Gold Discussion for Investors and Market Analysts

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Golden Boy
(Fri Nov 28 1997 00:02 - ID#430233)
Mo in TO: Go Leafs
Mo: When you say it that way it makes me strart to worry ( again ) . What with all the talk a few years ago of cut backs and tough times I was hoping we'd seen the worst. Oh well, hope springs eternal.

I went to school in Thunder Bay with lots of guys from the TO area. They sure loved the Leafs no matter how poor they played. That was hope I'd say.

(Fri Nov 28 1997 00:05 - ID#255284)
fires and things
Tnx for eye in the sky url. On a smaller scale, there was a fire in the backblocks around Rotorua yesterday. Come nightfall the firefighters ( salt of the earth ) had to leave the fire blazing. The area is the volcanic plateau in the central North Island. It is dotted with many hot mud pools and steam-spewing vents, the firefighters were in danger from the volcanic land itself.

One for A. Goose ;-}

"The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing." __________ Jean Baptiste Colbert

"Panics do not destroy capital: they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." _______ writings of John Stuart Mill, 1867

(Fri Nov 28 1997 00:05 - ID#287277)
ROR@23:04, re: Greenback's worth
I don't like the greenback being thought worthless either...
it is my money too...

it has been VERY difficult to come to terms with the reality
and I've no doubt it started from the noblest of purposes,
rebuilding a devastated Europe...

but we did not honor the trust of holding the key currency ROR
for fifty years we have printed, printed and printed
then Russians ( through another irony ) created the Euro-dollar
and things got even worse...

and now the bill is coming due
and I don't feel good about it either
but accepting it
is better than pretending
that everything is the way it was

(Fri Nov 28 1997 00:06 - ID#31868)
Unfortunately it won't matter what the American people think. The dollar is going to get hammered. The stock market is going to be destroyed. All the talk and spin are not going to matter. There is nothing that is going to stop the dominoes falling. The Tigers, Japan, China, etc. are just the start of a whirlwind that shall strangle the globe.

The United States is going to be devastated as the power of derivatives works backwards and unwind and sucks everything into the black hole that will be the remains of what used to be investments representing the savings of many lifetimes.

The cheaper gold gets the more you should purchase. Accumulate silver and have cash on hand. Things will not happen overnight, but they will be swift once they begin. It is better to be prepared and not have to think of waiting in line to get on line.

Golden Boy
(Fri Nov 28 1997 00:15 - ID#430233)
Ultimate bears
Aren't gold-bugs the ultimate in bearhood. I mean it's the worst case scenario that leads to rise in gold prices according to gold-bugs. But isn't that an oxymoron. Things have to become terrible to become great??

(Fri Nov 28 1997 00:27 - ID#31868)
Beware the Executive powers of the President
The politicians and bankers have made a mockery of anyone that works hard and wants to enjoy the fruits of their labors. The people only get what they deserve by allowing these individuals to put them in the position they are in.

(Fri Nov 28 1997 00:30 - ID#255284)
Homeopathetically speaking
LGB_ Sure is easy to sell snake oil huh? Thought you'd like that 'un

Hedgehog it took me a long time to get your's last night! RFL.

Panda Thanks for the bird stories, here's one I just heard. Birds are starting to build nests on the cranes in Bangkok. The cranes have been standing idle for weeks, just like those in Wellington NZ after Oct 87.

TED G'day, In defence of Turkeys, they make great foster-mothers to orphaned ducklings.

Nick@C You go walkies across the golf course everynite? Bet your rotties look forward to it.

a couple more quotes

"A dollar saved today is 75 cents earned tomorrow." James Reston, Stores, Dec. 1969

"The state has learned from the merchants and industrialists how to exploit credit; it defies the nation ever to let it go into bankruptcy. Alongside all swindlers the state now stands there as swindler-in-chief." __________ Jakob Burkhardt

(Fri Nov 28 1997 00:43 - ID#284255)
One from Dad
I used to pick blackberries on the road from Tauranga to Rotorua.
When we got to Rotorua we used to have picnic's at the lakes. Great place but smelly.

Why complain
That evil men grow fat
And wealth increases for them
When justice costs so dearly
The common man is dispossessed
Of justice, in this land
For justice in this country
Justice gives place to the Law
And the lawyers thus grow fat.

The strength of government
Is the Law
But when Law invites corruption
Government itself becomes a victim.

When the Law is weak
Interpretation defeats justice
To suit the purse
Even our judges are confounded
And appeal but proves the flaws
The costly folly of our laws.

We need a government
Whose strength is justice
Rather than the law.

(Fri Nov 28 1997 00:58 - ID#31868)
the US dollar
I think it is a terrible mistake for people that think that the US dollar is sound and that the financial infrastructure in the US is safe. The air of arrogance and the smug attitude are a heartbeat away from financial implosion. The stadium is on fire and over the loudspeakers you hear nothing about the danger.

All you hear is that there may be ripple effects from these tiny problems overseas.

The entire country is so complacent it is truly scary to think of the inevitable. When people wake up from one month to the next and are completely wiped out and devastated.

Dave in CO
(Fri Nov 28 1997 01:18 - ID#215211)
(@fundaMETAList Nov 27 18:26)
Sounds like we're charting the very similar courses. The only exceptions are: I haven't decided between N.E. Nevada and Idaho, and the move will be late next summer. Good luck to you and your family.

(Fri Nov 28 1997 01:26 - ID#35767)
I agree with the financial fiasco scenario but are you telling me the guy at the 7-11 wont take dollars. That I find hard to believe as they still accept roubles in Russia. Arent we really talking about a change in reserve currency status at the end of the day. I think we will have an extreme adjustment but not total collapse because people are just used to doing business with paper and cards. As long as commerce accepts paper in business the complete wipeout seems impossible. Yet the extent of foreign ownership of our bonds and other assets does lay the ground work for a dollar crisis coming I think soon. It could be bad and stks could get hit by 60-70%. However, getting off the IMF dollar std will be good as other countries will be out of their financial straight jacket. Gold will definitely become important again. It is interesting how all the gold sale rumors come out of the west. Maybe the idea is to by cash gold by suppressing the bid in the derivitive which is used to discover price. If I were a CB I would be buying gold with all the Currency problems. Look whats happened to the Aussie $ since their gold sale! How can
Lloyd George of England postulate that gold will not be significant for the EMU ( especially since Britain is not joining ) in light of the Australian debacle. Another example of open anti gold sentiment among the financial west.

John Disney__A
(Fri Nov 28 1997 01:27 - ID#24140)
to All-

I spoke to a guy this morning that runs several

mining funds. He pointed out something that I thought

was interesting.

He reminded me that various central banks hold gold

valued at various levels but all near or well below the


And THIS king of chimpanzee accounting actually drives

business decisions. I was told that Germany holds

their gold at 100$/oz ( ?? ) - so if they sell gold or

lease it or whatever they THINK they are MAKING money.

The Japanese may do the same thing and he has no idea

how the Chinese account for gold.

If one is stupid enough ( and I think central bankers

qualify ) - then destroying the gold price ( by leasing

gold ) until it sinks to say 100$/oz in Germanys case

makes perfectly good sense.

A fairly simple solution to this problem would be to

get the CB to value gold at the market price - Anything

else is serious self-delusion.

But how do you do that ??

Rubin said he made a tidy profit by buying in

equivalent gold at 300$ to offset coin sales at 350$.

WOW !! a boy genius - Now how does he account for the

gold he bought - AT WHAT PRICE?? - does he keep it

in a special box ??

(Fri Nov 28 1997 01:29 - ID#200174)
You know aurator I have had the feeling that they are plucking the heck out of me recently, especially the way gold has been moving as the world drowns under the weigh of to many U.S. dollars.

As many others have said, the game is up. Some realize, more fear it while the fight the losing battle, more are unaware and belittle those that are drowning in pool of words.

Turning points are painful, patience is required. Know what you buy and why you buy it. Stay alert, stay informed. Relax when possible, enjoy your friends, family, and the life that God gave us ... life will continue no matter how tough things get.

John Disney__A
(Fri Nov 28 1997 01:33 - ID#24140)

I think you mean EDDIE GEORGE not Lloyd George - Lloyd George

is very quiet on this subject because he has been dead for some


I was confused on this too - I thought Eddie George was a song

and dance man.

(Fri Nov 28 1997 01:51 - ID#200174)

Friday November 28, 12:28 am Eastern Time

Japan premium eases but markets remain cautious

The Bank of Japan ( BOJ ) flooded the market with liquidity on Friday by refraining from its regular 0020 GMT operation and leaving a massive fund
surplus of about 3.7 trillion yen.

This sent the key overnight call rate down sharply to a low of 0.35 percent from 0.85 percent prior to the operation.

The central bank later drained a net 2.1 trillion yen from the market at 0310 GMT.

Traders acknowledged the dip in the premium, but warned that the overall situation remains grave for Japan's weaker banks.

``The broader situation hasn't changed at all and is unlikely to get much better in the foreseeable future,'' one trader at a money brokerage said.


Friday November 28, 1:13 am Eastern Time

Yeltsin says does not expect foreign capital flow

MOSCOW, Nov 28 ( Reuters ) - President Boris Yeltsin said on Friday he did not expect a new flow of foreign capital into Russia soon and added that
internal resources rather than outside investment would revive the country's ailing economy.

``We thought foreign investment would revive our industry, but it did not and cannot bring substantial changes, because a stable revival can come only from
internal resources,'' he said in a weekly radio address.

(Fri Nov 28 1997 02:03 - ID#255284)
Au as a store of re-value
John Disney, right, and the IMF "values" their SDRs at 35 to the oz of gold. Which was equivalent of US$35 at the time, the current US price of gold. Both SDRs and Gold are treated as assets in the balance sheets of the CBs.
I am unsure whether revaluing the gold would "allow" formation of extra SDRs. but this SDR caper is another paper blizzard, imo.

(Fri Nov 28 1997 02:23 - ID#200171)
``To a large extent, China will define the responses of the Southeast Asian nations.''

(Fri Nov 28 1997 02:32 - ID#206379)
All currencies are like leaking boats, it's just that some are leaking faster than others.

(Fri Nov 28 1997 02:50 - ID#393224)
Gold charts
Had a good look at the gold charts today. Since the beginning of 1996 there have been four downwaves of $$40-50. We are now @ $40 down on the fourth. Max $10 more down will contain this move and then sideways or up @$20. Short term some good upside trading in gold shares from these very low lows. IF this level holds -- will be a very good time to accumulate for the long term. If it doesn't hold, then look for another wave down to mid 200's and then the mother of all upmoves over the next decade. IMVVVHO we are now looking at a worst case @15% downside compared to unlimited upside. If 280-290 holds then the odds are even better.

gold 295.75
silver 4.26
Honkers -.73%
Nikkei +.20%
S. Korea -4.26%!! ( the contrarian in me wants to go buy S.K. shares--whooooaa boy!!! )

Just heard on the news "Too much food and too much wind in the U.S. today..." Hope that wind wasn't coming from you Kitcoites.

(Fri Nov 28 1997 03:19 - ID#393224)
bottom picking
Further to my previous post-- bottom picking is a very difficult thing ( sounds like fun though, doesn't it? ) . I have posted this message before--but shall repeat. There will be no bells, gongs and razoos at the bottom. Most will miss it. Those waiting to get in will be disappointed if the upmove is a violent one. Gradual accumulation at the worst of times is a better strategy. When the front page of the newspaper shouts "gold is dead" -- buy some. When there is a strong downmove -- buy some. When proof coin sets are panic selling slightly above spot ( as in OZ right now ) --buy some. When you read Kitco and it is as negative as negative can be ( Kitcoites throwing in the towel etc. ) -- buy some. The end result is that you will be averaging in at the worst ( best ) of times and will end up with a substantial position WITH MONEY YOU CAN FORGET ABOUT FOR A WHILE. In the back of your mind, though, you will know what is there. You will sleep well. Your day will come.

(Fri Nov 28 1997 03:28 - ID#393224)
Nick's First Bi-directional Law
Things go up and things go down. Gold right now is down, down, DOWN. Soon it will go ___!!!!

(Fri Nov 28 1997 03:31 - ID#257148)
Tequila, Ginseng, what's next? Chili? Rice?
Well, as far as I can gather, from this press interview with Camdessus, he has got pet names for the different crises, Tequila ( Hi Tolerant1 ) and Ginseng ( Hi TED ) . Also he sees the problems in SE Asia and S America as being naturally related. Finally he uses the metaphors of war in his job at the IMF, papering over the cracks appearing in the papering over by the CBs. I hope this is not a repeat

Perhaps someone could translate?

Je suis journaliste au Estado de Sao Paulo, au Brsil. Quel rapport tablissez-vous entre
la crise du Sud-Est asiatique et celle de l'Amrique latine ? Le Brsil est, comme
l'Argentine, un pays fortement touch. Si les mesures adoptes en Asie se rvlent
suffisantes, attendrez-vous de l'Argentine et du Brsil qu'ils prennent des mesures
similaires ?


Il y a videmment un rapport entre les deux crises. Nous passons notre vie  commenter savamment les
consquences de la globalisation. Il y en a une qui est certaine : dans le monde actuel, une crise peut
tre dclenche partout, quelles que soient la taille du pays et sa localisation gographique. Les marchs
sont unifis. Par consquent, les positions financires se modifient sur toute la plante  la vitesse de la
lumire. Nul ne peut se sentir  l'abri d'une crise,  moins de jouir d'une situation macro-conomique
et de structures financires inattaquables. Il n'y a pas beaucoup de pays dans le monde qui prsentent de
telles caractristiques.

Dans ces conditions, il est tout  fait normal que les pays d'Amrique latine aient t affects par la
crise asiatique. Je constate qu'ils ont t affects mais non dstabiliss. Le renforcement auquel chacun
de ces pays a procd au lendemain de la crise " tequila " a normment contribu  les placer dans une
position beaucoup plus robuste et  les rendre aptes  mieux rsister  ces effets de contagion.
Sommes-nous  la fin de l'preuve ? La crise " ginseng " va-t-elle ou non s'arrter l ? Bien malin qui
pourrait le dire ! Nous estimons que l'ensemble des conomies latino-amricaines ont gagn une bataille
mais elles n'ont pas gagn la guerre. Cette bataille doit inciter fortement  localiser ses faiblesses et 
prendre sans tarder les mesures  mme de parer toute nouvelle agression. De toute faon, les mesures
de prvention des crises sont toujours utiles pour le pays lui-mme et pour sa croissance.

J'ai dit au gouvernement brsilien que j'apprcie et approuve les rcentes mesures de politique
montaire qui ont t prises et qui ont contribu  doubler le niveau des taux d'intrt au dbut de cette
semaine. J'entends dire que les remarques inquites du Prsident Fernando Henrique Cardoso ont
pouss le gouvernement  travailler activement  un renforcement fiscal. On parle maintenant d'un "
paquet " de l'ordre d'un point de produit national brut, destin  accrotre le surplus primaire de ce
pays. C'est une mesure qui va dans le bon sens. Sera-t-elle suffisante ? Je l'ignore. Je n'en connais pas le
dtail. En tous les cas, cette dcision s'imposait car l'un des principaux risques auquel s'expose le Brsil
est constitu par le couple runissant dficit courant et besoin d'emprunt du secteur public. Tous les
dficits sont un petit peu trop levs. Je pense donc que les mesures prises par votre pays vont dans la
bonne direction. Elles traduisent l'indispensable vigilance qu'impose la conjoncture actuelle.

(Fri Nov 28 1997 03:32 - ID#257148)
FMI. another TLA, SDR
OOps forgot,that was Michel CAMDESSUS
Directeur Gnral du FMI
Novembre 6, 1997
Paris, France

(Fri Nov 28 1997 03:32 - ID#284255)
Who said we can't have another great depression?
Some will tell you that the stock market is an indicator of future economic prosperity. This well can be but that presupposes that the market is acting "rationally"--a market reflecting and digesting significant and relevant economic, social and demographic data. Are we to believe that we are soon going to see corporate earnings and the GNP increase by 200, 300 or even 400%? Are we to believe that shortly the American economy will see an increase in its annual GNP from approximately 7 trillion dollars to that of 14, 21 or 28 trillion? We'll see this, in the near future, only if we enter into hyperinflation--a most deadly state.

Who said we can't have another great depression? Whoever told you that needs to take a refresher course in economic history. Throughout all of man's history there have always been growth periods, recessions and depressions. However, after each "Great Depression" the public is assured that such travesty and economic hardship can never, and will never happen again. Such dreams of economic utopia have always met reality--economic recession and depression!

(Fri Nov 28 1997 03:39 - ID#284255)
Book review
Just when you thought the things were getting better, when you thought the world was starting to make sense, Glenn M.J. Epps speaks up: "This world will be turned upside-down, economically, socially, politically." A lonely voice pleading for sanity in a world gone mad! Distortions of Reality uncovers economic, political, environmental and social distortions found in North America and the global community.
Today actual reality has been distorted and contorted to such a degree that fiction has become fact. Glenn notes, "People haven't been told the facts--they're going to have difficulty making informed decisions." Chilling predictions for the future are found in the pages of Distortions of Reality.

. . .I'LL DO AS I PLEASE. . .

(Fri Nov 28 1997 03:41 - ID#257148)
La plus ca change la plus c'est la meme chose
Nick@C, that averaging down thing again. I understand your take. But if you are averaging down you know that your original position was a loser. And there's nothing harsher than being right at the wrong time. But, yes I'm averaging down and have dry powder enough to wait..dum de do.

(Fri Nov 28 1997 03:51 - ID#393224)
sharefin soup
G'day mate. Where IS that danged crash?? Sold all me SPI puts and now they're as expensive as buggery to get back in. My put warrants are frittering around trying to decide what to do. I'll need new record highs on The Street to get some cheap puts again ( and I don't see that happening ) . Could't believe the price of WMC this week so bought a truckload ( up 9% in two days ) . Gold shares are SOOOOO cheap cheep cheep!! I'm either a turkey or I'm gonna get rich ( er ) . Haven't decided which.

Auratious-- have translated that article for you. It says "BUY GOLD".
Whater you suckin' up to the Quebecois for, mate?? Gotta walk the two rotties. We live next to a golf course. Nice of them to mow my huge back yard for me. Roos out this time of night. Dark in 1/2 hour. BBSoon.

(Fri Nov 28 1997 04:03 - ID#257148)
tie me kangaroo down,sport!

Nick@C What, if any, are reactions rotties v joeys? see any Gallas ( sp? )
How can i track these aussie options mate? Got an URL?

Steve - Perth
(Fri Nov 28 1997 04:06 - ID#284170)
Dr Doom Warns of Trouble Ahead
Business Review Weekly 28th Nov 97

Article by Robert Gottliebsen ( Editor )

Despite the turmoil in Asian markets there is still a

chance that there could be another bull phase on Wall

Street. But all the participants should understand that the

long-term risk factor in the American market is escalating

as a result of events in Japan. As readers will recall, in

February this year I came back from the World Economic

Forum in Switzerland believing that the state of the US

economy was unlikely to trigger a big fall on Wall Street

in 1997. I still believe the US economy is basically


Readers of BRW over the past 16 years will know that I

have strong admiration for the views of the veteran US

economist Dr Al Wojnilower. During the 1980s,

Wojnilower was widely known as "Dr Doom" because of

his early predictions of the 1987 crash. Henry Kaufman,

who made similar predictions, was dubbed "Dr Death".

Both men suffered ridicule in the later stages of the

1980s boom. In the 10 years following the crash,

Wojnilower has been almost continually optimistic

because of the great strength he saw in the overall US

economy. Occasionally he raised concerns about

inflationary pressure but, overall, he has believed strongly

that there were good reasons behind the strength of Wall

Street. Now, for the first time since the 1980s, he has put

on the Dr Doom cloak again and is predicting that,

although there are forces developing that could send the

market to higher levels, all the elements are in place for a

significant fall in about two years. As with all long-term

predictions, the timing is uncertain; he says the fall could

happen much sooner, or a little later.

On the upside, the collapse in the Asian markets and

other emerging countries, plus sluggishness in Europe,

makes Wall Street the only game in town, so it is

capable of rising substantially.

Although there is a severe shortage of skilled and

unskilled labor in the US, which will almost certainly lead

to moderate wage rises, the likelihood of cheap Asian

imports, resulting from the currency devaluations, will

moderate some of the inflationary pressure. A small rise

in interest rates is possible in the US as a result of

domestic events, but it should not be sufficient to turn a

bull market into a bear. But gradually the momentum of

the US economy is moving from an emphasis on growth

in the "real economy" to sharp rises in capital values.

The US investment community is becoming very

deal-oriented and business structures are being set up to

escalate the value of capital assets. Companies are

borrowing money to buy back their stock because they

cannot find investment avenues that will produce the

desired returns from their capital.

The use of derivatives increases the gearing of the

market, and ordinary Americans are now big participants

through their investments in mutual funds. Most cannot

or do not borrow to buy shares, but many have allowed

their home mortgages to rise and this provides the capital

for them to play the market.

Wojnilower says the last time the US experienced a

boom in capital values without an overall economic boom

was in the 1920s. That boom was ended by a sharp rise

in interest rates, which spiked the stockmarket. It was

the fall on the stockmarket that did so much damage to

the economy. Wojnilower, wearing his Dr Doom hat,

predicts that in the year just before or just after the turn

of the century there will be a stockmarket fall of such

magnitude that it will harm the economy, as is happening

now in Asia. The higher Wall Street goes, the more

vulnerable is the US economy to a serious stockmarket


What if the Japanese turn off the tap?

If inflation in the US is not the most likely force to bring

about a crunch, how will it happen? Wojnilower believes

the Japanese banks and the Japanese economy are the

key to long-term trends on Wall Street. Readers will

recall that last week I pointed out that the Japanese

Government was being forced to rescue the banking

system and this was good news for Japanese recovery.

The collapse of the big stockbroking firm Yamaichi

required the Government to assist depositors and it will

need to follow that pattern with the broken banks.

Wojnilower believes that much of the capital that is

boosting Wall Street is coming from the Japanese banks

as they recycle Japanese trade surpluses. The banks

have also been a big force behind the Asian economies.

At present, the big US investment banks can borrow

Japanese yen effectively at a negative interest rate. The

yen base rate is very low and the currency is falling. All

stockmarket booms require the availability of cheap and

plentiful capital. The Japanese have provided this on a

scale never seen before in the world. How long can they

keep up the pace?

If the Japanese Government had bailed out the banks five

years ago, it would have been a fairly easy exercise. Now

it is much harder because the banks have lost much

more money in their excursions into Asia. An earlier

rescue would have stimulated the Japanese economy,

less capital would have been diverted to Wall Street and

Asia, and the markets would have been kept under much

better control.

If the Japanese Government continues its rescue

strategy it will be the beginning of the recovery in Japan.

That is good news but it may have a side-effect.

Wojnilower says that less money might be available to

finance the Wall Street boom and the present token

interest rates would become inconsistent with higher

levels of Japanese economic activity. A lift in Japanese

interest rates would be, in effect, a rise in the rate for a

key source of capital for the US stockmarket. Wojnilower

believes that Japan, in effect, has become America's

central bank. Obviously, the chief of the US Federal

Reserve, Alan Greenspan, might take issue with this

downgrading of his role. Nevertheless, the Japanese are

supplying the funds for the boom and if they turn off the

tap or increase the price, it will come to a rapid end.

