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Louis R. on Nightline, "people are not excessively invested...gloomsters have been scaring people from putting more money in market...small investor is smarter than the pro..can expect 10% return over long haul they will do better in stocks
Biggs comment that "mutual fund investors will get their clocks cleaned" was right on target. To bad they spoiled a great show with LR's usual Wall Street Week in Review smug mug mumblings of "buy stock, buy stock , stock is the only proper investment" crap ..up to that point it was a decent show.He just had to yap about those totally bogus stats and bar graphs that he used in his show earlier...all the real players know that Lr is a puppet and they know just how to pull his strings.
I think this show that the PR people are preparing for major damage next week...they want to make certain that a stampede does not get started because they had their hands full attempting to keep todays loss for the DJIA below 100 and they were not able to pull it off.
Not only does the beat go on .....they don't even miss a beat....very seamless spin Doctoring going on here...The actual facts support the case that mutual fund investors in previous marets lost Upwards of 80% during a correction and ther funds had to fold just like some recent hedge funds that we have all seen go bye bye ...
Many of todays Mutual Funds will go from BUY BUY to BYE BYE in the blink of an eye.... most of the punks managing the funds have never even seen a bear market...they would know a bear if eat bite them on their ASSets.
It is interesting to go back and read post from yesterday @ this time, when the world markets were crashing, and than review what did and didnt happened in the US markets later. It is a shame that the talking heads and spin doctors are misleading the public.
I have recently noticed, as I talk to various people, that I am surprised how many have heard that Gold is a bad investment and even more surprising how many have heard about the Swiss Gold Sale. I am talking about a real cross section of the public. I have also noticed the same misinformation influence with respect to politics and some individual stocks - Apple for one. Now that Apple is on the team there stock along with Intel was one of the few which were up today.
I am still waiting for that first sign from the media that Gold is a good place to be, of course they will be behind the curve at that point, as I think they may be now with respect to markets.
Between Greenspan, Australia's Central Bank, and Switzerland's Central Bank, the conspiracy to kill gold makes it cheap for the Central Banks to sop up gold out of the market. When the worldwide fiat confidence crisis hits and the Central Banks have removed physical gold from the marketplace to limit the investors' moves, how will we gold bugs prosper in a gold market without resources?
I found Anothers Thoughts intriguing tonight, the following is my attempt in translating some of his thoughts.
He has said previously that all currencies are the same now, and now he says that all currencies are backed, supported. and/or based on US Treasuries. He adds,
Market valuations were and are not real. They were and still are overvalued. The collapse of those markets and currencies will spread around the world. Countries that own US Treasuries will not sell those Treasuries, because their currencies are based on those US Treasuries. They will let the dollar increase in value to support those debts based with US Treasuries as a final defense for the US Treasuries. The price of Oil will have to rise to support the US dollar. They will stop the CB selling of Gold. This will support or allow the rise in the price of Oil.
"Today, we stop our CBs from selling gold! " Who/whom is we?
Interestingly,the potential problems in the Mid East will also support the rise in Oil. Unfortunately this may mean that Gold will not have to rise?
I am betting on the fact that if they are soaking up all of the available physical above ground. That this has to eventually mean that below in the ground Gold is going to go up. They have to have a vested interest, in some form or another, in the mines. The only problem I see is that a lot of the producers are forward selling at lower and lower prices I think?
Does anyone have thoughts on this.
Leave it to Kitcoites to tell me I wasn't accurate even though the DOW made a 2% gain on the week and Gold dropped! ( And Conspiracy posts rose 23%! )
Can't read the full text of last night's comments as Kitco seems to be locked or crawling. BUT, in response to those who felt I didn't come clean on Asian market's. yes I'll concede they did poorly. Remember though I said firming Asian markets would lead U.S. market higher and U.S. would end the week with a gain. Didn't promise the same for the Asians!! OKOK, that's hedging. We'll call the Asian thing a "Miss" if it'll make ya happy dammit!
Here are next week's predictions.
1 ) The further declines in Asian markets this evening bode poorly for the DOW. I'm beginning to lean toward the possibility that the Domino effect may be more servere than previously anticipated. This being the case, I expect an "Off white" Monday for the DOW with a substantial decline. Perhaps a small dead cat bounce Tuesday ( Not saying this for sure... ) , and the week will end with DOW lower. I'll keep my money safely on the sidelines.
2 ) Gold will make a small comeback in spite of the manipulations by the Eeeeevil Central Bank, Soros/Rothschild/Rockafeller Jewish bankers to continue driving it down.
3 ) Kitcoites will increase their noisy "See I told you so" mentality posts, as their frustration levels must now be approaching that of a dying man seeing his last mirage in the desert. Backpatting and congratulations all around, will increase to deafening levels as Kitcoites exert all their mental powers to attempt to erase from their memories, the horrific losses of the past 15 years in Gold, and missed 1000% gains in Equities.
4 ) Platinum will end the week higher, as major players on the long side fight back.
5 ) Silver will remain relatively flat.
6 ) Analysts who have made their clients hundreds of billions in past 25 years will be derided as fools on Kitco, and analysts who have bankrupted their followers will be lauded as geniouses once again.
7 ) El Nino, Soros/Rockafeller/manipulators, and Y2k will make their presence known as always.
8 ) "SAD DAMN" ( as George Bush would say ) will begin the process of backing down in the face of U.N. pressures.
9 ) The S.F. 49'rs will OF COURSE win their game, as always. ( Easiest prediction of them all! )
Finally able to access your earlier posts. Allen, I think the difference in drawdown rate isn't as important as the overall inventories. With CB selling, total available inventory, production rates, etc. I can't imagibe how a "shortage" in Gold will occur anytime in the near future. SIlver on the other hand..not only will all the inventory be "gone" soon ( unless Princeton is correct ) , but a play could be made on what inventory does exist at any time.
Miro. Now let me say this as kindly as I possibly can. YOU FOLKS ARE AMAZING! I've made a string of prediction over 3 months that have had an accuracy rate that could NEVER be achieved by random chance, and yet you all not only deride my calls and market plays ) which have been profitable for many years ) , but you laud the folks like Puetz who are CONSISTENTLY not only inacurrate, but making such bad calls that they don't even approach random chance!
Sheesh, what a place. I guess if I called the direction of the DOW 20 days in a row and missed the 21st, I'd be a bumbling idiot who's "lucky" but a good TA man like Puetz could miss 19 and hit 1 and be called brilliant ( but with his timing a little off ) . UmmHmmm, reality check boys! reality check...
I might add another reality check- the gold market is fixed. It dosen't matter how much COMEX has in inventory when 90% of the gold market trades behind closed doors - we only get a peek twice a day when they set the London fix.
Cheers ... and goodnight ( as he knocks down his Corona )
Gold Fund getting trashed, but does make the S&P look kind of overpriced. A stronger, dynamic, low employment, economy normally supports Gold.
http://www.stockmaster.com/sm/mf/G GRFRX.html
Later , time for some shut eye.
Actually, Sir, I think you calls for next week a just about right. I'm not sure about SADDAM backing down next week though as it'll take a lot more for the US to justify bombing them this time with the "concesus group at the UN" slowly disolving. BTW what the hell is a "geniouses" ...
SI.SPY walks into the bar of a strange town.
Many locals are already there.
Standing around discussing their favourite topics.
Being lounge lizards and comfortable, they talk their own lingo.
SI.SPY dressed in his flash hand-sewn Ostrich suit and Alligator boots.
Watches and listens to the locals for ten minutes.
SI.SPY then buts in telling every-one how wrong they are.
Pompously he tells them all.
Tells how he knows what is true or not.
SI.SPY ridicules them and tells them to get real.
Then leaves the bar in disgust.
SI.SPY sounds to me like a politician.
To make such value judgements in ten minute is beyond me.
JTF
Some of the reasons, why I expect a large crash very soon.
To many indicators are moving in lock-step.
There are to many indicators, from past crashes, that are moving in lock-step.
There are to many occurrences, happening at the moment, that are reminiscent of past crashes.
It is like:- there is a certain criteria, that must be in place, for the crash to exist.
It is like:- the criteria for a crash, is currently moving in lock-step.
I see too many pieces, of these criteria, being met and qualified.
kiwi ( hell raising...was this you cat? ) ID#194311:
Your article is an excellent pice of logical reasoning.
It could well be applied to the Market Mania we are currently in.
hey Nick, yer not hangin around that bar a little too much tonite are ya? I saw SI Spy's post and I too have a problem believing the 100mil fifure. Nevertheless, it's a HELL of a lot more likely than some of the posts I see aorund this place where people claim they made money on Pits ( Oops I mean PUTS! ) in a rising market.
Anyway, I think SI did say that he spent hours scrolling back and readin everyone's posts, and I CERTAINLY understand how he came to the conclusions that he did. After all, where else do people lool at a White table and try to tell each other it's Green? The Emperor has no clothes and SI Spy saw that right off as an "outsider".
How many times can a HepCat ( or an LGB for that matter ) make flawless market calls after years of sucessful investing and still be derided as a Moron, while the folks who have been perpetually wrong and losers, backpat each other for their genious? Their special "insider" knowledge? Their love of humanity and wish that it will all come crashing down in one final Apocolypse?
I forgot one. El Nino will gently make itself known as the first real storm of the season sweeps in from teh Pacific to the Northern CA coast. BTW Kitcoites, you ARE aware that Aliens are the cause of El Nino no?
Hey Spike. Who won the game tonight? I wasn't able to watch it. Sheeesh. Had to read all the posts from the legendary stock market analyst LGB. Sheeesh. I have been riveted to the computer screen. I hope LGB can post ALL night long. And ALL of this weekend. Nonstop. I am hooked to kitco ever since he helped me make a bazillion dollars. Sheeesh.
Since when do news articles give market advice!? The last time staying in the market was widely heralded as patriotic and humanitarian was 1929, wasn't it? OK, the Kitcoites may be wrong on gold here the last 15 years, but admit it, there is something a little eerie about the aura around the market these days. Let's face it - risk is risk. There is a chance that the market will drop 90% and stay there for a long time. That risk has simply not been removed. As it has been said, ask investors in the land of the Rising Sun who bought at 30000 in 1989 ( numbers and dates approximate ) . They may be at 13000 in 2013.
Yes, the US market has been a good place to be these last 15 years, and may be for the next 15 as well. However, let's not delude ourselves: It may turn out to be a ( financially ) disastrous, or just boring and slightly negative, place to be for the next 40.
Southern California real estate was heralded as can't miss several years back, as was real estate in general the last 30-40 years. As many have found, even real estate is not a guaranteed win either. My house appreciated nicely from 1984-1989, and I'm glad that I own it, but since then it has been basically flat. My brother-in-law just turned down a very nice job transfer because - get this - he could not afford to sell his house!! It would have cost him too much cash out of pocket to get out from under a mortgage that exceeded the value of his home, which he bought five or so years ago and which has depreciated 10-20%. And it could get worse.
Being right a few times does not mean you have all the answers. Similarly, although goldbugs have been horribly wrong in their investment conclusions these last few years, they ( we ) are not necessarily, IMHO, misguided, misinformed, or ill intentioned. Just poorer. That may not change in the near future. But I sure hope so. I would like to retire someday.
LGB, Sir. Your 16k in 6 weeks prediction is looking a little dead in
the water. Could you please tell us, if NIKKEI225 less than 15000 in six
weeks, and given that 1998 will be just hours away, what are the
implications for gold.
Panic grips ailing Seoul
http://www.scmp.com/news/markets/topmark.idc ARTICLES:::::::::::
Japan bank worries buoy dollar
Dow drops on inflation fear
Asian slump hurts FTSE
HK weakness dampens sentiment
Bank woes push Nikkei below 16,000 level
Profit-taking and currency fears slash share prices
State divestment plan hits snag
Falling won sparks panic selling to near 18-year low
Investors worry over impact on company profits
Poor land auction result hurts property issues
Chuan news puts buyers into action
Weakness in region pares index gains
Uncertainty over reform spurs drop
Stocks drop as concern over Asia resurfaces
Shares follow regional trend
Silver gets ready to outshine gold
Deutschemark jumps as buyers seek refuge from tumbling stocks
Aussie dips on concern over exports
Utility investors look to be getting a raw deal
Alas, the property agent, we knew him well
SOLAR ACTIVITY IS EXPECTED TO BE LOW
TO MODERATE. C-CLASS ACTIVITY IS POSSIBLE IN REGION 8103. REGION
8100 MAY PRODUCE ANOTHER MAJOR FLARE BEFORE ITS DISK DEPARTURE BUT
THIS IS BECOMING LESS LIKELY.
THE GEOMAGNETIC FIELD IS
EXPECTED TO BE MOSTLY UNSETTLED TO ACTIVE WITH ISOLATED STORM
CONDITIONS DURING LOCAL NIGHTTIME. A SIGNIFICANT INCREASE IN
GEOMAGNETIC ACTIVITY IS NOT EXPECTED FROM THE X9/2B FLARE DUE TO THE
FLARE LOCATION AND THE PRESUMED DIRECTION OF THE ASSOCIATED CME.
HOWEVER, IF THE SHOCK ENCOUNTERS THE EARTH TOMORROW, AS EXPECTED,
GEOMAGNETIC ACTIVITY LEVELS MAY BRIEFLY BE ENHANCED TO ACTIVE TO
STORM LEVELS. THE PROTON EVENTS ARE EXPECTED TO REMAIN IN PROGRESS
THROUGH TOMORROW AS FLUXES SLOWLY RETURN TO BACKGROUND.
We suspect that, with collapsing stock markets worldwide, investors are ready to run into gold. But if the price can be kept down, then panic will be averted.
http://www.usagold.com/Daily Quotes
EB I'm watching mine
And a good day to you too..... ( :o}}}}}}}
need to know the future? look behind you, and
elvis is there....i spoke with elvis at the luxor
in vegas last week-end,.... and he said.....
who said what, and when was it said?
the gilded strip, the cragged peaks of san bernadino, black
chips and legal OBLIGING women, where else but in the corridor
known quite familiarly as "elvis doing 90 in a 30." hot damn...
lose here, win there.....the circle is complete....dora my love
where are you?
G.Day Nick. What a week. These guys in Australia just dont know whats
going down. I have just one word for it, BIG. Anyhow talk about scary
charts. I cant stop looking at NABs form. Looks like someone threw
that baby into reverse while cruising at 110. You could play music
on dem waves.
Greenfields
Checkout the nabwmp's, up 400% so far, and all they have done is factor in the risk.
I like the ANZ story as they have far greater exposure to asia.
genious????before one can speak of ANYthing
with authority, one SHOULD be able to correctly
spell same.....where are the readers of the word?
those are the spellers of the words!
hep-rat??? and good calls? so??! there are good calls made
here all the time. limit moves in wheat, platinum, etc...
MQs should bring home some bacon also. I dont get it how the RBA thinks
ever shings just fine. Maximum spin cause thats the last trick left
up their sleeve. Maybe its shows over. Just goes to show how they treat
the people with utter contempt.
Nick ( @Aussie ) : Morning! don't know why I'm up so early in my part of the world -- long day at work -- lots of primmadonna's wanting things -- have this sort on Kitco too, don't we? Mine beat Kitco's hands down!
Great options page you just posted - not sure I know what implied volatily is -- how does this relate to Black Scholes/random walk?
All: USAgold's daily market report of 11/7/97 States that Alan Greenspan was in Frankfurt, Germany to address Germany's economic difficulties. According to USAgold, conincident with Ag's speech, the Swiss National Bank started lending gold heavily. The message I get from USAgold is that this is why gold went down yet one more time -- to avert panic in the markets.
USAgold then goes on to state that gold is forming a double bottom. USA gold is watching "very closely" for confirmation of rumors and reports that George Soros is buying gold and gold stocks. London-based gold bullion broker Rudolf Wolf apparently stated that he expected $340/oz gold in 1998.
My take on this is that the sentiment toward gold is finally beginning to shift, and I will be increasing my position in gold stocks when there is strong buying activity. Am reluctant to jump in with both feet until the Japan/Korea/Brazil situation unwinds.
Nick ( @Aussie ) : You are much more experienced in the technical aspects of the market than I.
I think the following scenario is likely, and I would like your counterpoint: The world markets are moving in "lock step" -- a necessary condition for major downturns. However, the US market did not drop as much in the last few days compared to the ping when Hong Kong dropped last week. Thus, much of the weakness in the US market may have been taken out, and a much bigger shock will be necessary before the market drops more. Further, it is very clear that Japan and South Korea are in deep trouble. However, both of these countries have very tightly interlinked financial and corporated systems, and Japan in particular has been remarkably stable since the 1990 Nikkei crash. My take on this is that an outright collapse in Japan in the next week is unlikely -- however, I have no intention to be long in the markets until I see a clear resolution in Japan's financial problems. A Japanese collapse is highly likely very soon - maybe sometime in the next three months -- and if that key world class Japanes bank gets caught in the turmoil, the world's financial system may get disrupted as well! It does not bode well for the USA dollar to effectively be the world's currency, because eventually all those foreign reserve dollars will return home -- just a matter of time -- but the when is hard to guess.
One other wild card in all of this is that, while the US economy is doing well, most other countries in the world will want their currencies to be relatively weak so that their trade is not adversely affected, even Switzerland! Thus Switzerland is in a bind -- should they let their currency remain strong, or should they inflate it somewhat to keep it on a closer parity with the dollar? My take on all of this is that the dollar will remain relatively strong only as long as the US economy is doing well. The only other wild card I see in this is the price of oil. SE Asia, and now Korea, and probably Japan will or are haveing an oil price shock already. If the price of oil rises significantly in US dollars, we will have recession ( at the least ) in all countries, confidence in the US market will drop, and gold will eventually rise as a consequence.
Thus what we need to watch is Japan ( signs of collapse ) , the US dollar ( sudden drop ) , and oil ( sudden rise ) . Since the El Nino I believe will not peak until next year, I would suspect that we have more crises to come for at least 6 months before the dust settles.
QUANTUM MECHANIC: Thanks for a great laugh. More truth than poetry. Having said that - the gold scene looks so bleak it if isn't near a bottom we are in bigger trouble with our "insurance" than most of us think.
Yes Goldbug23 things look real nasty. Insurance however is exactly that,
insurance. And I would think a wise option in todays markets is to have
plenty of it. Aussie dollar could move big time up or down. One straw!
The charging bull investors tramping through equity markets seem headed for the disappointment of significantly lower returns in the future, says Martin Wolf
LAST week investors' faith in the stock markets was tested, but not found wanting. Having recovered from their little trip, are world stock prices set to rise to ever more glorious heights?
The chart shows the modesty of last week's correction in New York. Over the week, the Dow Jones Industrial Average dropped a mere 3,5%, London's FTSE 100 2,6%, Tokyo's Nikkei 225 index 5,2%, the FTSE Eurotrack 100 5,6% and even Hong Kong's Hang Seng only 4,7%.
But other Asian markets are well down. Between January 20 and October 28 the FT/S&P-A index for the Pacific basin ( excluding Japan ) fell 39% before making a slight recovery.
In the west, however, there was just a small reduction in the gains made this year. Between the end of 1996 and the end of last week, the Dow Jones Industrial Average rose 15,4%, the FTSE 100 rose 17,6% and the FTSE Eurotrack 100 went up 30,2%.
"Markets in turmoil: nothing happens." That is the headline. For bulls, that proves their case. For bears, it means that gross overvaluations remain intact, notably on Wall Street.
The basis of the bearish case is that market valuations oscillate around well-defined averages. Sooner or later these revert to their mean. Two averages are worth close attention - the ratio of market valuations to corporate earnings; and the ratio of market capitalisation to the replacement cost of the underlying corporate assets - known as Tobin's Q, after Yale University's Nobel laureate, James Tobin.
Estimates of Tobin's Q for non-financial corporations by the US Federal Reserve, though recently revised downwards, show the highest valuations since 1925. If this ratio were now to revert to its mean, the stock market would decline by half.
Similarly, even after last week's correction, the price:earnings ratio for Standard & Poor's Composite Index was 22,7. At this level, it is still hugely above its long-term historic average of 13,7, estimated between 1871 and 1996, by Jeremy Siegel of the Wharton School.
Should the price:earnings ratio revert to mean, the market would fall 40%, even if earnings were to be sustained.
Henry Ford famously declared that history is bunk. The big question now is whether these historic patterns are also bunk.
"When discontinuities threaten, it is perilous to base decisions on established trends that have always seemed to make perfect sense, but suddenly do not," warns Peter Bernstein, a well-known investment adviser, in a fascinating book on the history of efforts to understand and manage risk ( Against the Gods: The Remarkable Story of Risk by Peter L Bernstein, published by John Wiley & Sons, 1996 ) .
In 1930, notes Bernstein, US President John Edgar Hoover declared that "prosperity is around the corner". In 1959 yields on shares fell below those on bonds.
In both cases, something new and unexpected was happening in the market - the great depression, in the first case, and the great inflation, in the second.
Is this another such occasion? If so, why might historical experience have become irrelevant? There are two hypotheses: changes in the economy and an increased appetite for risk.
Some argue that the US economy can sustain faster growth than before. Correspondingly, prospects for profits are improved. Yet growth in US underlying productivity has been considerably lower than in the 1960s - a comparable period of sustained expansion and high stock markets. Moreover, the rise in corporate earnings reflects not fast growth, but a recovery in the share of profits in GDP from a trough of 6% to 10%, close to the 12% peak attained in the 1960s.
More cogent than fantasies about economic transformations is the fact that during this expansion the reduction in unemployment has proceeded without adverse inflationary consequences. For this there are three obvious explanations: the power of labour has dwindled; the US has been able to import low inflation, helped by weakness in Europe and Japan and the dollar's strength since 1995; and this earnings expansion has been rather feeble. None of these looks permanent.
Behind the benign economic expansion may also lie improved policy-making. This would have broader implications. In this century, the two great periods of stock market undervaluation were the 1930s to early 1950s, and the 1970s and 1980s.
These were both catastrophes - the great depression and the Second World War, and the great inflation and the oil shock.
Investors may hope that lessons have been learned. If they believe disasters will be avoided, their perception of risk will fall. But this would not be the only reason for a reduction in the premium they demand for holding equities.
Cheaper access to diversified portfolios, the growing liquidity of the markets and the availability of more sophisticated hedging instruments could all help reduce the risk premium. That, in turn, might help to underpin apparently stratospheric valuations.
Over long periods equities have yielded far higher real returns than bonds. Since the Second World War the difference has been as high as eight percentage points.
These gaps look too large. If investors have realised this, current valuations could be less unreasonable.
At next year's prospective price-earnings ratios, the earnings yield on Wall Street will be 5% or so. This is also the real yield that matters to shareholders if they assume that companies will reinvest money as profitably as they can. But this real return is only about two percentage points higher than might now be expected on a portfolio of safe government securities. The equity premium would then also be about a quarter of its post-war average.
For this justification of current valuations to be credible, one would have to believe that investors rationally perceived an exceptional opportunity for profit in the excess returns available on equities. These were then exploited and eliminated, the result being a once-and-for-all upward shift in market valuations.
Yet, precisely because of this revaluation of equity markets over the past one-and-a-half decades, actual returns on investment have been more than double those that investors would now have to be content with.
Unfortunately, these investors may not be in the least bit happy with these lower returns.
Instead, they are far more likely to expect that the returns they have enjoyed over these glorious years will continue.
If so, investors are doomed to disappointment. Once they realise this, they are likely to wish to shift out of stocks.
But, for the market as a whole, only a fall in equity prices can bring about such a shift. Once that fall has occurred, high returns are again plausible.
But first there must be painful losses. If investors are to be charging bulls, they must suffer the inevitable disappointments.
This could trigger a market collapse. Present market valuations are only sensible if there will be no adverse economic shocks and the bulls are content to graze on equity returns that are far more modest, in relation to those on other investments, than anything they are used to.
A reduced equity risk premium may provide part of the explanation for current valuations. It is impossible to accept it is the only, or even the chief, one. - Financial Times.
Quantum Mechanic: Are you a "spin doctor"? I guess Physicists are included, aren't they.
Goldbug 23: I remember a famous investor -- can't remember who -- saying that when the market really makes you sick, that that's the time you buy. Maybe George Soros really is buying, but unlike 1993, noone else is taking the cue -- just yet. I wonder why A Greesnpan is in Germany -- maybe the ECU/EMU is nearly pulseless, and Germany is desperate for a strong dollar for favorable balance of trade. That might keep gold down for a while. In the meantime, all that cheap gold is leaving the western industrialized world -- to where?. Where will the financial center of the next 10-50 years be? S E Asia? ( after they rise up from the ashes like the Phoenix? ) . I think China is the key. Will they follow India, and officially endorse gold accounts?
So -- is this fantasy? Or reality? What do the gold spin doctors say?
We should not forget that turmoil offers the opportunity for change.
Donald: Thanks. I have wondered why I do not get all of my e-mail. ATT offers high-speed internet service, but the mail is not ideal. My only problem is that I can never get a warm body at the other end. I only get automated answers to my messages.
Perhaps I need to purge the E-mail at the ATT core site. Do you have a time limit, or a space limit in your e-mail service?
JTF: I have no e.mail limits that I am aware of. Sometimes I hold a message to read later. I am not sure where the storage takes place. Their site or mine. Occasionally I get a message to compress, again not sure, theirs or mine, but I compress anyway.
JTF
Many of us expect, that which we see, to turn up on our doorstep tomorrow.
Patience, yesterday's move was a very important step in the coming unfolding.
The effects of yesterday, shows up as a strong bias towards the next 'ping'.
Being larger than the last.
The oscillators have already crossed over and have moved into solid acceleration.
The last reference that I made to lock-step, was not meant so much, to talk about the current lock-step.
But rather the vision of historical lock-step.
