yet another post on the LBMA! Some of the text seems rather familiar! Aren't there some other intriguing comments from ANOTHER -- or they to be in part 7?

WW; I am starting to like your style. I am really glad you raised the
subject of prostitution of the environment by third world countries.
( It also happens in first world countries ) . It takes a greedy miner
or logger and an indifferent political structure to create diabolical
mayhem and destruction of the environment. What would the price of gold
be if every miner was told it had to restore the enviroment of the
mine sight back to its original pristine condition. How odd that we
let miners polute our ground water with heavy metals, sell arsenic and
lead contaminated sand as suitable for kiddies sandpits, destroy
water resources and waterways, render land uninhabitable, endanger
the lives of civilians in bordering towns, kill civilians opposed to
insatiable greed of big miners. Summary= dump, kill and destroy. Loggers!
Well, those filthy rich Chinese loggers of Indonesia have almost wiped
the habitat of the orang utan. These guys suck so hard, love nepatism,
and are sycophantic anti-enviromental gorillas. Politicians are just
about totally out-of-order with gen-xs. Instead of us buggering up
this world so we all have to leave it, lets put all the politicians
and miners in a big rocket and they can go and bugger up some other
world along way away. Forget about CO2 targets Indonesia has just
blown its for the next fifty years.

Is nobody listening to Papa Alan anymore...on the way up if he smiled it went up 100 and if he belched it jumped 200. Now he's screaming stop and they don't want to hear it.
Ready credit may raise dangers - Fed's Greenspan
SAN FRANCISCOOct 11 ( Reuters ) - Federal Reserve Chairman
Alan Greenspan said Saturday readily accessible consumer credit
had helped to ``democratize'' borrowing markets while increasing
the risks of borrowing excesses and default.
``While we should applaud the 'democratization' of our
credit markets over the years, we must be vigilant to the risks
of excess, both by lenders and consumers,'' he said, according
to the text of a speech to a conference on economic development.
The conference was organized by the Greenlining Institute, a
San Francisco-based umbrella group dedicated to promoting
low-income and minority economic development.
The central bank chief said both structural change and
financial innovation had helped to expand access to credit for
the vast majority of Americans, ``including those of limited
means.''
``Access to credit is essential to help families purchase
homes, deal with emergencies, and obtain goods and services that
have become staples of our daily lives,'' he said.
But Greenspan warned that more easily accessible credit
might entice consumers to exceed their spending limits. At the
same time, more relaxed lending standards could play a role in
higher default and delinquency rates, he said.
``Along with unprecedented credit access, some problems are
occuring that should alert us to potential dangers,'' Greenspan
said. ``While every potential doesn't result in disaster, it's
important to recognize the risks and take protective steps.''
The central bank chief acknowledged there was concern about
whether low-income families enjoyed fair access to credit.
``All of our citizens should be treated equitably in our
credit markets. This view responds not only to a sense of fair
play but also to the necessities of the financial marketplace,''
he said.
``It is critically important that the structure of our
financial system reflect the realities of the marketplace,''
Greenspan added.
The speech did not contain references to interest rates or
the U.S. economy as a whole.
In congressional testimony Wednesday, Greenspan said tight
labor markets might suggest the U.S. economy was on an
unsustainable track, jolting global financial markets.

The party may be over for some and some never
there was a party.During the past few years a
Corporate profits have risen and the pay of
a few.Nobody else has shared in the "white hot
economy".Labour turned the corner at the UPS
strike and will continue to gain recession
or not.The cost of labour can only increase
from here given how effective downsizing has
been.

Nick, Aurator, Kiwi, Nick--How 'bout the Cap'n, eh? Next to Kitco, the Privateer is my favorite site on the web.

WW -- I think you're a scream! :- ) )

We've been down this road before, ( been there, done that! )

The bottom line is this, freedom of capital is freedom. The ability to freely contract is freedom. The right to have honest money that is not traceable is freedom. It is NO ONES business what I do or don't do with MY MONEY. The institution that you rebel against is one of your philosophies own creations, that is the corporate socialist society. You are correct about them, they wish to rule everything and everyone. In order to do this, they use the organs of government and the tools of law to circumscibe the individuals freedom by limiting choices through the power of law and taxation. All this in the name of the 'greater good', or 'the children', or 'the elderly'.

We are rapidly approaching the point where no one is accountable to anyone for anything because, "There ought to be a law..." The government will take care of this or that. We have welfare for this, SSI for that, Medicare and Medicaid. A sad state of affairs. I wonder, how much would medical care cost if there were no such thing as medical insurance? What a thought! Market forces in medicine! Maybe this would force people to adopt a healthy style of living? I don't know, but it shure would cut my tax burden. Perhaps medical costs might even approach something that us 'ordinary' people could afford. One more thing. If there's no insurance, socialized or otherwise, what you do with your body truly becomes your own business. Think of it, no more laws like, "Thou shalt not smoke in public by decree of the state!" Talk about religious zeal, statism, and the new eco religion! Enough of the political commentary...