If the Japanese Government cannot or will not stand

behind depositors, then the world crisis could come

much earlier, because Japan would not be able to

continue providing the capital required to fuel the US


The idea that Japan has become the central bank for the

US and the world and that Japanese capital is partly

fuelling the rise in the US stockmarket, will be foreign to

many readers. Yet, once you accept that idea you can

see that Japanese interest rates and/or the availability of

Japanese capital is vital to Wall Street's continuing


Wojnilower could be wrong, but few economists have a

better record for long-term predictions. Wojnilower is the

senior economic consultant to Credit Suisse Asset

Management Australia. He warns investment managers

that they cannot afford to heed his advice because if they

pull out of the market and it rises, they will lose their

business. Investors forgive managers who go down with

the market but they are harsh on those who sell in the

expectation of a fall and instead the market rises. So

Wojnilower's long-term view must be ignored by most

global managers. Long-term predictions are hazardous

but they enable us to isolate the forces at work. We will

need to follow these currents closely in the year ahead.

Meanwhile, beware of predictions that Asia will be back

on its feet again in two years. The fall in asset values is

too severe to allow most of the countries involved to

achieve a quick recovery. Nevertheless, it is reassuring to

observe that some Australian companies, while realising

there is no hurry, are preparing to acquire good

businesses that come on the market because their

owners are forced to sell. The countries to our north will

recover and they will be much stronger for the


Steve - Perth
(Fri Nov 28 1997 04:22 - ID#284170)
Dr Doom Warns of Trouble Ahead

(Fri Nov 28 1997 04:39 - ID#393224)
Just got back, mate. Six medium sized 'roos out tonight. We got to within about 20 m of them. You've heard about boxing kangaroos-- well two of these guys were going at each other tooth and nail. Kickin' and shreiking they were. I've heard of men being disembowelled by an angry roo. The rotties were chompin' at the bit to get at 'em but I try to preserve our protected species ( like gold ) , so hold 'em back. The 'roos ignored us as they were too busy watching the fight. One jumped over our fence one night ( two acre back yard ) --BIG mistake!!. All I found in the morning was one of my rotties chewing on a leg. No skin, no bones, no nothing left. Dogs weren't hungry for a coupla days!! Now if only a central banker would stray into my back yard!!

(Fri Nov 28 1997 04:40 - ID#93130)
SAS A near term recovery for gold would appear bleak:

1. More and more CB bank officials are openly supporting the position that there is no compelling need to retain a substantial amount of gold as reserves. And Gold has not responded to any financial or global crisis in any manner which gives further evidence of its demonitization.

2. I see nothing that supports your view that inflation will soon reappear. Deflation in Asia will adversely affect global GDP in 98. Most companies in the US will not be able to raise prices which will be reflected in the CPI which should continue its disinflationary trend.

3. A disinflationary global trend is further predicted by ( i ) the CRB index of 13 raw industrial spot prices now falling signficantly after being generally flat for the last few years, ( ii ) a drop in oil prices, ( iii ) fall in copper and ( iv ) as earlier mentioned a flattenning yield curve - as well as the fall in gold price. There are no signs of inflation - absent that of the stock or financial markets which wealth effect is not yet affecting the rest of the economy. Full US employment has not had the cause and effect of increasing prices, as would be expected, due to productivity gains or for other reasons. And one wonders whether this full employment can continue in view of the Asian debacle and the consequences in GDP growth.

4. The dollar should remain strong because of capital flowing into the US bond and stock market, despite a reduction in bond rates, and thereby offset an expected increase in the Current Account due to an expansion of the trade deficit which would otherwise be detrimental. The risk is of course that bonds will be sold and capital withdrawn to provide liquidity in Asia but this has not substantially taken place and apparently is not foreseen the recent performance of the bond market and dollar. The strong dollar will also offer an investment vehicle other than gold for investors in countries having a weakening currency.

5. Asian demand for gold should weaken due to the twin effect of a reduction in GDP and an increasing gold price due to currency devaluations. Most troublesome, India, the largest market, is now having a start of a run on its currency which if effective will likely cause a steep drop in demand. Particularly, if as you say, as a form of savings, Indians buy an amount of gold each year based on what a certain amount of their money will buy. The West will not take up this slack in demand.

6. Although you believe an increase in the money supply in the US and globally will produce inflation, as I earlier contended, a direct link between money supply and inflation is observable on a long term basis but not in the short term. It is for that reason and others that the FED does not pay attention to money supply as closely as it once did. Futhermore, I would agree with ARMSTRONG in his contention that inflation and deflation are no longer a strict function of money supply, since international capital flows have more influence on its availability than anything else.

7. Although I prefer to observe general market condtions and then look to see if confirmed by the charts, rather then vice versa, long term charts on gold equities look terrible and there is no evidence that they have reached a bottom other than some majors are coming into LT support. Unlike today, in 93 when gold had its run, NEM and ABX were uptrending into a falling gold market, now they are leading its downturn. Thus, the charts are not supportive.

As to what will cause gold to appreciate:

A. Some posted at Kitco a stale study that gold performs better in a deflationary environment - but no reason was given for the better performance. Some claim fear in a deflation will drive funds to gold, and others believe that although gold will fall with everything else, it will fall less and thus increase in price relatively. Personally, I question this and would not buy gold because of it even if I thought there would be deflation in the US which I do not. I do accept that if the FED lowers interest rates due to an impending recession that this may support gold.

B. IMO the US trade deficit is a sleeping bear, is adversely affecting the US manufacturing capability, and must eventually be reckoned with. The US is only able to get away with it because as mentioned the defict in the Current Account is offset by an increase in the Capital Account by investment capital flowing into the bond and stock markets. This of course is also absorbing a lot of the money supply being generated in the US. What I am concerned with is that if anything happens to cause this capital to flow elsewhere, the US is in big trouble for obvious reasons. This could lead to a severe recession with a lot of pump priming and other liquidity steps to stop it and a surprisingly steep fall in the dollar. And this of course should be beneficial for gold - if indeed gold has any role as a money.

C. The reduction in producer supply due to a drop in gold would appear the best shot, and is almost a certainty in the long term, but such supply would have to be reduced to the point that it would offset the danger of any CB selling. And as the speculators have not yet seen the need to cover their shorts, and since they are in control of the market, it looks like gold still has much further to fall for this to happen.

D. It would appear that ARMSTRONG may be right in calling for lows in 98 as it would seem likely that the speculators could get as much as they could get out of the metal by that time and move on to other greener pastures.

E. Technically, if one assumes that gold is a commodity and should respond as such, the market is ripe for a turn as explained by this commentary of a London Broker: ``It's not a question of price, it's a question of perception of central bank selling. The quantities on offer are relatively small such that a technician would argue that no way gold could be down here, and gold could move quickly when sentiment finally turned."

I am throwing all of this out for discussion and comments.

(Fri Nov 28 1997 04:54 - ID#210114)
Agree with your prognosis on gold in '98. While I would like to see a rally and bull ( I have some of the stuff ) it appears that sentiment is indeed down on the noble metal.

I await further responses to your contribution from minds greater than mine.

(Fri Nov 28 1997 05:16 - ID#93130)
SPOCK: IMO no one can predict a bottom for gold, and in view of what would seemingly be a sharply over-sold gold market and incredibly cheap gold stocks that are priced at more than wholesale levels, the market may turn at any time - and we may have already seen the bottom in gold. In addition, a confluence of extraordinary factors come to play at the year end on the gold and stock markets which are not fundamentally related. Thus, it would not be surprising to have a strong rally in both gold and stocks in January - which I do expect - even if gold has not reached its ultimate low beforehand.

(Fri Nov 28 1997 05:23 - ID#257148)
Skylark, Add my thanks for lifting the early shift.
You haven't bought Jastram's "gold is a good hedge against deflation" huh? Ok, his book was amazing, found it in a library in 88. I know there are deficincies in his analysis, perhaps the time periods are a little arbitrary or even self-serving, but is there any other analysis you've seen while up there soaring on the relative purchasing power of Au cf commodities?

However, being contrary to ordinary, methinks that Rees-Mogg's mentioning of Jastram in his Times column could be the time to have another look at Jastram?

Perhaps one part missing from your excellent sr ma tete post was the madness of crowds. Was the sanity of the people.? A panic. Hong Kongers panicked over cake coupons. hmmmm

(Fri Nov 28 1997 05:34 - ID#93130)
AURATOR: I have been waiting for your expected reply which I appreciate and thank you for it. No I have not read the book. I understand the conclusion but you nor anyone else who has read the book has advised me of the reasons for it.

IMO, there is great danger of trying to predict market activity on past events for it is exceedingly difficult if not impossible to duplicate all factors that enter into a market - including the psychology of the market - to make an accurate clinical comparison.

Yes the maddening crowd is there. I cannot help but believe, if I may be so bold, that some of the gold stocks have been taken to levels by this crowd due to tax loss selling, fear, fund redemption, margin calls and the like which make them so cheap that it makes them the best bet on the board for a January recover. That is my bet.

As you say: La plus ca change la plus c'est la meme chose

Best Regards

(Fri Nov 28 1997 05:48 - ID#257148)
as to reasons, that's a tough one. Perhaps outside the ambit of both fundamental and technical analysis? The chaos factor

btw did you see this expansion on Jastram? can post in full if needed.

Date: Fri Nov 07 1997 16:02
tolerant1 ( @Tequilaville ) ID#31868:
The following is from


(Fri Nov 28 1997 06:06 - ID#93130)
Flying Above the Pigeons
AURATOR: Yes, I did see your expansion, but thanks for the offer. I accept the author's conclusion that gold has performed better during deflations in the time periods reported. But if I may be so bold, conclusions are rarely helpful without reasons for the conclusions. And what puzzles me is why you and other thinking persons who read the book are not able to explain why deflations are good for gold. Which leads me to conclude the author has not supported his findings with reasons therefore. I certainly can speculate reasons, but they may not necessarily be the reasons why gold has peformed well in the reported time periods. Thus I cannot accept that gold will perform well today during deflations as it did in ancient history merely by the fact that it did.

Got to leave so will not respond further, have a good day.

(Fri Nov 28 1997 07:02 - ID#200167)
Friday November 28, 6:29 am Eastern Time

Gold gains a dollar despite U.S. holiday market

LONDON, Nov 28 ( Reuters ) - Gold added a dollar on Friday to its previous London close as physical buying in the holiday-affected market jolted the
metal from its downward drift.

Gold fixed at $296.90 an ounce in the morning, a mite firmer than Thursday afternoon's $296.00, the new 12-1/2-year low fix, but still at a level which left
producers little to cheer about.

The metal was last at $296.65/$297.05 versus its previous London close of $295.75/$296.25.

``There was a little bit of physical demand in the first hour or so this morning,'' said one London dealer, who added that volumes were very low given the
two-day U.S. holiday.

Bullion dealers were more intent on what would happen to gold when U.S. traders returned on Monday from their Thanksgiving Day break.

``I think the range is going to be $294 to $297 but not today. The market will trade after a fashion up until the afternoon fix and then that will be it,'' he

``At the moment, I would suggest we are going to test the whole of that narrow range. We are really in new territory. Obviously a breach of $294 would
be a new low again which would leave $288 as a target,'' he said.

Hong Kong dealers reported two-way trading, which swayed the price higher as buyers overcame the sellers.

``We saw initial selling from Australia, but when Europe came in we saw some buying interest but only slight interest,'' a trader said.

With physical demand weak in many parts of Asia, the downward trend was likely to continue, traders there said.

``If we don't see buying interest at this low level, I expect gold to drop,'' said one.

The strong U.S. dollar means locally priced gold in traditional gold-loving countries like India is not at the discount it might be given the sub-$300 price.

Intervention by the Indian central bank on Thursday retrieved the rupee from its record intra-day low of 38.85 per dollar although the currency remained
under pressure.

Silver pottered along with little to say for itself, its three cent range during early trade offering a sharp contrast to its wild weaving for a couple of days on
either side of last weekend.

Silver was last at $5.27/$5.29, up two cents.

Platinum and palladium were also a little up, the former at $381.50/$383.50, up $1.50 on its previous London close and the latter at $207.00/$209.00, up

(Fri Nov 28 1997 07:05 - ID#333131)
Mahather proposes Asia-only IMF

(Fri Nov 28 1997 07:06 - ID#26793)
Gold may not do well for everyone in a deflation. If you are holding the physical metal, have no debts and your gold is paid for in full, you will do well. This is because the value of all paper holdings of wealth will drop in value in comparison to the gold. You will have "something" while all those around you have "nothing"

On the other hand, if your gold was purchased on margin and/or you have other debts that offset your paid for gold holdings, you will do less well.

Most people are heavily encumbered by debt, live paycheck to paycheck, and own no gold. Deflation is total ruin to them; goldholders, relative to the rest of society, will be the survivors in a deflation. I have not read the Jastram book but I suspect that is the reason for the statement by the author.

(Fri Nov 28 1997 07:11 - ID#333131)
South Africa mining news?
JGOLD down hard ( 4% ) with gold steady. Anything happening with the mines? Colleen?

(Fri Nov 28 1997 07:20 - ID#333131)
Eight Japanese Life Insurance co's release stock market break even levels

(Fri Nov 28 1997 07:47 - ID#200175)
Very interesting Carl.

Profits at zero
Tokyo Mutual 17,600
Taiyo 11,000
Daido 15,000
Daihyaku 18,200
Fukoku 13,900
Kyoei 18,000

Nippon Dantai 16,000

Toho Mutual 17,500

Looks like half are underwater already. The pain is spreading.

Will anyone care to venture when the U.S. multinationals be buried because they can not compete with Asia's new pricing structure? Korea is already pricing down and "dumping " memory chips. It is reasonable to assume that all goods will follow similiar strategies. I would assume that soon the multinationals will have to revise down their sales not only to Asia but also world wide ( where the competition with Asia will be brutal ) .

(Fri Nov 28 1997 07:56 - ID#287207)
Sharefin: Thanks for the world map site. What part ( s ) of Australia are the fires in?

(Fri Nov 28 1997 07:59 - ID#200175)
How about the U.S. companies competing in these areas?
LONDON, Nov 28 ( Reuters ) - Goldman Sachs Strategist Mike Young said the move ( cut its recommended German

weighting for the third time in six weeks ) on German equities was due to increasing concerns about a market were 45 percent of companies were in sectors

such as chemicals, engineering and autos where the global growth backdrop suggested earnings were vulnerable.

(Fri Nov 28 1997 08:15 - ID#333127)
Check out USA today, money section, another negative gold column

(Fri Nov 28 1997 08:15 - ID#287207)
The Sun Also Rises
Predictions of World Financial disaster may be threatened by Japan's future:

(Fri Nov 28 1997 08:25 - ID#390214)
If the Japanese banking rescue happens and the economic stimulus is well received, the Japanese market will soar. Japanese funds will leave the US and invest in Japan. The Dow tanks, the US $ tanks, gold soars.

Mike Stewart
(Fri Nov 28 1997 08:31 - ID#270253)
South African Golds
The South African Gold Index was actually up at the close on Wednesday. I think that they are catching up with the U.S. trading prices from Wed p.m. when they got hit along with the other gold issues.

(Fri Nov 28 1997 08:32 - ID#287207)
nomercy: Great twist. If Japan had not bought US debt during the decline of gold and its booming '80s your prediction might have the ring of possibility about it.

(Fri Nov 28 1997 08:33 - ID#31868)
I was trying to impart the thought which stipulated that the dollar will clank big time as will the markets. You will still be able to ge things for your funny money.

The main thrust is that you should transfer as much as you can out of funny money and into gold and silver. The lower gold goes the higher the transfer rate. Silver is a bargain at present prices so buy as you feel comfortable.

(Fri Nov 28 1997 08:34 - ID#60253)

Date: Thu Nov 27 1997 09:02

Leland ( What "Another" has been speak-plain-talk ) ID#316193:

Leland, this report is very good! I will add to it

tonight and add some replys.

(Fri Nov 28 1997 08:48 - ID#287389)
clear thinking@Skylark
Bravo, Skylark:

Your 4:40 am post is well worth the read. You have managed to knit together all the loose fragments bouncing around in my head in a logical and well thought out manner. I nominate you Kitco Citizen of the Day.


(Fri Nov 28 1997 08:52 - ID#333131)
Mike Stewart
Of course. Thanks

(Fri Nov 28 1997 08:56 - ID#26793)
Strange as it may seem, I agree with that positive report on Japan. In years to come Japan will do well. Japan is a nation of savers. I do not think that Japan will do well for several years. First, the debts must be paid by the overextended debtors. I expect this will be done by bankruptcy. Once that process is completed those who remained healthy will do well. Japan will recover several years ahead of the rest of the world and at a time when our assets are on sale dirt cheap.

(Fri Nov 28 1997 08:58 - ID#200201)
SDRer looks like you and ANOTHER are in sink.
See ANOTHER's reference to the article you pointed out yesterday.

Date: Fri Nov 28 1997 08:34

(Fri Nov 28 1997 08:59 - ID#149144)
XAU & NY Gold close
Is there a site ( s ) that provides 6-12 months of historical data on daily closes for the XAU and NY gold. You suggestion shall be appreciated.

(Fri Nov 28 1997 09:00 - ID#390214)
Japan has investments all over the world. Their private institutions, ei ) life insurance companies, are already selling bonds, that's why Canada & Australia's dollar woes are beginning. Japan is forced to salvage their banking and financial industry, thus selling of overseas investments will continue in one form or another.

Gold prices have only 'fallen' in US $ terms, but risen in other currencies. WHEN not IF the US $ tanks, speared by competitive reasons ( ei ) auto industry and the Dow tanks ( inevitable as the rewards for financial returns will be more attractive in battered markets ) . Gold will soar in US $ terms. Gold will shine as it is presently shining in other currencies.

Regardless of which scenario unfolds, the booming Japanase Nikkei market or the gloom and doom scenario ( more catastrophic for the US $and all paper currencies, as confidence erodes ) The US $ will tank. Gold will soar.

(Fri Nov 28 1997 09:01 - ID#24095)
Jimmy Rogers' views
Jimmy Rogers appearing on CNBC still does thinks there is not enough "blood in the streets" for anyone to think that gold is putting in a bottom..He believes there needs to be screqaming front-page newspaper headlines about bank failures before he would think of buying into gold.

He did reiterate earlier that is is "short" the Hong Kong market...sees

likelihood of China devaluing its currency.

(Fri Nov 28 1997 09:02 - ID#287207)
Donald-A: I suspect all that is required is the first sign that things are recovering in Japan and then for the reasons you listed the heat will dissipate. I doubt there is a need to pay off all the bills for the current disaster before "recovery" is declared.

(Fri Nov 28 1997 09:05 - ID#31868)

I think they do?

(Fri Nov 28 1997 09:09 - ID#287207)
nomercy: You could be right but I doubt it. I know something of the C$ situation and all the Canadian gov has to do is stop its attempt to keep the C$ low vs the U$ and it can take quiet a lot of pressure before it declines very far. On the other hand a low C$ makes for more exports and more jobs so who knows what the politians will do. I don't think the Asian problem will have much direct effect since '80 % of Canadian exports are to the US so the US economy has to feel the pressure first.

(Fri Nov 28 1997 09:09 - ID#426220)
THE DOMINO EFFECT... it'd NOT a game
Politicians worldwide ( the enemies of gold ) , continually carp about GOLD HAS NO VALUE! Well, lets see if there is truth in their words!

Tell the victims of Thailand, Malaysia, Indonesia, Korea, Brazil and now Japan, that they shouldn't own gold because it doesn't pay
interest. They would laugh at you. For several mornings thousands of Japanese investors lined up at the door of Yamaichi -- some hysterical -- demanding their money. Money they may or may not ever see again.

Excepting the Yen ( although its turn will inevitably come ) , the average currency devaluation in South East Asia is about 30% in terms of the US dollar AND A LITTLE LESS IN TERMS OF GOLD! The Japanese Yen has only a short reprieve, before it TOO will be forced into involuntary devaluation...

Consider recent financial revelations in the Land of the SETTING Sun:

There are growing rumors Japanese Banks non-performing loans now top US$1 TRILLION - thats a One, followed by 12 zeros! DO WE REALLY KNOW THE SIGNIFICANCE OF WHAT A TRILLION MEANS???? Lets put the Nippon non-performing loans of US$1 Trillion into perspective or reference point we all understand.

For the sake of our example, assume the Japanese may attempt to some way recover or amortize the loss of $1 Trillion at the rate of One Dollar per minute, ALL DAY LONG. How long would it take the Nippons to pull out of the non-performing loan hole?

WOULD YOU BE SURPRISED THAT IT WOULD TAKE APPROXIMATELY 2,000,000 YEARS! So you may rest assured there is no typo here, I will spell it out: T-W-O...M-I-L-L-I-O-N....Y-E-A-R-S!

Is there anyone out there who naively believes that this one will be pulled out of the fire WITHOUT MASSIVE DEBT CLEANSING THROUGH DEVALUATION VERSUS GOLD????

The financial Domino Effect has begun! ORACLE paints a GRIM picture of the chaos, turmoil, havoc of the financial crisis:

(Fri Nov 28 1997 09:15 - ID#57232)
Accounting Practices in Japan need to be more than a rubber stamp
All: Before Japan will do well, virtually every Japanese company will need a clean fiscal bill of health.

(Fri Nov 28 1997 09:15 - ID#287207)
New Zealand
New Zealand has the reputation of putting its economy in place over the last decade and to have transformed itself from a socialist state to a non socialist state. Is there a chart showing the value of the NZ money vs gold or the U$ somewhere to see how it has held up this year?

(Fri Nov 28 1997 09:16 - ID#57232)
Barclays closing equities business in Japan

(Fri Nov 28 1997 09:18 - ID#57232)
South Korean finance minister in Japan to appeal for help

(Fri Nov 28 1997 09:20 - ID#57232)
Asian crisis multiplies Yeltsin's economy woes

(Fri Nov 28 1997 09:23 - ID#57232)
Asian financial

(Fri Nov 28 1997 09:23 - ID#256201)
@ Dave in CO.
I'm an old digger from the Mountain West. If you would like to talk 'bout N.E. Nevada email me : ajent@Mena-Ark.COM
Spent several years in Winnemucca and got around from Battle Mountain to Boise, to Oro Fino, to Ely and Elko.
Looks as if this gold devaluing may hit those areas VERY hard.

Does the CO stand for Colorado? I was sure it did, but hadda ask.
One of my older friends who, incidentally, is a computer whiz, still lives in Denver area.

(Fri Nov 28 1997 09:27 - ID#57232)
Asian financial fallout affects Germany
Sorry -- should have been "Asian financial fallout affects Germany" in my last post.

Good morning Donald -- glad to have you back!

Is Donald_A the new, improved, upgraded, Mark II, enhanced Donald?

(Fri Nov 28 1997 09:36 - ID#7568)

I am in complete agreement with you regarding the coming turnaround in Japan. What is happening now is the climactic event in their now 8 year old recesssion. The effect on the real economy going forward should be minimal. The BOJ is taking care of any further deflationary effects by printing Yen. The 30 odd billion dollars they have injected into the system to indemnify the depositors of the failed banks and brokerage companies stops the deflationary spiral dead in its tracks. In olden days when a bank went under the depositors got screwed and the dominos fell. Not so today. Today the pain is spread across the entire economy in the form of a devalued currency. Since the Yen is not devaluing much at all, the pain is very small. The cleansing process from the bubble of the late 80's is nearing an end.