Much of the observed criteria, that occurred in the last great crashes,
Is already in place at the moment.
There would be dozens of events, that foreshadowed these previous corrections.
Day by day, these same conditions, are being fulfilled today.
The uncanny resemblance to these past criteria being fulfilled.
Leads more support, to the quickening of coming events.
JTF & QUANTUM MECHANIC: Appreciate your comments. I should tell you both I bot NEM twice in the past two weeks so tho my guts are weak my philosophy is the same as yours.
Nick and LGB: You two are among the BEST "advisors" I can find on this site! Thanks.
Donald: Changed my e-mail to "purge server after message transmission". Am no getting 35 messages -- some extremely large -- will probably take an hour before done.
Donald: Changed my e-mail to "purge server after message transmission". Am no getting 35 messages -- some extremely large -- will probably take an hour before done.
JTF
I had a similar problem with my mail server.
My email server had a file limit of 16mb.
The sever was compiling all the files into one file.
When this was full it wouldn't download.
I could still send but not receive.
I had to get them to seperate the emails at their end one by one and forward them onto me.
Nick ( @Aussie ) : I have also studied 1929,1937 and 1987 for insight. I think part of the problem is that history never repeats exactly. This time the central banks are fully versed in derivatives trading, and we have the best Central Bank leader the US has ever had -- AG, who is using every ounce of skill he has to hold everything together -- even suppressing the indicators of that "flight to safety" such as a gold rally.
I think you are right that the computerization of the market accelerates time -- however, on the other side the computerization offers the opportunity to manipulate and control to a much greater degree than ever before by the central banks. History does reveal many instances where the markets have been controlled by special interest groups. But I think most of these prior instances were more higly focused on particular sectors for personal gain, rather than attempts to keep the market up in a general way.
-- My guess is that the end result is that the "powers that be" have delayed the downturn trend of the Kondratiev wave in the US ( shift to hard assets ) . However, the consequence of this is that when the correction comes -- it will be catastrophic. On that day there will be no trading, except by the central banks - desperately trying to unwind all of those derivatives trades. This time instead of the European Rothschild Kreditenstalt Austrian bank crisis in May of 1931, it will most likely be a world-class Japanese bank -- and there will not be several years between the market fall and the bank failures -- months apart or less, I would guess. Markets first, then the banks?
Seems like the papers are changing concensus.
Six months ago, the news was all hale and hearty.
Articles from the Hong Kong Standard:
Liquidation of 16 banks defended
Legislators query Jakarta's right to Clinton assistance
Oil ruling freezes projects
Senator warns Philippines against early IMF exit
Rubin says US could ride to more rescues
Firms given ultimatum on ties with underworld
Japanese recovery `has come to a halt'
Plan to cut dole queues abandoned
Tokyo hits lowest level in years while politics lifts Bangkok
US job data floors reeling shares
http://www.hkstandard.com/online/finance/001/features/features.htm
There are a great many opposed information bits around. Gold is cheap, gold is dead. Gold demand is up, warehouse stocks dwindle. Clinton beats bush and dole. Clinton and republicans team up on fast track against democrats.
Economy is stable in US. Highest rate of personal bankrupties. The economy is built on sound fundamentals. The consumer is maxed out with personal debt. The unemployment figures are great. The amount of people holding down two to three jobs has grown and is growing.
There are more millionaires in the US then ever before. The working people are getting hammered. Fast track is good for the people of the US. The goverment is already allocating hundreds of millions of dollars it does not have to retrain workers displaced from a bill that has not even become law.
The market place is global. Asia, Europe, South America and Austrailian markets have no impact on the US. The US is an island. The US will lose out in the next century if fast track is not approved.
The world is being taken over and will be held captive in the year 2000. The world will come to a stop due to Y2K problem wreaking havoc on systems worldwide.
President Cinton is honest. President Clinton cannot get Fast Track approved because democrats say that can't trust him. Clinton hates Newt. Newt and Clinton say fast track must be past for safety and strength of USA.
Folks, how does this sound for theory: Gold has become well tarnished for investors as of the past years. It does not matter as much wether gold goes up or down, just as long as you can turn a profit on it. It would appear that gold has entered a pricing pattern. EU Central Banks want to sell gold and when they do they drive the price down. This is not good for mining companies. On average the Austrailia gold mines have a cash production cost of Ux = $340.00/oz, Africa has a cash cost of Ux = $320.00/oz, while America have a cash cost of Ux = $300/oz. NEM = $188/oz. Central Banks drive the price of gold down below profitable levels for mines. Mines shut down, supply lessens, Demand remains unchanged and the price climbs back up. CB hold on before they dump more gold for the price to rise back up to get the most bang for the ounce. When price of gold gets High enough mines re-open and supply increases, cycle repeats. Guess we could compare this to expensive corn prices last year and how several corn milling companies had to shutdown till the bushel cost lessened. What do you gold jockeys think about this theory, comments PLZ, what would be the factory to break the cycle? - Scott Ginn
Crunch: The net asset value for Central Fund of Canada was US$4.04 on Thursday. The fund computes the NAV twice a day. You can call them at 905-648-7878 to get it.
Tolerant1: You forgot to add the contents of one automobile trunk opened after a ten years in Arkansas. Apparently there was a check to Bill Clinton for over $20,000 from Jim Mcdougal's bank, among other things. But -- BC has testified that he was not actively involved in financial dealings such as these. Isn't it interesting that Jim McDougal is now saying that he is being harassed by the Executive branch while he is still in jail? Do you think they don't want him to say anything that might implicate BC? Last week the FBI raided 17 or so "Child support ( deveopment? ) Centers" in Arkansas, one of them lead by the most senior democratic state congressman, as I recall. May not have this exactly -- but it looks like the "good guys" may be back. Clearly there are now two active groups in the US government - those looking for the truth, and those defending the system. Only a few months ago there was no visible dissention. There is more coming out on the Vince Foster death as well!
It's not just the markets that are waking up to reality!
JTF
This is what I find so disturbing at the moment.
That history is repeating itself in such a close knit pattern.
I have a belief that at the end of this debacle, 5-10 years later on.
We will look back and make the comparison between now and 1927.
There will definitely be an unfolding pattern to the correction.
Markets first, then banks, then the people.
I personally feel that the derivatives markets are in extreme danger.
We are already seeing the effects with the currency attacks.
Soon, and it is already starting, it will enter the soft and hard commodities.
You will never be able to buy the positions again at today's prices.
Because we have been on a 15 year bull we have all forgotten to price in risk.
Now in this volatility, it is raising its head.
Only a month ago I could by risk at an all time low.
Many computer programs have been designed around this bull run,
And haven't priced risk into their formula's.
The potential for a mammoth explosion in this area is immense.
We are already seeing funds going down because of a one day loss.
This is not investing - this is speculating.
I think ? that -
The white knight has let himself and his men be check-mated!
The bottom line from Fiendbear:
The market may crash on Monday, but I will be out of town so the next
update won't be until Tuesday, November 11th. Have a nice weekend!
http://home.sprynet.com/sprynet/fiendbea/marketre.htm
Hi Ted: Nice pictures of your place the other day. Here with 800 ft of waterfront and 40 acres we would call that a State Park. We have 51F, wind to 20, rain expected.
Considering recent criticism I offer this analysis ( pedantic though it may be ) of our recent market movements with some projections for the future.
We have seen four tops in the past 3 months each occuring on or about the first week of eah month; 8250, 7900, 8100 and 7650. These tops are forming a downward biased saw tooth pattern which may be confirmed by 7950 in first week of December followed by 7700 first week of January.
We have seen a testing of the 7550-7600 bottom in mid-August to mid-september followed by a drop to a recent bottom of 7400 in the last week of October. It remains to be seen whether this next round of bottoms again does a triple test. If it does expect that we will bobble in the 7350-7400 range for these bottoms through November.
A pattern may be emerging which we might call a 'bump down the stairs'. If so we are at the bottom of the second bump down. What I see is a market that is losing steam. A high degree of volatility means that there are two camps here; convinced sellers and fairly convinced buyers. The bias is to the sellers. Since the American markets do not live in a vacuum and considering the drastic downward movement of both share prices and currencies valuations in Asia and now starting in Central and South America there appears to be a number of 'shocks' ahead which will drop the American markets in a sudden fashion. Each successive recovery will be less enthusiastic as a pattern of decline becomes more appearant and the buyers less willing to commit in this type of environment.
Shock triggers included banking crisis in Korea, Brazil and Japan, oil price increases based on dissaticfaction amoung large producers in the middle east and a potential escalation in conflict with Iraq. Political problems may emerge for the Clinton administration in its attempt to defend itself against charges of corruption and misuse of power. The Federal Reserve may have problems balancing its act in view of the increase in rates by European banks.
It is possible that a market capitulation could appear during one of these shocks without an ensuing rebound. The longer this decline is in force the more likely that buyers will pull back strongly on a percipitous drop. At that point I would expect to see an increase in the rate of fall for this market.
Recent opinion has been expressed that the turmoil in Asia will have little affect on our markets. Others indicate that a full assessmetn will not be available for many months. I tend to feel that the later opinion is more rooted in reality. The international banks which are exposed to these areas are pretty negative in their assessment and projections for future developments. I feel that they of anyone know their business and exposure. They are predictors of the affect on American international business interests.
Summary: A bear market has developed with the potential for steep drops in American markets. Developments in overseas markets and currencies will play an increasing role in fueling the pessimism associated with a bear market. A possible banking crisis in Asia, oil price increases or interest rate increase could accelarate the downward momentum of this bear market. As yet the players which will define this bear market are not fully in their places. With this regard it is difficult to make reliable mid to long term projections about this market's behavior.
Mornin Donald: So ya think this would be worth more in Connecticut...eh!
P.S. Property taxes are 700/year ( and that includes FREE garbage pick-up at the end of thr driveway )
Eh-You ( @Giner ) : I think you have summarized what's happening quite well. Gold differs from comparison with commodities markets in my opinion because it is being used as money and as a commodity. It seems that right now the "powers that be" are using gold as money but do not want anyone else to do so. It's a two-tier market with two sets of rules -- the public ones, and the ones of the LBMA ( etal ) that we are not supposed to know about.
Don't want ot upset all of those innocent souls who think paper currencies are safe and reliable. Gold is supposed to be an outdated form of money with no use ( except to certain insiders some of whom have traded gold as money for hundreds of years, and will continue to do so ) .
The key question is when all of this will unravel, and gold will rise again. Hard to say when the Fed Chairman AG knows the value of gold, and what will happen if he ( and others ) let the price of gold rise. The dollar would drop and oil prices would rise.
How determined are "the powers that be" in keeping the price of gold down? How far will they go to retain the status quo? Look at what Japan did -- now for nearly 8 years after their crash! Are the governments of the Western world any wiser? I don't know.
My lesson in all of this is that I need to learn how to make profits in gold and other markets on the down side, as well as the upside. Also -- did you know that most intermediate term gold bear markets end in 1 1/2 - 2 years? We must be near the end of this one. A long term gold rally may not yet be in the cards. A intermediate-term gold rally is just around the corner -- the corner being 6 months or less.
Nick@Aussie: More on risk. At least some people understand that there is risk in the shares they buy. A second, less understood risk is in the currency that the shares are priced in. A third, rarely understood risk is the health of the broker who holds the shares in street name.
Scott Ginn: The flaw in your cycle is the part where you say the price goes up and the mines reopen. Some of those mines will be bankrupt. The current shareholders will be wiped out. The new owners may make a profit, as may new shareholders. The trick is not just in making a good decision about the price of gold, but in picking the companies that have a strong balance sheet and can wait it out.
Nick ( @Aussie ) : I think you and I are not so far off on the what, just the when! Our White Knight has his hands full, and is running out of ammuntion. Is he trying to support the US and the rest of the world as well? I shudder to think how long the US dollar can survive that kind of punshment.
You reminded me of an excellent point -- we should be following commodity prices, as well as the markets, dollar, oil, and news of banking crises. Not necessariliy in that order.
If you are right about that 1927 and 1997 analogy, we may still have that final market rally blowoff from dropping commodity prices. However I doubt that we will have a US rally for at least several months regardless -- a rally into 1999-2000 is still possible. Perhaps you did not mean that -- but it could happen if the world currency crises blow over.
Frightening thought that the big one might wait for 1999-2000!
G'day Mates--Calling all Autralians mining stockholders
G'day mates ...I should the following Australian mining compnaies late last year and early in 1997:
1- Aurora Gold Ltd
2- Normandy Mining Ltd
3 - Emperor Mines Ltd.
4- New Crest Mining Ltd
I am currently thinking about pumping some serious money back into these Australian mining concerns , but first I would like to hear from some folks that may have held them for the last year and fllowed them more closely than myself. I would certainly appreciate it , due to the fact that I would save plenty of time on my research. Thank You very much in Advance.
Donald
The third risk has enormous potential.
I wish to sell well before the bottom and not to be caught in the rush.
The way some banks are falling now,
I expect to be the same, for some brokers/houses in the future.
Donald: good point about gold mining companies -- don't want to be choosing the wrong horses -- only the gold mines that can still make a profit when gold is less than $300/oz or so. I have a real hard time determining what that critical price is, because each producer seems to put different things into the profit prediction. I guess the amount of cash reserves, and previous profit margins, and the competence of the operators helps. I will be putting some of my investment in oil, and defense as well - just to play it safe, since gold is so unpredictable.
I am reluctant to do this now, because I think the ElNino will ensure that market shocks occur for at least 6 months - somewhere in the world.
Sorry about that, Nick. Gold will remain stagnant. Paper is where the action is right now. Until gold is reactivated in price ( beginning 1998 ) we will see continued weakness with trading in a band from 305 to 320. This weakness will persist unless another panic selling occures which shake confidence in the system.
All that said it is time to buy gold with both fists. The formalization of the EMU participants at the beginning of 1998 will releave the downward bias in gold. Gold will pop back up to 330 - 350 range.
Buying opportunities like this probably don't occure once in a lifetime. My horizon is 5 years out. This includes Y2K and crash events very possible. The money I have put into physical metal on gold and silver has mantained its value well ( I counld actually sell and make a small profit ) . But to my mind now is the lull before the storm. As per my previous posts when you need to buy it there will be none available ( as we are starting to witness now ) .
My apologies for this and the prior post being at such a low level. SISpy and LGB motivated me to chart the recent numbers. Even I, the non-technical one, can see we are going down. I just wanted to post the OBVIOUS NUMBERS NAD TRENDS here.
Thank you very much for you very informative links and news post... you save the Kitcans ( new term/nomenclature ) many hours of digging through search engine data. thank you for you daily efforts....it adds a nice perspective to the site ....especially when looking back at previous posts .....THANK You very much
Hi Selby!! Unfortunately ( since I'm not from Haiti ) I don't qualify for that free brain surgery and my the looks of things it hasn't done "The Bretoners" too much good~~~~~~~~~~~~
I commend you on your choice of black gold as something to add to your portfolio...a few oil stocks have done rather will for my family and I recently...I have actually considered selling them and taking the profit...but the last time I made than move I went into Gold mining stocks and barely got out in time.
Welcome back dude!!!! Am on my way ta Sydney ta pick up the Globe+Mail ( I know---means nothin ta ya ) and then a stopover @ the Sheraton Casino ta see if I can break the losing streak....Ain't Vegas grrrrrreat!!!
Good point about the broker. I wonder if e-Schwab would even give me the time of day if I asked for stock certificates. Might be a good idea if I wish anything long term. Don't think one can do this with mutual funds --I guess I will have to rely on the reliability of Fidelity. They do seem more trustworthy than Schwab. Donald -- what would you do if you had Rydex URSA, and wanted to ride the downwave?
Private Investor
Normandy has hedged out 6 yrs,
Is one of our major producers,
Soon to list O/S
Cashed up to acquire bargains.
Chart looks fantastic.
Huge accumulation last 6 months.
NCM sold their 10% of Normandy to Tiger Fund who is reputed to be one of the majors, planing the coming silver squeeze.
It's always hard to take 'em down, but this week they either can't
take 'em up, or certainly can't keep 'em up. And that's not good.
Supply easily exceeds demand in this market, which is more
important than probably hits most investors at first blush. Gene Inger shares his stock market wisdom with us:
http://www.gold-eagle.com/gold_digest/inger1107.html
Now the question is how Japan holds up in all this turmoil. Japan's banking problems are well
known but with the Nikkei sliding below 16,000 there is a risk that the banks will have to
liquidate cross holdings of shares. It is estimated that the situation becomes critical below the
14,000 level in the Nikkei. If that were to happen then Japanese banks would be under severe
pressure which in turn could lead to renewed recession and a deepening of the downturn in
global equity markets. The irony is that the whole situation can eventually become circular. If
Japan's banking problems really accelerate to the downside, then they may be forced to sell
their U.S. treasurys - the very asset that investors are rushing to buy as a safe haven. There are
no easy answers, but the markets appears likely to price in the worst case scenario near term.
http://lp-llc.com/cents/jones.shtml
JTF: You have made reference in many of your posts to "powers that be". You mention in your 7:20 post "WE have the best Central Bank leader the U.S. has ever had...A.G.". And you have mentioned also "special interest groups".
My questions,if I may impose, by asking for an explanation of those references of, *WE* & *powers* & *groups*. I suggest that these references are in fact not of mystery. But, are very obvious and clearly defined as Corporate USofA. Not sinister, but, a Business consortium, of the best business minds of the USofA. The head of such consortium, is the Federal Reserve Board, ( Central Bank ) of the USofA. Mr. Greenspan.
The best power group,that should be available, to counter balance the enormous power and influence of the USofA Corporate consortium, is the Democratically elected officials, of the USofA, people's government.
I would appreciate your point of view, your take. Thanks, take care.
@Home - derivative risk changing -- no longer bull market
Nick ( @Aussie ) : Have a nice trip -- away from the markets for a while I hope. Did notice later your point about buying risk. If the derivatives markets risk is calculated on the last few years, as you say, the hedgers may be in for a big surprise! I had figured out that some big hedgers might be in trouble after last weeks episode, but never thought about mutual fund companies. Fidelity has rules limiting derivative risk to a certain percentage of the portfolio -- but I suspect that is a guidline, which could be exceeded inadvertently during times of turmoil.
What about Rydex URSA, and other funds like this where derivatives play a much larger part?
JohnK and others: If japan is anywhere near this desperate condition you describe ( and I agree that they are ) why are they not buying massive amounts of gold for yen as they could reverse the trade making an enormous profit in yen after a devaluation, also why are the worlds speculators not selling yen short for the same reasons?
Good Morning, All: Don't miss the article in Barrons - interview with the editor of The Bank Credit Analyst. Very ominous for US equity markets. He forecasts 0% growth in profits Dec 97 - Dec 98. This outfit has a great record and, I believe, is read and respected at the highest levels.
Iraq(Thousands rally in Baghdad in support of Saddam)
BAGHDAD, Iraq ( AP ) - Chanting "Down, Down, America!" thousands of
Iraqis demonstrated in Baghdad today to show support for Saddam Hussein
in his confrontation with the United States.
http://www.canoe.ca/WorldTicker/CANOE-wire.Iraq.html
6pak-Your 9:24. You ask a very complex question. I wish I knew more of the answer myself. I think our AG is a very powerful individual, and that the Federal Reserve, set up to be separate from the Federal Government, is still separate. AG is on the board of that bank of banks: The Bank of International Settlements, and he is part of the IMF in some way. I think in rality he answers more to other bankers around the world, than he does to anyone in the USA. This may not be as bad as it seems - though it will not always be in our best interests. I suspect that there is a circle of power outside world governments what consists of banking entities, that control the world's currencies in a general way -- the big picture so to speak.
I doubt that congressmen in this country would have much success at controlling our own Federal Reserve.
Despite the way this sounds -- conspiratorial, isn't it! -- there is one good aspect of this. Think what our shortsighted congressmen would do if they got complete control of the US money supply! We have enough trouble with debt as it is!
You do have one valid point that I think you are making -- Does the American taxpayer have a say in how our money is spent? Should the USA be the world's currency with all of the associated burdens on the US dollar? I have no answer to that, and I think AG himself would like to have a basket of currencies to replace the dollar if he could instead. I'm sure he is well aware of what happened to the pound sterling in the 30's.
The problem is that noone wants to put up that streetlight at the intersection until someone dies. Noone is going to actively choose a new world currency until the dollar falters. I don't think the ECU/EMU will be the answer. George Soros doesn't think so. Will he go after that one too? Will be interesting to see if he does.
Noone is going to regulate the world-wide unregulated OTC derivatives trading. That is part of human nature, and cannot be resolved unless we had a world dictator fixing our problems for us. That would be worse, I think.
This wasn't much of answer, but I hope it helps. I think we just hunker down and wait for the storm to blow over. I am open to ideas if you have them -- but we are talking about changing the world government. Nearly impossible to change those policies - or the lack of them.
Thailand (IMF stalls on bailout-Cdn banks exposed)
BANGKOK -- The troubled Thai economy was officially declared in free fall Friday after the beleaguered government
admitted the staggering problems facing its financial institutions and currency would push the economy into a recession this year.
http://www.canoe.ca/MoneyNews/nov8_imfstallso.html
Nomercy: I will agree with all your observations based upon the analysis-report of Prudential Securities. Their statement below that It is estimated that the situation becomes critical below the 14,000 level in the Nikkei. IS A DAY LATE AND A DOLLAR SHORT! This statement came from the paragraph:
Now the question is how Japan holds up in all this turmoil. Japan's banking problems are well known but with the Nikkei sliding below 16,000 there is a risk that the banks will have to liquidate cross holdings of shares. It is estimated that the situation becomes critical below the 14,000 level in the Nikkei.
In actuality the crucial level at which the Japanese Banking System becomes to come unraveled is a Nikkei of 17000 -- as ascertained by the Bank of International Settlements ( BIS ) about three years ago. And as we all know this critical level was broken this past week... with expected devastating market action in the Land of the SETTING SUN.
Prudentials Nikkei 14000 estimate is typical broker subterfuge to defuse a bad situation - with the express purpose to divert attention from an immediately bad situation. Ohhh, the 14000 Nikkei definitely has significance... BUT NOT THAT STATED BY THE BROKERAGE HOUSE. The Nikkei 14000 is the low established in the third quarter of 1992 of their long-running 8-year BEAR MARKET which began in January 1990.
It is Nikkei 17000 ( not 14000 ) which puts the Japanese Banking System below the highly critical 8% equity to loan ratio. Its been there and is rapidly HEADIN SOUTH toward 16000. If the 14000 level does NOT hold, technically we are looking at 10000 established in 1984. Based upon the following study by ORACLE, methinks the prospects of retesting 14000 are high - INDEED VERY HIGH -- as the Land of the SETTING SUN will have the help of all South East Asia in achieving this dubious feat:
http://www.gold-eagle.com/gold_digest/oracle1106.html
6pak -- This is an off topic thought, but here it goes. The people of Massachusetts have gotten a lesson in Democracy versus a Republican form of government. The issue? The death penalty. Flawed though I feel the proposed legislation was ( I don't believe in specific protected classes of murder victims, murder is murder. ) , it was overwhelmingly supported by the electorate of the state. Trouble was, the elected representatives felt differently. Although, the representatives went along with the charade in the beginning by voting for the bill in the statehouse, in the end, the vote of one man killed the bill. His reason? His conscience. A curious side note. This representative was given police protection because of his vote. I wonder, would the proletariat rate that level of protection?
The lesson here is simple, but many will not learn it. Our elected representatives are in the statehouse to do OUR bidding. Not their bidding on how they think we should be governed. In a Democracy ( Mob rule ) , you elect leaders to make decisions FOR you. In a Constitutional Republic, you elect leaders to REPRESENT you. A small distinction, but a huge difference.
Newcrest is well hedged with forward sales of 3.6million ounces at $A600/oz ( 7 years ) but it has had problems at it's Telfer mine and Newcrest's production costs are high. I read that costs at Telfer were $A582/oz. Their web site is at
http://www.newcrest.com.au/NMLHOME.HTM Resolute Samantha have cash costs of $A164 at it's Chalice Mine and Resolute's prodn costs for the last quarter were $A300/oz ( about US$210 )
http://resolute-ltd.com.au/ and Sons of Gwalia is hedged for 10 years at $A638/oz
http://www.sog.com.au/ Anyone for Devex?
http://www.devex.com.au/ ....another low cost producer with a good hedge book
Selby: If you have not had a chance to look at the post yesterday by John K. it is an excellent read. I ain't much on formality, yesterday you and I were in a dialog about financials, Japan, gold, etc. My conversation was mostly comical ( to me at least ) and never got point specific as to your very specific questions and commentary.
Color me stupid. The post is I believe an exhaustive and well written post on the answers to much of what I think you were looking for, but I was unable to provide.
I am soaked in Tequila, listening to Enigma, wrapped in a blanket.
JTF: Seeing as you mentioned watching Japan more closely, I took a look at its national horoscope. You may want to consider the following: The major outer planets are of course a background situation, and we can guess what that background signifies as possibility and actuality. However, Mars is interesting to watch as it moves fairly quickly, and its aspects very often coincide with short-term triggers for major background events. In this light, transiting Mars will square ( ordinarily stressful 90 degree angle ) Japan's Mercury in the 2nd House on November 24, 25 ( Mon & Tues ) . Mars will be at 11 Capricorn, with Japan's Natal Mercury at 11 Aries. Mars will also be moving into opposition with the Moon in the Yen's First Trade futures chart at 13 Cancer. Coincidentally with that, Mars also squares NYSE Midheaven ( 10.49 Aries ) as well. And Mars also will be moving into opposition with USA's Sun ( 13 Cancer ) and, as extra added spice, conjuncting OPEC's Saturn.