WW: You are in your usual rare form tonight....you make me laugh!! haha.....Wish you could of seen your idea of utopia ( Cape Breton ) this year....yeah,socialism works ( snicker snicker ) ---said with a sarcastic grin thing....Maybe Panda's right...what have you been drinkin??? For Bart: Go Gold!

HI dudes.......

And i wasn't sure if i was a butterfly dreaming i was an aurator or an aurator dreaming i was a butterfly.

aurator

living the life of Lao Tzu

To all of the enviromental purists of the world, just how are you communicating to all of us here? How was the electricity generated? The plastics, metals and insulators used in the 'box' that is sending your 'message' to us all? Where did those metals come from? Obviously from some greedy, filthy mining outfit. Let's not forget the PMs used in all of this high tech stuff. I've worked in the semiconductor industry. You want to talk about toxic? Look up HF ( hydrofluoric acid ) and let's not talk about the heavy metals used in that industry either. Or why pregnant women are not allowed in certain areas of the manfacturing process.

Oh, I forgot. When you guys have the 'good' message to get out, it's OK to do it by any means possible. Because it's 'justified', for the 'children'. Ya, I want to live in a cave too... :- ) )

Hi TED, I'm just warming up here! Who's that eco-god thing? GIA?

Howdy Ted--I just sold about $25K worth of 9% Zero's of 30 Yr. Treasuries this week. Got 'em just after the '87 crash. Hope your weather is as good as ours.

Wow! Leave here for a week or so and...Wow!

Bart, Would you consider bringing the old format back? Please.

Duncan, Panda, Kuston and Mike Sheller--
What I was referring to in my 11:08 posts, and what I believe ANOTHER is referring to is a complete lack of confidence in all dollar-denominated paper ( derivatives, bonds, currency, insurance contracts. mortgages and stocks, gold stocks included ) . For the problem, you see, under ANOTHER'S scenario, is not the underlying value which the paper represents per se, but rather the lack of confidence in all paper promises to deliver the underlying value when called upon to do so!
We're not talking short term corrections in public confidence in dollar-denominated paper, but an unprecedented systemic breakdown so severe that no one will trust anything ever again but GOLD ITSELF! RAW, HARD PHYSICAL METAL IN THE HAND! Not a pleasant prospect, to be sure! But if the present system must be detroyed to wipe the slate clean and start over with gold-backed promises, then I for one intend to prepare for it. Not to do so would be sheer folly! In short, what I hear ANOTHER and BIG TRADER saying to us here at Kitco is FORGET THE PAPER PROMISES which will shortly be defaulted on and detroyed ( in the interest of national security perhaps? ) and GET PHYSICAL GOLD IN THE HAND! Anybody see it differently, feel free to respond. After all, that's what this site is all about! GO PACK!

JTF -- for all your musing about interest rates, consider the T-Bonds. If there is a sell-off in T-Bonds ( foreign buyers were down this week ) , that would cause interest rates to rise and the Dollar to fall.

Think about it. You're a foreigner who buys a U.S. bond. You need Dollars to do this with. So you need to purchase Dollars to buy the Bond. By buying Dollars, you cause the Dollar to get 'stronger'. By buying the bonds, you cause the rates to fall ( by driving bond prices up ) . The process works quit well in reverse to!

How does gold fit in to this? Consider gold another currency in the equation. The thing about gold is that it is not a credit instrument. It does not rely on the 'full faith and credit' clause of government. Conclusion? The Dollar can fall with interest rates rising and gold can rise simultaneously.

Hi everyone!! I'm not one to play in beans, corn or OJ. But I've lurked from afar as the market worked it's way through the spring and summer. I remember Cherokee's chants and forecasts that the midwestern spring flooding would run everything to the moon. And indeed, the future prices did start out in that direction. However, the soybean crop is at an all time high and the corn harvest is near a record high. This is one of the big reasons I stick with gold and those things that "make sense" when they move up or down. The worst thing in the world is to try to predict the weather and what it will do on crop yields IMO.....

However, my hat is off to Cherokee for taking a stance in public! I just don't have the cajones to do that -- right or wrong. By the way, check out this URL for the lasted in yields and such.....

http://www.abcnews.com/sections/business/corn1010/index.html

Nick@Aussie --some great url's today. Glad you're lending respectability to our handle. I have been touting Normandy on this site for the last two months 'till I am blue in the face. I am now very happy as the Tiger Management Fund has obviously been following this site and made a great purchase. $343,000,000 is a nice chunk of money for an 11.8% share of an Aussie gold miner. I shall now sit back and await my commission from Tiger ( 1%--@3.43 mill should do ) . I shall then shout all the posters on this site a case of Dom Perignon for Xmas!!!

Byron--re: your post "diversify,diversify,diversify."Beg to differ, mate. Put all yer eggs in one basket and NEVER take yer eyes off that basket. If you diversify--you end up breaking even, so for cautious types ok. If you want to make a killing you have to stick yer neck out. Just be damned quick if the guillotine drops!!!!