(Fri Nov 28 1997 09:39 - ID#31868)
I think you should be well entrenched in the metals and metal stocks long before you see anything positive about the metals in the major media sources. By the time it starts to make "big" news and there is "blood in the streets" the large positions will be in place and locked in. Personally I think the big players are already locked in. I see supplies getting tighter and tighter in the physical markets at these prices. Clearly there are hundreds of thousands of people buying the metals currently in the US, millions upon millions overseas.

I say the CBs will never dump their gold. The younger CBs are jerks. All that is being put out is propaganda. The Swiss gold sale will become a text book example of deception in financial practices. The tons of metal that Veneroso refers to will come to a head soon.

Don't forget that as other currencies devalue the price of gold has been driven down in dollar terms at the same time. Seeing their paper going bad these countries are diving into the metals. When the snap back comes it will be vicious. Every adjective, in every language will be used to describe the explosion in the gold price.

If a mousetrap goes of in Iraq the shorts will be slaughtered. There are many things going on in the world that could catapult the metals prices. I think that as each position in the world financial swindle unwinds the pressure on the lid of gold will be enormous.

Watch Mr. Mathir carefully. At first he was tagged as a racist and all the other wonderful ploys at play in the media. He is the West's worse nightmare. I see him and others getting braver and braver as things fully unwind. Actually I don't think he needs to get any braver. But his stance and thinking has taken hold and lets face it, race and culture are a huge factor and the round eye bankers of the West and the speculators are considered the dark forces strangling the region. I do not say this is a good thing or correct, but it is clear that is the perception in the region.

He has not been referred to with racist overtones of late because the media propagandists would be playing right into his hand. This is an incendiary fellow, and he is pounding away at what he considers the best for "his" people and their neighbors. At the same time he is driving a stake through the heart of the vampires he considers to be feeding of his people and their neighbors.

You have the EURO vs. APEC with the US in the middle. The US cannot play both sides and come out on top. The US dollar and markets get smashed like so much cornmeal between the grinding of this grain wheel.

(Fri Nov 28 1997 09:43 - ID#390214)
The Bank of Canada has increased interest rates by 3/4 % in the last month with no effect, the dollar is trading little over 70 cents US. Thus higher interest rates are in the horizon to prop it up. Canada's trade balance with the US has been narrowing in recent months, thus a lower Cdn $ means higher inflation. Canada's riches are natural resources and with commodity demands decelarating worldwide re:Asia exports will dwindle.

The combination of higher interest rates, fall of the TSE market, lower exports will significantly affect GDP growth in 1998. Therefore higher deficit, more unemployment ( presently at over 9% ) and ultimately lower US imports.

Canada, Mexico and South America represent over 45% of the US exporting market and major trading partners. The overvalued US stock market along with the WEAK trading partners, are the ACHILLI to the giant. You're only as strong as your weakest link.

With Asia already fallen ( lower US exports expected ) that leaves only Europe ( excluding Eastern Europe ) as the only healthy market for the US.

Earnings by US multinationals and share values will diminish.

Global trading has been the 'new paradigm'. Money flows where there's less risk ( presently the US ) later ( next 6 months ) ...we'll see.

The US $ will tank. Gold will soar.

(Fri Nov 28 1997 09:46 - ID#93130)
Good Poin
D.A. A valued comment. But how do you see this injection in the long term, ie is this an increase in money supply which together with the prolonged low interest rates in the economy will prove inflationary or merely an adjustment to the money supply to maintain it at a level consistent with non-inflationary growth.

(Fri Nov 28 1997 09:47 - ID#57232)
ANOTHER - the dollar and the price of Oil
Your 8:34 is appreciated. Looks like the US did have an agreement to subsidize the dollar price of oil after the dollar went off the gold standard ( Beirut agreement for two tier system ) . However, if this post is accurate, the deal was not honored by the US, and the value of oil in terms of gold continued to drop anyway.

It strikes me that the dollar has not really been freely floating in relation to oil and gold, despite the fact that the dollar was ostensibly off the gold standard since 1972. I still don't understand how the forces of oil supply and demand affect the price of oil -- inflation of the dollar should be factored in. For some reason, it is not. I think we need to understand what is the mechanism that prevents the dollar from floating freely relative to oil and gold.

One thing I do know -- any artificial system that distorts true equilibrium pricing of a commodity leads to major trouble sooner or later. It is much better to accept the current hardship of the rising price of oil than to prevent it, only to cause a sudden shift to equilibrium later. This is always the ultimate consequence of price controls. We all remember what happened to oil/gold in the 70's.

I do not think that the official entry of the ECU/EMU/EURO by itself will cause the dollar/oil relationship to change, simply because there is no indication that the new ECU/EMU/EURO currency will be any stronger than the dollar.

(Fri Nov 28 1997 09:48 - ID#287207)
nomercy: the interets rate went up 1/4% for the first time in months this week. Where did you get the 3/4's from?

(Fri Nov 28 1997 09:50 - ID#284255)
Bush Fires
The bush fires are mainly centred around Sydney.
Down the South-Eastern corner of Australia.
Fires have a more golden glow than the city lights.

(Fri Nov 28 1997 09:53 - ID#93232)
I see the central condition as being matters of overinvestment and debt.Citizens of industrialized nations are charged-up to the max, asian banks have loaned all their deposits and their equity without fear and the governments/treasuries of the world have financially obligated themselves into the 22nd century.
Being American, I am immensely concerned with the Fed's incredible level of current debt...T-Bills. These "notes" will become due and payable as the asian lenders require the cash to maintain operations. I realize that these bills pay a handsome rate and are perceived as safe; however, those attributes are quite secondary to the need for cash.
As the notes are cashed, our treasury will become increasingly illiquid and will need to restore cash levels. They will do this by offering rates of return higher than the perceived rate of return yielded by stocks and other equities ( when discounted for risk ) .
This future condition will attract enough capital away from those markets to substantially change it's allure to investors. If this monetary transistion is not handled in the most careful manner, a stock market panic will result. I don't think this will be that beneficial to gold prices due to deflationary pressures. However, fear and greed may drive the price of gold off the map.

As a side note...whoever the investor or financial institution that is selling or shorting gold right now, by evidence, has much more liquidity than we goldbugs. This particular animal eats bugs. We should consider doing the same as he, this would facilitate his obtaining his profit objective more quickly...possibly create an "oversold market" and then the market would be friendlier to bugs. By the way, the same monster will, most probably, go long after the sell-off.

I've seen this monster...he looks alot like the ORKIN MAN.

(Fri Nov 28 1997 09:53 - ID#287207)
Sharefin: thnak you for the direction. I think I see them. Do you know how often the map is up dated? I could see the intervals anywhere.

(Fri Nov 28 1997 09:54 - ID#31868)
Took a look at the link you provided. Good grief! How are the winds at present affecting the fires?

(Fri Nov 28 1997 09:55 - ID#372285)

I just picked up the chart. Muchas gracias, amigo. Very interesting.

(Fri Nov 28 1997 09:56 - ID#390214)
Prime lending rate is presently 5.5% vs 4.75 not long ago. Bank of canada's increase was only 1/4%. Prime rate increase 1/2% ( Business borrow based on prime rates.

(Fri Nov 28 1997 09:58 - ID#57232)
Beruit Resolution XXI.122 to maintain price of Oil at 12.76 barrels OPEC crude/oz gold
All: Is this the essence of the Beirut resolution? More importantly, is there a similar resolution with other oil producers so that they are paid in an inflation-free currency?

(Fri Nov 28 1997 09:58 - ID#7568)

One thing that has been overlooked in the gold lending discussion is who are really the lenders. The central banks do not make gold loans directly to the mines or shorts. Instead they lend to large money center banks who in turn do the smaller scale lending. If the current gold loan book is on the order of 5000 tons, then we are looking at around 40 billion dollars in loans. Come the end of the year, mines will be forced to write down assets and properties which are to be closed due to their unprofitability. When this happens they may no longer meet the credit standards necessary to float the loans. Loans may be recalled, forcing the buying in of shorts. This may lead to a domino effect causing a fearsome covering rally. As loans are defaulted upon and the banks are forced to take losses the rest of the loan books may be revisited. Banks may look at these 'risk free' loans in a different light. Lending standards are always tightened after a large scale default, because the banks will have learned their lesson. It is quite possible that a wave of defaults may cause the entire gold loan business to dry up.

(Fri Nov 28 1997 10:01 - ID#372285)
DEJ - Re: Your 12:57 Yesterday
My Dear DEJ,

Sorry for the late response. Your entire argument is based on the assumption that the price of gold would NOT have slumped if the Aussies had NOT sold their gold. There is simply no evidence to support this, and it is a highly unlikely presumption, given the quantity involved, vis--vis sales by other CB's.

Even if this assumption were correct, whether Australia would be ahead depends to a large extent on what they decided to do with the proceeds of the sale. For example, if they used the proceeds to retire foreign debt, this may well put the country ahead overall.

(Fri Nov 28 1997 10:02 - ID#31868)
When the blood runs into the streets this time is will fill every drain and will rise like a flood in the narrow canyons which are the streets lined with tall buildings in the financial centers.

All different breeds of rat will drown. A golden snorkel and silver flippers will be all that gets you to safetly.

(Fri Nov 28 1997 10:02 - ID#287207)
Thanks I didn't think I had missed the 3/4's. I don't follow your logic re: inflation and the exports notions you present but
maybe we are woking from completly different perspectives.

We shall see --just like we will see if the $250 price is reached.

(Fri Nov 28 1997 10:04 - ID#426220)
Dollar Price of Oil VS Gold Price of Oil (1987-1997)
Ref: JTF ( ANOTHER - the dollar and the price of Oil ) , YOUR Comment:
Looks like the US did have an agreement to subsidize the dollar price of oil after the dollar went off the gold standard ( Beirut agreement for two tier system ) . However, if this post is accurate, the deal was not honored by the US, AND THE VALUE OF OIL IN TERMS OF GOLD CONTINUED TO DROP ANYWAY.

With all due respect, the last part of this paragraph ( IN CAPS ) is wrong -- as THE VALUE OF OIL IN TERMS OF GOLD INDEED INCREASED STEADILY SINCE 1987. See study containing charts of the Dollar Price of Oil versus the Gold Price of Gold:

(Fri Nov 28 1997 10:04 - ID#57232)
Fires near Sidney -- Connection with ElNino
sharefin: I still do not have a historical link between the ElNinos and Australian weather in the 30's versus the current time. However your dad did say that the weather was unusually hot in the thirties just as it is now. Could you ask him whether the hot weather preceeded the market crash, or did it get worse after the crash?

If I am right, it may get worse before it gets better. Not good for the markets. My guess is that agricultural disruptions are going to increase.

(Fri Nov 28 1997 10:06 - ID#390214)
Selby(this before the rise of Prime by 3/4%)
Canada Sept bankruptcies rise over year

OTTAWA, Nov 28 ( Reuters ) - Bankruptcies in Canada rose to 8,854 in September from 7,632 a year earlier, the

Department of Consumer and Corporate Affairs said on Friday.

The department said 940 businesses and 7,914 consumers went bankrupt in the month.

The total figure was higher than August's 7,800 bankruptcies ( 872 businesses and 6,928 consumers ) .

For the year to date, 75,478 bankruptcies have been registered ( 9,376 businesses and 66,102 consumers ) , up from 69,358 in

the same period last year.

(Fri Nov 28 1997 10:12 - ID#371247)
The doldrums
The pessimism many of us are feeling is the same thinly veiled panic which we felt the last time that gold emphatically bottomed out. My advice to all of us would be to keep our wits about us and not bale out just as the ship is about to tough bottom near the fog shrouded shore. I think history has shown that when everyone is recommending dumping gold that is the time to buy and when the clamor is to buy gold on the top end that is the time to start divesting from the investment. Though this market seems to have forgotten to play by the rules, nevertheless, I think the fundamentals have not changed and that we of all people who have followed gold for many years, many of us anyway, ought not to be frightened by glib words from investment analysists who do not understand the market and who are gloating over this precipitous drop in the price ( not the value ) of gold.

(Fri Nov 28 1997 10:13 - ID#390214)
With regards to Canadian exports, would you agree that commodity and resources exports will be curtailed in 1998 vs 1997, because of lower demand and lower prices ( copper, nickel, etc. )

(Fri Nov 28 1997 10:19 - ID#333131)
Anybody happen to notice that credit card delinquencies are rising again?

(Fri Nov 28 1997 10:23 - ID#287207)
nomercy: The bankrupcy figures are not too important in my way of thinking. The social stigma is gone from bankrupcy and as your figures show the vast majority of them are individuals getting out from under debt. It is a growth industry now that leads the figures --sort of like divorce lawyers and divorce rates. My facts is/are that Canada has virtually no inflation, very low interest rates, booming economy, lower Provincial taxes, fewer civil servants and just about no deficit. On the other side Big Federal debt, probable turn down in BC and unions rising. On balance, until the US economy no longer needs raw materials the good times will roll--except for the permanently unemployed who constitue most of the 9% you mention and whom we have been supporting for years now anyway and will regardless of the finacial/economic future.

Have to leave for a few hours to add my contribution to the turnover in C$ locally.

(Fri Nov 28 1997 10:23 - ID#284255)
Bush burnout.
Those fires look real, real bad.
The ones around Brisbane look the worst.
Brisbane is about half way up the East Coast.
Map centre: 2618'S 15143'E, width 10 degrees
I have watched a few fires using this viewer, and what is visible at the moment, staggers me.
There are fires right up the Cape ( top NE corner ) .
Half of coastal Queensland looks outrageous.
Sydney has some nasty ones too.
What you saw on TV would probably been around Sydney.
It does not bode well at all.

Will ask my dad tomorrow, he has a good memory of the era.
He often tells me about his days as a bagman.
Truly unbelievable times, but the people were good solid people, who stoicaly struggled on.

(Fri Nov 28 1997 10:26 - ID#7568)

The injection of liquidity ( printing of money ) is simply indicative a new process in the world banking arena where bank failures are simply not allowed in their classic sense. Depositors are always insured regardless of the investment acumen of the bankers who them. This allows the bankers to take risks with capital which most certainly would not be allowed if the depositors were at risk. The end result of this process is over expansive lending leading to inflation.

I view what is happening in Southeast Asia and Japan somewhat paralell to what happened to the US energy sectory in the mid 1980's. Recall that at such time all of Texas and Oklahoma was in a depression due to the collapse in oil prices and the unwinding of all the real estate speculation financed by the energy boom of the late seventies. The response to that crisis was the same as is happening here. The rest of the economy was treated to below normal interest rates so that the 'shock' to the system would be lessened. This gave rise to an exploding economy in unrelated sectors which lead to the stock market boom and bust in 1987 and the subsequent sharp decline in real estate markets. The paralell is that in order to shore up the weak sector in the global economy ( Southeast Asia and Japan ) , overly expansive global monetary policy will be pursued by the rest of the world.

Besides the obvious lack of rate hikes here in the US, the German central bank is now jawboning the other European central banks to lower their rates so that EMU interest rate parity is reached at the German level rather than at some intermediate level warranted by the fundamentals.

The take home message is that money will be created faster and faster. The underlying reason for this whole exercise is the quantity of government debt which is much more easily serviced in a devalued currency.

(Fri Nov 28 1997 10:26 - ID#426220)
THE DOMINO EFFECT... its not a game
Politicians worldwide ( the enemies of gold ) , continually carp about GOLD HAS NO VALUE! Well, lets see if there is truth in their words!

Tell the victims of Thailand, Malaysia, Indonesia, Korea, Brazil and now Japan, that they shouldn't own gold because it doesn't pay
interest. They would laugh at you. For several mornings thousands of Japanese investors lined up at the door of Yamaichi -- some hysterical -- demanding their money. Money they may or may not ever see again.

Excepting the Yen ( although its turn will inevitably come ) , the average currency devaluation in South East Asia is about 30% in terms of the US dollar AND A LITTLE LESS IN TERMS OF GOLD! The Japanese Yen has only a short reprieve, before it TOO will be forced into involuntary devaluation...

Consider recent financial revelations in the Land of the SETTING Sun:

There are growing rumors Japanese Banks non-performing loans now top US$1 TRILLION - thats a One, followed by 12 zeros! DO WE REALLY KNOW THE SIGNIFICANCE OF WHAT A TRILLION MEANS???? Lets put the Nippon non-performing loans of US$1 Trillion into perspective or reference point we all understand.

For the sake of our example, assume the Japanese may attempt to some way recover or amortize the loss of $1 Trillion at the rate of One Dollar per minute, ALL DAY LONG. How long would it take the Nippons to pull out of the non-performing loan hole?

WOULD YOU BE SURPRISED THAT IT WOULD TAKE APPROXIMATELY 2,000,000 YEARS! So you may rest assured there is no typo here, I will spell it out: T-W-O...M-I-L-L-I-O-N....Y-E-A-R-S!

Is there anyone out there who naively believes that this one will be pulled out of the fire WITHOUT MASSIVE DEBT CLEANSING THROUGH DEVALUATION VERSUS GOLD????

The financial Domino Effect has begun! ORACLE paints a GRIM picture of the chaos, turmoil, havoc of the financial crisis:

(Fri Nov 28 1997 10:28 - ID#57232)
Price of oil in gold bullion now within Beirut resolution
Vronsky: Appreciate your post. I must admit I was a bit confused by the terminology of Ken Coleman's "The Coming Oil Shock" post. Using your numbers I calculate 17 barrels of crude/oz gold as of May 1997. This is indeed better than the goal of 12.76 barrels/oz of the Beirut resolution.

I stand currected! This means that the two-tier system that ANOTHER was referring to was in existence. It would be nice to know how this worked, as it must still be in place. My guess is that real gold sales were necessary. My problem is that I remember doing a calculation of how much gold was needed over the last 5 years to support a $10 price differential in oil, and calculated that the central banks would have run out of gold!

Where did the subsidy for the two tier system come from?

I find it interesting that the OPEC group was accustomed to 26 barrels of crude/oz gold before the dollar went off the gold standard. OPEC has been getting significantly less income than the pre 1972 price ever since!

I doubt that the 17 barrels/oz price can be kept up much longer if oil is priced in dollars, unless the price of oil in dollars goes up fairly soon. If the US survives the massive deflationary processes going on elsewhere in the world, we will be in for an inflationary shock -- probably created by the cost of oil going up. After that time, a gold rally will be unstoppable.

Crystal Ball
(Fri Nov 28 1997 10:30 - ID#287367)
I love the golden snorkel and silver flippers. To paraphrase Slim Pickens as he said to Harvey Korman, ( in Blazing Saddles ) , "You use your mouth prettier 'n' a $2 whore!"

(Fri Nov 28 1997 10:34 - ID#287207)
nomercy: Copper is one reason BC is in trouble and INCO is hurt almost as much by the low nickel price as it is by its bad management eg Voisseys Bay and mining ore at Sudbury at cost and less. But yesterday Northern Telecom sold billions of telecommunications to China. This actually reflects a successful diversification of the economy and with regard to the probable sale of INCO -- the removal of a drag on it as well. Off to help out the Lieutenant Governors husband at his Supermarket.

(Fri Nov 28 1997 10:34 - ID#390214)
Selby (Globe and Mail article on Canada's future woes)
Consider the following. In a week when Canada is host to many deflated Asians at the Vancouver APEC summit, its central

bank finds the economy strong enough to justify a third interest rate rise, which instantly pushes up all borrowing rates.

Governor Gordon Thiessen has said the economy needs cooling, the dollar needs saving and it is the job of the Bank of Canada

to make policy now for 1999. Such foresight does not apparently engender any concern about the fallout from Japan and the

rest of Asia even though the Canadian dollar is weak because Asia's woes have weakened commodity prices.

(Fri Nov 28 1997 10:39 - ID#287207)
D.A. nomercy
D.A : Re: Your latest Post --we agree again. nomercy: I agree with the Governor of the Bank of Canada. I'm standing here with my coat on so I gotta go.

Crystal Ball
(Fri Nov 28 1997 10:41 - ID#287367)
Hi Nick! I tried the site but could only see the Western Hemisphere. How do you get to see the Land Down Under? Thanks!

(Fri Nov 28 1997 10:42 - ID#373403)
Money devaluaton protection
If/when the $US starts to be devalued, what methods are there to protect your money? I am assuming for the moment that the stock market has crashed and gold has risen to levels at which I would sell.

Then again, isn't devaluation just the consequence of money creation as it relates to other stable stocks of money? Then we are talking about inflation protection. Or is it the relative measure of market strengths based on aggregate production? In this case domestic purchasing power is not altered, just the price of import rises and exports decrease. Which is it?

(Fri Nov 28 1997 10:51 - ID#284255)
Avid chatter
Crystal Ball
Zoom out to the world map then choose the eastern seaboard of OZ.
Zoom in to approx 10 degrees.
are the bonds finally reacting???? U.S. Bonds Fall, Investors Start Considering Curve Inversion U.S. bonds fell, amid speculation that Japanese banks may be selling bonds to bolster their capital. The benchmark 30-year Treasury bond fell 10/32, or $3.125 per $1,000 bond, to 100 21/32, pushing its yield up 2 basis points, to 6.07 percent. Two- year note yields rose 2 basis points, to 5.75 percent. There has been concern that Japanese investors, stung by the failure this week of Yamaichi Securities Co., will sell U.S. securities to support Japan's banks and brokerages, which are buckling under more than $200 billion of bad loans.

seems like alot of doo doo goin on in the worlds 11th largest economy ........Korean Stocks Tumble, Led by Banks, on Slower Growth South Korean stocks tumbled for a sixth day, led by banks and Korea Electric Power Corp., on concern that slowing economic growth will drive many borrowers out of business. Moody's Investors Service today lowered Korea's foreign-currency ceiling for bonds, notes and bank deposits, as well as ratings of most banks, Pohang Iron & Steel Co. and other leading companies. The U.S. credit-rating company said it made the decision because of deteriorating corporate performance, a rapid build-up of short- term external debt and a weakening of the financial system. The benchmark KOSPI index of 775 companies dropped 21.19, or 4.9 percent, to 411.91, the lowest since July 1, 1987. Almost 20 stocks fell for each that rose.

my crash theory : I believe no big player can sell stocks because he w'ont get anything for them. that means we will never see a correction but a crash. this will happen when some big players would need money and will have to sell. in japan and HK it startet because banks had to finance bad credits. do anybody know what should force american MF and banks to sell ?! and when ?!

an example: some big players got bruised in asia by investing in asian corporate bonds

I suppose that what will do it is some surprise comming out of left feild..... something akin to what happened at a large NA brokerage house or bank disclosing huge trading losses that went somehow unreported.....that could trigger it .....but when and how that will happen is beyond anyones ability to predict

at some point fear will overwhelm greed - nobody knows where that theshhold is or what, at the margin , will pull the string - lots of candidates out there

Equity p/c of .665 on Wed. folks, the little people continue to load up on puts, perhaps after hearing pundit after pundit gravely say "we're now in a bear market." Meanwhile utils, drugs, health care, retailers, and consumer goods all at yearly highs. Be bullish ( no, be a pig ) .

Anybody note the irony in this press release: October 20, 1997 - - The Philadelphia Stock Exchange ( PHLX ) announced today that it set a new one-day equity options trading record on Friday, October 17, 1997 when 189,866 contracts changed hands. This surpasses the previous one-day equity options volume record reached on October 16, 1987 when 187,224 contracts changed hands.

Crystal Ball
(Fri Nov 28 1997 10:59 - ID#287367)
@Nick, Tol
XAU bounced off 70.00 ! Could this be "the bottom" ? Check out$xau&tables=CHART ; then go to "Technical charting"; choose 14-day RSI and Stochastics; then choose "Get chart." Is this stuff oversold or what?