Mars also conjuncts the Comex Gold Futures Contract First Trade chart Sun, and Sugar's first trade chart Sun ( though each "born" 5 years apart, they share the same Sun position - 11 Capricorn ) . We have, in the past, discussed the correlation with moves in Sugar and moves in Gold. The gently bulling sugar price currently may be a portent of something ahead for gold. There are a few other coincidences from this fleeting, but interesting, Mars position, but these are enough to ponder. There's potentially something for everyone here. Besides, I wouldn't want to be accused of covering all bets so that "one of them" comes "true." This all being wrapped up in the ongoing weakness in the stockmarket, which may be ready to come back and test 850 on the S&P 500. If this general level does not hold, it appears that a new channel line will come into play at the 760's level by January. So all in all, a case can be made that the week of Nov 24 may prove a critical time to watch.
Talking about oil and gold, I purchased a stock call Environmental Remediation Holding Company, ERHC a while back. Jay Taylor's Gold & Goldstocks newsletter brought it to my attention. They are an interesting company involved with recycling, oil, gas. Take a peek, you may find a stock you like in ERHC.
The reason is that the NIPPONESE do not have enough gold as it is.... they have less gold on hand than any other major nation ( calculated on a percentage basis ) .
In addition to this troubling situation they are , and have been for along time , awash in US Dollars...they are caught between a rock and a hard place.
If you check some of my earlier posts you will find that I have been SCREAMing about the fact that a very large number of Jap Banks are in fact BANKRUPT!!!!
The wierd thing is their government and banking regulations do not require the banks to recognize bad loans ...they can keep a nonperforming loan on the books literally forever...they do not play by the same rules as the rest of the world. Many of the bad loans were made to Yakuza gourps and were collaterialized with Stocks at the top of the market...the stocks were placed in safety deposit boxes... the loans were made...the YAKUZA transfered the loan proceeds out of the country...went back to the bank and the loan officers that granted the loan and politely requested that the securites put up for the asset back loaned be returned to them in exchange for the yakuza not taking the life of the loan officer or his family. The securities came out of the safety deposit boxes and were handed over to the Yakuza... the yakuza promptly dumped the securities back on the market with the help a afew major trading houses...they then defaulted on the loans... over .and .....over this ....scam was played out in literally hundreds of smaller banks , and credit co-ops throughout Japan....The lenders failed one by one and the tradional insurance program was over burdened by the failures...the major banks were forced to take over these smaller institutions... and a convaluted scheme was developed to consolidate the state railroads and sell of excise land and use the capitol to shore up the losses of the banks......only the sale of this land helped to burst the real estate bubble...and corrupt politicains demanded some of the excise land go to their pet projects at way below market value...further bring down real estate values... and the money they did raise was no where near enough to cover the huge losses that occured during the nationwide Yakuza "Bank bust Out". This scam was very similiar to the S&L "bust out "the US organized crime groups pulled off in the Us...the only difference is the required japanese bailout will make the taxpayers bailout look like peanuts...and guess what the JAPANESE TAX payors told their government to GO TO HELL... they refused to fund a bail out....So here we are Bankrupt banks...money spent offshore....real estate and others assets defalting at greater than 11% , banks holding notes with out collaterial that had been on the books of banks that went bust...oh yeah and they have very little gold ... but an entire city block of US Dollars and scary bond...not a pretty picture!
JTF: The Constitution REQUIRES that our congressmen have control of the money supply. That would not be a problem if the other requirement, that it be gold and silver, were adhered to.
I agree. These shares have been Bre-X'd etc for the whole year. I've had to sell some recently dispite the lows and have noticed that in about half of my orders the shares were bought with no drop in the bid.
The one company I most regreted selling was a UK gold co, named Arain.
I sold a bunch and the thing went up. I'm hoping nothing much will happen for a month and a day. The primary reason I've done my tax loss selling now is so that I can buy any shares back in Dec while ( hopefully )
tax loss selling by the "other guy" is still going on.
PANDA. You are correct in distinguishing democracy from constitutional republicanism. You have it backwards though. In a democracy, "mob rule" as you put it, the raw will of the people is king. A "representative" in a democracy would have no choice but to vote as the majority of his constituents desired ( how you determine this desire is another problem ) . The purest form of democracy would be something like what Perot advocated a few years ago--large electronic town meetings where voters decided issues directly, bypassing Congress.
Fortunately, we are not a democracy but a constitutional republic. In a constitutional republic, the law is king ( the phrase "the law is king" was a rallying cry of the American Revolution ) . Representatives are elected based on character and their stands on issues. If they prove untrustworthy ( e.g., said one thing to get elected but did another once they got in office ) they can be voted out. But they are never under any obligation to rule by opinion poll. In fact, I would hope that a representative faced with the death penalty issue in a state where most people were opposed to capital punishment would not rule by opinion poll. He would be doing something objectively wrong. Similarly, I would hope that a representative in a country where the popular sentiment favored treating Jews as subhuman ( does Nazi Germany ring a bell? ) would have the courage to cast his votes contrary to the will of the mob.
Again, the law, i.e., objective ethics and the constitution derived from the same, should be king. An errant, tyrannous representative cana and should be voted out of office. It is a sad comment on our times that often they are not.
Milhouse: Thanks for the Princeton Economics update. Martin Armstrong's forecasts have been on the money dating back his May speech summary was posted on Gold-Eagle. Its hard to believe that gold could drop to $250 or less but recent action suggests that you should not "fight the Fed". You can forecast the stock market volatility by how hard "somebody" jumps on the gold price before the open of the general stock market. On the other hand its hard to believe that we will have the opportunity to buy gold at $229-$250. Oh Baby!!!! We're gonna get rich!!!
Carl: I read that Barron's article. He seemed to be nervous about calling another 1929 in exact words but he described a 1929 type situation throughout the entire article.
JTF: I own Rydex Ursa and they are held in street name with my broker, Waterhouse Securities, now a division of Bank of Montreal. Lots of things to worry about. Does the corporate structure isolate Waterhouse from the bank? Does Rydex use derivatives? Will the derivatives pay off when I am ready to cash in? Who is behind the derivatives? I don't know but I should find out.
LGB: I'm asking this question for the third time. Excuse me if I missed your reply. I have some cash which is anxious to jump back on this Dow bull and its 30% returns. I am a long-term investor who recently sold out of the stock market:
The Japanese mutual funds have lost more than 90% of their holdings in the past few years. I have heard from you and CNBC and SISpy ( you remember him - the 9-digit financial wizard/Bob Brinker regurgitator ) , and many other mainstream experts that U.S. investors will NOT sell their retirement stock holdings for ANY reason. HOW DO THE U.S. INVESTORS ( e.g., SISpy ) DIFFER FROM THE JAPANESE INVESTORS? Thanks for your imminent reply.
Mooney: I can't access the Kitco Stock site. What is the new address? Thanks.
Mr. Bundy.....uh.....Van Gundy. Everyone has an excuse. They are like A**holes. One game IS only one game. I'm glad you can add because the team you coached last night could only 'add' to 94 while MY team 'added' to 99.........DOH! It was FANtastic, don't ya' think? "Showtime" took a bite outta your rear. OUCH! See you in the playoffs.....if you make it there.........
Armstrong forecast of $250 gold only makes sense if you believe his projection that the dollar will soar into the stratosphere. You can't have one without the other.
A soaring dollar implies a vast intensification of global deflationary pressures. In fact it probably would trigger a global depression such as last occurred during the 1930s. That is why I see very little chance Armstong's projection will come to pass. The global monetary spigots will be unleashed full blast to head such a scenario off at the pass. And if policy makers really became concerned about deflation and depression, they probably would fire the gold plunge team and hire a gold skyrocket team.
All: Where can I get data about DJ 1987 crash - as detailed, as possible, with volumes. Any reference to URL, or may be a file in any reasonable format, posted here. Thankx in advance.
JTF @ 9:56: COMPLEX SUBJECT, to be sure. My take on the subject is less complex. Complex situations, are usually manufactured, to confuse a relatively simple matter. As in Central Bank, to serve the government contract, and agenda, or to serve the interests of the Central Bank, via, the use of deception, relating to a government contracted right. Yes, the Federal Reserve Corporation has a right to protect their corporate interest. But, the government also has a right, to protect the people's rights. Here is my take on a complex subject.
A Corporation is an artificial "being" given life, and created in law, to afford this artificial "being", a status of rights and privileges, as given to an individual citizen.
A Consortium of Corporations ( "beings" ) is a gang. This gang of artificial "beings", should be treated as any other gang that would be active in your community, such as Hell's Angels. Give these gangs, the same respect, and consideration afforded any other citizen. But, be conscious of the gangs potential threat, to the peace and harmony of your community. A gang is formed to protect, and service each other, or to take charge of a given situation, to advance the interests of a gang.
I suggest, the Central Banker's are active in world and community government, to advance their interests.This gang expects your community of individual citizens, to also advance their interests, and if you are not servicing the gang, you will be punished.
Gold, is the tool, that may put a stop, to these artificial "beings" from continuing to inflict their agenda, on individuals and communities rights and privileges. Yes, it will take strong government, ( people's gang ) to put a stop to this present economic madness.
Responding to your 20:00 post on the 7th ...Did you consider what happens if the value of some of these mining companies continue to fall... gold price continues to drop... mines are shutter...mining companies will be forced into BK filings ...stock holders will receive a big fat zero...... big boys will by up remaining assets at pennies on the dollar....don't think it will happen...check your history... some of the most profitable mines in North America were purchased not from the original claim holders , but from the counties for back real estate taxes, and from other creditors...Some of these questionable takings saw many years of legal battles... the ultimate winner ofcourse was the well capitalized big boys.
Royal Precious Metal Funds.John Embry-There was some notable improvement in the precious metals markets in late September as silver rallied sharply through recent highs and reached $5.30/oz., up over 25% from the year's low. Gold, perhaps taking its lead from silver, also enjoyed a spirited rally late in the month rising from the low $320's to $337/oz.
The *TSE Gold sub-index was ahead by 10.5%, reducing its year-to-date decline to 19.5%. The Royal Precious Metals Fund was ahead by 6.2% during the month, reducing its year-to-date decline to 12.2%. The absence in the portfolio of a number of lower quality large cap gold stocks that paced the rally, contributed to the underperformance during the month.
The revival in interest in both gold and silver was heartening after a lengthy period of relentless weakness. As we have discussed previously with respect to gold, the threat of massive central bank sales has emboldened short selling and panicked certain producers and the resultant flood of borrowed metal into the market overwhelmed what is an extremely encouraging supply-demand picture. Worldwide gold demand rose 17% in the first quarter and 11% in the second, while mine production stagnated. Thus the well-advertised gap between demand and supply continued to widen.
We will continuing to focus on good quality gold stocks rather than high cost producers, whose future is in jeopardy if the gold price does not rise in the near term.
I do not understand the use of "Proletariat", in regards to the State killing it's citizen's.
On that note, of the State killing a citizen, for killing another citizen, is a tough issue. China, is killing her citizen's, and selling these condemned person's organs. Big money in this form of commerce. What ever it takes, to make a buck eh!
It is alleged, that China, will have blood tests done, and if there is a match, you can purchase the organ transplant service, via, person's in New York City...............Take care.
Wild days on Wall Atreet Become Trial by Fire for Online Brokerages
Wall Street last week provided the first real stress test for the nascent trading business, as days of record volume led to record traffic and often epic delays.
"In a small way," said Yahoo finance producer Mike Riley, "finance sites experienced what the exchanges experienced in 1987 with the crash, where the system could not handle the order flow."
then agian, countered one analyst, "the ( online trading ) system didn't crash.'
The record volume in the markets last Monday and Tuesday Oct 27 and 28 --when the Dow Jones Industrial Average dove 554 points only to shoot back up the next day as a record volume of 1 billion shares were traded --surprised both Wall Street and Web Street.
much of the publicity following Monday and Tuesday focused on rebukes of online brokerages. few, however, caught the kind of flak fired at E*Trade.
Ironically, that site had spent 70 hours the previous weekend refining and adding system capacity, said E*Trade spokesman tin Ryan. two days earlier, E*Trade hosted a record 8000 simultaneous users and proccessed 50,000 trades, double its normal volume, but the refinements weren't enough. After beginning the week claiming the site performed well , E*Trade executives were more apologetic by week's end and vowed to increase capacity.
"Who would ever have predicted so much volume?" said Ryan. "Who would have predicted this?"
Answer: Kitcoite PrivateInvestor on the previous Saturday & Sunday!!!!!
Will Monday bring another electronic log jam at the online houses...will mutual funds take their phones of the hook because they are fully invested and need time to raise cash to meet redemptions??
Japanese bank exposure to SE Asia $118 billions according to BIS
Japanese banks had external claims of US$138.3
billion to developing countries last year, with the
lion's share - about $118.6 billion - in turmoil-hit
Asian markets, according to the Bank for
International Settlements.
Economists said there was a danger Japanese
banks could be hit by a wave of corporate defaults.
Strategists yesterday raised their forecasts for
continued yen weakness, predicting the dollar could
trade between 125 and 130 yen before there was
any prospect of the yen strengthening.
The slide was further fuelled by the authorities
keeping silence on the exchange rate, with Finance
Minister Hiroshi Mitsuzuka saying the government
would only keep monitoring movements in foreign
exchange rates.
In London trade, the dollar settled back slightly to
123.51 yen, compared with 123.02 on Thursday.
The deutschemark benefited even more than the
dollar from the yen's weakness, rising to a
six-month high against the yen, and a five-month
peak against the dollar.
"The mark is seen as safer than the dollar," Rob
Hayward, an economic adviser at Bank of
America, said.
Analysts said there was still "extreme pessimism"
towards the yen.
"In London rhetoric, the market is long to its gills in
dollar-yen," an analyst said. "But the big obstacle to
further yen weakness is the market itself."
PrivateInvester. The market soared 90 points in 20 minutes and the ticks were +342 at Fridays close. Take a look at the Asian markets Sunday evening, if they continue to go down, who knows. It would take a person with a crystal ball to know whats going to happen Monday.
I think there are major forces at work in the markets that we can only guess at, Nick & G.SC. have the best "handle" on it IMHO.
A United Nations mission left Baghdad yesterday after apparently failing to
end the Iraqi ban on US weapons inspectors. This raised the spectre of
heightened confrontation with the UN Security Council and additional UN
sanctions on Iraq.
President Bill Clinton said he saw no reason to hope that Iraq's President
Saddam Hussein would back down in his stand-off with the UN over arms
inspections.
Comments from both Mr Clinton and other US officials suggested that military
action might become inevitable soon, but diplomatic procedures had some
way to run.
Baghdad said yesterday it was ready for "constructive dialogue" to resolve the
crisis through further discussions in New York. The US has insisted that
diplomatic attempts to resolve the stand-off not be turned into negotiations,
but the State Department yesterday said it would grant a visa to Tariq Aziz,
Iraqi deputy prime minister, to allow him to speak to UN officials in New
York.
As UN envoys, led by Algerian diplomat Lakhdar Brahimi, were heading
home from Baghdad, Iraq banned US weapons monitors on the UN special
commission charged with disarming Iraq ( UNSCOM ) for a fifth day.
The Iraqi ban was sparked by a Security Council threat to impose a travel ban
on Iraqi officials. But Mr Saddam's intransigence may speed up the
implementation of the Security Council threat. UN officials said yesterday they
expected no action until the secretary general supplied an authoritative report
on Monday on the Baghdad talks.
But one option being canvassed is a resolution to apply immediately the
overseas travel ban on senior Iraqi military and intelligence officers, to which
Russia, France and China objected before the row over Americans in the
monitoring teams developed.
Some diplomats said last night that President Saddam's obduracy made it
unlikely that Moscow and Beijing now would oppose the ban, weak though it
might be as a response to the crisis. French support is reported to have been
assured.
William Cohen, the US defence secretary, said earlier that the UN should be
given an opportunity to decide whether to intensify economic sanctions or
authorise military action. "We can have greater economic sanctions, there are
a variety of things that can be done," said Mr Cohen, "There are military
options as well, but we at least ought to give the ( UN ) inspectors a chance to
come back. . . and make a recommendation."
In Baghdad, Mr Aziz said Iraq was extending the deadline for the expulsion of
US nationals on UNSCOM, but he again warned the UN not to use US spy
planes during the crisis. A Pentagon official, meanwhile, warned Iraq that any
attempt to shoot down a UN surveillance aircraft would be considered an act
of war and incur retaliation.
Mr Aziz made clear Iraq was seeking changes in the make-up of the UN
special commission. Iraq was not seeking a confrontation with the UN
Security Council, he said, but it had reached the conclusion that UNSCOM
was being used by the US to maintain the sanctions against Iraq
Greenspan (a debate has emerged over whether our economies are moving towards price deflation,
Alan Greenspan, the US Federal Reserve chairman, yesterday chided
European countries for having inadequate statistics for measuring inflation, and
warned of the dangers this posed for the management of the European single
currency.
Few European countries publish regular and punctual monthly data, which
means economists are left with a disjointed picture of growth and inflation
across the continent as a whole.
Mr Greenspan told academics and bankers in Frankfurt that European
countries had failed to adjust inflation for new technologies and services and
for improvements in the quality of fast-changing goods such as computers.
"For a region with a single monetary policy, a single, consistently estimated
measure of inflation is necessary to gauge the region's economic
performance...however as it now stands, the harmonised measures do not
contain a broad measure of consumer services," he said.
Mr Greenspan admitted that US measures of consumer prices probably
mis-stated US inflation. But he said European Union measures lagged behind
the US.
"As monetary union proceeds, then, it would be to the advantage of monetary
authorities in the euro area to have a consistent measure of inflation defined
over a broad basket of goods and services that is measured according to
established statistical methods."
Mr Greenspan said being able to measure prices accurately had taken on
greater significance in the present low inflation environment. "Biases of a few
tenths in annual inflation rates do not matter when inflation is high. They do
matter when, as now, a debate has emerged over whether our economies are
moving towards price deflation," he said.
6pak: Saw your 12:16 post. I would not have described the world's banks as a gang - but there is truth to the analogy. I can imagine the worlds economic future decided behind closed doors. Everyone is after their own interests, and if you don't complain, you certainly won't be heard. How would you go about organizing the American people to complain that our taxpayer dollars are being misused, and that a new world currency must be devised before we ( and the rest of the world ) go bankrupt? If you are not carefull, all of those dollars might come back all at once! We don't have a lot of time left - for example, the turmoil in SE Asia was due in part to instability of the dollar ( and derivative trading ) .
Secondly, the same thing needs to be done with the world-wide unregulated OTC derivatives trading, a potentially far more dangerous problem than the US dollar problem.
I'm all ears -- what do you suggest?
If you thought the south east Asian currency crisis shook global markets, just wait to see what the Korean crisis might do The Korean economy is worth $500bn a year, broadly as much as the south east Asian developing economies put together.
The dollar touched a five-month low against the D-Mark yesterday, dragged
down by the world's stock markets.
The US currency is vulnerable to equity slides chiefly because they can
prompt large outflows of foreign capital from Wall Street. The D-Mark and
Swiss franc benefit as perceived safe havens.
The yen fell to six-month lows against the dollar and D-Mark, hit by the slide
in the Nikkei stock index and in other Asian markets. The turbulence in Korea
was seen to provide a new threat to the weak Japanese economy.
Yesterday's drop in the Korean won, despite heavy intervention by the central
bank, raised fears that one of Japan's main export rivals might be forced into a
large devaluation. The Brazilian real's peg to the US dollar came under
renewed attack.
The market shrugged off far stronger than expected US jobs and earnings
data in the October non-farm payrolls report. However, Nick Parsons,
currency strategist at Paribas Capital Markets in London, said the figures
raised the prospect that the Federal Reserve might increase interest rates too
late. Given the stock market jitters, almost no one expects the Fed to tighten
policy after its open market committee meeting on Wednesday.
The dollar fell 1.5 pfennigs against the D-Mark to close in London at
DM1.706. It rose 0.8 against the yen to 123.9. In late US trading, buoyed
by a recovering Wall Street, it broke 124. The D-Mark jumped 1.11 to
72.62.
The pound fell 2.1 pfennigs to DM2.890.
If you thought the south east Asian currency crisis shook global
markets, just wait to see what the Korean crisis might do. The Korean
economy is worth $500bn a year, broadly as much as the south east
Asian developing economies put together. And the won has begun
sliding faster. It has so far dropped just 9 per cent since July 1,
compared with a 58 per cent fall in the Thai baht. A bigger devaluation
could ripple around the world, and certainly as far as Japan, many of
whose exports compete with those of Korea. Mr Parsons said that
problems in Korea would hit the world's stock markets, prompt new
slides in south east Asian currencies and rattle the Hong Kong dollar's
currency peg. "We are very worried about the situation there," he said.
The won dropped to 975 against the dollar yesterday, and seems rapidly
heading for the 1,000-level that the authorities have designated as their line in
the sand. The Korean government is desperate to prevent a freefall in the won
at least until after next month's presidential election. It is using currency
controls, and the central bank is intervening heavily, but some currency
strategists believe that the bank's net foreign exchange reserves have dropped
well below $30bn. Korea cannot easily raise interest rates because the
country's chaebol have heavy borrowings.
Desmond Lachman, head of emerging markets research at Salomon Brothers
in New York, said Korea's current account deficit and foreign debt levels
were not overly worrying. However, the problems came from elsewhere.
"What are reasons for concern are the state of the banks, the amount of short
term international debt, and the level of reserves," he said.
George Cole: I can't see the Yen getting stronger against the dollar anytime soon. The trend of a stronger dollar against the Yen has been in place for some time and recent currency events in S.E. Asia should only serve to accelerate the trend. The Japanese are pretty slow when it comes to coming clean about their financial problems, so we may get a slow motion crash of their currency. We ( i.e. the $ ) had a Yen in the 220 range not too many years ago. Why would a Yen in the 150-180 range cause the world financial system to come unglued in 1997 or 1998?
6pak: Are you referring to the idea of encouraging the average American to buy gold? This might be the only thing at this late stage that would be guaranteed to work. The gold would be needed as a cushion if the worst does happen anyway. That is what virtually everyone on this web site is after -- a cushion so that there will be something left if paper collapses. If the government tries to confiscate the gold, the trick would be to hold on to it until the crisis is over, otherwise the gold would be of no value to anyone.
Rockwell Semiconductor Systems Inc. said last week that it has proposed a new technology that defines a standard for 1-Mbps data transmission over ordinary cooper phone lines.
The proposed standard, called Consumer Digital Subscriber Line ( CDSL ) , is a simplified, lower-speed variant of DSL broadband technology. Rockwell said that CDSL, which it plans to submit to the International Telecommunications Union ( ITU ) for consideration, will be much less expensive for phone companies to deploy than other DSL technologies, because it requires no modification to the wiring in customers' homes.
INTERNATIONAL MONETARY SYSTEM BEYOND 2003 - Orpailleur
The "flight to quality" into the U.S. induced such a tremendous
rise in the US$ that those currencies pegged to the greenback
came under pressure. The underlying assets in Asia and South
America became overvalued. They are not worth as much as
implied by the present value of the US$. It is important to
understand that the flight from the Euro into the US$ is the first
and main reason for the present currency crisis in Asia:
http://www.gold-eagle.com/gold_digest/orpailleur1103.html
Dave, sorry I didn't reply more quickly on Japan retirement question. I'm not an expert on the Japanese situation, so I can only speculate. However, I do know that Japan's Nikkei ( and real estate market ) turly were in a bubble situation and multiple of ours re valuation. Further, the average Joe on the street was using leveraged positions and all kinds of nonsense. I'm not aware of mass bail out from their retirement plans for those who did NOT have to cover their leveraged positions, but I don't have the statistics, just relying on what I have read in the WSJ and such. Now for those foolish enough to be speculating.... they had to cover. Also the mindset in Japan as you know, is to all move as a herd. Moreso than in our marketlace. Finally, the investor here shows no sign of concern at the events of the 27th even though it was wedly precicted that he would bail at the first sign of a panic. Two down stops and a market closure should have done the trick. It didn't. Not only did it NOT panic the little guy, they seemed entirely unconcerned, as if it had nothing to do with them! On an anecdotal level, I talked to many people that day. No one expressed even a thought of selling, 2 guy's bought the close.
Nick, let's catch us some Blues mate! AS to crowing like a Peacock, it's the onl;y recognition I'll even get on THSI forum dammit! Besides, reforming mean's not making personal insults to folks.
Donald: Your 11:02. I know Rydex Ursa uses derivatives. As I recall it is the only mutual fund that is allowed to use more than x% of its assets in derivative and similar type trades, where the maximum x% is set for all other mutual funds, I believe. You should get the prospectus, and see how they do it. Some of it may be short selling too. In 1987, derivative trading was used as insurance for a variety of funds, but during the crash the derivative system failed to work properly and people lost alot of money. Rydex URSA must be doing something similar to this, but focuses 100% on the insurance part. I do not believe that all of the bugs have been worked out, so that you can't believe anyone who says that derivative-based portfolio insurance is foolproof. My take on this is that everything has degrees of safety, in the order of
1 ) precious metals
2 ) gold-backed foreign currencies
3 ) US or strong foreign short-term treasuries
4 ) stock certificates
5 ) mutual funds
6 ) derivatives, expecially for hedging other investments
S.I. Spy. I find myself a little skeptical of your gains, thouh certainly they seem far more plausible than what I have read on this site lately.
HepCat, your post yesterday ar 18:48 was an all time classic! You are sir,a genious and I well understand your frustration with this site. You are casting your pearls before swine. One tiny criticism if I might. I do believe that was one of the most insightful and accurate posts I've ever seen here. However, you did omit just a handful of important Kitco mentality rules for beginners;
11 ) Technical analysis based on Lunar Eclipses and Tarot readings are far superior to analysis based on economic fundamentals. The validity of analysis is inversely proportional to it's success rate.