The rum is goood....Panda: eco-god thing...GIA... ( HUH ) ....Auric: almost exactly what I sold in the past year of 30 year long bonds that I bought around 9% about six years ago....sold em a little early @ approx. 6.60% but still nice to get some capital gains....

Weather: 38 degrees with a bright moon shining on a calm ( for a change ) ocean.....Rangers 1 - Canucks 0....first intermission....will keep you updated----should determine next week's gold direction....EB: did you get "IT"...

GOLDEN CHEESEHEAD -- I don't deny that such a scenario could happen...BUT, you would see something that bad coming! The time frame for such an apocolypse has to be taken in to account. For such a calamity to occur, it would take a truly unbelievable event occuring within a day. What could it be? A nuclear event? Hillary announcing that she is in 'control'. The point being that it takes some time to destroy the 'faith' people have in their credit instruments.

Non the less, it's an interesting question, how do you declare all contracts unenforceable, null, and void? Declare the Dollar dead?

Jews not happy to see Moslems prosper: Mahathir
KUALA LUMPUR, Oct 10 ( AFP ) - Jews are not happy to see Moslems
prosper, Malaysian Prime Minister Mahathir Mohamad said Friday,
referring to recent attacks on the local currency and stock market.
"We are Moslems and the Jews are not happy to see Moslems
progress," Mahathir was quoted as saying by Bernama news agency. "We
may suspect that they have an agenda but we do not want to accuse
them."
Mahathir, speaking in the Moslem-dominated eastern coastal state
of Terengganu, reportedly said that the government was not blaming
speculative attacks on a Jewish conspiracy as such.
But the fact remains that American financier George Soros is
Jewish, he reportedly said. Mahathir has repeatedly accused Soros of
triggering the currency's plunge, branding him a "criminal" and
"moron" in recent months.
"If viewed from Palestine, the Jews have robbed Palestinians of
everything but they cannot do this in Malaysia, so they do this," he
reportedly said.
Mahathir said that neighbouring Indonesia, the world's largest
Moslem country with a population of 200 million, had also become a
victim of speculative attacks against its currency, Bernama said.
The ringgit has plunged by as much as 30 percent over the past
three months while Malaysian stock prices have suffered similar
falls.

Two Australian blokes were seated at the end of a bar when a young lady seated a few stools up began to choke on a piece of hamburger. She was turning blue and obviously in servere respiratory distress. One Australian said to the other
"Stone the crows mate that sheela's not havin a good time"
The other agreed and said
"Mate, I Think we should goan help"
"You betcha" said the first, and with that he ran over and said
"Can ya breathe?".
She shook her now slightly blue head; no.
"Can ya speak?"
Again, in paroxisms of suffocation she frantically shook her head no.
With that, he pulled up her skirt and licked her on the butt. So shocked was the young lass that she coughed up the obstruction and began to breathe. After sitting back by his mate the first Australian said,
"Funny how that hind lick manoeuvre always works"

I'll think about this for a bit, but for now I'll say good night to all. I wonder if those PPI figures will sink in to the collective investment mind over the weekend? Maybe the CPI numbers will confirm the PPI? Now wouldn't that be a scream! Finally the government sees some inflation. :- ) )

Ted--I bought a sh--load of Zero's when Saddam decided to help himself to Kuwait. Sold them a little too soon at 7.5%.

Hmmm, only the yellow metal will be trusted when the "crises" comes? Come now, how liquid will gold be for trading? it's always been a store of value, but as currency, it'll never be practical. "Survival" gold is a rather meaningless idea unless it applies to physical gold as a hedge against your basic financial crises. You're better off hoarding canned food if you think the economy will come to a point where only gold will have value.

Yeah,I'm doing some selling for the first time in almost ten years...gotta take advantage of that new cap. gains tax change...eh..Sold approx. 50% of my utilities in the past six weeks....now totally out of nuclear generated power companys...Remaining portfolio ( all in drip ) SBC,FRO,CNG,BGC,PNY,TRP,HE,SIG,XON and ABX....

According to all doctrines through out history the current state of affairs with regard to equities is a "mania in the making". All manias have all ended with parabolic rises and shortly there after panic selling=CRASH.
The fed is now on full alert and is determined to deflate this mania before this country borrows and mortgages all to buy stocks. It's already happening and the fed knows if it continues we will be led into a full blown depression later, no one can stop. There's no way out. It must be stopped now before there is unreputable damage. When people mortgage and borrow to buy stocks the fed is now on top of it.
The stock market will go on to make new highs with several hundred point gains in a day in the next 2 weeks and then by the end of October the crash. The dow will reach 9000 or there abouts before panic selling sets in. You can't fight the fed this time around. Greenspan has already made up his mind. I'll have to stand by the fed. Break it before it breaks us.

Master Sun--that 'hind lick manoeuvre'--- can it be applied to trading the precious markets??