(Fri Nov 28 1997 11:01 - ID#57232)
Can world-wide depression (deflation) be avoided?
D.A.: You bring up an interesting point. Can some aspects of the Kondratiev wave cycle be avoided on a world-wide basis? If the deflationary crises occur randomly world-wide ( not all at once ) , and the world's financial system remains intact, the overall effect will be currency inflation, not deflation. The Kondratiev wave cycle was really based on the behavior of single economic systems.

I doubt there is any historical data that would substantiate this idea -- it would be nice if it were true -- as inflation ( other than the post WWI germany type ) is preferable to the sudden trauma of deflation ( followed by inflation ) .

Unfortunately, however, I don't think any single country in the world can avoid the Kondratiev debt - hard assets cycle, even if we don't have a world-wide depression.

Crystal Ball
(Fri Nov 28 1997 11:13 - ID#287367)
Nick: Thanks for telling me how to use the "World View" site

(Fri Nov 28 1997 11:14 - ID#316200)
JTF - InDeflation History
History is not sympathetic with those who tried to stabilzie money with deflation. During the French revolution enemies of the Assignats were put to death. In 1919 the Czech Minister of Finance tried it and was put to death by civil servents who had been laid off. During the early thirties, the German Chancellor and the Reichbank President attempted stabilization via deflation. They were replaced by Hitler. The current mountains of debts will not be repaid with gold or a sound currency.

(Fri Nov 28 1997 11:14 - ID#284255)
Crystal Ball
Way oversold, but my guess is that it won't turn till after paper is burnt. - nkz7 = Nikkei futures

(Fri Nov 28 1997 11:19 - ID#200200)
Why are the prices up ^ there changing. Red lights are on.


(Fri Nov 28 1997 11:23 - ID#280245)
The War, on the 2nd front

Indeed yes. That is why IMO, such effort was put forward to get Camdessus
out. My A Team really worked this issue--but Camdessus went to
Africa and doing a stunning PR job for M. Camdessus[and offering who knows what sweeteners] maintained his position.
They have expended effort in several important posts ( Trichet for Euro Central Bank for instance ) .

As I view this battle as the last best chance to both save the system and anchor it in financial reality, of the kind to which we subscribe, I hope for the best and truly wish them well.

It is my belief that they are following a two-pronged approach which is dangerous and difficult: they must wait until major players feel backed against the wall, while simultaneously preparing the painful salvation, i.e. a solid, global, non-hegemonic, gold-backed currency.

PS--Your posts have been wonderfully witty. Cheers one up immeasurably.

You are the man of 1000 voices, all of which are exceedingly interesting.

(Fri Nov 28 1997 11:24 - ID#390214)
Re: Cdn bankruptcies. We agree on the social stigma, that being bankrupt is ok it today's society.

However, it may be that the decaying attitude, both in the US and Canada which will be the catalyst.

I once wrote a thesis on the Roman Empire and its fallout. To summarize it "A country will fall from within before it falls from without"

(Fri Nov 28 1997 11:26 - ID#26793)
Glad the chart arrived OK. I should point out that the Dow/Gold Ratio was at 26.27 on Wednesday. That is a slight new high ( .07 oz ) over August 6th. History says that a new peak is about 3 months away under those circumstances; much to my chagrin.

(Fri Nov 28 1997 11:28 - ID#26793)
You don't get to be "new and improved" at my age.

(Fri Nov 28 1997 11:29 - ID#287207)
nomercy: Decaying is a judgement that may or may not be appropriate in half a century. One thing is sure once bankrupcies or divorces become important enough the rules to make them harder to achieve will be put in place.

(Fri Nov 28 1997 11:31 - ID#31868)
all, still pondering in Tequilaville
I for one am intensely and eternally optimistic. I have not one stitch of pessimism in my internal golden braid. There is no question in my mind at this point that the worldwide derivative crisis is on the move and accelerates with every passing second.

Quite frankly, as the transparent disease of deflation takes hold I am more confident in each and every decision I have arrived at. Make no mistake. I do not claim that much of what I think is of my original creation. No, in fact it is the culmination of all that I have come into contact with.

I am not a Goldbug to be squashed or eaten. Oh no, not in the least. I am a Goldist, an individual that has far deeper spiritual inner workings so as to be merely a physical object, a body. My thoughts are infinity, the body, such that it is, a sending and receiving machine. Gold is a thing that is true. But a Goldist is one that believes in the truth to be found in that which is not the promise of another. ( A wistful look at the posts of a certain someone in the last four words in that sentence. ) I have faith in many truths and beliefs, which strike at the breast of any, which would rob, lie, cheat and demean my goodwill toward mankind and my respect and love for the integrity of Creation.

There is no lust or greed in my heart to hold the metal. There are deeply rooted beliefs that cannot be destroyed by the destroyers. They can never take these beliefs from me. They can not rob me of that which they cannot touch. They can steal away the physical form that is gold, but they can never deny the beliefs in what it represents and the higher beliefs, which are merely framed in the physical form of a coin.

There is much to learn from that little gold coin, far more than just holding it in the palm of your hand and realizing that you can spend it. What is represented cannot be truly spent, nor degraded. Those that kill in the name of God are no different than those that try to hoard the gold. Gold is not to be kept away, it is a shining example to those good people that they never forget the lies of mankind.

A few thoughts from Enigma, enough tequila or without, there is infinity in the following few words...

Second Chapter
We came out from the deep
To help and understand but not to kill
It takes many lives till we succeed
To clear away the debts
Of many, many hundred years.

Silent Warrior
Long ago, for many years
White men came in the name of GOD
They took their land, they took their lives
A new age had just begun

They lost their GODS, they lost their smile
They cried for help for the last time
Liberty was turning into chains
But all the white men said
That's the cross of changes

In the name of GOD - The fight for gold
These were the changes.
Tell me - is it right - In the name of God
These kind of changes?

They tried to fight for liberty
Without a chance in hell, they gave up.
White men won in the name of GOD
With the cross as alibi.

There's no GOD who ever tried
To change the world in this way
But for the ones who abuse his name
There'll be no chance to escape
On judgement day

In the name of GOD - The fight for gold
These were the changes.
Tell me - Is it right - In the name of GOD
These kinds of changes?

Tell me why, tell me why, tell me why,
The white men said:
That's the cross of changes
Tell me why, tell me why, tell me why,
In the name of GOD
These kinds of changes.

The CROSS Of Changes
If you understand or if you don't
If you believe or if you don't
If you believe or if you doubt

There's a universal justice
And the eyes of truth
Are always watching you.

(Fri Nov 28 1997 11:40 - ID#93130)
What time does the Comex close today?

Gusto Oro
(Fri Nov 28 1997 11:41 - ID#377235)
Zooming in.
Great post Sharfin. I'm wondering if a big earthquake somewhere might set it all off. Thanks for the globe site.

(Fri Nov 28 1997 11:46 - ID#280245)
and the Bundesbank has a few concerns too

In its new special report, "Off-balance sheet business of German banks", the German Bundesbank presents a detailed and shocking picture on the overall foreign exchange and derivatives exposure of German banks.

Until the end of 1996, the nominal volume of swaps, futures, options and more complex derivatives on interest rates, currencies, stocks and indices, held by German banks, exploded towards DM 16.8 trillion,
an astonishing 61% more than the year before.

By the end of June 1997, which is the last figure presented in the Bundesbank special report, the off-balance-sheet liabilities of German banks had already reached DM 21.7 trillion, which is more than 6
times Germany's yearly GDP. While the proportion between off-balance-sheet liabilities and balance sheet volume stood at 25% in 1987, this figure had increased by the end of June 1997 to nearly 250%.

(Fri Nov 28 1997 11:48 - ID#93130)
Close of Market.
I got may answer, thanks

Crystal Ball
(Fri Nov 28 1997 11:52 - ID#287367)
Thanks for the poem at 11:31. {:- ) }

(Fri Nov 28 1997 11:55 - ID#390214)
Bankruptcies and credit failures are at the core of financial crisis as we are witnessing in Asia and which are unravelling worldwide. North America is not immune. Credit card delinquencies are on the rise. Debt and corresponding deficit have been transferred from both the American and Canadian gov't to its people, . ( Savings rate for both countries has fallen dramatically in recent years. ) This shift was caused by lowering interest rates and the switching by investors from bank savings to mutual funds investing. ALL THE EGGS ARE IN ONE BASKET.

DEBT, derivatives and overvalued markets are our problem. That's why a well diversified portfolio in physical assets ( ei ) gold, platinum is the best strategy for years to come.

The US $ will lose its battle with Gold. Every other currency has. It's a matter of time.

(Fri Nov 28 1997 12:04 - ID#26793)
@SDRer: Have you visited this site?

(Fri Nov 28 1997 12:04 - ID#38970)
The trigger?
I can't help thinking back to Hashimoto's threat to sell US bonds and buy gold when the yen was at 120 to the $. This could be done with the surprise of Pearl Harbour.

Tantalus Rex
(Fri Nov 28 1997 12:07 - ID#295111)
Pearl Harbour
Neil: I keep thinking of that too, but the US talked him out of it cause the price of gold isn't low ebough yet. But the time is near when gold will explode.

(Fri Nov 28 1997 12:09 - ID#31868)
still pondering in Tequilaville
Definition of SDR, it should be obvious to all of you what it is. I am sure that many of you have thought about it.




(Fri Nov 28 1997 12:12 - ID#287207)
nomercy. the figures you presented on bankruptcies reflect that it is individuals who are going bankrupt here. Canadian industry, as it is reflected on the TSE, is as strong as the proverbial bull--booming --profits coming out of all ears. The Asian crisis is the usual result of pouring money and energy into a small area ( s ) and producing inflated prices of everything and using the capital items to raise more money based on their inflated price. Then someone ( China this time ) notes the "lack of clothes" and the whole thing falls. This is different from easier bankruptcy hurdles that allow individuals to default on their personal debt.

(Fri Nov 28 1997 12:14 - ID#38970)
Tantalus Rex: Wouldn't the last half an hour of trading on a quiet Friday afternoon be a good time?

(Fri Nov 28 1997 12:15 - ID#31868)
Gold Mining Outlook

by Steven Jon Kaplan

Gold touched $295 per ounce at 3:39 a.m. EST on Wednesday, its lowest spot price since March 15, 1985.

Updated @ 9:00 a.m. EDT, Friday, November 28, 1997.

COMMENTS OF THE DAY: Commodities and precious metals ended mixed on Wednesday. Gold dropped $3.70 after hitting its lowest level since March 1985; silver was unchanged, platinum rallied $3.50, and palladium was up $1.90. As gold explores the below-$300 level, extremely bearish sentiment has led to a final frenzy of borrowing and short selling which has overwhelmed the strong physical buying that has emerged by those who are cognizant of the opportunity to buy at historic lows in anticipation of what the price will be in the next few weeks rather than in the next few days.

As panicked investors have fled from gold mutual funds, fund managers have been forced to hold a virtual fire sale of all but the most liquid issues. Therefore, those companies which have substantial assets, but are just below the top large-capitalization tier, have been unusually hard hit over the past month. Even if one believes that the price of gold will remain below $300 an ounce for years, which contradicts all historical evidence, these shares will still rally substantially as they recover from absurdly oversold levels, and as the large capitalization companies take advantage of the unusual opportunity to expand cheaply by acquiring their smaller, artificially devalued competitors.

Mexican President Ernesto Zedillo has asked Switzerland to reconsider selling off some gold from stocks held by the Swiss National Bank in a speech to mining executives at the Asia Pacific Economic Cooperation forum in Vancouver.

There is a plan to create the world's largest gold company, based in South Africa, to be called Anglogold. This would be done via the merger of Vaal Reefs, East Rand, Eastvaal, Elandsrand, Free State Consolidated, Southvaal, and Western Deep Levels. It will also acquire 19% of Driefontein. Vaal Reefs will be used as the vehicle to consolidate these mines, after which it will change its name to Anglogold. Proven reserves will be 140 million ounces of gold.

Bank of England Governor Eddie George spoke about the quantity of gold reserves to be held by the future European Central Bank on Monday in a speech to the European Parliament's Monetary Affairs Subcommittee in Brussels: "I would be surprised if that decision involved holding large quantities of gold because whereas gold used to be seen as a good asset, it's now seen as the bottom of the pile."

While the Swiss government--whose employees are compensated regardless of the intelligence of their fiscal plans--have proposed delinking Switzerland from the gold standard and/or selling some of their long-held reserves, private Swiss money managers whose reputation and remuneration depend upon sound financial decisions are selling stocks and using the money to raise cash and purchase precious metals and their shares. Alain Etienne, senior partner at Geneva asset management firm Etienne, Odier, Pythoud and Cie, sold more than eighty percent of his equity portfolio, and now has ten percent in gold and "at least fifteen percent" ( he declined to release the exact figure ) in gold mining shares.

(Fri Nov 28 1997 12:17 - ID#31868)
Mr. Crawford did not like the looks of this weekend.
He did say there would be bad things between Thanks day and the beginning of December.

Tantalus Rex
(Fri Nov 28 1997 12:20 - ID#295111)
US Bonds
The US isn't stupid. They want your money pumped into their bonds with the belief that inflation will never hit in 30 years. No the US is not stupid. They will repay or redeem your bond after 30 years...WITH PAPER, which you may then use for your toilet.

(Fri Nov 28 1997 12:23 - ID#38970)
on Safari
It is well known that a few lions can kill an old sick elephant bull!

Tantalus Rex
(Fri Nov 28 1997 12:28 - ID#295111)
Jon Kaplan Article
The Swiss will not sell their gold. They might sell gold to say the European Central Bank but to me that's not a sale at all. It's a transfer masked as a sale.

Crystal Ball
(Fri Nov 28 1997 12:32 - ID#287367)
We just barely made new lows in ABX ( 16 1/4 ) and XAU ( 70.00 ) . If ABX and XAU can close unchanged to up a hair, we could be setting up two-day island reversal bottoms, assuming we have even a small gap up on Monday.

(Fri Nov 28 1997 12:32 - ID#390214)
The TSE and Canadian economy booming is past tense. It is the future we're looking at. Interest rates are rising, The Cdn $ falling, stocks are falling. Payroll taxes are going up significantly. Unemployment is rising. Poverty levels increasing.

(Fri Nov 28 1997 12:39 - ID#287207)
nomercy: what canada are you talking about?

(Fri Nov 28 1997 12:42 - ID#269191)
Facts are facts
Dear Tim: Facts are facts. Look what happened to the price of gold and
gold shares immediately after the Australian announcement.
It's reports and rumors of central bank selling that has created the
negative psychology allowing this bear market in gold to continue much
longer than the fundamentals would warrant.

Tantalus Rex
(Fri Nov 28 1997 12:43 - ID#295111)
Crstal Ball: Volume for ABX today was low, on New York, a mere 350,000 shares, on Toronto, 152,000 shares. ABX is down on New York but up in Toronto. I'm predicting heavy trading for it in mid December as shorts will want to book profits.

(Fri Nov 28 1997 12:46 - ID#24355)
AS this day seems to be poetry day.....
Ring the bell that still can ring
Forget your perfect offering
There is a crack in everything.
That's how the light gets in.
We asked for signs
the signs were sent
the birth betrayed
the marrige spent;
the widowhood
of every government-
signs for all to see.

You can add up the parts
but you won't have the sum
You can strike up the march,
there is no drum.
Leonard Cohen

(Fri Nov 28 1997 12:46 - ID#287207)
nomercy: go here. 2nd quarter GDP -the latest figures-- up 4.4 %. This sounds like a booming economy to me.

(Fri Nov 28 1997 12:53 - ID#390214)
Your Canada. Here's a few examples.

Interest rates rising

Prime rate is now 5.50% and projected to rise vs 4.75% a few month ago.

Cdn $ falling

Was between 72 and 73 to US $ . It is now barely over .70

Stock Market falling

Check out the TSE. check the Gold stocks ( or aren't they Canadian eh? ) check out Nortel ( high of $155.00 cdn to today's $126.00 )

Payroll Taxes increasing

I'm referring to the mammoth increase in Canada Pension Plan ( oh yes a little decrease in UI )

Unemployment rising

Over 9% and more to come as the layoff in the resources industry take its toll.


Check out today's Toronto Star, where it cites that over 1.5 million children live in poverty , 500,000 higher than in 1989.


L. Bouchard,

Hopefully I answered your question.

(Fri Nov 28 1997 12:53 - ID#26793)
Silver Forecast of August, 1996

(Fri Nov 28 1997 12:58 - ID#222167)
Donald: Regarding Japan recovering first. While Japan is a creditor nation, that doesn't necessarily imply that they will recover first. It all depends on if they are able to collect on the loans they have made. Creditors often lose just as heavily as debtors during a deflation. It all depends on the return of their capital.

If Japan were soon to convert their credits to gold, then I would agree with you that they will recover first. If they lose on their loans and bonds ( which I expect ) , they will be just as broke as everyone else at the bottom. Hence, they won't be able to recover any quicker. The key question is: Has Japan been saving for naught all of these years? I think they have, because they continue to save in paper instead of hard money.

Crystal Ball
(Fri Nov 28 1997 13:02 - ID#287367)
@Tantalus Rex
Thank you, sir ! Have a good weekend !

(Fri Nov 28 1997 13:04 - ID#225283)
Gold stock portfolio manager

Just got off the phone with my bold stock portfolio manager in London...He stated that:

"I thought last week was the worst week I had ever seen for gold stocks but this week is turning out even worse.I am fearful of what next week will bring. End of year tax loss selling in Canada is effecting the small caps , and even the strongest gold mining companies which have been not sold forward gold are being hit very hard."

My portfolio manager has an excellent record of out performing the rest of the gold equities and other advisors. I could tell from our conversation that although he was confident he is truely fearful of what may lie ahead. He is currently looking at huge paper losses.

I will be structuring an investment plan to take advantage of the current strength of the USD ( which will be short lived IMHO ) the future strenght of the Swiss paper, and the current unheard of weakness in gold stocks.

Any comments would be appreciated.

I have not been following Kitco for the last two weeks due to a Deep Vein Thrombosis which left me hospitalized and near death...literally one clot and a heart beat away from Coronary,Stroke, or Pulmonary embolosim.Hopefully I shall live to see the coming bull!

(Fri Nov 28 1997 13:09 - ID#269191)
Confirmation that Venoroso's borrowed gold figures are correct
The Wall Street Journal reported that central banks made "over $25 billion in gold loans in 1996". Assuming a 1996 average price of $360
per oz, I calculate that at about 2200 tons. The supply deficit for 1996
was about 900 tons and will probably be about 1500 tons for 1997. That means gold loans will probably be at least 600 tons more in 1997 for a total of 2800 tons in 1997. That's 5000 tons in the last two years. The article also stated that gold loan volume was twice as large in 1996 as 1990. That still makes for about 1000 tons in 1990. Let's assume that the gold loans were a cumulative 3000 tons through 1995 ( probably
conservative ) then the figure through 1997 would be 8000 tons ( this may well be conservative ) . This is a giant position amounting to about 27% of the total global monentary reserve of gold ( 950 million oz at the start of 1997 per the WSJ ) . This means the central banks have about
700 million oz left to loan or sell and at current spot this could be purchased for around $200 billion. The hedge funds alone have $1.5 trillion at full leverage. If this is correct only a very small turnaround in investment demand would be enough to turn the small and thinly traded gold market around. When this happens the shorts will be unable to cover unless the central banks make enough gold available to
account for the 8000 ton short position. It's highly unlikely that the
central banks could or would make this amount available. IN SHORT ( pardon the pun ) THE PRICE WILL SOAR!

(Fri Nov 28 1997 13:15 - ID#280245)
Tolerant 1, (using voice #459)
Of course it is! What piece of paper, IOU isn't. That isn't the
point really ( said gently and amicably )

The point is: it is there; it is global; it is not alien to major
players, as they have used it increasingly in last years;
it is a youngster who has promise, and might yet be saved and
molded, given caring parents!

Yes. Thanks tho! You are a natural resource=to gold. ( See why
we all missed you! )

(Fri Nov 28 1997 13:16 - ID#57232)
Peutz - Japanese savings - only hard assets matter
I agree with you regarding Japan. Despite how hard the average Japanese works, and how much they save ( more than Americans ) , the key question is where their money is right now -- real estate, equities, bonds, us treasuries? I doubt all of their savings are in Japanese Yen.

As you rightly point out -- these assets are not secure unless they are in the form of gold, platinum or equivalent. It is not how much saving that you have that cushions a depression -- it is how much saving in "hard" assets.

Early Riser
(Fri Nov 28 1997 13:18 - ID#228275)
Looks like someone here made a good call about a two day island
reversal in the XAU. Strong close today, but of course on low volume. Now we just need a gap up on Monday.

(Fri Nov 28 1997 13:26 - ID#315256) Longer monetary, no longer a secure store of value
Puetz, JTF, et al. I notice that Japanese, Korean, Southeast Asian, investors are doing the OPPOSITE of what you say they should. They're dumping their Gold, not rushing to buy it. And this in the face of rapidly declining confidence in their economies, and Govt.

With CB selling and current monetary policies of the major world economies, Gold no longer has much meaning as a monetary instrument. It will never again be a commonly liquid "spendable" medium of exchange for goods and services, regardless of whatever "crashes" occur.

It also has little meaning to the vast majority of investors, even in times of crises. This will not change either, as we see in Southeast Asia and all the other recent crises we've had in the past couple decades such as the Gulf war.

The only thing left for Gold, is fundamental supply/demand, and how much play it will get by the warring "Bull/Bear" big derivitive players, CB selling pressure, Mining CO.'s forward selling, etc.

That's the cold hard truth about Gold. If oil runs out tomorrow, and we abandon our gas guzzlers, the world will never return to Horse's & Oxen for transportation, we'll find alternatives. Same with Gold, it's a dead relic as a monetary instrument, and we'll never return to it as a common medium of exchange or value.

(Fri Nov 28 1997 13:38 - ID#57232)
Gold no longer an asset of value?
LGB2_A: You never cease to amaze me -- 1/3 of the world is in depression, the price of gold is going up in almost every currency exept the dollar, the Rothschilds, and others are quietly buying gold, etc. If the Japanese are selling gold now, it is because they have no choice. Didn't you see the news that gold prices went up I believe 15% in one day in Korea?

To you I guess over 6000 years of history is to be forgotten. If the average american or european feels the way you do, it is not surprising that the new world's central bank is not supposed to have very much gold in it. Strangely enough, the Swiss will have not have any part of that. I wonder why? The Indian government is moving toward gold accounts, because their people will buy gold whether or not it is legal anyway.

If you really believe what you are telling us, why don't you sell all of your gold coins? Then I will know that you practice what you preach!

(Fri Nov 28 1997 13:43 - ID#315256)
DA, Good posts
Your posts on Japan and Gold lending rates are the most reasonable scenarios I've seen here in a long time, on either subject. Are you a professional economist or analyst? If so ( or even if not ) you're worlds ahead of the ones we usually read here.

(Fri Nov 28 1997 13:44 - ID#222167)
DEJ: Yes!! I read the Wall Street Journal article. And I made these same projection. I estimated gold loans were at least 2,000 tonnes last year.

However, the new Gold Fields estimate is even more bullish than Veneroso's recent projection. Remember, Veneroso wrote regarding 1996 and the 1st 3 quarter of 1997: "This implies additional gold borrowing of 1,500 tonnes [900 in 1996; 600 in 1997], bringing the global aggregate to 8,000 tonnes."