12 ) Gold investors believe in extremely conservative investment strategy and security for the future. This is why they constantly discuss their purchases of Options and futures.
13 ) Wealth made during this Bull market is not real wealth. Poverty created by Gold investing IS real wealth.
14 ) Goldbug analysts are so clever, that they can make money on S & P Puts in a rising market.
15 ) A Falling DOW Means a Bear market
16 ) A rising DOW means a Bear market.
17 ) Low volume in equities means a Bear market.
18 ) High volume in equities means a Bear market.
19 ) A 1000% increase in the DOW over 15 years is actually a Bear market, that is too stupid to know it's a Bear market.
20 ) All coin dealers are perpetually out of Gold coins and now make their living selling Cappucino.
21 ) Homes, Cars, Durable Goods, Bonds, Cash, and yes, even precious metals are illusory and will disappear overnight in a magic "poof" if said goods were purchased with those worthless "paper" profits from stocks.
22 ) Technical analysts who are always wrong are exhibiting brilliant genius and "artistry" in their incredible market insights, especially if they sell Newsletters to their impoverished followers.
23 ) Per # 22 above, a sustained record of accurate market calls is worthy of disdain, disrespect, and outright contempt. Anyone making such accurate market calls obviously knows nothing, and is a complete ignorant fool. ( And B.S. artist )
24 ) An 80% loss of net worth due to Gold investments, is morally superior to an 800% gain in equities.
25 ) There is no such thing as a "free" market when stocks fall and Gold rises.
26 ) In a "free" market, stocks fall and Gold rises.
27 ) Y2K, and El Nino are far more serious than all the wars, disasters, financial and political crises that have beset humanity since the industrial revolution.
28 ) Jewish bankers control all world finance and manipulate all markets. Also involved in this conspiracy, is the Illuminati, Soros, the Rockafellers, Rothschild's evil offspring, the second gunman on the grassy knoll, the Tri-lateral commission, Aliens, and all One worlders. These evil conspirators have controlled all markets for 100's of years.
29 ) The conspirators above will somehow fail to keep their conspiracies going, beginning next week.
30 ) Justice will soon return to the land, Nuclear war and the Apocalypse are about to begin. All stocks will crash to zero, a worldwide depression will destroy all paper wealth, disastors will destroy humanity and all socio/political entites and GoldBugs will then be happy with this new and "Perfect" world they have craved for so long.
Check my posts just prior to the final hour of trading on Friday ...and at the close ...that final hour move was not the market soaring... it was pure market manipulation in hopes of bringing the point loss below 100 for the day...this was done exclusively for the benefit of Ma & Pa ignorant average buy & Hold investor so that they would feel comfortable Friday nite and over the weekend ...and in hopes of them being off to their wage slave job by the time it hits the fan again on Monday.
Given the uncertainty that clouds global stock markets, investors are looking to avoid risk. Consequently, profit-taking by institutional investors and the unwillingness of US funds to buy dollars and sell yen to exploit the interest rate gap between the US and Japan ( carry trade ) should continue to fuel dollar selling.
On the other hand, a sharp rise in the yen is also unlikely, due to mounting concerns about the Japanese financial system, which has been exacerbated by the de facto bankruptcy of Sanyo Securities. And while
the fiscal reform bill is under deliberation at last, we don't think the government*s second economic stimulus package include strong fiscal measures to prop up the economy. As such, the dollar should remain fairly strong for now.
Private Investor: How does this Rockwell system get 1megabit/sec on a copper line? Twisted pair can't be good for more that 100khz or so without very expensive boosting hardware, etc. Maybe LGB knows -- Your territory LGB? Are you a communications engineer? I know microwaves and BNC/TNC cable stuff but not this. My information theory is rusty -- I don't think compression algorithms can do this.
JTF: The distinct lack of vision on the part of institutions like the WGC is remarkable. It would serve the industry, and her many established mining corporations, to fork over a few paltry million for an educational ( propaganda - and I mean it in the nicest way ) campaign targeted to the public in general and mutual fund investors in particular. Not an "end of the world" approach, but rather a stating of the opposite case, the potentials inherent in this stage of a long cycle, and the traditional philosophy behind gold as money and paper as fiduciary media. This could be done in a coherent, enlightening manner, and would probably be very bizarre and controversial to many who are not aware of the essentials of monetary theory and history. With support from bullion dealers, an ad campaign, and prepared literature, there would be at least an effort made to allow people the room to take protective measures if convinced, and the gold industry, as the producer of a product, would not just be rolling over dead. The marketing vision of this industry is shameful. I could round up a handful of people from this site alone and create a campaign. I really don't understand how such a powerful industry force is so impotent, or negligent, promotionwise.
Afraid I can't help on that one. My area of expertise is in high frequency RF. C band and above. Like you, I've been out of school too long and too many breakthroughs since then.
@Home the Fed is Independent from the US Government
Donald: your 10:42. Congress may have control over the money supply - on paper at least - but I was under the impression that the Federal Reserve was an independently chartered organization, independent of the Federal government. I think JFK tried to get the government to get around this, but he was assassinated before anything came of it -- I think someone posted some good info on what Kennedy actually tried to do. You wonder if JFK stepped on too many behind the scenes toes. That and the CIA/drug connection.
By the way, would you want our tax and spend and tax congress to have total control of the money supply? I think I would rather have the current system - at least as long as AG is at the head. It is a tradeoff not to know if the best interests of the American public are always follow, I admit.
The reason the WGC is incapable of doing an effective marketing campaign is that they are controlled by a board that was mostly hand picked by the Rothschild's & Rockafellers & world CB's to keep Gold depressed. Also, Mars is in Uranus and they were "hexed" by a Carribean practicioner of VooDoo.
JFK becomes President. ( 1960 )
JFK issues Executive Order # 11.110 ( 1963 ) to allow Treasury to issue U.S. Notes costing little to taxpayers.
JFK is killed.
LBJ becomes President - rescinds Kennedys Executive Order.
U.S. Notes withdrawn and replaced with Federal Reserve Notes.
JTF: The Federal Reserve Bank is an independent PRIVATE company whose shareholders of those owners of the 12 Regional Reserve banks.
I've had discussions with Federal Lawyers regarding this and have won the argument every time. Try this: Go to your local telephone directory under government listings. There U will find Federal agencies including DPA, Postal Service, Social Secuity, etc. However, U will not find the Federal Reserve. REASON: It is PRIVATE. U will find it in the WHITE PAGES but not the government listing.
The Federal Reserve is neither FEDERAL nor does it have RESERVES.
Thanks for your reply. I think we agree that Japanese buy-and-hold mutual fund investors are down more than 90% after 8 years, with no relief in sight, whatever the excuses may be.
I'm a novice at the markets but I read that our valuations are the highest in history at P.E.'s greater than 20. LGB, do you know if this is based on the S&P only or does it also include all other indexes?
It seems to me that a rash of bad earnings could put the U.S. in a similarly bad situation. Agree?
The P/E valuations are based on the broad market, not just the S&P. Also, the Japanese are down approx. 55% on their funds, not 90%. Note that another major difference is that they don't have the type of tax structure we have here, where it's so incredibly advantageous to an employee to save in a 401K, 403B, etc. due to matching and outright tax savings. Most employee's are making 80 to 100% on their contributions for each dollar invested up front, due to these factors even BEFORE any capital gains. I know that's been the case for my 401K dollars. 45% saved in taxes, 40% made in matching contributions, and then it's been an approx. 800% rise in valuation for noth my own co. stock and the mutual funds I've been in the past 12 years that I've been with this particualr copmpany.
@Home - get World Gold Council to promote Gold purchases?
Mike Sheller: You are right! The World Gold Council could promote the value of buying gold coins to prepare for that rainy day.
What worries me is that they should have the expertise, and they don't advertise. Perhaps they are too intertwined with the "powers that be" who wish that gold not be considered as money. Maybe they, are afraid of stepping on toes.
The World Gold Council is based in Geneva Switzerland. Perhaps they are mostly Swiss run, and reluctant to invoke the wrath of all those countries that use paper currency, namely almost everyone else!
Re your 10:29 on Barrons article. Barnes also alluded, rather darkly I thought, to the unpredictable role of derivatives. As in: "Leverage, measured as margin debt as a % of GNP, is at its highest levels since the 1920's. And we will only know the true extent of other sorts of leverage being employed in this market after prices drop." I repeat, The Bank Credit Analyst is well read and respected by top people, which is probably why he is so restrained. However, his message is clear. I don't receive it, except when they offer a free copy, ( it's damn expensive ) but I imagine his message has been out for a while. It might go a ways in explaining why bonds have been as strong as they have been recently.
WetGold: Thanks for the info about independence of the Fed -- thought so.
Someday I'd be interested how you chose your ID -- Dubloons found scuba diving, or caught like many of us in the 1 1/2 year gold bear flood?
To summon the engineer or not ... that is the question.
Whether in this legacy of Babbage's fertile brain
Some errant, failing part may yet be found
That thwarts completion of my ill-starred run
And makes a mockery of production schedules.
Or in the cryptic logic of that troubled task,
An ancient algorithm exhumed from dusty archives,
I failed to set a switch, initialize a laggard subroutine,
Or overlay a segment of the miserly core.
Perchance, the dozing Operator, sleep bereft,
Bestowed with leaden hand an unsought aid,
And made himself the author of this mountainous dump
Whose octal mystery shrouds an endless loop, and puzzles the mind.
Aye, there's the rub.
For in that chartless realm of ill-conceived branches and motley patches
A mortal swain could scare his earthly wits sustain.
For who would bear the double-talk of manuals,
The analyst's wishful celebration,
The deadline that fall a week before,
The bellowing salesman's mendacious pitch,
Or files forever lost or scratched when he, himself
Might yet his final End-of-Job attain by surreptitious alteration.
But that the thought of no recurrent paycheck must give him pause
And send him back again, with darkened mien,
To curse anew a damned and down machine.
WetGold: Our backgrounds are similar -- what you say about twisted copper lead makes sense -- driven very hard, twisted lead would work for short distances -- probably only inside the house. The service coming to the house would probably have to be coaxial ( like cable ) , so I would guess that the cable guys have it made. Otherwise boosters every 100ft or so.
I don't see a big market for this Rockwell modem system, unless I am missing something.
Whether the drop in Japanese stock mutual funds is 55% or the 90% number I read is not important. Their stock funds dropped in a big way.
After participating in a 401K for 12-13 years, I moved my money from stock funds to a money market fund. Any body can do the same. Sorry, but I still don't understand your argument that "U.S. buy-and-hold stock investors will never sell, no matter what" ( your words, if I recall ) .
The Japanese experienced the "no matter what" scenrio and sold.
JTF regarding what do I suggest. I do not expect the USofA nor, Canadian citizen, to understand that the Federal Reserve, and Bank of Canada, are a private corporation, with vested interest being their shareholders.
I suggest, it is like a forest, when the situation gets extreme, the forest will burn, and it is best to let it burn. The burned out forest will produce new life.
Gold, is the only true form of value. The citizen, has been educated to believe that money is the form of value. Well, as it shall be. Time will be the teacher, as will present economic events. The time is at hand, maybe. Unless, the government gang, can view the economic situation as it exists in reality, nothing will be done to correct, or, inform the people's mindset. Events will do the work, that must be done.
I expect you are a goldbug. That suggests you have experienced an event, or trusted a person, that directed you to understand where gold is placed in the economic structure, of the world, and your country.
Will gold resolve the present economic situation, Yes, but it is going to take a heavy toll on the people. But, hell, this has happened before eh!
Let me also state, the Kitco site, is a wonderful place to exchange idea's, and form new idea's. I just wonder, ( if if if, ) the exchange of these idea's have made a difference, to those that have lurked, and posted. Has there been a positive change, in understanding, of the relationship, of the Federal Reserve, and Bank of Canada, being as a government of economics. LIKE ( Governor, as England sent a Governor, to Canada, to track and control, the investments, of the money Lords of England )
Take care.
JTF: Makes sense. I do know that several RBOCs have trialed several different schemes for transmission over different facilities to compete with cable and some have abandoned them. The reason was mainly due to rapid pace of technological breakthroughs outpacing implementation to the customer. ( South New Jersey was one example in 1996 ) .
The cable companies, long distance carriers, and RBOCs all want the other guys business but each is so embedded within their own technologies, respectivly, they are finding it difficult to emerge into the others arena. Thus - we have a slow moving process because all side await the latest breakthrough in modems, ISDN, facilities, and/or materials changes to fully fund a massive capital expenditure.
WetGold: I like your Engineer's soliloquy. There should be one for the Computer operator. I know one at work who always answers that things can't be done -- and I can't tell whether it is because he doesn't know, it can't be done, or he does know but doesn't want to do the work. He can easily bamboozle my business administrator associate who is his boss. I am not exactly his boss, but I do know enough to check up on him if I need to.
I have usualy found the engineers I work with to be honest and truthful. I am not used to this on-the-job-trained computer person breed that seems so prevalent these days. Right out of Dilbert -- in real life, nonetheless!
JTF: In every profession there are hackers, lackers, slackers, and dim-wits. I've been fortunate in my short time on this earth to be exposed to many differing professions. I've seen the above listed type in the medical, legal, engineering, and other professional posts. I've seen it at the undergraduate, graduate, and doctoral level at the University. This is not to knock any profession ( including software and/or computer folks ) .
Moral: One's education level and performance does not impress me ( it did at one time until I joined there lofty ranks - haha ) . What does is your reasoned approach with reasonable people no matter what tasks are being performed.
6pak: your 14:47. Sadly, I must agree with you. I had already figured this out, and was wondering if you had a better idea. I honestly would try to educate others if it would help -- but I know from many years of experience that a belief system cannot change quickly. Often, as is happening in SE Asia, the only solution is the "forrest fire" as you say. Change comes from the Phoenix that rises out of the ashes. What the powers that be have tried to do is eliminate the business cycle of the past -- the Kondratiev wave that so many have forgotten. We have moved too far from hard assets, and will be forced back whether we like it or not.
All one has to do is go to a restaurant or other public place in the USA. Business as usual -- nothing has changed, really, and it won't until the crisis is on its way in the USA.
Hopefully the financial experts of the future will figure out how to have "controlled burns" instead of trying to prevent the forrest fires altogether. The latter only makes the fires worse when they finally happen.
I am just as frustrated as JTF in spreading the news. The sniping over the last week between gold and paper bugs on this site only isolates us further. Some call goldbugs "gloom and doomers". The only way the game must be played out ( completed ) is to go full cycle and have another 1929 depression. On the surface that appears cold and uncaring. No one wants to see people harmed or suffer hardship because despite how most of us believe we are secure in our future endeavors we would also be harmed. Someone in our immediate or distant family will be hungry or lack shelter.
However, the way I see it is that this must occur in order to get this back in order - HISTORY shows that it must happen. It is just a matter of time before it does. Do I wish it to happen - NO. Will it -YES.
When ? I don't know and no one here does. The best we can all do is cover our bases by acquiring wealth ( be it paper or gold/silver, real estate with no mortgage, etc ) . We are all in the same boat just getting to the same place via different paths.
WetGold: Yes you are right -- I shouldn't disparage one profession. That personality is found in all walks of life. I try very hard to reason with people and encourage them to do their jobs without causing fireworks. This kind of personality drives me nuts, and this fellow would be fired if I had the authority to do so. My competent administrator associate ( and friend, I think ) does not agree with me and puts up with his antics. I don't have the time to check up on everything this person does. Fortunately some of the things he does are actually useful, and fortunately I have some other loyal people who do good work, and redo some of what this frustrating fellow does.
Private Investor: Actually I like 1800, 3 bottles emptied 1/2 way - 1lbs peyote fresh, very fresh. Pluck the strychnine tufts and carefully discard them. Separate the peyote into thirds and press them into each full bottle of 1800 until just barely cork worthy. Cork them. Drink remainder of tequila until Castenada enters the room or you find a comfortable zone.
Relax.....wait one week, seek out the company of true friends, open bottles and ingest contents...enjoy.
For info on the Fed:
read THE CREATURE FROM JACKYL ISLAND, by Ed Griffin
SECRETS OF THE FEDERAL RESERVE, BY Eustice Mullins
also read: Chapter 6 in Ann Rands book on capitalism, copyright 1966 ( chapter was written by ALAN GREENSPAN titled GOLD AND ECONOMIC FREEDOM ) It will make you a believer.
Donald - Much obliged for the info. If we have 2 nav's and the gold & silver prices when nav is computed, we can determine the net oz. gold & silver/hundred shares. Can you get?
Dave Dave Dave, I would never say that U.S. fund investors will never sell "no matter what!" I myself have sold all my funds and sittin on the sidelines in MMF cash at the moment like yourself. I think there's just too much risk right now and I'm waiting for the dust to settle before the next Bull leg up begins. Investors will sell when they retire, need the cash, move to other investments, etc.. My point is that they won't sell "en masse" in a panic when the market falls into it's next Bearish trend.
@Home Mike S. -- How about some down dates for Japan?
Mike Sheller: Should be doing my chores -- last post before the real boss pulls me off the computer by my ear! Your 10:28 went right over my head. Are you saying that you think Japan is reaching a critical point in November? Nick ( @Aussie ) thinks the market will collapse on this Monday. My opinion is that our market is handling the current stress level fairly well. However, if Japan implodes that will be different, as a key international bank might go with it.
Could you just give us a number of likely dates for trouble? Say, for November and December? I would like that very much. I will not trade on this as I do not understand the Astology business. But I do know it pays to be more alert on the days the Asrologers such as yourself mention.
Thanks --- good luck on your investments -- watch that paper! Loved that post about some Russians getting paid in Toilet paper!
Russian's getting paid in toilet paper ? That rings close to home remembering when R. Reagan took office in 1980 a group of taxpapers sent +$500 toilet seats to the IRS to relieve their tax obligation ( shake-down ) ...
Hey Tolerant! Authority = LGB? Dammit man, I'm a reformed Hippie who used to drive a VW dude! I'm as far from a conventional authority figure type as you can get. I try to look at life as objectively and broadly as possible ( within certain analytically deductive reasoning parameters of course ) . I don't have an "agenda" or set in stone "Philosophy". My market beliefs will shift and evolve as conditions do the same.
As I've said many times, I'm lookoing for the truth about the markets and trying to make decisions accordingly. the truth is NOT "What does LGB want it to be". the truth IS "What is true if LGB doesn't exist?"
I'm a NON existentialist as you can see. Authority figure? Only to my kids and subordinates, and a gentle one at that ( hard to believe I know )
Tolerant, I finally got around to reading your 15:40. Now THAT explains everything my friend! And here I've been scratching my head wondering whether you're reality meshed with the world I live in. Have a good trip....!!
Below you stated that huge contributions will continue regardless whether the market rises or falls. But a few minutes ago you were emphatic that you would never state that U.S fund investors will never sell no matter what.
My untrained eye thinks there is a contradiction here.
Help group? Any comments please? I'm tired of this debate.
--------------------------
Date Thu Nov 06 1997 13:07
LBG ( @Nick Aussie DOW mania )
"cash flowing to the Dow is coming from long term, buy-and-hold, IRA, 401K, etc., investors WHO WILL CONTINUE TO INJECT HUGE CONTRIBUTIONS INTO THE MARKET REGARDLESS WHETHER IT RISES OR FALLS."
Interesting @ Central Banker in small Slav State in jail
November 8, 1997
Ailing ex-central banker freed on bail in Belarus
MOSCOW, Nov 8 ( Reuters ) - The ailing former head of the Belarussian central bank has been freed from KGB custody after nearly 11 months but is still being investigated on corruption charges, Itar-Tass news agency reported on Saturday.
It quoted the Belarussian state prosecutor's press office as saying Tamara Vinnikova had been released because her health had deteriorated while in a KGB security police jail. The bail conditions state that she must not leave the country.
Tass, reporting from the Belarussian capital Minsk, did not give details of the ex-banker's illness.
Vinnikova was sacked and arrested on January 14 after less than a year in charge of the small Slav state's national bank. She faces as yet unspecified corruption charges, and Tass quoted the press service as saying the investigation was not over yet.
Reports at the time of Vinnikova's arrest said hardline President Alexander Lukashenko had instigated the move against her.
From my experience with talking with "Joe Blow" re: his/her 401 ( k ) is that they leave the contributions alone ( despite market jitters ) because it is a "long-term" vehicle. If U draw this to its logical conclusion: The Cash into the Market via 401 ( k ) stays the same...
The Constitution of the United States has been changed, illegally and without due process and consent of the people of the United States.
The government shall issue coined money. Constitutional Law broken.
Federal Reserve Act ( not law ) Unconstitutional. Rights of people denied.
FDR, President of the United States commits an illegal act against the people by demanding their gold at gunpoint. Constitution and rule of law from said document broken. Charge - treason.
Paper representing money issued by third party, Federal Reserve. Illegal.
Government allows issue of illegal paper. Illegal.
Government trades gold stolen from the people to third party ( s ) . Illegal.
Central Bank and individuals that control them, receive gold for paper equal to and misrepresenting money of the people of the United States.. Grand larceny. Aiding and abetting known criminals.
November 8, 1997
ASIA WEEKAHEAD-Gloom, doom, despondency over Asia
HONG KONG, Nov 8 ( Reuters ) - Unabated gloom will hang over Asian shares next week as they face another week of currency turmoil, jitters in other major world stock markets and more economic uncertainty.
"It's all been one-way traffic," said one regional head trader at a major European investment bank. "The volumes have dried up dramatically. People are looking for value but they're not doing very much at all."
Asian fund losses in U.S. dollar terms are approaching 60 percent so it's "gloom, doom and despondency," the trader said. "Fund managers have had a beastly year and they're rather upset about it. They're waiting for markets to sell off dramatically again so they can clear off their books and start over again next year," he said.
November 8, 1997
Brazil could hike taxes to calm markets -papers
RIO DE JANEIRO ( Reuters ) - Brazil's government is expected to increase taxes and cut spending when it reveals a tough package of budget measures next week to try to restore investor confidence in Latin America's largest economy, newspapers said Saturday.
Brazil's stock markets and real currency came under increasing attack last week as the economy struggled to maintain stability in the face of global financial turbulence."It is necessary to proceed to reforms. Without them, the vulnerability of the Brazilian economy will stay high, and with a tendency to go higher," the Folha de Sao Paulo newspaper said.
Speaking in Colombia Friday, Brazil's President Fernando Henrique Cardoso described the need for harsh fiscal adjustment and pledged that his government would defend the real from speculative attacks abroad.
http://canoe2.canoe.ca/ReutersNews/BRAZIL-ECONOMY.html
Dig Deep: Thanks for the Elliot wave Dec1, 2 dates. I think we should accumulate a few possible dates in the next two months to be a little more alert for market activity. Don't know when Japan will go, but the shockwaves could be big ones. Hard to predict when their system has defied gravity since 1990. We did hear about a run on Japanese Insurance companies --- I guess we should be on the alert for a run on other Japanese firms. The Japanese people have incredible patience, even more so than the Chinese I think. But their government and bureaucracy is finally testing even that -- I have trouble with just a few months with my investments. Wonder what it would be like if the Japanese were as regular internet users as us?
November 10, 1997 -- "Like pirates, a group of commodity funds and hedge funds is wandering the world looking
for weak currencies or commodities to attack," says Douglas Donald, strategist and advisor to gold-oriented mutual
funds. "These are big, big funds and they deal in monstrous sums.
This is hyperactive money: if it isn't playing in one
place it'll play somewhere else."
November 10, 1997 -- "Like pirates, a group of commodity funds and hedge funds is wandering the world looking
for weak currencies or commodities to attack," says Douglas Donald, strategist and advisor to gold-oriented mutual
funds. "These are big, big funds and they deal in monstrous sums. This is hyperactive money: if it isn't playing in one
place it'll play somewhere else."
http://www.talks.com/portfolio.html
Bart
On Nov 03 1997 01:13, you said:
"Consider watching lease rates as a leading indicator. Higher lease rates means an increased demand for the physical metal which is often reflected in the price later."
Do you have any preference for watching the 1, 3, 6 or 12 month Lease Rates that you post?? The short end seems more responsive, but are there any disadvantages in attempting to interpret this higher volatility?
Thanks
A Lease Rate Novice
tolerant1: The Federal Reserve Act ( as far as I can see ) is law.
The Act passed on the eve of 23 Dec 1913 while most congressional members were heading home for the holidays. Although it would have never passed with a full membership it did pass legally.
This is from memory - please correct me if I am wrong.
I have come to the belief that the large gold mining companies are in bed with the CBs....with their idiotic forward selling every time the price goes up...the question is, what is in the deal for them?? Any ideas?
Abstract: I submit that the monetary policy of the United States since the Articles of Confederation government is flawed. Its thread continues through historical events that have been the cause of major depressions . During the 19th century the stark philosophical differences between Alexander Hamilton and Andrew Jackson are those of " soft & hard" money. Hamilton argues that fiat currency is required in order to promote the western expansion allowing small and large business to contribute to the overall National Economic System ( NES ) . Jackson perhaps saw the atrocities and venomous nature of securing a central privately owned bank and realize it is detrimental to the citizens of the United States .
Although this is by no means a comprehensive list, it does provide some relative historical events that have occurred in the 19th and 20th centuries.
1784
"Crisis of 1784" occurs due to too much paper money issued by the Articles of Confederation government.
1790
Hamiltons "Report on Public Credit" promotes the establishment of a private "Bank of U.S.".
Hamilton states a need for central bank.
State banks openly compete with the private "Bank of U.S.".
1791
1st Bank of U.S. is chartered for 20 years.
1792
Gold is deemed legal, lawful money of America.
1811
1st Bank of U.S. goes out of existence. Constitutional concerns.