If gold-loans were 2,000 tonnes in 1996, instead of Veneroso's guess of 900 tonnes, then outstanding gold-loans total a lot more than 8,000 tonnes. Here are my estimates, based on the Wall Street Journal article.

Gold-loans in the 1990s:
1990 - 1,000
1991 - 1,200
1992 - 1,400
1993 - 1,600
1994 - 1,800
1995 - 2,000
1996 - 2,000
1997 - 2,000

Total during the 1990's -- 13,000 tonnes -- Or, nearly 1/2 of the 28,000 tonnes that the IMF says that central banks own. I'm not sure what to make of this report. Did I misread the Wall Street Journal report? If not, this is incredibly bullish for gold. If the central banks have already sold or leased 1/2 of their gold, and the price only dropped from $450 to $300, the bulk of the selling pressure is gone. An explosive rise must start soon.

(Fri Nov 28 1997 13:47 - ID#287207)
NO NO nomercy: You have not found my Canada in your search.
For example:::
The Childhood poverty and Poverty figures you present are those of the welfare industry that is attempting to maintain itself in the face of cutbacks by presenting a picture that favours their employment. They are not to be believed. As this is old news the following is available
for their evaluation.

"Sarlo, professor of economics at Nipissing
University, North Bay, Ontario. "Most of those who are now defined as poor using conventional measures would have been solidly middle class a generation ago. These conventional measures, such as LICO, tell us about inequality and the lack of 'social comforts', but very little about the true nature of poverty."

Canadians have been shocked to learn that there are more than one million poor children in this country. While this estimate is based on a definition of poverty that is not credible, there is legitimate concern about the number of children that are malnourished. "Irresponsible parents are far more of a threat to children than an
uncaring welfare system," added Sarlo.

Northern Telecom is one of Canada's best companies and as such has been over bought for some months. I sold all my gold holdings in Nov '96 and put much of it into Nortel. It has grown from the '70's to the 150's in that time. It is now fairly priced in the mid 120's.

The rise in the Canada Pension Plan starts in the next century and occurs over a decade. It will not be fully implemented till today's "crisis" is a textbook paragraph. I will be getting my CPP payments in 6 years and an extra 7000 looks good to me.

Unemployment always goes up in Canada in the winter. Has to do with trying to farm and fish in the ice and snow

The gold stocks play a large role in the TSE index's but are of less importance to the Canadian economy as a whole. I have lived in Toronto for over half a century and have never met anyone who made their living in the gold industry. Beside I thought you thought gold was a good investment.

What has Quebec got to do with anything. It drains 5 billion from the rest of Canada each year and forces rates up because the rest of the world thinks it might separate and that that would be a bad thing. Imagine how strong Canada's economy might be without a constant
financial drain and bad PR generator like that. Lucifer Bouchard is tomorrow's Parizeau--a joke at home and an embarrassment abroad.

Alberta has a budget surplus of over $2.5 billion and they are putting another 5 billion into the Oil sands. Ontario drops 14,000 civil servants in 2 years ( unemployment goes up--hurray ) Ontario lowers income taxes 30% in the last 2 years.

Construction booming in Toronto and Alberta--Housing sales up. Welfare cases down 30% in 2 years in Ontario.

That looks like a great place to me nomercy just like what I see out my window.

(Fri Nov 28 1997 13:48 - ID#315256)
If Gold is going up in value in countries where devaluations have ocurred, why havn't investors there rushed to buy it? Instead uf DUMPING it! Because, all the other goods they buy are goin up equally quickly relative to Gold or even FASTER than Gold.

Why don't I sell my Gold? because I'm a Numismatist buying ST GAUDENS ( which have gone UP in the past few weeks not DOWN unlike Gold ) , and because I believe the fundamentals of supply, demand, mine closures, will ultimtely llow for a price rise. My Gold holdings are VERY small compared to my Platinum, Silver, and Dollar holdings.

Sorry, 6000 years or no, we live in a completely revolutionized economy, worlwide, with too much complexity and links to ever return to a metal as a medium of echange for our goods and services. It'll never happen. Those who can't face that fact are simply living in the past.

We won't be riding horses again JTF, except for pleasure....even if they did it for hundreds of years before the advent of the auto....

(Fri Nov 28 1997 13:52 - ID#315256)
@ Puetz....We agree!
Finally a post I can shake your hand on Puetz. Gold's price to be driven by fundamentals instead of some massive worldwide monetary collapse. Like I was trying to explain to JTF, it's the supply/demand/CB sale/major player manipulation that will drive Gold's price. "FLights to safety" will have nothing to do with it.

The only economic change I could forsee that would drive up Gold's price signifigantly would be a return to hyperinflation, a possibility certainly, but one that isn't on the horizon yet.

(Fri Nov 28 1997 13:55 - ID#216239)
Dollar price of Gold
JTF Most currencies are tied to the dollar. What matters is the dollar price of gold . I think we are moving from a disinflation scenerio to Deflation. It is hard to say what assets will appreciate.

imho Tom

Lurker 777
(Fri Nov 28 1997 13:56 - ID#317247)
Discount brokers fees too high.
I have an account with Jack Carls Futures and I pay $30.00 per option contract. The commissions are killing me! Does anyone have a better deal?

(Fri Nov 28 1997 13:57 - ID#285233)
Have a speedy recovery PrivateInvestor!!!!!

All: It is getting harder and harder to defend gold as an investment or financial crises insurance. Other investors that I know just laugh at me when I bring the subject up. These people can afford to loose 70-90% of what they have in the market now and still be in a better shape than most of PM investors.
I know that one day the prevailing belief on this site will be proven correct. The problem is that with all the controls in the "free market place" by the gov'ts and CBs this game may go on for still longer, perhaps much longer.
Also, I am begining to lean towards severe deflationary scenario in which case we may easily see 1977 low for gold of $103. Under this scenario all will go to hell and buying gold under $200 will be the right thing to do ( if you have any cash left ) .
Meanwhile, this enormous paper bubble appears to be getting bigger and now the only way to stop it is for the FRB to raise rate. This will stop this insane speculation. Of course, I am not talking about just .5 or 1% but perhaps 2-3%.That may start the market decline and deflationary collapse. Before that happens the market may see new dizzying highs and we, the gold investors suffer more agony.


Crystal Ball
(Fri Nov 28 1997 14:01 - ID#287367)
@Early riser
I'm very happy with today's action in the gold mines. XAU and ABX each made a new low for this year ( XAU at the *magic* round number 70.00 ) , but each closed on the very highest tick of the day, with XAU only down 0.21 and ABX unchanged. I believe the downward momentum has been spent, and next week will be straight up. I have no idea what the "news" will be.

(Fri Nov 28 1997 14:03 - ID#57232)
Just how important is the Gold to the Central banks?
Peutz: One of the problems with the gold loan business that I have is that there still is 2/3 to 1/2 of the CB gold still to loan. I agree with you that this deflationary charade in gold cannot go on much longer.

My problem is that I think gold has room to go down before it goes up, barring an international crisis.

As we have seen, there are posters on this site who do not believe that gold is a store of value. Just how many of the Central banks believe this, and how many do not?

I think we can get a better estimate of how much lower gold can go down by making a list of the central banks, how much gold each one has, and whether we would expect they would sell gold at this point.

I doubt the following banks would sell gold now, because they know better. ( 1995 numbers, in million ounces ) :

USA 763

Germany 95.2

Switzerland 83.3

France 81.9

Where is the rest of the CB gold? Is there any left among those that do not believe gold is an asset of value? I sometimes worry about the USA, because we could be dumb enough to sell gold. If anything, given the size of our economy, we should be buying it. Fortunately our own AG knows the value of gold, since he has said only about one month ago that we should go back to the gold standard.

LGB2_A: I've got one for you. Why did our R Rubin say that the USA is currently buying gold if it is no longer a store of value?

Crystal Ball
(Fri Nov 28 1997 14:04 - ID#287367)
@Lurker 777
Lind-Waldock has commissions as low as $5 per round turn ( options ) , depending on how many you buy. 1-800-445-2000 or

(Fri Nov 28 1997 14:04 - ID#344308)

you are absolutely un-equivocably------WRONG----
with regards to gold being regarded as
a store of wealth and safety now and in the future.
the times are just not un-sure enough to put
the proof in the pudding...yet.

there is still a generation here in the us that
remembers the days of the haves and the have nots.
they remember what happened to paper, and the
repercussions that dictated their abilities to
earn a decent living. gold and silver rules when
paper falls from on high. what else is there?

the majority of the rest of the world KNOWS that
gold and silver ARE stores of wealth regardless
of what price the speculators have driven it to.

tangibility becomes quite essential as the fiats
begin/are crumbling....this mr spock, correlates to
much higher prices for all the pm's, logically speaking.

you are quite brash to indeed intend to crash a righting
of a wrong. your reasoning is reasonable in mans world,
we live in a world where the ebb and flow is dictated by

for every action-----yeah, you know the spiel....

better listen to what your eyes are telling you...........

cherokee!; ) hammering-with-pewter

(Fri Nov 28 1997 14:06 - ID#287207)
Hey Private Investor::: congratulations on your recovery. Don't forget to take your thinners and for a bit of a laugh ask your cardiologist if it is possible to buy the stuff in a hardware store--he might know. If your broker is in London Ontario you should look into the Canadian stocks and bonds --gold and otherwise-- that pay out in U$ if that is what you want to get.

Crystal Ball
(Fri Nov 28 1997 14:06 - ID#287367)
@Lurker 777
Field Financial Group has $16 flat round-turn commissions on options ( not an introductory rate ) . 1-800-800-6304 or

(Fri Nov 28 1997 14:06 - ID#315256)
@ Dragon, ..Relative Price of Gold......a good men's suit?
Dragon, you hit the nail on the head. The problem with Gold isn't even it's value relative to dollars. The old "Suit" analogy is always used, though it's a tired and worthless analogy.

The fact is, ever since the U.S. allowed it's citizenry to once again own Gold, it's been a HORRIBLE store of value relative to most goods and services. If you compare the number of ounces of Gold to the price of a decent home in an area with strong economic development, a good car, a basket of groceries, an insurance policy, a gallon of gas, or any of dozens of other fundamenatl goods and services we buy, Gold has lost FAR beyond it's simple dollar losses.

It's been the absolute WORST "store of value" anyone could have held in the past couple decades. I agree now is a good time to buy it, based on rising demand, mine closures, CB unloadings mostly accomplished, third wolrd nations with exploding populations and economies eager to buy jewelry and such.

As to the past though, anyone who believes Gold has held it's own in our modern post hightech. world economy, is seriously deluded.

(Fri Nov 28 1997 14:11 - ID#57232)
St. Gaudens going up
LGB2_A: You can't be a numistmatist, specialize in buying and selling gold coins, and say that gold's value as an asset is over. You need to think about the inconsistency of what you just said. How can you make money on a worthless asset represented by your valuable gold coins?

You are are right that gold coin transactions cannot replace electronic money transfer. I don't plan to put all my assets into gold. In fact I know we have had a conversation like this before, and you have many more gold coins than I do.

What is important is the gold offers an anchor to reality for any electronic currency that is developed, eg the University of Warwick economic symposium in 1990.

Until governments are no longer able to corrupt their currencies, the people of the world will need gold, and gold coins. Just as you do.

(Fri Nov 28 1997 14:11 - ID#315256)
Cherokee, great emotional sentiments in your 14:04. Unfortunately, not backed by any factual evidence. We have the evidence of what third world citizens do in the face of crashing ecomomic policies. As to the "older generation" remembering bad times, perhaps this is why most Gold investors ( according to WSJ artcile ) are over 53 years.

The newer generations won't turn to Gold, regradless of any fears, as has already been amply demonstrated many times in the past few years. If we had a Gold standard ( which we never will ) then perhaps....citizens might turn in dollars for metal. Now...we'll never see a return to those days.

try buying a loaf of bread or a gallon of gas with a Tenth ounce Gold coin Cherokkee, better yet, try it after the next "crash" occurs. See how far it gets you before you get blank ( and pitying ) stares.

Lurker 777
(Fri Nov 28 1997 14:18 - ID#317247)
Crystall Ball
Just got off the phone with Field Finacial Group and they are sending info. Thank you. You just saved me a couple Maple Leafs a month.

Crystal Ball
(Fri Nov 28 1997 14:20 - ID#287367)
Gold like anything else has cycles, and swings ( or varies ) around its true value due to mass psychology and emotional swings; at times it will be fairly valued, but most of the time it will be either over- or under- valued. For much of the 50's and 60's gold was undervalued at $35oz. It then became fairly valued in the early to mid 70's, but then became over-valued in the late 70's and '80-81. Since then it has been forming an enormous base in the $280-500/oz range, and is currently as under- valued at $296.50 as it was undervalued at $35 in the 60's. Just look around you- When I was a kid, a Hershey bar was 5c, Bazooka bubble gum cost 1c, an average car cost $2000, and average house $15-20,000. Everything is ten times what it was in the early 60's, except crude oil and gasoline, which IMVHO are also undervalued. Everything that goes around comes around, and we've come full cycle. I pity anyone who doesn't buy gold and silver now.

(Fri Nov 28 1997 14:20 - ID#344308)

no factual evidence? how about ALL of recorded history?

i'll not banter with anything other than histrionics on
this issue, it is moot and the book is open for all to see.


(Fri Nov 28 1997 14:21 - ID#315256)
@ JTF, No inconsistency at all
JTF, you're completely mistating what I said. There's no inconsistency at all. I didn't say Gold had no value as an "asset", it does and it always will. I said it is no longer a monetary instrument, or a good store of value in the face of lost confidence in Govt., ecomonmies etc.

Don't be disingenuous and pretend you don't understand the difference.As to Numismatic value, Gold coins represent same both due to their collectibility, AND to their basic intrinsic Gold value. ( Yes, intrinsic value, as a relatively rare and useful and beautiful metal ) . Copper Numismatic coins have also appreciated greatly in value, does this make copper a great store of value or monetary instrument?

Mixing of apples and oranges doesn't work JTF. I have had no belief in Gold for many years, now I am beginning to feel it's a good buy based on fundamentals, but not for any of the antiquated and invalidated reasons postulated on this forum by Gloom & Doomers.

(Fri Nov 28 1997 14:21 - ID#57232)
Right now, gold is going down, not up
JGB2_A: If you read my posts, we do agree on this point. Supply and demand have nothing to do with what gold is doing right now. Several powerful groups have been seduced by the money-making activity of gold loans. How much better to take a non-performing asset, and turn it into a money maker! The Central Banks that are doing this have been seduced into the same delusion that makes people invest in the stock market right now - a quick buck!

When the wake up call comes, gold will skyrocket. In the meanwhile just as you say yourself, it is still worthwhile buying gold coins.

(Fri Nov 28 1997 14:23 - ID#263278)
Private Investor
This is not about gold, but hopefully Bart will forgive. I have a friend with deep vein thrombosis who is stabilized but who always is dealing with some management issues. She would like to communicate with someone else in the same situation. If you have an interest in same, please post your e-mail or fax me at 905-271-9804. Glad to hear you're on the mend.

Crystal Ball
(Fri Nov 28 1997 14:23 - ID#287367)
Mon plaisir, Mon ami!

(Fri Nov 28 1997 14:27 - ID#315256)
Cherokee, All of recorded history?
Puuuleaase Cherokee! "All of recorded history" becomes meaningful only within it's context of what happens today. We could use hundreds of analogies to prove that point. Our sources of food, energy, financing of industry and business, means of communication, electronic revolution, transporattion, etc etc. none of this is linked to 6000 years of history, nor will it ever be again.

Wake up Cherokee, it's the eve of 21st century.!!

Crystal Ball
(Fri Nov 28 1997 14:30 - ID#287367)
My dear friend, I truly like you, and would like to help you. You are rationalizing and turning a blind eye to what's going on around you. As to your comments, We have the evidence of what third world
citizens do in the face of crashing ecomomic policies. As to the "older
generation" remembering bad times, perhaps this is why most Gold
investors ( according to WSJ artcile ) are over 53 years.
The newer generations won't turn to Gold, regardless of any fears, as
has already been amply demonstrated many times in the past few years."

"He who does not remember the past is condemned to repeat it."- George Santanyana

"Try buying a loaf of bread or a gallon of gas with a Tenth ounce Gold
coin; better yet, try it after the next "crash" occurs. See how far it gets you before you get blank ( and pitying ) stares."

That's what junk silver coins are for, my brother. When the person from whom you are trying to buy bread or gas sees *REAL MONEY*, s/he will fall over her/himself to accomodate you.

(Fri Nov 28 1997 14:31 - ID#57232)
Gold is still an asset of value either as a coin or in a central bank
LGB_2: Why don't you reread todays' posts? I rest my case.

Crystal Ball
(Fri Nov 28 1997 14:32 - ID#287367)
You are thrice blessed with kindness, wisdom, and vision. Do not despair, for your good works shall certainly be rewarded. Have a good weekend!

(Fri Nov 28 1997 14:34 - ID#344308)
we shall let the final arbiter be history-----

as it has been------as it shall be-------

recorded for the sake of history-----and all lgb's


(Fri Nov 28 1997 14:35 - ID#26793)
Dow/Gold Ratio
Dow/Gold Ratio = 26.38 ( a new 31 year high )

(Fri Nov 28 1997 14:38 - ID#7568)

Thanks for the complements. I am neither an analyst nor an economist but
am the head of research for a small money management company in NYC. We get paid to speculate with other peoples money. This has been a happy year for our clients.

Your last post about gold being a horrible investment since it was legalized isn't quite right. The numbers I quote are off the top of my head so don't go crazy if they are slightly off, I know they are in the ballpark. The year after US citizens were allowed to own gold, it could be purchased for around $42 / ounce. About 23 years later the price is around $300 / ounce. This is an increase of about 7 - fold or a little less than 3 doubles, or a compound rate of return of between 7 and 8%. This I believe is a better return than one would have recieved in either, bonds, or bills, and is not far off the return in stocks.

The idea behind gold being a 'store of value' is really fairly simple. Gold, for whatever reason, has near universal appeal for its beauty and secondarily for its physical properties. Extracting gold from the ground has always been difficult, and the effort required to do so does not change radically overnight, like say the manufacture of more densely populated chips. The relative stability of supply and demand keep the price relative to a large basket of other goods and services within the economy somewhat constant. It is this stability which gives gold its 'store of value' label.

At the present time we are faced with a very different than normal situation in the gold market. The demand side of the equation is still intact but the supply side has been radically altered by sales and loans by central banks. If this obviously large supply is loosed upon the market in quick fashion there is no question that the price of gold will go down, like it already has. The only question relavant to the price of gold at the moment is what the central banks are going to do. If you believe that they are going to sell their inventories to zero then you would not want to be invested in gold. If you believe that they have nearly completed their sales, then you would want to own gold, or gold related investments in a large way. At these levels the risk vs. reward seems to compel one to take a shot. We are in the process of doing this.

(Fri Nov 28 1997 14:38 - ID#316200)
Thomas Jefferson
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them ( around the banks ) will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson

(Fri Nov 28 1997 14:38 - ID#26793)
XAU/Spot Ratio
XAU/Spot Ratio = .239

(Fri Nov 28 1997 14:46 - ID#427357)
860 GLOBAL SOURCES of Daily Business & Financial News From 6 Continents
No website MORE completely covers important world events and happenings like the "Global News section." NEWS SOURCES grouped by continents.

USA ( 111 ) , Canada ( 80 ) , International ( 20 ) , Europe ( 101 ) , Africa ( 58 ) , South Africa ( 16 ) , Asia ( 200 ) , Australia ( 50 ) , Oceania ( 16 ) , South America ( 208 ) . Just CLICK below the clocks on the continent name you desire. All major languages included:

(Fri Nov 28 1997 14:52 - ID#57232)
@Home musing
LGB2_A:I should thank you -- had to get the cobwebs out so that I could do the chores -- too much turkey.

Crystall Bal: I think your post to LGB said it better than all of mine. It is all in the perspective -- those who have seen hard times know why gold is important, those who are too young to have seen hard times, and have failed to read their history books think gold is worthless. What amazes me is that LGB likes to straddle the middle ground. It must get uncomfortable sitting on the fence all the time.

When people try to convince me that gold is worthless I think of one of my relatives who escaped the communist chinese takeover in china, and how many chinese own gold -- simply because it is a way to carry wealth when you must leave your home because of civil unrest. The chinese know about gold, because they went through at least 3 currency debasements over a 6000 year period, when it was harder to debase a currency than it is now with electronic/plastic money. I also think of those europeans who routinely have gold accounts -- LGB must not know about this either. Perfectly acceptable to have a gold account in europe. The devastation of wars are much more recent in Europe than in the USA, so the europeans know the value of gold.

What really amazes me is that the Belgians have forgotten already! ( Or more precisely, the Belgian government has conveniently forgotten ) .

I just hope that our gold is still in Fort Knox. Just imagine what would happen to the dollar if someone announced that all the gold was sold! That day would be the day that gold went up, not down.

(Fri Nov 28 1997 14:52 - ID#390214)
Anglo gold (putting the heat on the CB's)
"Godsell also called on central banks to clarify their positions on gold reserve."

Anglogold CEO sees reduced gold output - WSJ

NEW YORK, Nov 28 ( Reuters ) - The chief executive of South Africa's new Anglogold forecast a major decline in world

output of gold if its market price stays under $300 an ounce for any length of time, the Wall Street Journal reported on Friday.

Anglogold is the corporate vehicle for a merger that will create the world's biggest gold producing company.

The Journal quoted Anglogold CEO Bobby Godsell as saying in an interview that ``if the price stays below $300 for any length

of time, a huge amount of gold production will come out.''

Godsell's statement followed a drop in the price of gold to below $300 an ounce on Wednesday, its lowest point since 1985.

In the interview, Godsell also called on central banks to clarify their positions on gold reserve.

(Fri Nov 28 1997 14:58 - ID#333131)
Dow/Gold ratio. A little arithmetic: From here, if gold remains the same, say 297, then if the Dow were to advance 662 points, we would touch the all time high for the Dow/Gold ratio. That would be about in the region of the Dow's all time high. A little more weakness in gold and it wouldn't be all that implausible to have the Dow touch its previous high just when the Dow/gold ratio touched 28.61. Wouldn't that be something??!!!!

(Fri Nov 28 1997 14:58 - ID#31868)
A speedy and health filled recovery to you.

(Fri Nov 28 1997 14:59 - ID#287207)
Gold's Value over time
D.A.: I recall the days when gold was in the $800's and saw lines of would be buyers circling the main Bank of Nova Scotia in town--and on TV all over the world it seemed. I have a back burner interest in the actual buyers of the 800+ ozs. I have the impression that most of the buyers were little guys like most of Kitco's posters and that most of the "Pros" knew enough to stay out of the market. I would appreciate any leads to relevant information or opinions on my guess.

About 8 months ago it was posted here that 850 put into the DOW --at the time 850 bought an oz--- was worth about $3000. It depends where you draw the start line. $42 has a clear validity but for many "small investors" avoiding the next $850 is an important issue as well.

(Fri Nov 28 1997 15:01 - ID#280245)
This is offered NOT as a comparision of the value of silver vs. gold, rather
as an example of how markets have functioned for a VERY
long time...

In the Middle Ages, when money consisted primarily of coins, silver and gold coins circulated simultaneously. As governments came increasingly to take over the coinage, and especially as fiduciary money was introduced, they tended to specify their nominal monetary units in terms of
fixed weights of both silver and gold--to adopt a national bimetallic standard. Gresham's law, however, usually assured that the bimetallic standard degenerated into a monometallic standard: if the quantity of silver designated as the monetary equivalent of one ounce of gold was less than the quantity that could be purchased in the market for one ounce of gold ( i.e., if the mint overvalued silver ) , no one would bring gold to be coined. If one had gold, it was better to buy silver and bring
it to be coined. Silver, the cheaper metal, "drove out" gold and became the standard. This happened in most of the countries of Europe, so that by the early 19th century all were effectively on a silver standard. In Britain, on the other hand, the ratio established in the 18th century at the advice of Sir Isaac Newton, then serving as master of the mint, overvalued gold and therefore led to an effective gold standard. In the United States a ratio of 15 ounces of silver to one ounce of gold was set in 1792. This ratio overvalued silver, so silver became the standard. In 1834 the ratio was altered to 16 to one, which overvalued gold, so gold became the standard." M. Friedman

LBG2: While your statements surely reflect the consensus in the world
beyond this board, I would suggest that whatever else has been "revolutionized", homo sapien sapien has not. We still relect our biological imperatives, and it is we who are the market.

(Fri Nov 28 1997 15:04 - ID#344308)

excellent---too bad we are living his warning

debt is a ploy------paper is their minion----

gold and silver are their un-doing-----

the fuses are lit, we know them by name.
take your pick, the out-come will be the same....


(Fri Nov 28 1997 15:05 - ID#26793)
Several year end and 1998 gold forecasts.

(Fri Nov 28 1997 15:05 - ID#93232)
I don't know many "money" guys buying 6% 30-year T-Bills. The best economic condition for appreciation of gold would be a substantial interest rate increase. Supply/demand and fundamentals take too long to prove the price results from futures trading and speculation by financial entities. Quickly determined strategies based on vast amounts of fresh information.
Ultimately and soon, the federal reserve will have to compete for the same capital that Wall Street targets. To obtain it, the Fed will be forced into raising rates. Does not gold fare well with rising rates?
With all mines closed, there will still be plenty of gold to trade and the price of gold will be determined by gold's trading opportunities...not fundamental merits.
Has anyone determined the amount of US$ currently warehoused in the NYSE, AMEX and NASDAQ? It could be all the money in the world...I bet the Fed has to come get some of it.
My company has produced and sold oil for many years. As a result of oil futures coming into existence just a few years back, the market price has become extremely volatile and somewhat irrational to what we see as market conditions. It is now unusual for the posted price of oil ( this is what we're paid ) to remain static for more than two days. The futures market determines today's fundamentals. These markets are easily moved and manipulated...the same as gold.
It may be of some little interest to note, that my company has reduced its dollar holdings by 10% in favor of physical gold over the last two weeks. I have also done this personally. My company nor myself have ever considered gold until now. We will buy more physical gold if the price falls further and/or when interest rates reverse.

(Fri Nov 28 1997 15:14 - ID#390214)
Canada HAS enjoyed a few prosperous years, and if the Asia's turmoil hadn't hit it would have continued to do so. However things have changed and the Asian flu is spreading and Canada will be victimized. We appear to differ on the impact to Canada's growth in '98 and beyond.

I forecast slower growth, lessened tax receipts, higher deficit, lower exports, bear stock markets, higher unemployment.

I'm also expecting higher gold prices for a variety of reasons.

You appear to be bullish on paper and bearish on gold.

Let us keep us informed from herein.

(Fri Nov 28 1997 15:15 - ID#31868)
Your opinions that gold is not the money of the world and that we live in a new era are wrong.

Clearly there are a couple of billion people that have never made a phone call. The not so modern type people.

The vast majority of the population does believe that gold and silver are money. Add up the population base of China, India and Africa for starters.

You believe that technology is omnipotent. Technology, touch your thumb and second finger together on the same hand. Technology in plain and simple terms.

The two idiot economists should have been given the Ignoble Prize.

You live in a virtual financial world that has been created woth smoke and mirrors. Poof, your financial world is gone and when the puff of smoke clears all that will be left, gold and silver and some thug with a gun calling itself a partiot.

(Fri Nov 28 1997 15:25 - ID#57232)
@Home - I know someone who takes coumadin for DVT's.
Private Investor: Glad you are feeling better. If you are taking coumadin, you should read up on how it works. Many sites on the Internet for this. You must remember to take the doses religiously, and be careful with other medications, since coumadin has a complicated metabolism -- other drugs can affect how strongly it works. Also it takes days for changes to be fully evident.

If you have any doubts because you have changed other medications, don't forget to get that PT test! Best if you get it at the same lab every time. If you don't, make sure you right down how they do the test, the INR and the ISI. With all of these numbers, you will have a better chance of understanding the result if you ever get tested at another lab.

Don't let your blood pool in your legs! Regular exercise, I'm sure, is what will be recommended if not already.

Speedy recovery! --- JTF

(Fri Nov 28 1997 15:26 - ID#280245)
Sorry, that should be LGB2...
that should be LGB2...

Crystal Ball
(Fri Nov 28 1997 15:29 - ID#287367)
Thank you for yours of 14:52 ! Be well, and have a good weekend!

(Fri Nov 28 1997 15:31 - ID#398105)
Gold and perception of wealth

Greetings from Kalgoorlie In Western Australia.

"Long has man travelled in the realms of gold"

During a centuary of mining in South Africa, some 4,000 million metric tons of ore has been treated from the Witwaterand deposits, resulting in the recovery of 37 million Kg of Gold ( 1200 million ounces ) . An estimate of total global production is 3.85 billion troy ounces, which could occupy 18.5 metres cube - a small volume.

The focus of the South African production is controlled by companies directly and indirectly controlled by the Oppenheimers and Rothchild.

Given the toil, trials and tribulations inherent in the production of this gold, and the subsequent accumulation of wealth, does anyone seriously think that "they", interests controlled by Rothchild, are going to give it away?! I think not.

Gold mining is not easy, a clear example recently demonstrated by Pegasus Gold Inc at Mt Todd in the

(Fri Nov 28 1997 15:35 - ID#26793)
I have been thinking along the same lines. If we examine the bb fisher chart we can see that there was a similar drop just a few months before the final peak in 1929 and again in 1966. We have discussed this previously here on these pages and this event of the past few days is not a surprise even though I had hoped that "this time is different". The fact that it has happened should not tempt anyone to sell gold and buy the Dow in my opinion. Quite the contrary. Notice the subsequent spike for 1929 and 1966. Remembering that it is a semilog scale the spikes are equal to 3 Dow/Gold Ratio points on each occasion. As you suggest, we could easily match the 1966 peak without a new Dow high from these spot levels. One example would be Dow 8300 and gold 290. That could be done in one day with the kind of action we have seen in the recent past.

I see no need to change my personal strategy. Rydex Ursa and CEF are doing relatively well. The silver component of CEF has helped a lot.
With the history of the 100 year Dow/Gold chart for comfort and the currency tsunami spreading and compounding daily from Asia, it has the best chance of a favorable result in my opinion.

(Fri Nov 28 1997 15:40 - ID#398105)
Gold and perception of wealth

Greetings from Kalgoorlie In Western Australia.

"Long has man travelled in the realms of gold"

During a centuary of mining in South Africa, some 4,000 million metric tons of ore has been treated from the Witwaterand deposits, resulting in the recovery of 37 million Kg of Gold ( 1200 million ounces ) . An estimate of total global production is 3.85 billion troy ounces, which could occupy 18.5 metres cube - a small volume.

The focus of the South African production is controlled by companies directly and indirectly controlled by the Oppenheimers and Rothchild.

Given the toil, trials and tribulations inherent in the production of this gold, and the subsequent accumulation of wealth, does anyone seriously think that "they", interests controlled by Rothchild, are going to give it away?! I think not.

Gold mining is not easy, a clear example recently demonstrated by Pegasus Gold Inc at Mt Todd in the

(Fri Nov 28 1997 15:52 - ID#7568)

You are certainly right. By definition the masses must get clipped in the game of musical assets because the majority cannot sell to the minority at increasing prices. At the moment, the majority is chasing the dream of financial security through ownership of equities. This will be as much of a dream as those who were lined up around the bank to get thier piece of $800 gold security. Observations such as these don't help much with trading but certainly do with investing, the difference being the time horizon. Donald's Dow/Gold ratio is relavant just for this point.

When asset prices are viewed in relation to other asset prices it becomes relatively easy to pick out the ones that are at the high end of historicial valuations vs. the low end. Of the ones that are at the low end, try and figure out the 'reason' for the low valuation. If the reason does not stand up to scrutiny then perhaps a case can be made to take a shot. Picking tops is a whole lot harder. The very end of a rise in a particular asset is often spectacular, with emotional concerns overriding any possible rational justification for prices. At these times all you can do is sit back and watch in awe.

I spend a lot of time going to auctions and dealing in fine art. I am continually amazed at the bidding wars that break out for objects of inferior quality but that for whatever reason strike the fancy of two determined bidders. Sometimes I play a little game with myself trying to pick the top in my mind. Invariably I aim too low.

(Fri Nov 28 1997 15:59 - ID#398105)
Gold and perception of wealth

G'Day again....

I have never been to Fort Knox. If gold is not a store of wealth what is the point of having any security at Fort Knox?! Surely, if gold is not a store of wealth, the US Government would not require any security.

I think not.

The "Chaps" in London are creating a new market for gold ..... Japan.



(Fri Nov 28 1997 16:16 - ID#39121)
Will gold ever shine again?
In recent months, I have stubbornly held on to gold mining shares in roughly one third of my investment portfolio. Surely, there has not
been a worse performing sector of the market to be invested in for
quite some time.

Having lived through the gold and silver craze of the 1970's, I became
interested in mining shares well over two years ago. I recall speaking
with a broker who was puzzled by my interest in gold shares, as he could
not imaging anyone wanting to invest in a commodity which was being mined
on a continuous basis. He said, "Don't you realize that nearly every ounce of gold that has been taken from the ground is still with us today?"

Many months later, I realize that there have been and perhaps always will
be many factors which dictate the price of gold. One would have to be very blind not to see the blatant manipulation in the gold market through
the recent global currency and market turmoil.

With the powers that be wanting to push gold to "trinket" value, does anyone know what price gold would have to drop to in order to be comparable to the $70 per ounce level of the early 1970's?

(Fri Nov 28 1997 16:18 - ID#398105)
Gold and perception of wealth

"Nature herself makes it clear that the production of gold is labourious, the guarding of it difficult, the zest for it very great, and its use balanced between pleasure and pain"

Diodorus Siculus, first centuary BC

"Gold is the most exquisite of all things ... whoever possesses gold can acquire all that he desires in this world. Truly, for gold can he gain entrance for his soul into paradise"

Christopher Columbus, 1500

The first quote applies to gold in 1997, very painfull. We certainly felt it in Kalgoorlie

The second certainly applies to the Rothchilds. Will it apply to gold 1998 - I hope so.

Christopher Columbus, he had something to do with America, or am I wrong on that point?!



(Fri Nov 28 1997 16:20 - ID#197289)
Line ups at Bank of Nova Scotia
Selby: Your guess is correct. I was in the line up at Scotiabank when the

price was approaching 800. My friend commented the people there were 'working people'. The average purchase made was small - 1-2 oz.

I bought a five ounce bar and it was beautiful.

I showed my 5 ounce bar to my brother's father-in-law who at the time was

the vice-president of one of the larger Toronto stock firms. His only comment was "buying at the top eh!". His response floored me but I respected his opinion. I thought about his response and went back down to the bank a few days later and sold the bar.

I spent some time watching the people who were buying ( I was a student and had lots of spare time ) . They were working people and were all convinced gold was 'going over 1000'. At the time inflation was 15% and

interested rates 22. In hindsight it was an obvious top.

The pendulum always swings too far - now it is toward the undervalued side. Where it

(Fri Nov 28 1997 16:30 - ID#197289)
Line ups at Bank of Nova Scotia
Selby: Your guess is correct. I was in the line up at Scotiabank when the

price was approaching 800. My friend commented the people there were 'working people'. The average purchase made was small - 1-2 oz.

I bought a five ounce bar and it was beautiful.

I showed my 5 ounce bar to my brother's father-in-law who at the time was

the vice-president of one of the larger Toronto stock firms. His only comment was "buying at the top eh!". His response floored me but I respected his opinion. I thought about his response and went back down to the bank a few days later and sold the bar.

I spent some time watching the people who were buying ( I was a student and had lots of spare time ) . They were working people and were all convinced gold was 'going over 1000'. At the time inflation was 15% and

interested rates 22. In hindsight it was an obvious top.

The pendulum always swings too far - now it is toward the undervalued side. Where it

(Fri Nov 28 1997 16:30 - ID#197289)
Line ups at Bank of Nova Scotia
Selby: Your guess is correct. I was in the line up at Scotiabank when the

price was approaching 800. My friend commented the people there were 'working people'. The average purchase made was small - 1-2 oz.

I bought a five ounce bar and it was beautiful.

I showed my 5 ounce bar to my brother's father-in-law who at the time was

the vice-president of one of the larger Toronto stock firms. His only comment was "buying at the top eh!". His response floored me but I respected his opinion. I thought about his response and went back down to the bank a few days later and sold the bar.

I spent some time watching the people who were buying ( I was a student and had lots of spare time ) . They were working people and were all convinced gold was 'going over 1000'. At the time inflation was 15% and

interested rates 22. In hindsight it was an obvious top.

The pendulum always swings too far - now it is toward the undervalued side. Where it

(Fri Nov 28 1997 16:33 - ID#222167)
JTF: According to the latest IMF statistics ( which are a few months old ) , the US owns 262 million ounces of gold. All of the central banks own a combined 896 million ( about 28,000 tonnes ) .

I am not absolutely sure of this, but I believe gold that is loaned out is still reported as owned by the central bank. In other words, as of 1997, the central banks own 28,000 tonnes of gold. If 13,000 tonnes have been loaned out, we must conclude that they only have 15,000 tonnes still in their vaults.

I would be more interested in the IMF reporting what central banks still have in their vaults. I can only estimate that there is only 15,000 tonnes left. No one knows for sure, we can only guess.

(Fri Nov 28 1997 16:40 - ID#224151)
Some thots on recent posts.
Studio-Rs comments on his oil business: that The futures markets determine todays
fundementals and these mkts are easily moved and manipulated like Gold ( and
Currencies I might add ) ....... Emphasizes the game playing aspect of todays business
world which further impedes and complicates todays business arena.

A lot of todays so-called financial Realities are in fact delusions resulting from years of
avoiding.ignoring,and tampering with some very basic univeral laws. You can find ways
to defy these laws for a time but you cant change them. The current Global financial
picture defies the laws of reason if nothing else. More credit to solve the problems that
have indeed been caused by too much of same. And with that Easy credit have come
some very negative side-effects not the least of which involve our value standards.

It has often been argued that one cant Eat Gold. Well, I dont think that the nutritious
value of paper is too great either.And as a storehouse of value it is not hard to
comprehend that Gold will store much better than most other hard assets and in many
cases with less associated cost.

Yes,as has been noted we are very much creatures of habit and conditioning. While we
have been conditioned to accept the value of paper ( Mainly the U-S $ ) the intuitive habit
will resort to gold when the occasion merits it. IMHO.

Studio-Rs comments on his oil business: that The futures markets determine todays
fundementals and these mkts are easily moved and manipulated like Gold ( and
Currencies I might add ) ....... Emphasizes the game playing aspect of todays business
world which further impedes and complicates todays business arena.

A lot of todays so-called financial Realities are in fact delusions resulting from years of
avoiding.ignoring,and tampering with some very basic univeral laws. You can find ways
to defy these laws for a time but you cant change them. The current Global financial
picture defies the laws of reason if nothing else. More credit to solve the problems that
have indeed been caused by too much of same. And with that Easy credit have come
some very negative side-effects not the least of which involve our value standards.

It has often been argued that one cant Eat Gold. Well, I dont think that the nutritious
value of paper is too great either.And as a storehouse of value it is not hard to
comprehend that Gold will store much better than most other hard assets and in many
cases with less associated cost.

Yes,as has been noted we are very much creatures of habit and conditioning. While we
have been conditioned to accept the value of paper ( Mainly the U-S $ ) the intuitive habit
will resort to gold when the occasion merits it. IMHO.

Studio-Rs comments on his oil business: that The futures markets determine todays
fundementals and these mkts are easily moved and manipulated like Gold ( and
Currencies I might add ) ....... Emphasizes the game playing aspect of todays business
world which further impedes and complicates todays business arena.

A lot of todays so-called financial Realities are in fact delusions resulting from years of
avoiding.ignoring,and tampering with some very basic univeral laws. You can find ways
to defy these laws for a time but you cant change them. The current Global financial
picture defies the laws of reason if nothing else. More credit to solve the problems that
have indeed been caused by too much of same. And with that Easy credit have come
some very negative side-effects not the least of which involve our value standards.

It has often been argued that one cant Eat Gold. Well, I dont think that the nutritious
value of paper is too great either.And as a storehouse of value it is not hard to
comprehend that Gold will store much better than most other hard assets and in many
cases with less associated cost.

Yes,as has been noted we are very much creatures of habit and conditioning. While we
have been conditioned to accept the value of paper ( Mainly the U-S $ ) the intuitive habit
will resort to gold when the occasion merits it. IMHO.

(Fri Nov 28 1997 16:47 - ID#26793)
An interesting site many of you will want to explore

(Fri Nov 28 1997 16:56 - ID#348169)
I doubt you were a very old gold panner at that time. ( I am pointing out the obvious as you stated you were a student at the time and the majority of students are less than thirty ) I have probably told this storey here about a year ago but most here today ( Selby excluded ) were not students here a year ago, so I will repeat as its a good one. ( BTW - We are all fellow students here, now that the place is back to normal. )
At the same time you were lining up and the pictures of the lineups ( which were happening 'round the world ) , were being broadcast on the nightly news, I was about 27/28 and I sat with my wife pointing at the screen saying, "Look at these idiots!", ( no personal offence, remember we were in the privacy of our own humble, ( believe me, it was humble ) , abode, "they are lining up to buy at $600-700 when two/three years ago they were nonchalant when they could have bought at $200."
At the time I had staked placer ( gold ) claims on two spots in the Cariboo region of British Columbia; near locations where the original gold rush in the 1860's had attracted so many panners from around the world that soon B.C. became a province ( instead of a territory ) due to the huge influx of people. Yes, you were buying at the top. It's easy to say this in retrospect, but believe me, students of the big picture were saying it even as it was occurring, as per the vice-president in your story. I was saying it from my lonely outpost on Vancouver Island, just as two-three years before I had been trying to explain to my friends that Gold and Silver were Undervalued.

Gusto Oro
(Fri Nov 28 1997 17:02 - ID#377235)
Market tout.
Hey everyone, Myron Kandel on CNNfn just mouthed an assurance that the Dow would hit new all time highs by the end of December, ( or at least by the end of January he now says ) .

(Fri Nov 28 1997 17:02 - ID#194311)
Legality questions....?
When travelling to another country it is okay to carry cash say of around $US 10K without declaring it. If I was carrying gold would this be $10K of legal tender face value, i.e US$50 per Eagle, CAN$50 per maple leaf or would it be the going market rate?
Also if I was to leave an inheritance that was taxed would the gold be taxed on the government value ( i.e. face value ) or market value?
Seems to me like taxes are for governments so they must use government value...right? Would be a cheap way to transfer wealth to the next generation.

(Fri Nov 28 1997 17:13 - ID#348169)
@NEWA @16:16
NEWA - Its already there and beyond. $75 times = $300. Guess what? Practically anything you can buy today costs FAR more than four times as much as it did back then. I am going to repeat a message now that many here have been trying to gratuitously convey to others who visit here.
GOLD, ( and Silver ) , IS NOW DIRT CHEAP.
Sorry guys and girls, had to get it out of me. Also didn't want to be accused in the future of speaking ambiguously!

(Fri Nov 28 1997 17:16 - ID#31868)
fighting over parking spaces
Today, the biggest shopping day of the year, ( according to the keepers of suspect facts ) found people were fighting over parking places and in some instances, coming to fisticuffs.

It should be interesting when the investors try to get their money out of their mutual funds, their bank accounts and what!..lo and behold...fight over getting in line to buy gold and silver. Unthinkable.

(Fri Nov 28 1997 17:17 - ID#93114)
The Crash - An Update Maybe?? haven't really given us an update as to the crash
prognosis. I recently covered all my December S&P puts at a significant
loss and over the past few days all you have been really concentrating on is the gold market. Are we still heading down? ( like a crash ) Have
you also covered your December S & P puts? I don't blame anyone except myself for succumbing to the extreme negative orientation
on this thread. I still do believe, that the world economic system as we know it, is in a severe stage of flux and probably will crash but, not when
everyone is looking for it to!! Good Luck and hope to hear your views.

(Fri Nov 28 1997 17:20 - ID#31868)
Way too subtle for the gold deaf, media dumb and reality blind parishioners of the New Era Paradigm Cult.

(Fri Nov 28 1997 17:28 - ID#348169)
KIWI - I'm amazed! Are you seriously worried or just joking? If it's three o'clock in the morning and a red light at the intersection and there are no cars within sight are you going to wait? Do you really worry about transferring YOUR money due to some bureaucratic degree? The experience of millions in this century has already proved to us that this is not a wise plan. ( Obeying autocratic government degrees ) . Start sending in small portions to me, and, for a small fee, I will safekeep! :- )

(Fri Nov 28 1997 17:36 - ID#348169)
Don't get uptight on me now. I realise that you were trying to make a valid point, I'm just going off on a different tangent and you know it!

(Fri Nov 28 1997 17:36 - ID#267276)
interesting topics
Adrain Van Eck, is calling for $500 gold soon. ( from his gold letter ) .
Check out Larouche talks to EIR. at

(Fri Nov 28 1997 17:38 - ID#39121)
Mooney: Thanks for the reminder of how cheap gold and silver are today.
Though I was very young, I do recall the days when there were full page
newspaper ads offering $12 for pre-1965 Kennedy Halves. Both gold and silver should be trading at much higher prices but I will be surprised
to see it as long as the media are telling the world that the two precious metals are barbaric relics.

(Fri Nov 28 1997 17:41 - ID#194311)
Actually it was serious question as to the legalities of the whole issue...but that is not to say that legalities bother me in the slightest, especially when it comes to releasing hard earned assets to bureuacrats....if ya know what I mean.

(Fri Nov 28 1997 17:45 - ID#194311)
Here we go rupee rue.....
India's Government Falls Apart
India's fractious 17-month-old coalition government fell
Friday after its key Congress party ally withdrew its support
following 10 days of political deadlock. President K.R.
Narayanan accepted the resignation of Prime Minister Inder Kumar
Gujral and ministers of his United Front coalition of free
markeeters, regional and communist parties but asked them to
stay on as a caretaker administration. Narayanan must now decide
whether to order the dissolution of parliament, which has been
paralyzed since its winter session began on Nov. 19.

(Fri Nov 28 1997 17:50 - ID#31868)
Government is a cancer and the cure is the vote.

(Fri Nov 28 1997 17:50 - ID#267276)
Elliot Wave has Dec 1 and 2, next monday and tuesday as probable crash days. More severe than the 550 point drop last month. There sure is enough to go wrong over the weekend to ignite it. I would say that if there is much more trouble with asian markets, saddam etc. get out first thing monday morning or short.