1812
War of 1812. Need currency to help finance war. Constitutional concerns.
1816
2nd Bank of U.S. is chartered for additional 20 years. Concerns over "hard / soft" money.
1819
"McCulloch v Maryland" establish constitutionality of bank.
"Panic of 1819" occurs. State banks collapse. 2nd Bank of U.S. restricts credit and calls-in loans.
1824
"Osborn v Bank of U.S." strengthen legal position of bank.
1829
Andrew Jackson elected President.
1832
President Jackson and President of Bank of U.S. ( N. Biddle ) conflict. "Bank War".
Jackson create "pet banks" to channel federal funds. Roger Taney is Treasurer.
1836
89 "pet banks" operating with U.S. funds. Biddle calls in loans.
2nd Bank of U.S. goes out of existence.
"Distribution Act" sent profits from public land sales to the states.
Jackson eradicates the federal debt and created a large federal surplus of money.
1837
"Panic of 1837" occur. State banks collapse.
1849
California gold rush. Land and commodity prices rise to meet demand.
1857
"Panic of 1857" occur. "Free banks" collapse due to high price of land and commodities in the west.
1860
Abraham Lincoln elected President.
Civil War. Surplus money created by Jackson is used to fund war.
1863
Lincoln commands Treasury to print money with no debt to taxpayers ( "Lincoln Greenbacks" )
Lincoln killed. "Greenbacks" replaced with bankers money with public debt.
1895
Supreme Court declares a national income tax unconstitutional.
1907
Teddy Roosevelt commissioned Saint-Gaudens to design one-ounce gold coins.
The Money Trust???.
1910
Private meeting at Jekyll Island, Georgia between Industrialists to discuss formation of private central bank.
1912
Woodrow Wilson elected President.
1913
President Wilson signs "Federal Reserve Act ".
16th Amendment passed .
1914
WWI begins.
Federal Reserve lowers interest rates to encourage borrowing and spending.
Federal Reserve Bank pulls 1/3 of money supply out of economy.
1916
Woodrow Wilson elected President.
1917
Bolshevik Revolution.
1920
League of Nations.
1921
Council on Foreign Relations ( CFR ) formed .
1929
Stock Market crash.
Congressional committee demands impeachment of the Federal Reserve Governors.
Departments of Labor, Commerce, Agriculture, et al. created.
1933
Gold confiscated by Executive Order and price set at $20.57 an ounce .
1934
Gold standard abandoned by FDR.
Gold price set at $35 an ounce by FDR .
Gold bullion confiscated by FDR.
Federal Deposit Insurance Corporation created. ( FDIC )
1940s
FDR extended the term of the Board of Governors of the Federal Reserve Bank from 7 to 14 years. This is to keep them out of reach from any single U.S. President.
1944
U.N. treaty makes dollar redeemable in gold to international banks.
1963
President Kennedy signs Executive Order # 11.110 allowing Treasury to issue U.S. Notes costing little to taxpayers. ( 04 Jun )
LBJ becomes President - rescinds Kennedys Executive Order.
Medicare created.
1965
"Coinage Act of 1965" introduced eliminating silver from U.S. coinage .
1971
All gold backing removed from Federal Reserve Notes.
Bretton-Woods Agreement canceled.
1972
Nixon signed Executive Order # 11490 to create Federal Emergency Management Agency. ( FEMA )
1973
Trilateral Commission ( TC ) formed .
1975
U.S. citizen allowed to own gold bullion.
1980
Deposit Institutions Deregulation and monetary Control Act of 1980 is created. ( DIDMCA )
1985
Ronald Reagan signs act authorizing a new 99.9% silver dollar coin .
1995
In January, the 104th Congress introduced Senate Bill S.307 recommending a "Two-Tier" currency .
1996
Treasury issues a new $100 currency allegedly to combat counterfeiters.
Note: Although the Federal Reserve is a private company it is not traded publicly on the New York Stock Exchange ( NYSE ) or any other exchange - It is held privately amongst its shareholders.
Note: Since the inception of the Federal Reserve System the dollar has lost over 90% of its purchasing power .
Bibliography
Friedman, Milton & Rose: 1980. Free to Choose: A Personal Statement. Harcourt Brace Jovanovich.
Gause, Andrew: "The Ravages of Inflation: Inflation ... Understanding the Problem".
McConnell, Campbell R.: 1987. Economics: Principles, Problems and Policies. McGraw-Hill, Inc.
Norton, Thomas J.: 1968. The Constitution of the United States - Its Sources and its Application. Committee for Constitutional Government, Inc.
Patterson, Samuel, et al.: 1979. A More Perfect Union: Introduction to American Government. The Dorsey Press.
Silverman, Daniel: 1992. "Why our economy is Struggling to Survive".
Sumner, William Graham: 1980. Andrew Jackson. Chelsea House Publishers.
Tindall, George: 1984. America: A Narrative History, Volume II. W.W.Norton & Company, Inc.
Tindall,George, et al.: 1993. America: A Narrative History, Brief Third Edition. W.W.Norton & Company, Inc.
White, Andrew Dickson: 1959. Inflation - Fiat Money in France. The Foundation for Economic Education, Inc.
Fast Track=MAI=SDR @ ALSO Abortion+ 2000 census count+school testing+Terrorism+Drugs
November 8, 1997
Clinton fears U.S. retreat on trade if bill fails
WASHINGTON ( Reuters ) - President Clinton told Americans Saturday that failure to pass fast track trade authority would signal a U.S. retreat from global leadership as supporters worked to round up sorely needed votes. A vote on the legislation in the House of Representatives was delayed until Sunday after it appeared Friday, when lawmakers were originally slated to vote, that Clinton was headed for an embarrassing defeat.
"A yes vote means America stays in the lead in fighting for new markets -- that's now at risk," Clinton said in his weekly radio address.
"But a no vote says, we don't want our country to negotiate lower trade barriers; we're pulling back; we're afraid we can't compete; and we're willing to walk away from our unique world leadership at this moment."
"A yes vote means that American Leadership in this hemisphere and elsewhere -- not only on trade, but in fighting drugs and terrorism and dealing with our other security problems will be strengthened," Clinton said.
The battle for votes continued into the weekend and fast track opponents complained about some of the backroom deals that were being cut to garner more support among both Republicans and Democrats.
Fox television network is airing "The Silence of the Lambs"...the title reminds me of the silence of the small investors as they are shepherded to their financial demise in stocks....BAAAAA...BAAAAAAAA
Let us review:
Early this year a very , very large buyer I know
said that if gold drops below $370+/- we would
see the largest trading volume in history. These
people knew the price was going to be forced
down to accommodate some special interest groups
( oil ) . They never bid on the table, they only
took the physical as it slid. During this time ( including
up to the present ) several other ultra large players
and CBs joined in. You see, none of them wanted
to upset the understanding so noone bid up .
As time progressed the trading became so large
that it disturbed several large paper only gold
buyers. They were what this understanding was
created for in the first place! These people received
a real suprise when they found that the off market
had grown so large that everyone could not be
supplied if they asked to be so! Many are asking
to do so and that is what started the real CB selling
to take place.
It seems this deal was discovered some time back
as early HK safe money was starting to leave the
island. Many of them were very worried that their
massive buying would drive the price. For a while
it seemed that the more they purchased the more
the merchant banks shorted. Could they in some
way be tring to help out the Asians?
What was thought to be big money became huge
money as a few found out about low gold for oil.
Now, today, many are convinced that the oil deals
cannot be worked out as the CBs will not sell all!
The end of oil for gold will drive oil sky high
and crush the Pacific Rim first. In an effort to save
the imploding currency system the CBs will go into
full reverse by no longer supporting the gold shorts!
The message is: We now must have higher oil prices
to maintain the currency system Economy be damned.
We are in for a wild ride. I let you test me! From the ___
I have, my thoughts are: A fast rising US$. A faster
rising oil price. A imploding world markets.
And a soon not to trade rising gold market.
To close: If you know my thoughts are fact, you
still do not know? Therefore, follow the outcome
and apply my thoughts. Then you will know.
JTF: The Constitution gives the House of Representatives, with the agreement of the Senate and the president, power to tax and spend. That is as it should be. If enough of us don't like what they did we vote them out of office. The founding fathers placed that authority in the lower house, with a two year term, so that they could not do too much damage. It gave them the power to coin money only in silver and gold so there would be no inflation. They had just experienced one of the worst paper inflations the world had ever seen.
By unconstitutionally removing silver and gold from the scene and substituting paper, the hidden inflation tax, the one they don't have to vote for, has been reintroduced. Inflation can not be tied to Congress. It can be blamed on greedy oil companies, unions, corrupt monopolists, anyone but them. This is exactly what the framers sought to avoid. It even gives Congress something to campaign about, fighting inflation!
WASHINGTON - The Pentagon warned yesterday
it is ready to hit back with cruise missiles if Iraq
tries to shoot down any U-2 spy planes.
It would be "a very big mistake" for Saddam
Hussein to threaten the high-flying U-2 planes,
which fly under the U.N. flag, Defense Secretary
William Cohen said.
http://www.nypostonline.com/news/2032.htm
The ancient Greek Hellenistic philosopher once remarked, "Nothing is true, not even that." I offer this unsettling conundrum because of the rampant bickering on this site and the despair that come with a depressed gold market. Yet, it can be demonstrated that Kitcoites are not the only advocates of gold. I offer the most recent volume of Stephen Leeb's newsletter, "Personal Finance." Leeb publishes the largest newsletter in the U.S.A. and has been promoting gold for some time now. Advising his clients to be prepared for the coming breakdown of value in the stock market, Leeb advises what he calls an "insurance portfolio," including is zero coupon bond fund which is heavy with long-term Treasury bonds. But he also recommends gold.
"A third form of portfolio insurance is gold. The yellow metal fizzled
during the October correction, as investors discarded it in favor of
interest-bearing paper assets. The dip in the U.S. market is a
reminder that the dollar and any other currency can go down as
well as up. Ultimately, that should benefit gold. And if we're half
right on inflation, the metal's attraction as an inflation hedge will
shine through a lot sooner than most think."
If those of us who believe gold will recover are as lunatic as some posters on this site have claimed, we can at least claim we have good company.
WETGOLD
I dont know what to make of Larouche, but if you look at his back issues of Executive inteligence review on the web you will see that he called the currency crises months before anyone else. One thing is for sure US KITCOITES NEVER NEVER HAVE TO BUY A NOVEL.
Gold at present is tremendously undervalued only IF the world in the not to distant future were forced to go back to a gold backed currency standard. I think the West may be getting set up for this. What if a very secret coalition of countries, say Japan, China and several critical oil producing countries were accumulating hard gold, and accumulating forward selling contracts from major producers, while actually allowing the world's economic situation to deteriorate.
The U.S. is currently the strong bastion for storing wealth, and total economic collapse is only prevented by the U.S. strong economy. However, at some point the trap will be sprung, with the threat of greatly increased oil prices dooming the world to severe depression, unless the world agrees to go back to a gold standard backing of currencies, with gold valuations of at least $1200/oz.
Talk about finessing the capitalistic West--we will not have any choice but go back to the standard of value of gold, which we should have never left in the first place. A combination of greatly higher oil prices, and massive selling of U.S. $ assets would even doom the U.S. economy. I think the closing of the trap will be made by the coalition in such a way as to be politically palatable.
DONALD amd JTF : Thanks for the feedback. Do you folks know of any mining companies that could be a likely takeover targets? I am currently invested with a mining company that has locked in the rest of it's 97 production locked in at a $400+/oz, not sure what will happen in 98? I would like to see some major acquistions take place, Corn Milling industry last year took a pounding due to high price/bushel. ADM acquired MCP and Cargill just finished an agreement and procured ProGold ( Corn Milling Co. ) . Any word on the street. PLZ advise.
Did anyone catch the quick camera shot at Bigg's market chart in his
office last night? If I caught the glimpse correctly, he had 4 markets
indicated by circles and arrow pointers. ALL THE ARROWS POINTED
DOWN!
Does anyone know of published number of how many people ( percentages ) own physical gold per country ??? My guestamate is less than 1% but this is only based on the real people I am in contact with not Kitcoites or other "enlightened"...
I've just read my November 2 1997 Freidbergs and he has changed from being stoutly bearish on gold to worried about an upside explosion. Freidberg's can't bear -pun- to go long so he's staying flat. the following are lines in the article.
"Rallies in this market have been preceeded by a substantial build-up in
speculative short postions, while declines have proceeded with a book generally light of speculative short sales. The recent decline to $307.50/oz followed the script to prefection. At the lows, a new build up of speculative short sales was in the making. More disturbing ( to the bears ) , however, is the precsistantly high level of lease rates, which has stayed above 3% per annum for most of the past few weeks. We suppose that it represents heavy producer hedge activities. We are at a loss, however, to understand the relative tightness of supply. Whatever may be the explanation, the market may be heavily oversold at these levels. If this technical condition persists, we can envision a substantial rally triggered perhaps by further stock market declines.
Nick@Aussie: I don't get the electronic edition of Barron's, just the newsstand edition so I will just post some of the better highlights from the interview with Mr. Martin H. Barnes, Managing Editor of Bank Credit Analyst.
In Asia classic background of deflation is present. Excess capacity, a fragile banking system, a fragile economic system very leveraged to real estate. Tremendous wealth destruction. Falling equity prices of truly epic proportions. Fallout will be severe.
We have a darker view of this than Wall Street. Deflationary forces are at work in ( North America ) Asia problems spreading to the developed world. We are amazed at the amount of complacency that exists about the outlook for the U.S. economy, corporate profitability and the stock market in the face of these deflationary forces. U.S. investors foolishly quantify this problem in the amount of exports to S.E. Asia. Impact will be far more widespread and destructive. There is an eerie parallel between Greenspan's comments and John Maynard Keynes' suggestion, in October, 1929, that the crash was a beneficial, rather than an evil event. Top financial leaders can totally misread a situation, their reassurances may create a deadly trap for investors. IBM's move to buy back its shares played a key role in restoring confidence. ( he compares it to 1929 when J.P. Morgan gathered bankers to do the same ) .
( to meet investor expectations we would need ) long run growth of 8%, doubling the pace since World War II. It would truly be a new era if we could produce such margins. ( He expects zero growth 4th quarter 1997 to 4th quarter 1998. ) The complacently bullish view of profitability will be shattered over the coming year. Equities remain in high risk zone. There is widespread denial about the true cause of the recent market turbulence. So, could the market suffer a major crash? It's certainly a possibility, given current levels of overvaluation, speculation and complacency. Stocks are expensive, bonds are cheap.
How can things get worse for a large bank in a deflation?
Ans. Have an inflation hedge, gold, go up. The banks are the ones who have been shorting gold, if they have to liquidate positions to raise cash; uh oh.
Arden, what's the possibility that the draw-down we are seeing in COMEX gold is being done by "the shorts" themselves, their idea being to make it look like COMEX is about to run dry & that they, they shorts, are vulnerable to an attack, and then when the longs go long thinking they have the shorts, to "magically" restore the gold to COMEX, thus burning the longs alive? Could the missing gold just be sitting in the COMEX wharehouses, off the books, waiting for the signal to instantly re-appear???
Dave in Co : LGB is incorrigible. Here's another one his 'predictions'.
Date: Sun Nov 02 1997 15:13
LGB ( Prediction for coming week ) ID#316409:
Specific predictions for this coming week. The oversold ASian markets will begin to recover, this will strengthen the U.S. markets which will end the week with a gain. Gold will languish. Gloom and Doomers wiull post all kinds of conspiracy theories on Kitco as to why the markets didn't REALLY strengthen but instead were manipulated by all the world financier conspirators with their bail out plans and secret schemes.
What's motivating Saddam's current shenanigans - if Saddam pushes Clinton hard, how will Clinton respond to the challenge if it goes beyond words. The "military" and its appropriate use is a skill that the Clintonites have not yet demonstrated. Might get ugly - I don't think Saddam intends to be humiliated again. Let's hope this isn't the way we get gold prices up. What did gold prices do during "Gulf War"?
afterthought, Lets consider Clintons last 5 years, except for embezzling and usurping power through Presidential directives its pretty boreing. Either his motives are very bad or he is a undercover patriot,you decide. However looking at his ego and love for the public eye, I would expect his remaining years in office to be chaotic. He's not the type to want to go down in history like a Jerry Chevy.
Thankyou for your posts, my family and I and several other lurking friends always look forward to your post. We shall watch and see as things ahead unfold.
Midas, I think Soros is dumping PDG per Wall St. article. As to Middle east tensions Gold made a blip up during Gulf war, and then started a long Bear market when everyone realized that Gold no longer seemed to respond much to world crises. It was consequently one of the most bearish events in recent Gold market history, as Gold "used to" move a lot higher during such crises.
P.S. Midas, I believe it was you who misquoted me the other day as being a holder of "Benguet" Gold mining stock. Quite the contrary, i was giving examples of Gold investments I was burned on in the early 80's, Benguet, and Homestake being 2 examples, before I learned my lessons and got out of Gold & Gold mining shares.
N.J. re your 17:27. You folks constantly astound me. The predictions you quoted could not have taken place more accurately now could they? We began the week with Asian markets firming ( I never said they'd end the week that way ) , the DOW ended the week with a gain ( I DID predict that it would end the week with a nice gain which it did ) , Gold got murdered as usual ( Gold will languish ) , and Kitcoite conspiracy posts were way up!
How is this incorrigible? Eveery specific prediction I've made on this forum has been accurate to date. Remember the "Eclispe", the "Full Moon" , "Halloween" my long term bets with Puetz as to October's activities?
Why don't you tell me what prognosticator has had a better record of accuracy? Like I said in my earlier posts, people here despise accuracy and facts in their Zeal to pretend Gold is going higher and the makrket isn't. I watched Hepcat SLAUGHTER the so called "analysts" here with his PRECISELY accurate Gold calls. I guess you think he's a market Moron too for being too accurate eh? What nonsense.
I think if I called every NFL pick correctly this week including final scores, and one of the scores was off by a point, the folks here would make hay of how "wrong" I am. Amazing. Well, it's OK pal, I'll keep making money as I have for 15 years, and losers will keep losing.....
ANOTHER: "Today, all currencies are traded against the dollar for its usage as a medium of oil exchange!"
This seems to be a very Saudi point of view.....which brings to mind an image of a housepet that feels that HE is the owner of the house, and the lowly HUMANS exist only to clean, house and feed the pet. These thoughts about oil skyrocketing to Jupiter when Saudi purchases are not accompanied with gold just dont square off to me.
Oil is wealth, a comodity, but not money. Oil as a comodity, is subject
to laws of supply and demand. When OPEC imposed its position during the Great Oil Embargo, Western goverments only helped to blow the problem out of proportios by pushing the image that the world was using world oil reserves up at light speed, and there would only be enough to last in commercial quantities for another decade or two
( remember? ) . As we can see today, there never was a shortage of oil reserves, only a regulation of the supply to jack prices up. Today, we see that oil reserves that will bring the world far into the future. O.K., lets assume that the Saudis have only sold oil, based on xxx gold at $1000/oz in certain small but determined quantities per barrel of oil,
to replace the non-renewable resource pumped from their ground. ( Having lived in wealthy third world countries for most of my life, I DO understand their logic, and DO understand how 2+2 can = 40....in their mode of thought ) . The Saudis have historically had the most competitive petroleum, and is why the U.S. has been supplied primarily by them. BUT REMEMBER, there are many, many more suppliers. True, oil is the
backbone to world economies, but man does not live by bread alone....in other words, the Saudis need almost EVERYTHING else exported to them in order to survive. Think about it. Water will always seek its own level, just as if oil rises, so will ALL other things, things that THEY must purchase in order to survive. If the Saudis refuse to sell without the golden rider on each barril, they can only raise THEIR price to a level THEY are willing to accept. And their will be many other third world petro holes willing to sell much cheaper, in that event. Venezuela is one excellent example, and has the capacity to supply the U.S. needs 100%, and do not require a golden rider. At THIS moment, Saudi is the prime supplier, but this can and will be changed should they step out of reality with supply/v.s. demand.
Their is an awful lot of oil out there, and without doubt, it will go up, but I just dont see the biblical proprtions that you describe. I do see a temporary imposition on the U.S., ( another attempt or threat to severly raise oil prices, based on the U.S.s dire need for their product ) , but how long do you think the Saudis would remain in Arabia with their oil and lifestyles.....IF the U.S. was to withdraw thier military protection?? They would not last ONE day. Their ability to pump oil is direcly related to their "protection" of the U.S. military. Period.
In the end, oil is but a comodity, subject to supply and demand, just as foodstuffs, medical supplies, and military arms.
Now back to oils relation to gold......if this golden rider has been in effect all this time, ( the REAL cause of the creation of all these strange gold derivatives ) when these paper gold holders demand their physical delivery, they will draw the real CB inventories down to almost ZERO, showing the real supply/demand, or very very soon................or paper gold must implode. Frankly, Id put my money on the goverments renigging on their physical delivery obligations, before exhasting their reserves.
If their is something Im still missing on this gold/oil scenario, please correct me. You have shed so much light on the subject, and please keep posting. I find myself anxiously waiting for your posts. Thank you.
I have often wondered, over the past 4 years, why people or institutions would buy yet to be mined gold at such heavy premiums over spot prices. It always seemed that it would be more logical, and better business to boot, to buy at spot. Well, with John K.'s and ANOTHER's posts, it makes sense. If you want to take over MAJOR positions in bullion without spooking the market and driving prices up, creating the business of forward sales would certainly do the trick. You get the bonus of not only harvesting bullion in the present at firesale prices, but also you lock in future "fire sale" prices. This mechanism also avoids upsetting countries, populations and most of all A.G.
I have to say that I am definitely buying into the program. Gold can rally to new highs with no "official" sales because pricing can initially be evolved from the forward sales contracts.
I do believe however that not all gold stocks will suffer. I believe that companies that have no or little forward hedges will soar as well as those that have new discoveries. Holding bullion will be very positive.
Frenchie:
Mind if I ask which canadian gold stocks you are eyeing?
Another: Looking behind your comments on the oil for gold conundrum I have difficulty in seeing only the honest motive of businessmen seeking a fair price for their product. Could there perhaps be a different motive?
It is apparent to me that since the fall of Communism the world has begun to revert to a form of tribalism that more resembles the way the world looked a thousand years ago. Fragmentation of Russia, Africa and Yugoslavia in the most recent times are the best example. The dissolution of the European empires over the past one hundred years are another earlier example. Do you suspect that the accumulation of gold by oil interests is part of grand design to restore the religious or political dominance enjoyed by their ancestors?
If the motive were only a business objective it would be in their interest to have the oil users of the world be happy and prosperous customers, a continuation of the status quo. Customers who had the ability to exchange goods and services in support of their continued lifestyles. On the other hand, destruction of the worlds currencies, and the resultant chaos, would fit into the plans of those who had more sinister objectives.
Midas: Let's not bash American consumerism and big business. If your premise is correct that $20/barrel correlates to 200-300 at the pump, THEN, European consumerism are getting rifled while paying 400-600 at their pumps.
Are you sure you're not a member of Slick Willie's defense team?
I can still remember when Clinton said he wasn't even in Little Rock when the Paula Jones incident occured.
Per NJ you said that "the oversold Asian markets would begin to recover." I think that reads as a prediction they would be up for the week.
You said "the U.S. would end with a gain." Did you mean the last 15 minutes when the Dow went from -200 to -100?
Contrary to popular belief here, The real power behind Mid East oil is USA. America propogates Democracy but prop's up Mid East Monarchy earnestly ( Saudi Arabia, Oman, UAE, Kuwait, Qatar etc. etc ) there as a King is easier to control than a Parliament. The Media states all Bull and American people lap without any access to contrarian point of view
The Seven Sister US Oil Company cartel made Billions out of cheap oil for 60 years before the oil price rise in 70's. The price was static for 50 years making all the Industrial Revloution possible, People are fed on only American Media's view here
Saddam is CIA, Why did they not finish his rule in Gulf War. Wool over the eyes. Oil is going up big, need some reason. Oil has remained same price for 15 years
I thought the American Media's view ( marching orders ) was to point out to the average American citizen that we have cheap oil compared with europeans due to government taxes. I don't believe it...
Aussie, et al .. what do U folks pay for petrol at the pump ?
When the collapse occurs Marxism will reemerge in Russia as the former ( read Yeltsin and co. ) but real Commies blame the West for the troubles of the world. Remember re the move to Communism Lenin said two steps forward and one step backward ( capitalism ) . Russia going to capitalism also happened in the 20s. Ditto for Commie China they know capitalists will sell their soul for profit thus the requirement that our Capitalists transfer their tech to the Commies for access to the glorious Chinese mkt. Lenin said "the Capitalist will give us the rope to hang him". Wake up Communism is not dead but working under a more deadly and deceptive form. Who knows where the American fifth column resides?
Just wait until the derivatives collapse the liberterian thought will be under attack by the losers.
Russia is finished as Super Power forever, China is it, not Japan, HK, Singapore etc. If China blinks in this Poker game now being played out in South East Asia, World is going to be a different Place
6pak -- Referring to, "I wonder, would the proletariat rate that level of protection?".
The 'common folk', often receive no special protection from the 'state', even when their life is endangered. Yet, we have seen fit to allow laws that define high political officers in the U.S. special protection. If one assaults the president or any one of forty ( ?not sure about the exact number ) other designated individuals under this special law, it becomes a 'special' crime. Thus, we have created a special class of citizens who are above the rest of us mere mortals. Hence, the term 'proletariat'. I'm sorry, but assault is assault to me. I don't call it wife battering, or child beating, or anything but what it is. It seems to me, the purpose of creating these 'special classes of crimes', is to further divide the society.
When we openly protect a legislative member with police force for voting to defeating the death penalty, because someone may harm him for casting his vote this way, I find it comical and sad. This action makes many statements at many levels.
Dave, let me repeat again slowly. The DOW ended the week with a gain. A HEFTY gain of approx. 2%. My prediction said clearly said that the DOW would end the week with a gain, it really wasn't complex. You can feel free to look at the perdiction post over and over, it hasn't changed. the meaning is clear. I know that there was a frenzy of folks back patting each other yesterday for the market's obvious "crash" they had foreseen, but nonetheless, the Moron's doing the back patting have not changed the final market numbers through their wishful thinking, which of course were a GAIN on the week, precisely as predicted. If you want to see a LOSS, this coming week is a better bet, though it might go either way.
As to your previous point on 401K's. Perhaps you don't understand how they work. Deductions are taken from an employee's pay. They are invested into whatever market allocations the employee has designated. The contributions take place with each paycheck. This will continue as long as congree leaves the legislation in place making this such a favorable investment vehicle. Non retirement investors will of course play the market, buying and selling as they always have. Nothing confusing there at all.
Excerpt from Barron's: "If China devalued, all the other SE Asian currencies would go down with it", says Albert Edwards, global strategist with Dresdner Kleinwort Benson in London. "Then all of Northeast Asia would follow, and the yen-dollar would go to 140-150 and both the Americans and Europeans would find themselves with massive trade deficits and weakened currencies and economies. The Dow would sink through the floor as earnings expectations disappeared. We're talking about a true doomsday scenario."
To Cmax: I'm sure that Japan and other Asian countries understand well the future--under the present scenario developing they look forward to becoming low paid production serfs of the "mighty" United States.
This WILL not be allowed to happen, in my view. The combination of oil and foreign held U.S. debt can and will bring the U.S. to heel. What do you think a significant run-up of oil prices will do to the European economies? What about our agreements with Japan to share oil in cases of shortages? Who knows, maybe Saddam is lighting the fuse right now, he would love being the fall guy if the U.S. can be brought down economically.
One way or another, I believe that gold will again become a very significant standard of value. God sets standards in the physical world and in moral principles--if they are transgressed, people will suffer. Gold has always been a biblical standard of value, and in more ways than monetarially. God uses people of all pursuasions to teach His lessons--study the history of Israel.
Midas and Wetgold: I filled my gas tank today for 1.03 U.S. per gallon. Of that amount 38.3 cents per gallon was tax. Texas gets 20 cents and the federal government gets 18.3 cents. The 65 cents profit is split between the retailer, distributer and refiner. The refiner paid about $20 U.S. to an oil company which, in addition to obvious expenses, has to pay taxes, severance fees and of course the royalties to the "little guys" who actually own the mineral rights. "Getting rich" in oil is damn hard work and very expensive. Europe pays more per gallon of gasoline because they are taxed at a much greater rate.
Dave, Panda, NJ, all @ Definitions of "End week with a gain"
For those who have never listened or watched a business report, read the Wall ST. Journal, or followed any analysts comments.
When you're prediciting an entire market week's activity and you say the market will "End the week with a gain", this does not mean the final minute will be a gain. It does not mean the final hour will be a gain. It does not mean the final day will be a gain.
"End the week with a gain" in the context of a weekly prediction, quite obviously means that from Monday open to Friday close, there will be a net gain. How anyone could interpret this otherwise baffles me, but hopefully this clears up any confusion on the matter.
US fed Reserve has sucked up 20+ Trillion Debt through selling TBill's, the American People are ultimately responsible to pay for it. THERE IS NO PUBLIC OR PRIVATE AUDITING of Fed's Account Books, Folks, Check it out.
A sweet racket indeed, if Japs or Mid East start dumping these, US citizens will get their clocks cleaned. More mutiual funds in the market than Stocks on Exchange. How can Stocks give 38% anticiapted return ( US Polls ) when the GDP is less than 3%, figure this out. People saving their Retirement Funds are risked ALL to Wall Street Swindling shenanigans, Remember the 80's Milken's and others....
"If oil prices remained stable in 1998 after the 11-member group increased supplies, Riyadh would potentially be in a better
position to pay off domestic debts, balance the fiscal budget by the year 2000 or increase spending, bankers said."
With all the money flowing into SR over the years HOW could they be in debt - aren't they devout in their religious beliefs ( no liquor, porn, clothing, etc ) ???
It's always hard to take 'em down, but this week they either can't
take 'em up, or certainly can't keep 'em up. And that's not good.
Supply easily exceeds demand in this market, which is more
important than probably hits most investors at first blush. Gene Inger shares his stock market wisdom with us:
http://www.gold-eagle.com/gold_digest/inger1107.html
WetGold, Most Mid East Oil Producing nations ARE IN DEFICIT while the Monarchs have stashed personal Billions in T-Bills, US Stocks etc. Check it out. I see all this misinformation from US media, it is pathetic indeed.
I understand 401K's well enough, apparently better than you.
When enough people move their money, as I did, from a stock oriented fund to a money market fund, the underlying stock will be sold. I pointed out your statement on 11/6/97 at 13:07 that "people will continue to inject huge contributions into the market REGARDLESS OF WHETHER IT RISES OR FALLS." And now you deny that statement.
You have made conflicting statements at every turn and now can't keep track of all versions of your stories.
Midas, you say US polls indicate investors expect 38% gains?? Just what poll exactly are you citing? Everything I've ever read has said that EIGHT percent gains are what investors expect over the long run and anything else is just gravy. really interested in your source of the "38%" number.
Your posts are always intrigueing.
The current open intertest on the Comex Gold ( futures + call options ) is
57.5 million ounces, or @ 1800 tonnes. We know that the warehouse stocks in case delivery is requested stands at less than 600,000 ounces.
The OPEN-INTEREST to ACTUAL-COMEX-STOCKS ratio now stands at 96 to 1.
Now anyone with a grade 5 education can realize that if just a few of these futures were delivered, this charade would be over.
Now you are also saying that on the OTC side, where the volumes are
enormously larger, the same sitiuation exsists.
This certainly looks like a precarious condition, one which cannot be maintained much longer, even with the infusion of CB Gold into the market. How the hell will the shorts deliver the Gold if their
game is finally called ??
One question, if as you contend, oil will be driven up to support the
non US currencies, is it a good time to go long on ( paper ) oil?
LGB: Please review your satire about gold bugs and consider adding one more point..to wit..Any weekly close of the DOW below the August high of 8259 shall be construed to be a crash or a confirmation of the continuing bear market and bullish for GOLD. This will resolve your current difficulties with regard to various interpretations of past remarks.
Seoul says warning two newspapers over won reports
SEOUL, Nov 8 ( Reuters ) - South Korea's Finance Ministry said on Saturday it was sending letters to the Asian Wall Street Journal and the International Herald Tribune over its coverage of the battered won currency.
Finance Ministry spokesman Chung Eui-dong said the letters would protest recent coverage of the won by the two newspapers, which he said ``had misconstrued the facts.''
``We are preparing to send letters to the ( Asian ) Wall Street Journal and the International Herald Tribune for their articles on the won which had misconstrued the facts,'' he said.
``I can give no further details,'' Chung said, when asked which parts of the articles were incorrect.
The South Korean won ended on Friday at a record close of 979.90 against the dollar. It has lost about 16 percent of its value so far this year, half of it the past month alone.
The Seoul stock market dropped nearly seven percent in opening trade on Saturday over fears about the won, but then recouped some of the losses to close 3.87 percent down. Traders said news of the warning to the foreign press cheered local investors.
Traders overseas have said they expect a 10-15 percent devaluation of the won, which has lost ground steadily over mounting pressure this week in the forward market.
Finance ministry sources said the government took exception to a Bloomberg News report that appeared in the International Herald Tribune on Thursday, which said South Korea's financial crisis ``could dwarf those in Thailand and other parts of Southeast Asia.''
The sources said the government also objected to a reference in the story that South Korea may have to follow Jakarta and Bangkok to the International Monetary Fund for emergency loans.
Both the Seoul government and IMF Managing Director Michel Camdessus this week denied South Korea was in the same shape as Indonesia or Thailand or that it needed IMF loans.
The Asian Wall Street Journal angered the government over a story this week saying the central Bank of Korea had depleted a big chunk of its reserves in defending the won in the forward market, ministry sources said.
Editors at the Tribune and the Journal were not available for comment on Saturday. Telephone calls to the Bloomberg office in Seoul were unanswered.
Dave, I've post patience with you. Of course I don't dent the statement, " 11/6/97 at 13:07 that "people will continue to inject huge contributions into the market REGARDLESS OF WHETHER IT RISES OR FALLS."
Not only so I NOT deny the statement, I'd be happy to repeat it a thousand times for your benifit if it would mean you'd stop misquoting my posts. What you claimed I said before was that people would NEVER take their mutual fund money out of the market for any reason!!! The two things are entirely seperate and unrelated.
Let me repeat again. Investors will move money in and out of the market. Even 401K investors will do so as I myself have already stated a million times that I did. Now in MMF. HOWever, market sentiment and investor strategy being what it is, attractive company stock matching contributions being what they are, and due to the fact that the vast majority of retirement investors are following a "buy and hold" strategy that cares not what the market does,
"people will continue to inject huge contributions into the market REGARDLESS OF WHETHER IT RISES OR FALLS."
"people will continue to inject huge contributions into the market REGARDLESS OF WHETHER IT RISES OR FALLS."
"people will continue to inject huge contributions into the market REGARDLESS OF WHETHER IT RISES OR FALLS."
Most employee retirement investors see a falling market as aimply an opporutunity to accumulate more shares with the same contribution amounts. Study the 401K retirement account mutual fund outflows on the "Off white" Monday 27th, 550 point loss day. guess what? there WEREN'T any! Them contributions will just keep a rollin in NO MATTER WHAT. And individual investors will buy and sell as always. No contradiction at all there.
Kindly quote the publication and date where the 30% and 25% expectation from the average investor is the norm will you? And the Govt. insured part too. I really want to read the publication where this is stated. If you have no such specific information that can be verified, please don't obfuscate by making up facts. It contributes nothing to the discussion. If you'd like to know where my facts came from on 401K's, please read the 10/31/97 edition of the Wall Street Journal.
Huge Garage Sale
Here's just a sample of the items that are now available at bargain prices:
Cars, boats, RVs, houses, jewelry, computers, clothing, businesses, furniture, books, estates, employees, currency, airline tickets, motorcycles, industrial equipment, farming machinery, raw acreage, intellectual properties, consumer electronics and much much more.
E-Z terms. Gold prices same as silver.
Special "fire sale" prices available in certain locations. See your local skyline for details.
Ground Floor Opportunites in the exciting new "Canned Food" futures.
Jolly Green Giant Canned Peas 1000 cases +.015
S&W Baked Beans 1000 cases +.002
Dinty Moore Stew 16 oz. 500 cases +.029
Yesterdays Close Todays Close
MRE Index 4,984.50 4,996.00 +11.50
Metals Markets
Brass and lead again outperformed all rivals in todays trading. Trading between long and short positions became so fierce that big board action was temporarily halted as heated exchanges between both camps resulted in hour-long delays at the small arms exchange.
Todays market report was brought to you by Dr. Gentle Willians Dentistry pioneers of the new aluminum amalgam fillings, bridges and crowns.
Midas, Louis was giving his opinion, not citing any valid study of investor sentiment. I'd really like to see a published poll, including the questions and demographics, where such numbers are quoted. However, I know that we WON'T see such a poll because none exists with anything remotely approaching those numbers.
@Home Donald, all -- Will log in later -- son wants computer!
Donald: Thank you for your note about the Constitution, and the summary of the Barron's article. I think it is very clear that we are in a bear market. The question is when and how fast we are going down. I think we can estimate how quickly by using the "fear" index. I think it is reasonable to assume that most individuals who are buy and hold are not going to sell for several months unless the market drops precipitously, even if Japan collapses.
I pose a question to all of you -- how many of the stock market investors are buy and hold? My only guess at this moment would be to estimate the percentage of the markets that are from retirement accounts: 50%?
Any ideas? What is our lower limit for how far the markets could drop, if fear in the retirement type investor does not yet exist. I would quess the DOW could drop to 4000, but I would like to hear opinions. Personally, I do not expect a sudden drop, because alot of dippers will pile in on the way down, just as they did after the 1929 crash.
I am not trying to scare anyone -- just trying to estimate how much of a drop if "fear" is not yet a factor. If the market does not drop, no harm done. Ideas?
@ASIA - DA BOMB #2. --- Do you get the feeling like me that we haven't even scratched the surface of this Asian crisis yet ???
FOCUS-Seoul stocks plunge on financial crisis
By Bill Tarrant
SEOUL, Nov 8 ( Reuters ) - South Korean stocks closed down nearly 3.87 percent on Saturday as investors stampeded out of the market over fears the won could be devalued in the country's deepening financial crisis.
``Stocks are falling as foreigners dump shares on fears the won will further plunge and local investors are jumping on the bandwagaon,'' said Lim Bok-gyo at Hyundai Securities.
The market closed down more than six percent on Friday. For the week, the key index was up five percent, but it has lost more than 24 percent so far this year.
The won, which has depreciated 16 percent against the dollar so far this year -- half of it in the last month -- has been the key factor in the market's fall.
``Korean exporters are hoarding dollars, foreign capital is fleeing the stock market and the central bank is running out of ammunition,'' said one fund manager in New York.
"You have the classic backdrop of a devaluation."
The government has denied it will devalue the won.
The central bank has repeatedly intervened in an unsuccessful attempt to prop up the currency, which is not fully convertible.
Meanwhile, the won was trading at 1050/1060 to the dollar in the one month non-deliverable forward market, 1165/1175 for three months and 1290/1325 for one-year.
Korean banks were among the hardest hit in the Seoul market on Saturday, reflecting investors' belief a devalued won would hit their foreign loan portfolios.
A downgrading of South Korea's foreign debt ratings by Standard & Poors and Moody's Investors Services followed by Moody's downgrading of four Korean banks has not helped.
Saturday's selling was presaged in London late on Friday when the deepening financial crisis sent Korea's global depository receipts ( GDRs ) to a discount for the first time. GDRs are securities representing shares, usually from an emerging market, that trade on overseas exchanges.
The discounted Korean GDRs meant their value was below that of the actual shares and highlighted tumbling confidence in the country.
At 1800 GMT, Korean GDRs were trading at a discount of 3.03 percent to the underlying market from a premium of 5.6 percent on Thursday, according to calculations by HSBC James Capel.
For the past several days, the emerging stock and bond markets have been abuzz with talk that Korean institutions were dumping holdings from their portfolios.
With short-term debt coming due and creditors reluctant to roll it over, Korean banks were scrambling to raise dollars overseas, market sources in New York said.
Concern has focused on Korea's estimated $100 billion foreign debt, most of it short term, which has suddenly become more expensive to repay because of the downgrades.
Central bank reserves of $30.5 billion are sufficient for just 2.5 months of imports. Moreover, the bank has an estimated $5 billion to $6 billion committed to the forward market after it attempted to stabilise the won, analysts say.
The central Bank of Korea's intervention is putting pressure on the banking system. Many lenders say they are already having trouble raising money.
Denied fresh credit from strapped banks, at least seven major conglomerates have failed so far this year and a number of others have defaulted on their loans.
The domino effect of corporate failures could tip the world's 11th largest economy into recession, analysts said.
The market has speculated Seoul may have to follow Jakarta and Bangkok in seeking emergency loans from the International Monetary Fund ( IMF ) , a prospect that both the government and the IMF said this week won't be necessary.
``It's difficult to see how Korea is going to make up this hole in its funding requirements unless it either prints it all, or brings in foreign help,'' said Graham Courtney, director of Asian economics for SBC Warburg in Tokyo.
Thank you Speed I'll take that one under advisement! Also, any DOW close that is less than a 20% gain at the end of 1997, should also be considered a crash by Goldbugs! ( after all, us paper bugs expect and DEMAND our 30% returns each year!!! )
NICK KNIGHT OF JAPAN'S Nomura Securities is among the best known global
capital-markets strategists. That reputation is the result of his correctly calling the rallies and plunges
in the equity and bond markets. While the world was following the siren calls of the bulls,
London-based Knight was a bear appealing for caution -- a stance that has been vindicated by the
market volatility of the past few weeks. Knight recently spoke to Asiaweek's Assif Shameen about
his views on what is happening in markets around the world and what is to come.
Is the great global equities bull run finally over?
A bull run can mean different things to different people. If you're a Japanese or a Malaysian
investor, you know that the bull run ended years ago. Tokyo's run ended in 1989, Malaysia's in
1993. Although Wall Street and a lot of the European markets have continued to break records up
until recently, there is no shortage of markets around the world that were either never part of this
Wall Street-driven bull run or decoupled from it years ago. But coming back to Wall Street, I think
we have seen for months now signs that indicate a turning point.
Source: Datastream, Morgan Stanley
The bulls are heralding a global deflation, which would keep inflation at bay, interest rates low and
corporate earnings growth strong, hence forcing markets to break new records for another two to
three years.
I have heard forecasts of the Dow breaking the 10,000 level in a year or two and the 12,000 mark
in three or four years. You can be silly and keep projecting this way for the next 100 years. I'm not
saying there won't be any good news; I'm just saying that most of the good news, if not all, is
already in the price with Wall Street at these levels. I don't think the news will be so good from here
on, especially with regards to economic growth, earnings growth and inflation. That's why I believe
the markets will correct themselves over time, perhaps not with a crash, but with several steep
declines like the one we saw recently.
Are we going to see more volatility in global markets over the next 12 months?
Yes, there will be a lot more volatility than we have seen in the past 12 months. George Soros's
recent comments were actually very perceptive. He said we don't quite understand what we have
unleashed.
Two weeks ago, Wall Street was spooked by Hong Kong, which isn't even a tenth of its size.
Was Hong Kong a trigger or an excuse for U.S. investors to sell?
Hong Kong two weeks ago merely reminded U.S. investors that stock prices can go down as well
as up. Having said that, I think there is also an element of U.S. companies' earnings becoming
slightly weaker as demand in Asia, which was the fastest growing market in the world, slows down.
What is the outlook for Asian markets?
On a 12- to 18-month time frame, I don't think you'll be making a lot of money in Asia. There will
always be bargains and special situations emerging, but generally, the outlook for Asian markets
isn't that rosy for the next 12 months.
Is that true of Japan as well?
Well, I can safely say that Japan is the one market that will be 20% higher than its current levels in
12 to 18 months. You can bet on that. In the short run, there will probably be a yen depreciation
and a decline in the Nikkei indices as a result of some more negative economic numbers making the
headlines. But on a 12- to 18-month horizon, Tokyo is one of the easiest markets to call.
Are emerging markets now going out of fashion?
Asians have to understand that the emerging-market cake now includes Russia, Eastern Europe,
Africa, Latin America -- you name it. Even within Asia, you have the unexplored Indian
subcontinent. There was once a time when Malaysia and Thailand were among the few attractive
emerging markets in the world. That's no longer the case. If I can make more money in Eastern
Europe or Latin America, why should I settle for markets where you have high interest rates, a
weak currency and low earnings growth? The glory days for Malaysia and Thailand are over. Asia
has some big headaches that need to be cured before it gets a fair share of the pie. There is just one
positive now -- the prices have fallen. But the bigger question is whether they have fallen far
enough, given that earnings are being downgraded all the time.
Where should investors be right now?
Cash is becoming king again. Bond rallies have been fed by equity price declines. To take the
bonds further, you need to see more distress in global equity markets. But I'm not sure if even that
is enough. What I suspect will happen in the coming months is that bond rallies will fail, which will
allow equities to come off. But the surprise will be the failure of bond markets to re-rally the equity
markets. So eventually the guy who is cashed up will wake up one day to find cheap equities and
bonds. That's when you will see the start of the next bull run.
From Barron's today, this guy is quoting another article I can't find yet. I'll post the full article upon request.
Why Worry?
Analyst Sees Deflationary Impact of
Asia's Woes Whacking U.S. Profits
KATHRYN M. WELLING
An Interview With Martin H. Barnes ~ ..... That would be
very debilitating on people's psychology toward the
market, given their buy-the-dips mentality and
overblown expectations for 34% annual returns. But I
don't feel any necessity to be super-bearish.
Monday--French banks and markets are closed.
Tuesday- US bond markets are closed and some futures trading is suspended; banks and markets in Canada and France are closed.
Wednesday Taiwans markets are closed in observance of Dr. Sun Yat-suns birthday.
This weeks Barrons Preview This Week
Nonlinearity means that the act of playing the game has a way of changing the rules.
DigDeep: I think Lyndon Larouche is off the wall sometimes, but I think he is on the mark about our currency crisis. I think we should read him carefully, and winnoe out the nonsense which he tends to utter. I think under that craziness is a core of brilliance. We just cross reference wiht less crazy sources.
REPORTING FROM THE EUPHORIC ZONE--Guaranteed true footnotes to the baby
boomer bubble ( a.k.a. "tiptoe through the tulips" ) :
According to the front page of the New York Times business section on Wednesday, October 22, 1997, a recent survey by Montgomery Asset Management of San Francisco found that the median expectation for current investors in U.S. equities is for an average annual gain of 34 percent for the next ten years, the highest in any such survey in history, and
surpassing the previous record of a 22 percent anticipated annual gain in a virtually identical prior survey by the same pollsters earlier this year.
"Alan Greenspan, the US Federal Reserve chairman, chided European countries for having inadequate statistics for measuring inflation, and warned of the dangers this posed for the management of the European single currency. Few European countries publish regular and punctual monthly data, which means economists are left with a disjointed picture of growth and inflation across the continent as a whole."
JAPAN BETWEEN A ROCK & HARDSPOT - Nekkei HAMMERED DOWN 4.2% to 15836
Massive currencies devaluations and stock market crashes! Absolute financial chaos reigns in South East Asia - This is spilling over into Japan, Australia, Europe and the US of A. A Financial Tsunami is Looming in Land of SETTING Sun. What inevitably follows will be the total collapse of their banking system. Japan will indeed be forced to dump US T-Bonds in order to defend the home economy. Subsequently, they will buy gold as they fight for economic and financial survival- SEE:
http://www.gold-eagle.com/gold_digest/oracle1106.html
Sorry for to take so long to reply. Yes like that co, like Tvx even better
When da golden she starts to rally, dis co stock goin to double in no time
flat.
Trustor chairman says funds intact Lord Moyne broke his silence last night to insist no cash was missing from Trustor, the Swedish investment company under investigation over an alleged misappropriation of funds.Trustor's chairman and controlling shareholder said the location of assets and funds had been established and that he planned to resign and sell his shares "when appropriate".
LGB, I was away, Polls from US News media are normally to shape your and my opinion and prepare us for 'events', I am quoting a 'respected' PBS Show, I dont recall the name of the Poll.
North American TV is replete with Nanny Case or OJ rather than more profound World events. The Bandwidth allocated to crap will numb any intelligence, Give them their six-pack and constantly show mostly scumbag idols, i.e. Rock Star's ( Marilyn Manson is constantly burning bibles on stage with 15 year olds roaring ) , Give them Movie Star's, $60 Million NBA player's they will not think about the World at large.
Coming Soon...Polish and few eastern Eurpean Currencies Tanking, Gold has mostly stayed in the same hands since 5000 years. Will Rise only if Masses want it to rise, OR When They want it to rise. The Swiss announcement and World CB's stand ( in tandem, irresepective of their political differences ) is baffling to say the least.
This Whole week it rose in Asia and was flattened in London/NY.
Check it out, IT IS BEING GUIDED CAREFULLY
The Jap 10 yr Bond is 1%, while it's neighbour customers are sometimes 100-300% overnite, Something is gotta give, but is being diverted where it has been told to go
LGB: What is your prediction for the DJIA next week?
ALL: I'll be making several postings tonight -- explaining my bearishness on stocks and my bullishness on gold and silver. For a change, I have a free night. I always enjoy the postings at Kitco. I'll try to answer questions, also.
Folks, I dont think that anybody can win this Kitco war between Paper and Gold. I think that everybody is making valid point, the problem is that everybody is looking only at facts which support his/her specific point of view and disregard facts which goes against it.
You have to admit that LGB was correct in his prediction, however I would argue his reasoning for stock market continued performance for a long time.. LGB, I gave you a hard time for how you justified your prediction ( Asia rebounding ) , however, I have to say that I also thought it would happen. Yes, I even put my money into Asia market - with my timing record no wonder it continued its decline ;- ) BTW, LBG you said last week that part of your money went into Asia also. Did the story changed?
My dear goldbugs, I think that we are really in the new era but not the one so frequently proclaimed by the stock market bulls. Accumulation of money by individuals or by different funds, access to timely information, and incredible speed by which traders can execute their transactions sets up the scene for market manipulation on scale we never saw before. I already expressed my opinion about it before, some on this forum were a bit offended because they also participate in this game. However, its a big money manipulation which worries me. I think that Nomercys posts at 16:06 says it all and I am in totall agreement. Just look at the daily graphs and you can see when and how the game is played. Now, as far as CB, etc., manipulation and conspiracy theory, I think they are not the real initiators but are guilty of letting the game go. As far as Gold goes, I think that as long as somebody can so easily manipulate it, it does not have the chance to be the "real" currency because it does not have any stability!
I think it will change, but I have no idea how long this process will take. All technical analysis I see on this site try to explain the market behavior based on some rules. Unfortunately most of these rules dont apply at this time and will become effective only when everything is trashed and we start all over again. Just look what's happening. E.g., does gold goes up when stock market goes down? How come that bonds keep going up even when market goes down? How come that even if there are some conflicts brewing it does not efect gold or markets in general. How come stock keep going up just a few days after company anouncement that revenue and profit will decline and P/E is already through the roof. These used to be rules which don't apply at this time. However, LGB don't you confuse that with "strong fundamentals".