(Fri Nov 28 1997 17:50 - ID#194311)
Shock therapy not convenient for China...i.e. Chinese gold still cheap.
Chinese yuan to strengthen despite currency crisis: official
HONG KONG, Nov 28 ( AFP ) - The Chinese yuan will not be devalued
in the wake of the Asian currency crisis and may strengthen in
value, a senior Chinese finance official said here Friday.
"Will there be a devaluation because everybody else is going
down?" asked Li Fu Xiang, deputy director general of the state
foreign exchange administration of the People's Republic.
"The renminbi ( yuan ) exchange rate will be, under present
circumstances, under upward pressure," he told the Asia Forex
meeting here. Asia Forex is the regional annual meeting of ACI
( Association Cambiste Internationale ) , an umbrella organisation for
member financial market associations.
China has the world's second largest foreign exchange reserves,
worth 134 billion dollars.
The effective devaluation of nearly all Asian currencies has led
specialists to question the strength of the Chinese unit, even
though it is protected from the regional crisis by its only partial
Asked whether the yuan would become completely convertible, Li
said: "I don't know."
"They ( the Chinese authorities ) will do it when they are ready,
but then they will do it well," he said.
He said the Asian financial crisis showed the importance of
having a healthy banking system before financial deregulation.
"Shock therapy is not convenient to China," he noted.

(Fri Nov 28 1997 17:54 - ID#31868)
That also coincides with the comments of Mr. Crawford who sees bad things in the stars and planets. ( I do not poke fun at him, I just do not know the exact term for the science he practices. Color me stupid. )

(Fri Nov 28 1997 17:58 - ID#255284)
exact tax
kiwi, rustle your feathers and fly home! 9999 gold purchases in NZ attract no GST, and of course, there are no notification requirements. As to inheritance Tax, good arguments for no necessity to declare what's in the hollow under the Oak tree with the sawn-off branch.

(Fri Nov 28 1997 18:00 - ID#344290)
@ LazloT
Do you think a US crash will be in-, or deflation? I noted your 11:14 post with great interest. Most "experts" I see quoted are calling for a deflation if we have a serious financial shock.

(Fri Nov 28 1997 18:07 - ID#194311)
won't be long now...

(Fri Nov 28 1997 18:15 - ID#194311)
Dawn of a New Era? Aurora Hydrino.
Here's an interesting one....if this guy is for real this will banish fossil fuels to the dark ages and good riddance in my opinion. His ideas are theoretically revolutionary but he is very commercial oriented which makes me suspicious. Initial Public Offering coming up soon no doubt, if nothing else it's fun to make believe the world could be a truly better place.

(Fri Nov 28 1997 18:23 - ID#26793)
Worst performing market was Brazil, down 2.33%, second was India down 1.87%

(Fri Nov 28 1997 18:23 - ID#210114)
Crashes and Crunches
I'm not an expert but I can't agree with the worsening predictions about the world economy coming from this page.

I think we are heading towards trouble with the Asia meltdown thing. The US economy will be effected. There may well be a fall on the DOW to 6000-6500 but I can't see the collapse of the financial system as we know it. The central banks and the governments of the world just won't let it happen. There will be some sweetheart deal done; a nod here a wink there, and life will go on pretty much as before. The consequences of doing otherwise would be to bad to contemplate. Can't really see a return to the gold standard either.

So, hold your gold; have fun with it. It probably will rise and make us a bit richer but predictions of $2000/oz and world economic catastrophe and collapse? Hmmmmmmmmmmm I don't think so.

Hope all you Americans have had a great Thanksgiving. Be glad that you have lots to be thankfull for ( except if you are a beggar on the street ) .

(Fri Nov 28 1997 18:24 - ID#269191)
Thanks Puetz!
I appreciate your input. I thought the world's entire monetary reserve
was more like 950 million oz. But that was probably at the start of the
year and there have obviously been substantial outright sales so maybe
your figure is closer to correct now. When I first read Veneroso's
analysis in Blanchard's letter, I thought it was crazy but after seeing
the WSJ article, and doing the rough calculations, I realize even he was
probably low. Thanks again. I didn't have any gold loan figures from
the years before 1996 so I was just making conservative assumptions.
If the 13,000 ton figure is correct, then there is no way the central banks can bail the shorts. I can hardly wait for the fireworks. There
should be massive gold loan defaults by the dealers. Sure is a shame the
central bankers won't be seeing any of their gold back anytime soon!

(Fri Nov 28 1997 18:27 - ID#222167)
Saul: I'm still extremely bearish on US stocks. I still have my December S&P puts. The chances are decreasing on these, by the day. Nonetheless, the global financial system is in such a precarious state that things could start to fall apart any day now. I have been buying January S&P puts -- although they are expensive.

I believe the peak at DJIA 7881 on November 21st was the end of the recovery for blue-chips. For secondary stocks, the recovery from the October 27th low lasted until November 5th. I doubt that a crash will occur on December 1st or 2nd. However, once the DJIA falls below 7000, a full-scale crash and panic will then be only a few days away.

It looks the the next panic is going to center around Brazil, South Korea, or Canada.

(Fri Nov 28 1997 18:33 - ID#257114)
Just started reading postings from morning and saw tolerant1's 00:06 posting and thought that was right on the mark. It 's seems equivalent to being hit by a hurricane with no forewarning at all. On CNBC they just shrug off the issue and explain it like it's a temporary annoyance. The public is completely oblivious to what is happening out there. Most americans couldn't even comprehend the situation even if you tried your best to explain it to them. But when will gold stop going down? Nobody knows. Just keep buying is the way I feel. You know the odds are excellent that these coins and selected mining shares are at very low risk buy points. I don't even have to think twice about pulling the trigger to buy gold and silver coins at these levels. I'm with you tolerant1. If they can do it with baseball cards then gold and silver related investments are right around the corner. Buy now to avoid the big rush of liquidity that will eventually hit this market.

(Fri Nov 28 1997 18:33 - ID#286249)
Chinese policy...
Interesting post Kiwi. Holding in mind that the Chinese
said some years ago that they would link to gold,
and comparing their foriegn reserves with say, oh--just for the sake of discussion--the US, who looks like a better candidate for
devaluation? ( Not to even mention current account comparisions! )

I wonder if the Chinese might represent the last governement that
engages in looooong term planning, and I wonder if a portion of
that long term policy might not be to assume their place at
the head table?

(Fri Nov 28 1997 18:38 - ID#333131)
Re your 15:35, Leaving out the ugly reality of what is to follow, a turn at the Dow's previous high with the Dow/Gold ratio at its previous high would be too beautiful for words!!!

(Fri Nov 28 1997 18:38 - ID#222167)
The reason the central banks cannot stop the panic is because they are not the ones making the loans to individuals and businesses. The central banks lend to the commercial banks, who, in turn, lend to businesses and individuals. The global liquidity cruch is coming from the commercial banks, not the central banks. Commercial banks have gotten stung with so many of their loans that they have virtually stopped making new loans. A credit crunch has begun.

Part of the recent problems in Canada are because Canadian businesses have been heavily dependent of borrowing from Asian commercial banks. Now that money has dried up. In this way, it's easy to see how an Asian financial panic can suddenly become a global panic.

The full brunt of the Asian financial panic has not yet been felt in the Americas. Just wait a few more days, or weeks, then investors will fully realize just how important Asia is to the rest of the world.

(Fri Nov 28 1997 18:38 - ID#65207)
South Florida retired but for how long? Back to the FUTURE!
I am not going to whimper here, but let me tell you all golgbugs, that I lost close to a million in gold this year alone.

It was suppose to be a free market.....It is all manipulated.

I lost a bunch in St. Gen. Group., still don`t know where this madness will end.I am bleeding to death not because these stocks did wrong but because it is a fake game where the T.A and fundamentals are out...and sheeps get in a slaughter-house.

The fundamentals were looking so bright.

Beg your pardon if someones get involved because of me.

I am not going to give up anyway...back to hit the sky..Flying again if I can find a new job at my relative old age of 54,..18,000 hres flight time,immaculate background and ,thanks GOD in good health.

Starting all over again,

See you in the FUTURE.

(Fri Nov 28 1997 18:44 - ID#222167)
DEJ: If that Wall Street Journal article was accurate, then you are right. There will be massive defaults on gold loans. I'm still having a hard time believing what I read. It just seems incredible that central banks could have loaned 2,000 tonnes of gold last year. I also find it incredible that you're the only one talking about it.

If everyone else read the article as I did, gold should be $50 higher on Monday.

(Fri Nov 28 1997 18:54 - ID#26793)
Whew! Asia crisis nearly over says Dow 100,000? guy.

(Fri Nov 28 1997 18:57 - ID#31868)
But you have to put things in perspective. His idol is the Black Knight in the Monty Python movie the Holy Grail.

(Fri Nov 28 1997 19:02 - ID#26793)
FDIC says 25% of bank loans too risky, up from 18% in May

(Fri Nov 28 1997 19:02 - ID#286249)
SATURDAY NOVEMBER 29 1997: Tokyo: Japan's central bank moves to calm
Authorities act as savers rush to withdraw funds, write Gillian Tett and
Bethan Hutton in Tokyo

The Japanese authorities yesterday lent further emergency large-scale support to the country's banking system as public disquiet grew about the stability of some financial institutions.

Savers again sought to withdraw their money from weaker banks. At the
Tokyo branch of Yasuda Trust, depositors queued patiently before being
turned away by harried bank officials. Similar scenes have been repeated
across Japan this week in spite of government pledges to protect depositors.

The Bank of Japan flooded the money markets with liquidity, leaving a record surplus of Y3,700bn ( $29.41bn ) aimed at curbing the rise in market interest rates. Officials feared that the weaker banks and brokers were being denied credit because of rumours they could also fail. Aside from Yamaichi Securities, which collapsed a week ago, Hokkaido Takushoku, a leading bank, and Sanyo Securities, the seventh largest broker, have also failed this month.

The central bank took the highly unusual step of issuing secret bilateral loans to some troubled groups under article 20 of its constitution, which allows it to offer loans in exchange for collateral.

These moves, which follow a desperate plea for market calm by the
government on Wednesday, had some impact. The key overnight call rate -
the average level that banks and brokers can borrow funds - fell to 0.25 per cent yesterday afternoon, down from 0.85 per cent earlier in the day, an extremely high level for Japan in the past year or so. "There have been signs that some groups have had problems raising funds," said one official.

Meanwhile, the Japan premium - or the additional rate Japanese banks
relative to similar banks based elsewhere must pay to borrow money in
international markets - also fell back to around 55 basis points ( 0.55
percentage points ) . On Thursday it surged over 90 basis points, threatening to squeeze the already beleaguered banks. The stock market also recovered 0.2 per cent, ending the week down only 85 points at 16,636.26.

Yesterday's rally partly reflects growing hopes that the government is finally moving to use public money to clear up Japan's long-running financial problems. Three former prime ministers - Kiichi Miyazawa, Yasuhiro Nakasone and Noburo Takeshita - have formed a crisis committee to address the issue. They met yesterday and Mr Miyazawa will address Japan's parliament on Monday. He is expected to announce moves to expand the pool of money available to protect customer deposits against a bank or broker collapse.

Government officials hope this will prevent public panic. In spite of the queues outside some banks and brokers, they deny any sign of serious runs on banks.

Few Western analysts believe official pledges that no more banks or brokers will fail. Russell Jones of Lehman Brothers said: "It is only a matter of time."

(Fri Nov 28 1997 19:07 - ID#26793)
I may be wrong but he has the same name as the Israeli broker who has been written up in Barron's twice with super high Dow predictions.

(Fri Nov 28 1997 19:09 - ID#31868)
Is it me?
Is the statment at the top of our browsers a Zen thing?

(Fri Nov 28 1997 19:12 - ID#26793)
FLASH! Billions pour out of Russia; IMF help requested.

(Fri Nov 28 1997 19:19 - ID#26793)
Czech currency downgraded by rating agency.

(Fri Nov 28 1997 19:19 - ID#65207)
Mickey are you still alive?
Mickey...where are you..when I need you..?

Drowned,..Red-throated on Thanksgiving Day...?

(Fri Nov 28 1997 19:21 - ID#287207)
nomercy: The difference is not so great. I believe that Canada is sitting pretty with its finances under control. Its "problems" are the usual Canadian concerns--higher than most unemployment ( even seasonally ajusted ) and a debt to be tackled. But these are business as usual items and I recall them as fixtures of my adult life. To consider these important from an investment view as though they are new or different or never seen before is to give them too much importance I think. Certainly Canada can get swamped if the US goes down in a world wide financial calamity. The direct Asian effect will be minimal because we don't do much with them yet. Japan for example holds about 40 billion of our debt and it isn't going to help them with their problems if they decide to take all their money back any way.
All relevant Canadian variables have been seen before, but-- Canada has not had its books in such good order to deal with them since Trudeau started the debt in the early '70s. You will note that no one can give any reason for the notion that Canada is one of the next to go some just like to say it--wisdom by regurgitation

With regard to the future of paper and gold I will demonstrate my 18 months of reading Kitco ( truly an education as Mooney says ) by stating unequivocally that gold will go up.

The only issue of interest or better the major goal at this point is to figure when a bottom might have been reached and all other matters flow from this question. Continuing to rant against the CB's or the Red Shields or the folly of bottom picking is entertaining but being on the golden horse as it starts to run back up the hill is my focus at this time.

And I think Vancouver will beat the Leafs.

(Fri Nov 28 1997 19:25 - ID#26793)
Brazil currency appears stable.

(Fri Nov 28 1997 19:27 - ID#31868)
You are going to wear your browser out keeping up with the down grading of currencies, plus markets losing a zillion semolians in this world wide market that is not falling apart.

Remain calm, all is well. Not!

(Fri Nov 28 1997 19:28 - ID#286249)
Projecting forward
FT 11/27/97 Sat
"Stan Shipley of Merrill Lynch said that a 5.8 per cent advance in the third quarter's real consumer spending "borrowed growth" from the fourth quarter. "An 18.2 per cent gain in real consumer durable purchases was in large part driven from aggressive sales incentives for motor vehicles."

(Fri Nov 28 1997 19:29 - ID#23181)
Gold Loans
Is it not true that the German CB indicated it would no longer lend gold.
Was this not mentioned by "Another" as the start of the end of CB lending programs. Is the manipulation in the gold market and the depressing of price only to enable the repayment in gold of the 8000+ tons borrowed. Is this the reason that all the CB's are knocking the future of gold as a reserve so as to assist the borrowers to aquire the gold to repay the amount borrowed? In the event of a default can the borrowers repay the CBs with currency rather that gold? I think not for they know the true value of their currencies.

(Fri Nov 28 1997 19:31 - ID#199183)
puetz posts
puetz: Your 12:58 post is right on. It is an example of the value of having someone of your ability on the chat. I posted here a year ago about the symbiotic relationship between the twin deficits and stated the fact that Japan was shipping us perfectly good Toyotas and Sonys in return for a promise to pay sometime during Chelsea's term in office. The Nips are definitely gonna be caught holding the "Old Maid."

Your 18:27 is a horse of another color. When I read the posts of the folks who've been decimated financially by fighting the bear in gold and the bull in stocks, I wish that I had posted more frequently to this board. I haven't posted much since about February, when I went short gold. It seemed not to be fitting to be here and be out of step, so I went elsewhere. Seeing the abuse heaped on the handful of dissenters hereabouts, my decision was right for me personally. But I probably could have saved some folks' financial hides if I had continued to post, and that I regret. To expect the stock market to hold up in December in the face of all the tax loss selling, which has given us a good dip to buy each of the last 3 years, then collapse in January when all the new money starts to pile in, is ludicrous. The January S&P puts will be worth the same on the third Friday of the new year that the Dec puts will be worth 3 Fridays from now. Zero,Zilch, nada. The stock market has become a commodity market now, and the top will look like the top of major commodity bulls. See gold in 1980, for example. Dow 10,000 is definitely doable in '98. Much higher is possible. Valuations have been meaningless for a couple of years now, as the market trades like any other run away commodity bull. If you lack the cajones to try to ride this bull, for god's sake, and your family's financial future, dont get in it's way.

That said, well financed accounts, using money that will not be needed in the foreseeable future, could start now to very gradually accumulate physical metal and stocks in the top half dozen or so gold producers. Leveraged positions at this time are folly.

Good luck to all. bbml.

(Fri Nov 28 1997 19:34 - ID#287207)
D.A. Oldgoldpanner: Thanks for you views on the people who bought gold in the 800+ range. I have a friend who bought 1000's of oz of silver below $5 and kept it up to $50 and all the way down again to sell in the 5-6 range some years later. It is probably too late to get any information but it would be interesting to know how much gold actually was sold say from 400 to the 850 mark. I would guess that only a small amount, relatively, actually traded compared to the number of individual transactions as the price setters charged all they could get from those who knew not what they were doing. My friend says that since he passed through the entire process-- and was unchanged --his function was that of a financial catalyst.

(Fri Nov 28 1997 19:38 - ID#26793)
Swiss begin payments to Holocaust survivors.

(Fri Nov 28 1997 19:42 - ID#31868)
The German CB representative clearly stated that they would not be lending more gold. It was on many different news sites.

(Fri Nov 28 1997 19:44 - ID#26793)
Maybe we have detected the IMF strategy. Send Russian money to Brazil; get a good Brazilian audit. Step two; Send Brazilian money to Korea...ditto. Then step three; Korea money to Czech Step four; Czech to Russia...repeat as necessary.

(Fri Nov 28 1997 19:45 - ID#60253)
After a proof read by one from the west this

is a start and should help you understand.

For a number of years many persons have tried

to invest in gold using the tools of past gold

encounters. Even thought the last several

upswings in bullion always took the gold stocks

along for a ride, this time it will be different!

Ever ask someone if they owned gold. They

might say  yes, but only 5% of my capitol

is in it for insurance Was it bullion? No,

my broker is to smart for that, he put me into

a good gold mutual fund. He says, if it really

looks like its going to go up Ill also have you in

some comex futures or options 

During the first bull market of the seventies we saw

few mining stocks outside South Africa worth owning .

Because they were relativity new to the game

most people stayed with bullion. There certainly

were no mass gold options and there were even

fewer gold coins around. Most just brought

whatever bullion bars they could find and as their

past European counterparts did, they just waited it


Today, the public went whole hog for paper

gold and has paid a great price. Wall street

invented this game from the previous war as

a way of keeping customer gold money  in

house! The shame of it is that these tools not

only would not work in this new market, but

they also gave the street a way to short gold

even more effectively. In many cases the public

brought little more than long paper from the

street, with no gold at all on the other side!

No one will ever have the truth on this as the

falling price made most people close out

without ever calling for the goods!

A good deal of the numerous mining paper

capitol was used to enrich the sellers while

the buyers actually had no chance of seeing

a profit. Thats because the commodity

these securities were based on was all but

guaranteed to go down as forward sellers

were given a green light to sell paper gold to

the limit of their financial resources.

To make a long story short, many people

who would have purchased bullion years ago

have now squandered much of their safe

insurance money on wall street. It is no wonder

that many WESTERN gold investors have now turned

bitter on gold. If they knew the truth about

this new market they would have turned their

bitterness on wall street instead.


(Fri Nov 28 1997 19:50 - ID#35767)
Christmas and New Years Crash of 97. The fundamentals are takin over oldman. Watch in winder!! Gold 274 is ultimate potential low though never may get there. Silver either another ST top or were off to the races. Talk of Dec squeeze in silver is bohooey however longer term squeeze in progress. Will be interterestin to see if buy gold sell silver action comes in next week.

(Fri Nov 28 1997 19:54 - ID#210114)
Puetz and Wall Street Journal
Is there a syte on the net where I can read this article in the WSJ?

(Fri Nov 28 1997 20:07 - ID#222167)
Spock: The Wall Street Journal is available on the Internet -- but there is a fee for the service. If you go to your local library, they probably have The Wall Street Journal on file. Look for the November 28, 1997 issue, on page C1. The article has a bearish tint to it. Nonetheless, in the article, they reveal that $25 billion ( more than 2,000 tonnes ) were loaned during 1996. They also stated that this was about double the level of loans in 1990.

From this information, we can infer that Frank Veneroso ( in his famous Gold Newsletter article ) grossly underestimated the amount of gold loans outstanding at the end of the 3rd quarter on 1997. Veneroso conservatively estimated 8,000 tonnes of gold were loaned out. Based on the Wall Street Journal article, it looks like as much as 13,000 tonnes of gold have actually been loaned out. That would imply that central banks only have 1/2 of the gold in their vaults that the IMF says that central banks own. ( 1/2 of what they own has been lent out, the other 1/2 is in their vaults. )

(Fri Nov 28 1997 20:08 - ID#26793)
Japanese deposit insurance system wiped out by first failure.

(Fri Nov 28 1997 20:11 - ID#210114)
Thanx for that.

(Fri Nov 28 1997 20:16 - ID#210114)
Gold Sales by Default
With such a large amount of CB gold out on loan, I'm tempted to think that there will be gold sales by default.

If all this gold is being turned into jewellery as has been suggested, it is quite concievable that if and when the CBs ask for their gold back the borrowers won't be able to return it. BUT rather than causing problems perhaps the CBs will shrug their shoulders so the speak and accept cash instead.

Anyone got any thoughts??

(Fri Nov 28 1997 20:16 - ID#310407)
@ Oldman
Oldman, your 19:31 is sound wisdom from a wise and successful investor. Others will ignore it at their peril ( and financial ruin )

(Fri Nov 28 1997 20:20 - ID#26793)
IMF bailouts inflationary in 6 to 18 months.
Earlier Debt Surge Now Stifles East Asia
By John Lonski, Senior Economist,
Moody's Investors Service

Of late, the IMF has been busy putting together rescue packages
for financially troubled countries. Facilitating the provision of
financial aid from the IMF has been the very low rate of inflation
in the industrialized world which allows the major central banks
to adhere to accommodative monetary policies. Ironically, the
financial straits of some East Asian countries can be partly
ascribed to the same flatness of tangible goods prices that makes
the provision of liquidity easier for the world's major central
banks. The latest injections of financial liquidity by the IMF hint
of faster global price inflation six to eighteen months hence.

Several East Asian economies have been financially hindered by
an extended surge of indebtedness relative to their economic
output. Heavy borrowing has financed additions to production
capacity and the construction of real estate whose returns have
been falling chronically short of borrowing costs. Improved
lending practices will necessitate the imposition of more stringent
lending standards.

East Asian companies will be under more pressure to deepen
their equity base. To do so, East Asia's financial markets will
become increasingly globalized. Whether cross-border or
internally, mergers, acquisitions and divestitures should become
more prominent. East Asia's financial crisis underscores the
importance of monitoring the growth of debt relative to
sustainable economic activity. Ultimately, the US's imbalance
between the 11.3% average annualized growth of
nonfinancial-sector debt and the 7.5% average yearly growth of
current-dollar GDP during the years of high leverage --
1984-1989 --would lead to a spate of troubled loans and
defaults. Recession would soon follow.

(Fri Nov 28 1997 20:21 - ID#287277)
Donald and Tolerant 1@19:42 or thereabouts: You Have the RIGHT of it i do believe!
McLeod's Theory and Practice of Banking describes how the Bank of England defended itself in September 1720 against a run brought on by its going back on a promise to absorb Sout Sea Company.
To avert failure, the Bank organized its friends in the front of the line and paid them off slowly in light sixpences. These friends brought the cash back through another door; it was depositied, again slowly counted, and then made available for paying out once more. By this means, the story concludes, the run was staved off until the Festival of Michaelmas ( September 29 ) . When the holidays were over, so was the run, and the Bank reopened."