LGB, you are also looking only on facts which support your views. Yes, 401K money will keep coming to market, however where itll go is not so clear and eventually money will start flowing out when baby boomers decide its time to retire. Your comment that 401K money in-flow did not stop when the market crashed did not consider that it takes a longer period of decline until 401K investors become testy to change their contribution allocation ( where the money go - stock, bonds, MM, or guaranteed return options ) . BTW, we dont have statistics available of how many participants can change their contribution at will. Only in larger organizations you can change your contribution at your will. They could negotiate better deal with specific mutual fund companies dues to the size of their retirement plan. I know that many of my friends in smaller companies can redirect the new contribution only twice a year. This means that even if market crashed today, their new money will still keep going into stock fund and it may take four month after the crash when they can change where the money go.
Natural Resources are it in a crunch..,Grain/Steel and Mortar. Gold seem to be worth less than celebrity old undies, Old Furniture & Car's, and other memorablia in Sotheby auctions.
I think the S&P 500 could stay in the range of 890 - 960 for the next 6 weeks or so, but I agree with you that for the intermediate term the trend is lower, and the S&P 500 will trend down towards the low to mid - 600's over the next 18 months. That would put the DJIA at perhaps 5400.
Wall Street has been making billions in commissions last 5 years rotating money in sectors 'tech' to 'energy' to 'health'. Beware that they all buy at the same time, the same thing and sell at the same time, mostly that not in current hocus pocus charts,
Do you follow the Bank Credit Analyst? Highlights in today's Barrons. They are basicly advocating an extreme underweight in equities and an overweight in bonds due to deflationary pressures. Do you agree/disagree with their positive bond commentary?
Do you follow the Bank Credit Analyst? Highlights in today's Barrons. They are basicly advocating an extreme underweight in equities and an overweight in bonds due to deflationary pressures. Do you agree/disagree with their positive bond commentary?
Gold has not reacted to recent crises because der people now liff in virtual reality, rather den actual reality. Der is no conception of personal danger. Der gulf var vas not a var - it vas schooting der fish in der barrel. Vait for der real problems to happen. Den you vill see der rabbits running every vitch vay. Den der gold vill climbenuppen.
Miro-excellent post..you are absolutely correct in your analysis..the rules of the game have changed...about 401Ks..everyone is overlooking the main card in that game.....the money is tax exempt with taxes to be levied upon withdrawel...that seems like a pretty large gray area..especially in view of all the gloomy government projections for the baby boom retirement...plus as heavy as the next generation of workers at that time will be taxed, and considering that they will be moving into positions of political power..could get very interesting..as the old saying goes..dont count your chickens before they are hatched,,and a 401K and IRAs and eggs still in the incubation stage..
Far-Eastern History tells us the Chinese have NEVER won a war against the Japanese throughout the last 2,000 years. Something that I read in the ORACLE article about Japan Between a Rock and a Hardspot reminded me of this historical trivia. Specifically, the following sentence verbatim is particularly relevant:
Japanese banks have accounted for 90 percent of foreign bank lending in Hong Kong, making the Chinese-ruled territory a bigger potential risk than Thailand whose financial troubles have rocked the region.
As we all know it was the Chinese who invented the game of chess. Could the recent chain of events not be the CHESS PLAY OF THE LAST TWO MILLENNIUMS? That via the shrewd machiavellian hand of Chairman Jiang - facilitated by political control over Hong Kong and the financial clout of the Chinese government - the Sino-nation will be instrumental in bringing down the Japanese Banking System. Furthermore, the Chinese financial strength ADROITLY used might be the cause of the run on ALL the currencies in South East Asia. Jiang could have given the patriotic order to his henchmen to SHORT SOUTH EAST ASIAN CURRENCIES ACROSS THE BOARD. Consequently, JAPAN, the heretofore KING OF THE ORIENT, brought to its knees in defeat BY A LOWLY PAWN!
What China could never do militarily, it achieves with financial deft and guile... and makes a tidy monetary profit to boot! And to add a little levity to the CHESS PLAY - as we know Jiang to have a well-developed sense of humor - he has the rumor spread throughout the world that George Soros - the epitome of CAPITALISM - is the culprit shorting all those currencies. Perhaps thats why the Chairman was always smiling during his recent visit to the US.
Miro -- The question you have about stocks and bonds de-coupling of late seems to have this as an answer. The scared money goes out of the stock market in to the bond market. This drives bonds higher and stocks lower. When stocks SEEM safer the inverse process takes place. Thus, stocks rise and bonds fall. This is a classic divergence pattern. Not good.
As to manipulation? Yeah it's there, but not in the way most would like to believe. Stock index futures are probably the most obvious way to move the market. Another way has to do with the way funds buy and sell their stocks. Typically, funds buy and sell late in the day. This gives the impression that someone is manipulating the market. I think what you are seeing, is mutual fund investor sentiment being summed up over the day and expressed in the last hour of trading by the fund managers. Can a 'Big Trader' move the market? Sure, but all of the floor traders would know it and position accordingly.
The gold market? Not much interest by the public. A few big players, banks, or whom ever. Then there's the media. Oh, and politicians to. Until the public moves in to this market, we are but dust being blown around by a draft. All IMVHO.
Don't count on all those 401k monies staying put for decades. If and when unemployment starts to rise again, those who lose jobs will be forced to tap those funds, even with stiff tax penalties. Most Americans are only one paycheck away from disaster because we don't save enough. Rising unemployment will cut contributions, speed withdrawals and cause the budget deficit to go up with a vengeance. Now for the good news...we are at full employment in the U.S. Unemployment can only stay the same or go up! This "Robust" economy is really quite fragile. imho...
Puetz: I am new to this sight. I find it educational and quite interesting.
I have been following lately the comex metal warehouse totals.
Nov. 7, Gold 571859 oz. and Silver 129785274 oz. After these
supplies are gone, where will they find new supplies? Are there
other metal warehouses in North America?
Wow, sorry for all non-English " constructs" in my posts. Got used to tech editor doing reviews of my writing. I should read before pressing "send" button :- (
Conspiracy theories are sharply frowned upon by many; and yet all students of history know that political conspiracies have always been present since the dawn of civilizations. It's the nature of the beast, ( Pink Floyd ) , and thus your 21:20, although seemingly terribly machiavellian to some, is actually only an act of machtpolitik by China.
Your scenario, which might seem wildly absurd to some, seems to be a very valid theory to me. I give it at least a partial 25/75. Keep us thinking!
Steve Puetz: I have a question for you. We are in a global devaluation race, each country attempting to obtain a competitive advantage over its trading partners. It is a race to the bottom. Each spiral down sinks them deeper into poverty. Eventually it will be our ( U.S. ) turn to devalue. How do we do it? What are the mechanics? As the reserve currency of the world how can we devalue? It seems to me the only possible way is to devalue against gold. In order to devalue against gold it would be necessary to first establish a new official fixed value for gold based upon the free market price against the dollar at the time of devaluation. Can you think of any other way? A new reserve currency such as the yen, mark, franc or Emu seems out of the question unless it has gold exchangeability.
I've been reading postings from others, since my last posting. Now I'll start my market analysis.
Thor: I read the Barron's article by the Bank Credit Analyst. I agree with much of what he said. He understands our monetary situation better than 99% of investors. However, it's a mistake to jump into bonds simply because we are headed toward deflation.
Before jumping into bonds, you must always ask the question: How solvent is the entity in which I am buying bonds? In the case of the US government, the answer is obvious -- they are bankrupt. Uncle Sam has made promises in the for of Social Security, welfare, bank deposit guarantees, Brady Bond guarantees, mortgage loans, and other smaller items. These promises can never be delivered on in a deflation. And deflation is where we are headed for the next few years.
Gold and silver coins will be the only safety in this environment.
Donald: Regarding devaluations: You hit the nail squarely on the head. We can only devalue against gold. In term that most people are more used to: The gold price will rise against all currencies.
The basis for my arguement is simple: Gold is honest money. And not a single major currency is honest. So, when confidence begins to collapse in currencies, honest money must rise in value against dis-honest money -- i.e gold must rise against all currencies.
This job will be done by the marketplace, not by any government fixing of their currency to gold. In the end, governments may fix their currencies to gold - but only after gold has risen many-fold from today's gold-to-currency exchange ratios.
Louis: Global supply-and-demand are more important than any 1 single supply or demand factor. Comex stocks are certainly a good indicator. But they must be evaluated in combination with gold and silver mining production, gold loans, lease rates, futures positions, and other supply-deamnd indicators.
Crystal Ball: The bull market in stocks can only be resolved with a crash. I'm absolutely sure of this -- more sure than any of my other predictions. I'll try to expalin later.
You recommend holding physical gold and silver. In what form? Bullion, coins, etc.? Do you know of a good source for any unexperienced buyer to deal with? Thanks in advance.
Louis - Although you claim to be a new poster here, I am wondering if you have seen some of the posts I have made from the times of your ancestor Louis 16Th of France? :- ) AAR ( At Any Rate - TM ) your question about comex stocks is a very good one and one that many here have been actively discussing for over a year now. According to Canada's financial newspaper the total closing open interest of Gold Futures contracts on the Comex was, as of Thursday Nov. 6, 216,865. Each contract represents 100 ozs. SO that means that IF everyone were to take delivery there is an obligation to deliver 21,686,500 ozs. How is this possible with a storage of only 572,000 ozs. There you have it my friends, ( RJ, DA, OLGOLDBUG, Selby, Front, Speed, EB, Eldorado, Aurophile, Roebear, Reify, panda, GLENN, vronsky, Ted, Strad, Tort, Oldman, Auric, Cheryl ( where ya been baby? ) , Jin, Oracle, Donald, ( O.K. - You too LGB - since you're being POLITE now ) , Nick, NICK and nick, etc, Etc, ETC. ) Please somebody answer the man's question! I'm dying to know the answer myself!!!!
Silver is immediately available from stocks kept by mines for investment. Read the quarterly statements of some of them and you will see it as a line item. Once the Comex and silver mine stocks have been depleted, the investment community will step forward and sell ( at a stiff price increase ) . Then who knows? The Hunt brothers pushed silver prices up high enough to cause a superabundance of silver to be supplied. So much silver was dug up, that it has take nearly 20 years to draw down the surplus.
Panda: The bear is waking up and I think it's a GRIZZLY!
Confused: Buy gold and silver for their monetary content only -- don't buy them for numismatic reasons. In other words, gold and silver bars are OK. So are Krugerrands, Gold Eagles, and bags of silver coins.
I buy lotsa silver/gold from retailers like Blanchard, etc. I want to reduce the preium they attached and buy it through a call and then take delivery of the bullion.
Is this the way to go ? Do U have any recommendation for discount brokers ???
Puetz, When a country devalues its currency what actually happens? How is the new valuation determined? At what point does a country decide to devalue?
Puetz: Thanks for responding. Why do you think that physical gold
and silver are better investments than gold and silver stocks? Are
you suggesting that maybe all governments and countries will soon disintegrate? Are we that close to the end? Would it not be simpler
for countries to go bankrupt, and close their doors to trade?
I think you're making a bad call to suggest buying gold and silver only for bullion content. There are several very excellent reason to buy old US gold coins such as $10 and $20 Liberties. They are:
A ) AU libs have continued to hold their value ( Depending on the quality of the coins many have risen in value. )
B ) Confiscation of gold or price controls cannot be ruled out. Coins with some numismatic value above bullion will most likely be exempted from regulations.
C ) There are a host of old US coins that are trading at almost spot levels. Even the junkers have retained their value. 10 years ago I bought
some very nice AU ( almost uncirculated ) $10 libs and they have increased in value despite the weakness in gold prices. The premium over spot is a very small price to pay for ensuring your gold is not regarded as bullion.
Even in a worst case scenario the people with the old US gold will be sitting on a goldmine. They may be the only people who can openly trade their coins.
I agree with you about numismatic coins in general except for desirable coins with very low populations ( less than 10 in the world ) in the MS 65 class. These coins are very expensive and hard to find but they should not be ruled out of our portfolios.
The numismatic market is even more depressed than gold is right now. There are some incredible buying opportunities out there if you do your homework.
Another nice thing about numismatic coins that are slabbed is that they are VERY liquid. I sold some rare coins which had a very high value and the dealer didn't even hesitate to cut me a check for $63,000. The whole transaction took about three minutes and I made a nice profit.
You are doing Kitcoites a disservice by dissing numismatics. Please reconsider.
Speed -- Good evening folks. I'm 'evaluating Internet Explorer 3.0 ( a freebie ) I still like Netscape better. I got curious about LGB and all of those ID#s. I've tried using two different browsers and my ID# stays the same. Short of using a different ISP, how does one change the ID#?
Thank you for sharing the minutes of your last meeting,
(
http://www.gold-eagle.com/editorials/gold_cost_oil.html ) ,
Even after reviewing the minutes, my observations and
deductions stand, unless of course you care to refute any
or all of them in detail.
P.S.: Please translate your message: "Assalamu Alaikum"
( Ill assume that it wasnt in response to my "housepet" analogy. )
Cmax
FWIW -- Nations officially devalued only when markets force them to. Look at the S.E. Asian situation. The price is always determined by the market. No one government is bigger than the market. The market rules. Look at gold.
I would not be suprised if they are using multiple channels at fixed frequencies to do this. Typically a modem has two channels or freq. One used to xmit the othr to recv. Increases in speed are done though chopping the sine wave into discrete phase components. A split of 16 would give each phase component the ability to carry four binary digits ( 0 through 15 ) . A 32 split would add another binary digit. This is phase encoding. It has its limits in the ability of a DSP to recognize a particular slope in a phase element. The only other way of increasing speed would be to multiply the number of channels used from 2 to 4 or 8. Phase encoding would still be used. So send channels might be at 2800, 2850, 2900 and 2950 Hz. Recv channels similarly alocated in the upper most region of the analog circuit. A wide data bus into multiple modem DSPs would be decomposed, transmitted and then recomposed on the other end. Error correction operations occuring at the next higher level of the structure using Hamming coding, etc.
I have a comment about two recent postings -- both within the past week. I don't remember the exact words, but I remember the jist of the postings.
The first was from S.I. Spy: After ripping gold-bugs fairly severly, he ended by saying something like -- the gold-bugs on Kitco are a bunch of paranoids.
There are two forms of fear: The first is "justified fear" of a real and threatening situation. The second is "unjustified fear" of an imagined and non-real situation.
I am sure that the fear expressed by goldbugs is a "justified fear". It is the stock market bulls, and the paper-money believes who are living under an illusion. The opposition of paranoia is mania. A mania is the "unjustified belief" in an imagined situation.
Time will irrefutiably answer the question of whether goldbus are "paranoid", or paper-bulls are "maniacs". To me, it's a no-brainer -- paper bulls are maniacs.
The second item was posted by LGB: Esentially, LGB said that he did not understand our monetary system completely. Nonetheless, he was sure that the bull market in stocks would continue in the long-run, after a brief correction.
I have serious reservations about taking financial advice from someone who doesn't understand our monetary system. In fact, only the smallest minority of people truely understand our monetary system.
The main reason for the confusion, is that the majority incorrectly assume the the US Dollar is "honest" money. It is not. But gold is. As with any dishonest transaction, you can fool some of the people all of the time, all of the people some of the time, but you can't fool all of the people all of the time.
Investors aware of the dishonest nature of the US Dollar have been moving out of the Dollar for many year. Central bank gold-holdings are 1/2 of what they were 30 years ago. This gold has been moving into private hands. Once central banks have lost their gold, they have lost their financial power. This is happening, more and more frequently.
A question to Donald, and others who have read my book, "Total Collapse" -- Did you find that my explanations of out monetary system, and the dis-honest nature inherent in them -- Did you find these explanations easy to understand and enlightening enough to fully convinvce you that our currency must collapse against gold? And that the bull market in stock must end with a crash?
If so, you might encourage others trying to understand our monetary system to read "Total Collaspe".
I have taught graduate level engineering courses ( DSP1,2,3 as an example ) and U are getting far too technical here. Also, you are mixing technology and terms that don't belong together.
Why do U use the term DSP regarding a modem as opposed to FSK, etc... ??
Panda: I have not tried to hack Bart's system, mainly out of disinterest, but also out of respect. In short, I don't know! Upgrade at once to IE 4.0 and Netscape 4.03 ( 4.04 is coming with AOL messenger service ) . Both products have extras that make them attractive. Ask LGB how he gens so many different Ids. pun intended
A small premium ( or commission ) is OK to pay if you want to buy gold or silver. But only buy the precious metals for their monetary content -- that is, their melt value. If the cheapest way to own gold is to take delivery in the futures market, then that's OK.
I'm not an expert on the cheapest way of owning gold. If you can buy numismatic coins for a small premium over their melt-value, then that's OK. All I'm saying is: Buy gold and silver primarily for their monetary content.
Wet Gold: You gave a good monetary history lesson on the US earlier today. All that's needed is an explanation of the honesty/dishonesty in these various actions.
The biggest drop in the XAU this year was from 122 down to 91, a
25% drop. If you take 25% off of the 109 recent high on XAU you
get 81.30....what did we close at on Friday? 81.39? Hmmmm.
Speed -- I only mention this because I am fascinated by someone who so adamantly tries to convince everyone posting on this site that they are wrong. Most people would give up, and say good luck suckers. This seemingly endless posting of people who have made 'fortunes', telling us how wrong we are, yet they 'drop in' on the pretense of looking for information. How curious.
Also, whenever a market 'event' occurs, you can't get in to this site. Not because of the number of postings mind you. No, I suspect the number of lurkers is damn near astronomical. Hence, my continued involvement with gold. When this market decides to move....
Your a nice honest guy from the mid west who everyone respects for expressing their opinion even though it is consistently and demonstratively wrong. Steve I am sure your children and your mother and just Maybe even your wife still luv ya. Keep the faith old boy.
Asia is burning down around our ears. You can't see this on the charts or fundimentals of US markets yet so using TA to understand where they will go is IMHAIO ( ..and ignorant.. ) not valid at this time. Myopia in seeing only USA markets and economy as key to success is possibly not healthy at this time. It is not the economics but the financials which worry us. No need to reiterate 1930 - 1937 to you. Considering Korea's rapid descent into oblivion closely to be followed by Japan. Duetch Morgan Grenfeld analyst disagrees with your assessment of the impact of this area on the rest of the world's monetary health. As the days progress international financial interests will quickly withdraw all available assets from this region paercipitating a death spiral.
At many point in investment effort it is prudent to withdraw capital and profits and to convert them intodeposits in the bank to await other opportunities. But what if your 'bank' dies? So might your liquidity and even your worth. In the USA we are only insured up to a TOTAL of $100,000 for any and all accounts. This was change after the S&L crisis to limit banks exposure.
Cash in bills may be an answer, except if there is a devaluation or inflation. Asian countries will find out what happens when they are perceived as bankrupt ... the money becomes worthless, subsequently tangibles becomes more expensive, as you know. Gotta keep ones ear to the ground to hear the elephants coming.
On Friday I put the remaining 55% of my mutual fund money in the
Rydex Precious Metals fund. I am convinced 78 is the absolute bottom
of the XAU on this down move, and Friday may be just good enough as
the gold metal came back to close only 2.00 down, holding support. Also we gapped down Friday, looking again like capitulation. My average price is just above 85 on the XAU. I was lucky enough to get
out right at the top at 109 recently and maybe my luck is running out
but I don't think so. This time I maybe just bought at the bottom...
or so close to it that it does not matter.
Puetz -- One of the indexes that I have been following of late is the VIX ( volatility ) index. This index is used in pricing options. This puppy is going to the moon. The readings are consistently over thirty of late. Two years ago, ten to fifteen was the norm. Options have become more expensive because of this. The premium is higher because the market swings are larger. This BS about using options to 'protect' your portfolio will wind up going the same way it did in 1987.
Not my Engish, Yahoo: Gols Price seen averaging $300- $325 per oun in 1998ce
Press artikal baad for Kapitalist and Zoveit Miners. Vee tink Kapitalist press vorst dan Pravda in the mizinfomation.
Not zay about mines dat klose bei low gold prize and never opening.
http://biz.yahoo.com/finance/971108/gold_price_seen_aver_1.html KGB NOT ZELL GOLD. VEE BUY AND ADD TO HOLDINGS
I agree. I also don't know what to think about the current market situation. So I keep some cash, some stocks, some bullion, some numismatics, a bible, a day job, you get my drift. I have been following this group long enough to be able to argue any perspective, even the BORG. Away to KP....
Now, back to today's issue of Barron's. It was very informative and interesting. I'll quote and comment on some of the articles.
From Alan Abelson: "'What US investors seem to be ignoring,' Daniel Cooper wrote to us last week, is the exposure US banks have, via the eurodollar and derivatives markets, to banking irruptions in the Far East. The trouble with both markets, he feels, is the lack of a central clearing corporation to act as a guarantor. That, he believes, gives credence to the potential of an international banking panic."
MY COMMENT: It's true. Virtually everone under-estimates the impact that derivatives will have during a bear market. That impact is only beginning to be felt. To simply this issue, a derivative is a form of leverage -- a leveraged bet on the direction of the market. Options, futures, and swaps are all derivatives.
I've been recommending a derivative -- S&P put options. However, during this bull markets, the creation of most derivatives have had a bullish impact of stocks and bonds. Derivative open-interest has risen in tandem with the markets.
As with margin debt, open-interest in derivatives will contract once a bear market starts. That's because margin-calls will force many derivative players out of the market -- just like margin-calls force margin debt to be reduced in a bear market.
All of this will have a snow-ball effect on the markets. Margin-calls will cause forced sales, which wil cause prices to fall even further, which will cause more margin-calls.
Based on data from this weekend, the margin liquidation has not started here in the United States. For every liquidation in the US, their has been two new speculators willing to take on new margin debt. So derivative open-interest and margin debt continue to climb here in the US -- even will our markets are falling.
However, overseas, the margin liquidation is at full speed. This repeated selling cannot help but eventually spilling over into the US -- thus triggering a margin-selling panic here. It's not far away.
Short Bull -- The 1993 low in the XAU was 64.2 . This is what I am using as some sort of guide to this gold bear market. I am also tracking individual gold stocks and comparing past performance to today's reality. That accounts for my surprise about Echo Bay Mines. It still could be the proverbial 'falling safe'. It's usually best to let it bounce a couple times.
Another concern that I have, is the gross indifference to the S.E. Asian situation. If I weren't P.C., I'd call this discriminatory! :- ) )
I believe we could eventually hit 70 or maybe even lower, but if
you look at the long-term XAU chart you will see that we often
bounce near round numbers like 100, 90, 80, 70, etc. and the
first time down to 80 or just under, we should bounce back above
90 and we should take several sell-offs to get down to 65, at least
4 or more as we bounce from 75 to 90, 70 to 88, etc.
I hat no ideya dat you vould be lurking here! I'ff been stoodying propaganda at da prezteigious Unifersity of Amerikan Broadkasting.
Ho boy, vat I half learned. Theez kapitolistic svine no nufting of hour struggles but do they know PR? DA!!! They know PR. How ist Ivana?
Maybe next year vee go to Black Sea again??
Panda: I watch VIX also. You're right, it has been going to the moon. I've been trying to buy more S&P put options, but the premiums are rich indeed. That's good for the options I presently own, but bad when I want to buy more of them.
I'm hoping for one final entry point on a last batch op put options this coming week. If I don't get them, fine -- I already own a bunch of them. If I do get some more, it'll be a gift from heaven. I agree with Prechter -- at the latest, stock will crash by December 1st or 2nd.
IF CURRENT MANIPULATION TO GOLD PRICES CAN ACTUALLY BE OCCURING THAT STILL BODES WELL FOR 'FUTURE HIGHER PRICES'AS MUCH AS THE OBVIOUS LOWER PRICES...IT THUS BREATHES AND MAINTAINS AN ABSOLUTE AND CERTAIN TRADING RANGE, ALWAYS IN FLUX OF COURSE, BUT GETTING YOURSELF INSIDE-THE-RANGE, BEING FAT TOWARDS THE BOTTOM, AND NAVIGATING WISELY [TRADE SECRETS NO DOUBT] IS WHERE YOU OUGHT TO BE ; THE WIDER THE GAP, ALL THE MORE SAP [PANICS HELP]. TRULY DON'T PANIC YOURSELF NOR SNORE TOO LOUDLY
...SO TOO THESE MANIPULATORS [NOT WHOLLY RECOGNIZED]ALSO KNOWINGLY/UNKNOWINGLY AT LEAST INSURE US A CONSTANT ALTHOUGH JELLO-LIKE FLOOR OR BOTTOM TO THE WHOLE FLOATING MESS...SLEEP EASY ZZZzzzzz...ITS REALLY ALWAYS BEEN THAT WAY ANYWAY GRASSHOPPERS,JUST THE CAST CHANGES EVERY NOW AN THEN...ITS ALL FUNDAMENTAL WATSON !
Don't like PDG....don't like management--Wilson, I think his name is--- a bum compared to Peter Munk....Got my position in ABX ( John Disney's FAVORITE stock ) ....Been in seven months and only need a 25% pop ta get back ta zero....not bad....eh!...Still think I'll get it all back and more within 6 months, so who cares??.....I ain't in no hurry...
Puetz Dead right on the multiplying effect of derivatives on volatility, Unknown, unknowable without wisdom of hindsight, How much dishonouring of paper derivatives will we see? Any thoughts?
Puetz -- I watch the Friday closes on the market. I really want to see how many people are willing to stay 'long' for the weekend. I was especially curious this Friday because of the latest news story, Sad'n insane hisself. ( pun and bad grammar intended ) . The watch word for the market seems to be the price of oil. If oil goes up, the overall market tends to slide due to inflation fears. The analogy I have about bonds and stocks seems to imply one more thing. The amount of money in the market has reached some kind of limit. So it appears that the bond and stock markets are starting to compete for the same pool of money. A final blow-off is still possible if there is no mass redemption by MF holders. Simply because of the last dollar chasing the last stock.
To those who keep asking me about gold and silver stocks: I haven't been recommending gold and silver stocks for several reasons:
1 ) Gold stocks historically perform very poorly during a stock market crash.
2 ) In an environment where gold is rising, while everything else is falling in price ( during a violent deflation ) , governments around the world may impose a windfall profits tax on gold mines.
3 ) Gold mines are not portable, gold is. During a financial crisis, you may want to exit you present country of residence. Hopefully, you can somehow exit with you gold. You may have to be imaginative and early in your exit. But if a country becomes hostile to gold ownership, gold mines are likely to receive the brunt of the punishment.
Gold and silver stocks may be a good short-term buy after the stock market crash, but for now I'm not recommending them. Even if they rise in price during the crash, they'll probably rise less than the bullion price will.
One more thing ( Isn't there always one more thing? ) With respect to the monthly cash inflows to the market, what is the markets present value? Eight or nine trillion dollars, ( the number is so large, who really cares ) . When you compare the monthly inflows to the total value of the market, it represents a smaller and smaller fraction each month. Would it be incorrect to think that you are buying fewer and fewer shares with the new cash inflows? Hence, the point of diminishing returns?
Puetz: Do you think the US Govt. would have the audacity to try and take gold from it's citizens twice in the same century? Especially considering the fairly recent "allowing" citizens to own gold, coupled with the ability to utilize coins and gold in retirement plans because of the new tax laws.
It's not me moving, ludd, It's the earth that's movin'
TED, gotta sell paradise first, then move. The hook is baited. Jes gotta wait, speaking of fish, ya got any kayaking in while playing these paper games?
I covered Wednesday's short Fri afternoon. If Monday gaps down, I'll buy for a daytrade. Will look to enter a 2 or 3 day short if Monday is an up day, which I expect. Whenever the bounce comes this week, the next slide will be the bottom for a few months. If I owned index puts, with VIX at 35+, I'd be looking to sell them on the next dip. World wide fundamentals are terrible. But today's fundamental picture has NOTHING to do with today's stock prices. It was all in the market months ago. As I said before, I am neither bull or bear while the market is open, just a trader. Long term I'm at least as bearish as Puetz. But his timing is wrong. A major top will probably come in the spring. If the Dow is not HIGHER on Dec 2, when Puetz says the crash will have hit, I'll buy his book and subscribe to his newsletter.
ps. If you buy index puts now, with vix at 35+, you damn sure better be right---and right in a hurry. The value of those puts will dissolve like snow on a warm hearth when the next dip ends. The low of 10/28 WILL hold on the Dow!
Went out to sea Thursday + Friday.....This is NO "fish story"---a dolphin surfaced about a paddles lenth ( 6 feet ) from me yesterday and then swam along side for 15-20 secs....COOL...Highlight of week!...
Aurator: According to "Swaps Monitor", globally, the market value of derivatives is in excess of $60 trillion. To put this number into perspective, total debt in the US ( all sectors ) is barely over $20 trillion. Clearly, the tail is wagging the dog.
In the US, the bulk of the gain in debt since 1990 has been in the financial sectors -- no wonder stocks and bonds are booming, while everything else is languishing. Financial institutions have been making leveraged bets on stocks and bonds. These are the so-called off-balance-sheet assets of banks and brokers.
When financial assets decline in price -- as they are in Asia and South America -- banks and brokers will be their own victims of margin-calls.
Borris: Russia Great Kountry, Bullzhit dat vee not Majer Power. Vee show dese guyz that Mother Russia is strong be her Zoviet or Kapitalist Pigg.
Zo you lern da PR bullzhit, kompliments of US propadenda machine and maybee? NWO. Not zame as gun to the head methode ov kompliance vee in difficult times hav used, but still very effectif. Zo they mak the proletariat and he strave to death. Zame ding, Eh?
Da Kapitalist presze mak Prava look like Babe in the voods.
LUv zummer at Black Zee, meet many ZIA buddies and vee chase da girlies. how dat fur Glastnoses.
Puetz: Here are the recent posts of "ANOTHER". From a recent post ( Date: Sat Nov 08 1997 23:25 ) of yours I see that you are in agreement about holding gold, but I thought you might like to read another's view anyhow. I alos include a post from John K. that I thought you may like to read. If I overload you, I apologize.
Date: Sat Nov 08 1997 16:27
ANOTHER ( THOUGHTS! ) ID#60253:
Let us review:
Early this year a very , very large buyer I know
said that if gold drops below $370+/- we would
see the largest trading volume in history. These
people knew the price was going to be forced
down to accommodate some special interest groups
( oil ) . They never bid on the "table", they only
took the physical as it slid. During this time ( including
up to the present ) several other ultra large players
and CBs joined in. You see, none of them wanted
to upset the "understanding" so noone "bid up" .
As time progressed the trading became so large
that it disturbed several large "paper only gold"
buyers. They were what this "understanding" was
created for in the first place! These people received
a real suprise when they found that the "off market"
had grown so large that everyone could not be
supplied if they asked to be so! Many are asking
"to do so" and that is what started the real CB selling
to take place.
It seems this deal was discovered some time back
as early HK safe money was starting to leave the
island. Many of them were very worried that their
massive buying would drive the price. For a while
it seemed that the more they purchased the more
the merchant banks shorted. Could they in some
way be tring to help out the Asians?
What was thought to be big money became huge
money as a few found out about "low gold for oil".
Now, today, many are convinced that the oil deals
cannot be worked out as the CBs will not sell all!
The end of "oil for gold" will drive oil sky high
and crush the Pacific Rim first. In an effort to save
the imploding currency system the CBs will go into
full reverse by "no longer supporting the gold shorts"!
The message is: "We now must have higher oil prices
to maintain the currency system" " Economy be damned".
We are in for a wild ride. I let you test me! From the ___
I have, my thoughts are: A fast rising US$. A faster
rising oil price. A imploding world markets.
And a soon not to trade rising gold market.
To close: "If you know my thoughts are fact, you
still do not know? Therefore, follow the outcome
and apply my thoughts. Then you will know."
Date: Fri Nov 07 1997 22:37
ANOTHER ( THOUGHTS! ) ID#60253:
GCH,
1 ) Why then did Hashimoto threaten to sell US SECURITIES and buy gold?
He will do both, but not in order or in amounts supposed. The BOJ is buying
gold now , much more than assumed. They will sell US debt but only after a
rising oil price runs the US$ thru the roof. Even then it will be as minor currency
management!
2 ) What will be the new world reserve currency once the dollar is hyper-
inflated to zero or devalued? E-gold, gold itself or nuclear weapons?
I don't know, but we will all find out!
Date: Fri Nov 07 1997 21:59
ANOTHER ( THOUGHTS! ) ID#60253:
Some replies:
Reify ( @sitcom.co.il ) ID#413109:
Date: Wed Nov 05 1997 20:33
To sell what I own would mean losses, and what investment at this point
Oil Stocks? Bullion? What?
Reify,
It is a hard game we play, yes? Many have used the paper game to
make great returns and have much to show for it. But, make no
mistake, if you try to use the solid reasons for holding bullion as a
purpose to trade paper gold you will not keep what is earned!
I know those who have traded with the sun and gold bullion will not
be sold at a loss by them. Indeed, these gains will view all forms
of paper as sad returns.
Divide your thoughts, give some to bullion as your will can allow.
Resolve yourself to let the others go if your loses come back.
Much luck to you.
Date: Wed Nov 05 1997 22:06
GOLDEN CHEESEHEAD ( @ANOTHER SHOCKING POST! ) ID#431263:
. All
paper gold will be worthless just like stocks and bonds! Am I right? If not
please correct!
Mr. GCH,
You may be more right than wanted to be. For some it is a long torturous
wait to go without paper gains. For ones outside the west, it is not hard.
Days pass easily as a thousand years of history give backing to our
investment.
"For what I hold is not an empty promise. Nor is it a major
thought of debt. I am now today, paid in full!"
Turn slowly now and view all directions. The wealth that was
had was not real. The Pacific Rim started, now South America.
Next will be Europe closely followed by the US. Remember,
all currencies are the same now as they are "digital paper"!
Nations will defend the system at all cost They will never sell
US$ treasury debt as that debt is their currency! The dollar
will soar as a final defense! As part of this defense they will
allow oil to rise as oil is priced in dollars. How do you get oil
to rise? Today, we stop our CBs from selling gold!
Date: Fri Nov 07 1997 14:49
John K ( WORLDVIEW ) ID#24760:
Currency Chaos and Financial Colapse
Part 1
To understand the world financial situation is to understand the difference between reality and illusions of
reality.It is to understand that the basis of all financial failures is the inability to pay debt.Debt is repaid
from income or profits.When income or profits are insufficient to repay debts,default
occurs.Occasionally,new debts are provided to repay old debts,but this will only increase total debts and
future losses.
Since 1990,the world has witnessed a large economic expansion in the U.S.,and explosive growth in
South East Asia and China.Within Japan,short term interest rates were decreased to .5% and the
government initiated the largest fiscal stimulus program the world has ever seen.Has anyone questioned
why the second largest economy in the world,with all of its major trading partners having substained
growth,with the lowest interest rates the world has ever seen,with the largest fiscal stimulus package the
world has ever seen,has not grown and now the economy is contracting at an annual rate exceeding 11%
?
To begin to answer this question,one must return to pre-bubble Japan,when the Nikkei was near 40,000
when land values at Ohtemachi and Toranomon in central Tokyo would have bought all of Canada or all
of California,and when Tokyo was worth more than the United States.On the basis of these
valuations,trillions of dollars were lent by the Japenese Banks,making them some of the largest
corporations in the world.These loans were not supported by the income of the borrowers,but by the
assets they pledged for security.Today,the Nikkei is below 16,500 and dropping,and commercial land
prices are down 70% and dropping.The loans are still outstanding,but with borrowers unable to repay
loans from income and realizable asset values far below loan values,these loans remain on the books as the
losses on these loans likely far exceed the banks capital.
The size of total losses is unknown.However,during November/95,Japan's finance ministry announced that
non recoverable loans at the Osaka based Kizu credit co-operative were 960 billion yen representing
more than 70% of total loans.A further 230 billion yen were thought to be doubtful leaving less than 10%
of Kizu's loans as performing assets.Does this tell us anything about how the balance sheets of the large
banks really look? The loss of net worth represented by the collapse of the Japanese stock and real estate
markets represents many trillions of U.S.dollars.At the height of the bubble,Japanese land values were
estimated to be between 16 to 20 trillion U.S. dollars.A 70% decline represents a $11 to $14 trillion
dollar loss in the real estate market alone.When the banks start selling real estate to repay bank loans,look
for the market to drop even further.Add this to the losses totaling trillions of U.S. dollars on the stock
market and the potential loss exposure of the Japanese banks is staggering.
When the bubble in Japan burst and banks were facing massive loan losses and negative growth
prospects,a new source of revenue had to be found.This led to a large increase in lending to South East
Asia which helped fuel a bubble in these economies.In addition,exposure to derivatives increased to
trillions of dollars.
We have recently seen the bubble burst in South East Asia which will further add to the loan losses that
the banks cannot report as they do not have the capital to do so.
It is estimated that when the Nikkei dropped below 16,500 many banks capital fell below the 8% minimun
required by Japan's Finance Ministry.This does not include the losses on loans to the Japanese and South
East Asia bubbles that are real,just not reported.
When the Japanese bubble burst,the Japanese government began a series of fiscal and monetary
stimulation to get the economy restarted.Total government debt rose to between 87% to 89% of GNP at
the end of 1996 and could be as high as 97% of GNP by the end of 1997.The government budget deficit
has been running over 7% of GNP.Significantly,despite record low interest rates,interest payments now
absorb over 60% of total tax revenue.In addition,their is Japan's Fiscal Investment and Loan Program,a
system that draws money from public pension and postal-savings systems and lends to 57 government
agencies.Total borrowings are about 374 trillion yen,and when combined with official borrowings could
see Japan's debt inflate to 150% of GNP.
Japan's life-insurance industry reportably holds 25% of the U.S.12 trillion dollars in household savings.As
highlited by the failure of Nissan Mutual Life Insurance Co.,this industry is also in need of a life line.When
Nissan Mutual collapsed,liabilities exceeded assets to such a degree that the industry's entire 200 billion
yen emergency reserve covered only 2/3 of the loss.These company's have promised returns as much as
5.5% while earning only 2.9% on investments in 1996.For 1997,with bond interest rates decreasing and
the stock market declining,returns on investment will likely fall below 1996 levels.
According to Standard & Poor's,the level at which hidden profits on stock holdings disappear are as
follows:
Company Nikkei Company Nikkei
Toho Life 19327 Mitsui Life 17167
Kyoei Life 19006 Dai-Ichi Life 14948
Nippon Dantai 18835 Meiji Life 13181
Chiyoda Life 17876 Nippon Life 12894
Sumitomo Life 17485 Taiyo Life 9757
Despite near invisable interest rates and hugh fiscal stimulus programs,the Japanese economy continues to
implode,contracting at a rate exceeding 11% in the last reported quarter.Problems will only increase with
the financial turmoil in South East Asia where 44% of Japanese exports go.
The question that no one dares ask is what does the Japanese government do?
The economy is imploding,government direct and inderect debt is 150% of GDP,the government budget
deficit is large and unsubstainable,and the banks and life insurance companies appear to be insolvent and
will need substantial capital infusions to remain viable.The answer is that the Japanese government cannot
repay present loans and that borrowing additional funds to bail out the banks and insurance company's will
only speed the road to bankrupcy.The banks are large holders of government debt,and while it could be
argued that the government could borrow even more money from the banks and then turn arround and
give this money back to the banks to improve their equity positions,this simply amounts to transfering debt
and does not address the central issue that neither the banks or the government are financially solvent.In
fact we have the situation where an insolvent government is borrowing from insolvent banks who in turn
rely on the backing on the insolvent government.Loans now far exceed the capacity of debt
repayment,and compounding interest and an imploding economy will seal their fate.Basically,it is simple
mathamatics.How long will this continue?Like any bankrupt person,until the credit cards are cut off.It is
important to realize that this will take much longer than in a normal commercial situation.Japanese banks
must be willing purchasers of Japanese government bonds at all times,reguardless of fundamentals.Should
a government default on its debt,the value of its currency which reflects the credit of the government must
approach zero.Currency is simply another unsecured promise to pay,and currency issued by a bankrupt
government will have no value.Generally speaking,the bank's assets are financial ( currency based ) and
will also fall to zero if the currency collapses.The banking and financial industries are dependant on a
functioning government bond market.It is for this reason that governments which are insolvent can continue
to borrow.For clarity,let me repeat the initial question.
Since 1990,the world has witnessed a large economic expansion in the U.S.,and explosive growth in
South East Asia and China.Within Japan,short term interest rates were decreased to .5% and the
government initiated the largest fiscal stimulus program the world has ever seen.Has anyone questioned
why the second largest economy in the world,with all of its major trading partners having substained
growth,with the lowest interest rates the world has ever seen,with the largest fiscal stimulus package the
world has ever seen,has not grown and now the economy is contracting at an annual rate exceeding 11%
?
These are all conditions which over an extended period of time should produce explosive
growth,expecially in a country like Japan with a hard working,well educated population with a high level of
national savings.The fact that they have not can only mean that debt levels are so high that they are
consuming more than the country can produce.If unreported bad debts at Japanese banks were only say
$500 billion U.S.,over the last 7 years,the effect of world wide growth, .5% interest rates, and trillions of
U.S. dollars spent on government stimulous programs would have easily solved the problem.The fact that
none of these measures has solved the problem can only mean that bad debts are much larger than anyone
realizes.Bad debts must total trillions of U.S. dollars.
Over the last several years South East Asia and China have expanded manufacturing capacity at a furious
rate,much of this financed by debt.Over capacity is driving down prices,with Asia's export prices falling
4% over the last year.With recent currency depreciations,this trend will likely accelerate.Falling prices
mean falling profit margins which further reduce debt payment capacity.Over capacity and high debt have
now infected Japan's neighbors.In Korea,company after company has gone bankrupt,threatening the
stability of the banks and possibly the entire country.In 1996,net profit at the 30 largest chaebols fell
90%.Due to the size of its economy,should the Korean won continue to fall,it will add to deflationary
pressures within China and Japan.The story is the same in almost all countries within the Pacific Rim.Even
China is affected with bankrupt state company's and insolvent banks,where 25% of bank loans are
non-performing.
Over capacity financed by debt leads to falling prices which leads to the bankrupcy of first the borrower
and then the lender.Problems accelerate when banks make loans on overpriced real estate or for stock
market speculation,as income from these assets is often only a fraction of debt service requirements.When
the market revalues these assets based on their ability to generate cash flow,losses are huge.When these
events occur in countries where governments have borrowed far beyond their capacity to repay,then bond
markets and the value of the currency are destroyed.
In China,consumer price inflation is virtually zero,down from 24% three years ago.Japan,Indonesia and
Vietnam are similar .Asset values,from real estate to stock markets are in a major deflation.
In the United States,during the last 3 to 4 years,foreigners have purchased over 2 trillion U.S.dollars in
debt and shares.These funds have driven up the value of the U.S. dollar in spite of a large current account
deficit.They have kept down the level of interest rates,driven the level of the stock exchange to new
highs,and propelled the economy to strong growth.Price deflation in Asia and a strong U.S.dollar have
kept inflation at a very low level.It has been the best of times for America.Some even call it a paradigm
shift.
"In equity markets, continual upward revisions of longer term corporate earnings expectations have driven
price-earnings ratios to levels not often observed at this stage of economic expansion"
"It is difficult to believe that our much higher than expected income tax receipts are unrelated to the huge
increase in capital gains which, since 1995 have totalled the equivalent of one-third of national income"
"Today's Central Bankers have the capacity of creating or destroying unlimited supplies of money and
credit."
"Clearly,how well we take our responsibilities in this modern world has profound implications for
participants in financial markets."
These are all quotes from Mr.Greenspan,head of the U.S. Federal Reserve.Mr. Greenspan cannot tell us
that Asia is insolvent and will collapse.He is giving us a warning that we must heed.Price deflation and a
collapsing economy in Asia will decrease U.S. corporate profits.Lower profits and a lower price to
earnings multiple will significantly reduce the level of the U.S. stock markets.
The U.S. budget deficit has decreased because of capital gains taxes.When people report capital
losses,the budjet deficit will balloon.
When Asia collapses,money and credit will be destroyed.Japanese banks and insurance company's will be
forced to sell U.S. assets to help finance losses in Aisa.So will the Chinese.For years,China and Japan
have exchanged their goods for U.S. paper.When Japan's economy collapses,they will convert this paper
for tangible assets.
The U.S. is the largest debtor in the world,much of it owned by foreigners.They have the largest current
account deficit in the world.These factors have caused major financial problems for every country where
they have existed.
When the Japanese are forced to sell U.S. Treasurey debt,it will cause a panick out of treasury's which
will sharply increase U.S. interest rates.In addition to other factors already mentioned,higher interest rates
will accelerate falling U.S. corporate profits,will accelerate the drop in the U.S. stock market and will
accelerate a move to a much higher U.S. government budget deficit.
When foreginers sell treasury's,Americans must buy them,which will take money out of other economic
activities.Future government budget deficits will have to be financed by Americans,and Americans may
find that they may not be able to run large current account deficits.When Americas banker goes broke,we
may see another paradigm shift.
The problems of large debt levels in a deflating economy are very real.Deflation reduces both income and
asset values,which leads to the bankrupcy of both borrowers and lenders.Japan has been deflating for the
last 7 years.With the rest of Asia also deflating,deflation in Japan can only continue.
Japanese households have about U.S.$12 trillion in savings.The banks have gambled these funds on real
estate and stock market speculation,and over-built manufacturing capacity.The government has spent it
attempting to kick start the economy.Some day,everyone will realize that the real value of the assets
backing these savings is only a small fraction of this U.S.$12 trillion dollars.Already,some of this money
has moved to safer destinations like the United States.While the U.S. financial position is much better than
Japan's,fundamentals are still very poor and will deteriorate rapidly when Japanese banks and insurance
companys are forced to sell U.S. assets.
When the Japanese panick in an attempt to preserve their wealth,their only choice will be an asset that is
not someone's liability.The asset that best describes this property is gold.
In 1997,the world wide demand for gold will be the highest in human history,and will far exceed mine
production.Yet the price of gold has fallen to 12 year lows. As the world watches the first tremors to the
world wide financial default,speculators are adding to huge short positions.Experts in the financial markets
will tell you that gold has lost its monetary value and their is the continual threat of Central Bank
selling.Central bankers in Austraila and Switzerland claim that gold is no longer a suitable
investment.Austraila's actions appear totally unreasonable.Gold is a major employer and export earner for
Austraila.Even if it were true,why would you tell the world that it has little value?The funds obtained from
the gold sale have now been lent to Thailand and Indosneia?Are loans to bail out bankrupt countries a
more suitable investment than gold?Even the Swiss announcement appears to be more geared to lowering
the price of gold than maximizing the price of an asset you may wish to sell.Gold has nothing to do with the
trillions of dollars in bank loans outstanding that are not supported by either the income or assets of the
borrower.It has nothing to do with the trillions of dollars in government bonds that are supported by no
assets and which interest costs now take up large amounts of government tax recipts.The only thing
holding world wide financial markets together is confidence.Confidence that governments and bankers will
not let things get out of hand.Confidence that requires the price of gold to remain low.
Yet all of the confidence one can have does not change the fact that the direct and inderect liabilities of the
Japanese government total about 150% of GNP,it does not change the fact that liabilities at Japanese
banks and insurance company's likely exceed realizable assets by trilions of U.S. dollars ,it does not
change the fact that the Japanese economy is contracting,and does not change the fact that Japan and Asia
are deflating at an accelerating rate.Some may say these problems are managable.I would only
ask,"How"? In the end,finance comes down to simple mathamatics,nothing more nothing less.
A little over 300 billion U.S. dollars buys every once of gold in every central bank in the world.When
Japan crashes,none of this will be for sale.Gold miners have sold forward about two years production and
speculators hold large short positions.How high does the price go when the U.S. $12 trillion in household
savings starts chasing an asset their is so little of?
My post earlier. ( A.Goose )
I have often wondered, over the past 4 years, why people or institutions would buy yet to be mined gold at such heavy premiums over spot prices. It always seemed that it would be more logical, and better business to boot, to buy at spot. Well, with John K.'s and ANOTHER's posts, it makes sense. If you want to take over MAJOR positions in bullion without spooking the market and driving prices up, creating the business of forward sales would certainly do the trick. You get the bonus of not only harvesting bullion in the present at firesale prices, but also you lock in future "fire sale" prices. This mechanism also avoids upsetting countries, populations and most of all A.G.
I have to say that I am definitely buying into the program. Gold can rally to new highs with no "official" sales because pricing can initially be evolved from the forward sales contracts.
I do believe however that not all gold stocks will suffer. I believe that companies that have no or little forward hedges will soar as well as those that have new discoveries. Holding bullion will be very positive.
Tolerant1: The US may try to confiscate gold from its citizens, but if they do, I'll be the first to try and escape this country with my gold. I've have no loyalty the the US. Especially to the form it has degenerated to in the last 40 years.
With that said, I doubt the US will try to confiscate gold this time around. The reason Uncle Sam confiscated gold in 1933-34 was to maintain the gold standard. Citizens were converting their Dollars for gold. The US Treasury was losing its gold. Uncle Sam confiscated gold to replenish its gold stock -- so that it could maintain the gold standard among central banks throughout the world -- even though it reneged on its promise to US citizens.
This time, our monetary system has no ties to gold. Thus, there is no reason to confiscate gold.
Spoke with a good friend and business associate overseas earlier this evening. I had been warning him about a deflationary trend coming down the pike for over three years even though I was short term bullish on the world markets... he has always commented that I am crazy. He has been expecting massive inflation , and has been a gold bug for a good many years. He agreed this evening that we are certainly seeing deflation throughout the world but he feels inflation will go through the roof in the US while deflation does its dirty deeds in other parts of the world.
Maybe but I doubt it... unless of course all of the central banks act in concert and open the tap full on.Even then i think the party is over and the only fitting conclusion to the credit binge the world has been on is a serious worldwide contraction of credit and liquidity... ala DEFLATION.
Granted things shall not be as bad in the United States as in Asia, South America, Mexico,Europe,and even Canada will be hit very hard.But the big D is coming soon to a town near you!!!
AG may even crank rates down to much lower levels say 4 3 2 even !% BUT IT WON'T BE ENOUGH.
JUST ASK THE JAP'S THEY TRIED IT AND DEFLATIONARY FORCES JUST KEEP ON TRUCKIN...
THE SAME THING HAPPEN IN THE US ABOUT 57 YEARS AGO.
THE GREAT ONE.
ONCE THIS THING GETS MOVIN IT WILL BE A REAL BEAR TO STOP!
THE ASIAN FLU WILL HAVE BECOME WORLDWIDE RESISTANT PNEUMONIA.
KOREAN WON NEXT...FOLLOWED BY THE TAIWAN DOLLAR AGAIN.
FOLLOWED BY CHINA ETC. ETC. round and around it will continue as one after another they devaluate their currencies.
Oldman: I believe you're wrong about the market not crashing short-term. Time will tell which of us is correct. In any case, I would enjoy having you as a subscriber to the Steve Puetz Letter.
By the way, I respect your non-confrontational, matter-of-fact way of disagreeing with me. The best of luck to you.