This is the history they know.
And it worked before...the question is...
Too Little, Too Late"

(Fri Nov 28 1997 20:29 - ID#26793)
BOJ "printed" equivalent of US$29 billion Thursday night to keep banks afloat.

(Fri Nov 28 1997 20:35 - ID#310407)
Tolerant, JTF, Crystal Ball......... Gold's relative value
You guy's still missed my point in your responses earlier. Sure it's comforting to wish there is a "magic bullet" ( Gold ) that will shield you from coming crises in the world. Unfortunately, that comfort is misplaced.

Gold has value as an intrinsic asset for many reasons. I never argued otherwise, quite the opposite. I would own any if I thought the current risk/reward ratio was poor. I believe now is a good time to move into it cautiously, though Silver and Platinum are better.

As to the monetary aspects, it's not my failure to study, understand, or learn from history that is the basis of our friendly disagreement. It's your failure to study, understand, or learn from the massive changes that have taken place at the end of the 20th century, and what they will mean re Gold as a monetary instrument, or a readily spendible liquid, store of value if and when crises come.

As for me guy's, I'll forsake 6000 years of history and continue lighting and heating my house with electricity, and fossil fuels, not candles and firewood. I'll keep my computer and forsake the parchment and communications methods of the past. I'll hold on to our refrigerator for food storage, my bank account for dollar storage, and my auto for transportation. I'll enjoy the fruits of an economy that provided more real wealth and gains to humanity, than the limited credit systems of the past, I'll face the perils of the future through adaptation instead of head in the sand a lot better these days.

(Fri Nov 28 1997 20:37 - ID#263259)
Might it be possible for the Dow and gold to recover together. Say $10000 and $425 respectively?

(Fri Nov 28 1997 20:39 - ID#26793)
BIS says SE Asia crisis no worry for European banks.

(Fri Nov 28 1997 20:41 - ID#310407)
@ D.A., Gold's price since legalization
D.A., good post, we mostly agree. On Gold's price however, a minor quibble. If we take Gold's price since U.S. legalization of ownership, allow for a year or so of stabilization, we're talking $120 an ounce to $180 an ounce in the mid 70's and of course much higher prices around the 1980 spike, thus virtually no long term investors have done anything other than lose their shirts. ( Other than previos long term holders of Numismatic Gold of course which remained legal throughout! )

(Fri Nov 28 1997 20:49 - ID#222167)
Demonitization: The US government was not the first to demonitize gold, in 1971. The Chinese ( ruled by the Khans ) declared their paper money as legal tender, nearly 900 years ago. After working for nearly 2 centuries, the inflation of the paper-money grew so great, the citizens rebeled. The paper sytem collapsed. The Chinese did not use paper as money for the next 600 years.

The use of paper as money has ALWAYS collapsed. The only question has been: When?

(Fri Nov 28 1997 20:51 - ID#26793)
Sure. That is possible Dow 10000, Gold 425, Dow Gold Ratio = 23.53 would be within the reasonable historic range. It had been my opinion at one time that we would have a false inflation scare that could produce that type of number. We seemed on that track in late July. Now that deflation is breaking out all over the place it seems unlikely. If the IMF and everyone else is going to print like crazy I suppose it could happen. They are almost in a panic to prevent deflation. It seems too late. Things are moving too fast now but the possibility does exist. All the money printed would end up in the banks with no place to go. Deflation would still be the result but the inflation scare could produce the numbers you suggest in the meantime.

(Fri Nov 28 1997 20:52 - ID#31868)
So what this all boils down to is that you are willing to bet the farm on easy credit and the printing of paper and creation of financial electrons irrespective of the fact that the money they represent never existed.

Am I missing something?

(Fri Nov 28 1997 20:55 - ID#222167)
South Korea: The blood-letting continues. South Korea's stock market is down another 3.5% tonight -- with the key index falling below 400.

(Fri Nov 28 1997 20:59 - ID#316237)
Placer Dome
I have recently purchased some Placer Dome and have watched in steadily decline. I was hoping to catch it near the bottom of it trading range but unfortunately miscalculated. What advice can anyone give me about the potential upside of this gold miner? I do know that that the average cost of production is around $210/oz. Is there any hope?

(Fri Nov 28 1997 21:01 - ID#26793)
Economists say Japan is too big to go bust.

(Fri Nov 28 1997 21:04 - ID#402151)
silver deficit

Does anyone know how valid the claim is of a 7 year deficit in world silver production? How accurate is the counting of available silver especially when it is the silver industry doing the counting?

I've been watching Comex warehouse silver stocks decline since 1993 when they were about 270 mil ounces. Last year they declined to 129 mil at one point then Comex added another depository with about 56 mil. Stocks rose again to over 200 mil in June then rapidly declined to 126 mil--where we are now. Are we going to get surprised again with some new find of a large silver deposit or are we really running out of silver.

The charts seem to agree that the 93 high in silver warehouse stocks and subsequent decline is an accurate accounting since silver did bottom around 3.50 and has been in a slow uptrend ever since.

(Fri Nov 28 1997 21:05 - ID#31868)
LGB2's New Era Welfare State

Worldwide Welfare
by Jane H. Ingraham

U.S. Insiders Rubin and Greenspan want to "reform" the IMF

Alan Greenspan and Robert Rubin have a bold plan for managing global financial affairs: Put themselves in charge. These two powerful Insiders are perfectly positioned to do just that. As chairman of the Federal Reserve and Secretary of the Treasury, respectively, these two control the money that controls much of the world. Small wonder they were able to call the shots for the "reform" of the international Monetary Fund ( IMF ) at the June summit of the Group of Seven industrial nations in Halifax. Their "bold proposal," authored by Rubin, supposedly is meant to increase help for "insolvent nations," "see them through insolvency," and "prevent another Mexican-style crisis," just as if this were a proper constitutional function of our government. But stripped of its flimsy altruistic camouflage, their proposal is seen to have quite different objectives.

"Critical" Move

Why do Greenspan and Rubin think the IMF needs to be "reformed"? First of all, because it needs much more money. Second, this money must be much more available. As things now exist, the IMF simply can't come up with enough money fast enough to stem the "inevitable" financial crises of the future. To remedy this unfortunate deficiency, the international financial system must be remodeled according to Rubin's plan. This move, Rubin says, "is critical for the future of the world and the future of this country."

How does the IMF function at present? In a time of crisis, it turns out to be far from the smoothly operating mechanism Greenspan and Rubin would like to have. For people in a hurry to bring about the new world socialist order, this is intolerable. It is only now that we are beginning to appreciate how furious the Insiders were when Congress refused to approve President Clinton's $40 billion bailout request for Mexico. When Mr. Clinton was forced to cut the sum in half, obtain the $20 billion from the Treasury's obscure Exchange Stabilization Fund ( which technically required no congressional approval ) , and turn to the central banks of the major industrial countries for another $10 billion, it was obvious that this kind of frustration could never be allowed to happen again. Although Michel Camdessus, director of the IMF, had promptly offered a $7.8 billion loan, this totaled only $37.8 billion. Camdessus was asked to do more.

But Camdessus did not have money immediately available. The IMF is financed by lines of credit, which are merely promises to pay by the governments of the IMF's nearly 200 member countries. Getting this money into the pipeline takes time. Nevertheless, Camdessus pledged an additional $10 billion in loans.

When IMF board members, who had expected to approve $7.8 billion, were confronted with the plan for $17.8 billion, the Europeans rebelled, claiming that the crisis was a North American problem. Delegates from Germany, Britain, Denmark, Switzerland, and the Netherlands angrily abstained from voting. But Camdessus, who actually had assured the U.S. of the additional $10 billion before the board met, announced that the plan was approved. The Germans were livid. According to the June 9th Wall Street Journal, Otto Lambsdorff, a former German economics minister and European chairman of the Trilateral Commission, accused "some at the IMF" of "welcoming the Mexican situation. They could say, 'See, we need money.'"

Camdessus then tried to please them all by announcing that he would try to raise the $10 billion from central banks in Brazil, Singapore, and elsewhere in the non-European world. But Rubin flatly rejected this, claiming that these banks would make only short-term loans, when Mexico needed loans running several years. In a public rebuke, he announced that he expected the IMF to fork over the full $10 billion, if it proves to be needed, solely in medium-term money.

Insiders in Charge

Clearly, the IMF needs to be revamped. People as important as Robert Rubin should be able to snap their fingers and get action. Otherwise, how could the giant Wall Street investors and banks ever be sure they could collect their billions in an emergency? For as all the world knows, the bailout was arranged less for the sake of Mexico than for the New York multinational banks and investment houses, which had over $24 billion at stake in Mexican short-term bonds payable in dollars that Mexico did not have. No wonder the Europeans balked!

Rubin's strong-arming of Camdessus reminds us that such appointees, no matter how elevated, owe their survival to the Insiders who raise them up. In Camdessus' case, it was the Americans who cast the deciding votes in his favor. He is now simply paying the price. By showing his clout so openly, Rubin revealed that the American Insiders, with by far the most wealth behind them, are indubitably in charge.

If the IMF is unsatisfactory in an emergency, how does it function in ordinary circumstances? Actually, the process of involving the IMF in an ordinary bailout is roundabout and time consuming. This is undoubtedly because the true purposes of the IMF had to be concealed at its founding at Bretton Woods, New Hampshire in 1944. The brainchild of John Maynard Keynes, one of the world's most prominent socialists, and Marxist Harry Dexter White, who was at once a U.S. Treasury official and a Soviet agent, the IMF was billed as a great stabilizer of international exchange rates. These fixed exchange rates, we were told, would facilitate trade and bring about unprecedented world prosperity.

In reality, the hidden agenda of the IMF's creators called for the building of world socialism. This was to be accomplished through the elimination of gold and its restricting discipline from world finance and the eventual creation of a world currency based on nothing. A world bank would then be able to inflate at will ( producing a uniform worldwide rate of inflation ) and control the world's nations ( stripped of their own currencies ) through the control of money and credit.

But the IMF's socialist architects were cautious. Keynes himself admitted that their ultimate ends could be made acceptable only through the process of gradual evolution. Today, 51 years later, the IMF is not yet a true world central bank with unlimited issue because it cannot create its own currency. It still has to depend on the central banks of its member nations to provide "credits," a great source of impatience for Robert Rubin. But these banks, all with fiat currencies, can create only as much money as they can politically get away with. Rubin's proposal, demanding much more money for bailouts on the principle that the New York creditor banks are "too big to fail," would quietly move away from any restraints on IMF funding.

Meanwhile, the IMF's so-called "original" purpose of maintaining fixed exchange rates has been long forgotten. The IMF has presided over more than 200 currency devaluations, and exchange rates have been floating since 1971. In that year Richard Nixon fulfilled the Insiders' objective of getting rid of the last vestige of gold in the world's monetary system, moving the U.S. into a purely fiat currency simply by abolishing the redemption of foreigners' paper dollars for U.S. gold.

Perpetual Interest

But the IMF is busy with a newer mission. It is helping countries to spend more than they earn and is providing a gravy train of interest payments to creditor banks. As G. Edward Griffin observes in his book The Creature From Jekyll Island, "It is important to remember that banks do not really want to have their loans repaid, as their profit is made from interest on a loan, not repayment of a loan .... One of the reasons banks prefer to lend to governments is that they do not expect those loans ever to be repaid .... The objective is perpetual interest."

(Fri Nov 28 1997 21:10 - ID#222167)
Donald: Does your 21:01 posting imply that we should be shaking in our boots -- that the world's largest debtor country ( the grand old US of A ) is heavily relying on foreign capital to sustain its economic expansion?

(Fri Nov 28 1997 21:10 - ID#31868)
One thing is for certain. With all the gold mines that are shutting down there will be even less silver produced as it is a by product of gold production as well as with other metals.

There are very few pure silver mines as many of them went off in search of gold and we have seen where that has gotten them.

The supply of silver is dwindling and has been for years. Unless you think Rumple is going to start spinning some hay into silver I would say that it is a safe bet that there is a genuine shortage of material.

(Fri Nov 28 1997 21:11 - ID#26793)
Fed printed money for the weekend to ease "pressures" in the financial system.

(Fri Nov 28 1997 21:12 - ID#267276)
Just got through watching Wall Street Week, it gets worst every week. Same old people reading their scripts. Rukeyser absolutly shot the heck out of gold, but I know how nuts they are because he was showing expensive Christmas gifts. One was a wooden cigar humidafier which cost $36,000. No one on his show could think that it could have been made of 120 oz. pure solid gold for the same price. The end of common sense!

(Fri Nov 28 1997 21:17 - ID#26793)
@Steve Puetz
The many, many thousands who have been "downsized" would be likely to object your calling this an economic expansion. BTW, did you see my post about Russia?

Mike Sheller
(Fri Nov 28 1997 21:19 - ID#347447)
Yesterday, Today, and Tomorrow
Regarding Oldman's sage comments, LGB's tart but cogent observations, and the veiled apocalyptic of the fascinating "Another," the distillation process brings visions of past, present, and future. There is no controverting the fact that when markets get going they move to extraordinary lengths. Far beyond what sane predictors and analysts would have figured. Gold's bull from '72 to '80 was a move of 2000%. Likewise the Dow bull from the early 1980's has been on the order of 1000%. Will it go further? Perhaps. Will gold go lower? Perhaps again. But all the wise market observers must note that dark pessimism concerning the yellow metal and its role in present reality. Tarnished, much as was General Motors and IBM a scant few years ago. These conditions are not permanent. There is no need to give up our computers, or our refrigerators ( they were around when gold was going from $42 to $850. They will serve us well when gold goes from $300 to $2000 ( and here, by historical standards, I am being conservative and matching the coming gold bull with merely the stodgy Dow's present rise - and we KNOW that gold is more volatile when excited, than any conglomeration of industrial behemoths ) . Those who have lived in gold's past have fared poorly. Those who are living in gold's present would appear to be justified by their pessimism and disdain. But those who look to the future know, as surely as the day follows night, that the future of gold holds in store that which is LEAST expected, as in any asset inversion, and as in any true market opportunity. What the "fundamentals" will be are likely beyond anyone's guessing right now, as was the case with GM and IBM. But perhaps some, like "Another" may be giving us more to ponder than we at first realize, or are willing to acknowledge. The truth that is revealed is ALWAYS a surprise. Bullion first. I agree. It is the wisest and safest way to play what is to come. Then, with apologies to the insightful "Another," gold in the ground - claims and properties - which are now at extraordinarily interesting prices. This entails entering or forming a corporate structure so that every current dollar goes to such purchases. It is almost a classic Real Estate play! Lastly, buying the stock of existing miners, most of which is diluted by several cycles of gold price fluctuations and industry adjustments since 1980. But, the point is, Tomorrow will come, with or without goldbugs. But there will be a place for some goldbugs in the 'morrow. And let none be of the mind that all who now champion gold necessarily forsook stocks in the past dozen years, or were clinging loyally to a losing investment. That is a narrow, stereotypical, and patronizing mindset. It is perforce untrue of all, and probably hardly true of many. Listen instead to the voices that suddenly appear within this great bottoming year. Therein lies the tale, the clue, of what is to come.

(Fri Nov 28 1997 21:21 - ID#255284)
over the mountains of the moon
Oliver, for you, fly by again soon huh? Your take on Bre-X helicopters right on.

and for Eldo, of course!!

 1849
 ELDORADO
 by Edgar Allan Poe

 Gaily bedight,
 A gallant knight,
 In sunshine and in shadow,
 Had journeyed long,
 Singing a song,
 In search of Eldorado.

 But he grew old-
 This knight so bold-
 And o'er his heart a shadow
 Fell as he found
 No spot of ground
 That looked like Eldorado.

 And, as his strength
 Failed him at length,
 He met a pilgrim shadow-
 "Shadow," said he,
 "Where can it be-
 This land of Eldorado?"

 "Over the Mountains
 Of the Moon,
 Down the Valley of the Shadow,
 Ride, boldly ride,"
 The shade replied-
 "If you seek for Eldorado!"

 -THE END-

(Fri Nov 28 1997 21:27 - ID#411149)
WSJ article
Steve Puetz- what is the name of the WSJ article, I have it on line but the name would help. Thanks!

Tally "OUCH" Ho

(Fri Nov 28 1997 21:31 - ID#93130)
Si Vous Plait
AURATOR: I recall that you keep a log of Kitco postings with a "search" capability. If so, I would appreciate if you could locate a posting on Durban Deep about a month ago. The posting referred to a site where a commentator gave an analysis of the company recommending the stock and I would like to have the address for the site. Thank you.

(Fri Nov 28 1997 21:34 - ID#93130)
CB Selling
PUETZ: FWIW, The CPM Group forecast central banks selling at a net 17.5 million ounces ( 544 tonnes ) of their gold reserves this year, compared

with 10 million ounces ( 311 tonnes ) in 1996 and 22 million ounces in 93.

(Fri Nov 28 1997 21:39 - ID#411149)
Skylark- the recomendation or should I say STRONG BUY iffin you think gold issa goin up came from the November issue of Gold Newsletter. That
recent of an issue I do not think is free but go to and look for Gold Newsletter. I am not aware of another place althought there may be.


(Fri Nov 28 1997 21:41 - ID#263259)
Mike S: Bravo!
Your inspiring little post sounds like Shakespeare's Henry V. on the eve of the battle of Agincourt...We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother; be he ne'er so vile,
This day shall gentle his condition;
And gentlemen in England now-a-bed
Shall think themselves accurs'd they were not here,
And hold their manhoods cheap whiles any speaks
That fought with us upon Saint Crispin's day.

(Fri Nov 28 1997 21:42 - ID#93130)
RAY: Thanks.

(Fri Nov 28 1997 21:43 - ID#200201)
Fed is going to be in market more and more in the coming weeks
Date: Fri Nov 28 1997 21:11
Donald__A ( Fed printed money for the weekend to ease "pressures" in the financial system. ) ID#26793:

Donald I am fairly certain that the Fed added reserves to the system on Wednesday to carry all over for the holiday weekend. I remember CNBC announcing it and that they did a larger than usaual amount to meet the holiday demands. They are obvious lying to cover their tracks ... the problems are growing daily if not hour by hour.

(Fri Nov 28 1997 21:43 - ID#31868)
This is part of the write up not included in my last post. I think you will in particular take special interest in the last sentence!

Sovereignty Surrender

Such a perverse structure would be greatly augmented by an official, automatic international bankruptcy court that would expose taxpayers to never-ending bailouts and never-ending funding of the banking industry. But we taxpayers are not the only ones coming out behind the eight ball; so are the borrowing nations, which have already been sucked into the trap of IMF-administered "austerity programs." It is a matter of record that these programs have done far more harm than good. The Wall Street Journal and other financial commentators frequently belabor the IMF for coming up with the wrong economic solutions. Thus, we are subtly led to accept the premise of IMF intervention and to hope that it will come up with the right solutions. All the while the IMF is carrying out an "end run around national sovereignty, eroding it piece by piece," as called for by Richard Gardner ( CFR/TC ) in his 1974 Foreign Affairs article "The Hard Road to World Order."

IMF power and control over borrowing nations will, of course, be enhanced under Rubin's plan, for recipients will be forced to surrender additional sovereign rights. For instance, noted the June 13th Wall Street Journal, the IMF could choose which debt gets paid first, "sometimes putting foreign creditors ahead of domestic ones." This, admitted the Journal, could "invite nationalist reaction." Alas, are we going to be dispatching UN peacekeepers as a result of such IMF-inspired struggles?

Although loss of sovereignty means the end of nationhood, this is not the only affliction borrowing nations would suffer. In addition, they would be ( or already are ) doomed to perpetual impoverishment. Numerous studies have revealed the disastrous effect of aid on borrowing nations. Far from raising countries up, aid keeps them down. As with the welfare mess in this country, being on the dole debilitates human beings anywhere. Ambition, incentive, and self-respect disappear. In spite of the hundreds of billions of dollars in Western aid handed out all over the earth since the end of World War II, not a single instance can be cited of any country that has been raised up by it. This, after all, has been the intent. The real objectives are obvious: to redistribute the wealth of the West and lower our own standard of living preparatory to world merger, and to control emerging national leaders ( usually despotic ) who become pawns in the game once they are hooked on high-living and wealth embezzled from aid funds.

As already noted, the IMF is not yet a world bank, but Rubin's plan would move it close to this Insider goal. With the IMF positioned as an "indispensable" mechanism of global finance, deciding who gets what among both banks and nations, it would be a short step to sell the idea of "fleshing it out" with its own international currency. Keynes termed this currency unit "Bancor," but whatever it is called, it would be a fiat money created out of thin air, like our own. The Insiders would have their new world order in place. Last year, Camdessus ( head of the central bank in France before moving to the IMF ) pushed hard to get IMF members to add $50 billion to IMF funds. The U.S., Germany, Britain, and other lenders, ruthless guardians of their own power, viewed the push as personal empire-building and scotched the move. But Camdessus slyly retaliated by publicly remarking that he was "only" trying to turn IMF Special Drawing Rights ( promises to pay by central banks ) into the world's central currency as envisioned in the IMF charter.

(Fri Nov 28 1997 21:44 - ID#432451)
oldmans 19:31 post
oldman It's been sometime since I posted. Not as long as you. Sure like the changes that have been made. Where do you see gold by March? Would some XAU Mar. options be a good buy now? Welcome comments from anyone else also.

(Fri Nov 28 1997 21:56 - ID#348286)
@Welcome Back
@Oldman: Nice to see you back here again, hope you post more often.
One question, are you still short, if not when did you cover?

(Fri Nov 28 1997 22:08 - ID#257148)
Gold Newsletter
Skylark, or you could try here. ( pardon, puta crashed )

mind you both myself and LGB_2 have old issues. Actually not much has changed..He was bullish at $380, Bullish at $400, and Bullish today..

(Fri Nov 28 1997 22:10 - ID#411149)
Skylark- for whartever it is worth, I have been down in the depths of DD.
The merger of DD, Blyvoors and Bufflesfontein should be verry good atleast I HOPE SO. Right now my thinking for my stock additions will be equal DD and WARSY. Both are highly leveraged and as far as I know have recalled any forward sales. WARSY's cash costs are $250/oz and DD I can't remember for sure but think are close to that. DD has a huge capitol program under way and WARSY has already done most of their renovations.
Another one to consider and I am already loaded is Harmony.

Hope gold moves in 98! UP that is!


Mike Sheller
(Fri Nov 28 1997 22:18 - ID#347447)
223: Thank you, Sunshine Superman. Apt analogy. It IS a war.

(Fri Nov 28 1997 22:20 - ID#65207)
Thanks aurator I will remember.
Thank you aurator,

I had put my money where my mouth was...

I have been killed....washed..burried...Run over by the ...@&%!

But,..the toughness goldbug realism in me will survive!

....As we say in this great Canadian lost Toundra,

live in this environement,

Down ...but not OUT...!

Group Therapy at kitco is EXTRAORDINAIRE. Thank you Bart.

(Fri Nov 28 1997 22:22 - ID#432148)
@Inflation vs. Deflation - continued
Kenneth L. Fisher's column in the Dec. 1 issue of Forbes weighs in on the side of Inflation. His arguments for inflation are when everyone expects deflation it will not happen plus government printing presses are at full speed globally and this precludes deflation. But then, we goldbugs all know that gold can go up in either inflationary or deflationary times, don't we? If we only knew when!

(Fri Nov 28 1997 22:24 - ID#93130)
AURATOR: Thanks. RAY: I have modest postions in both Harmony and Durdan, but when I look at their financial statements it is concerning. Neither company has substantial working capital, Durban will do well to bring its cash costs below $300, if it can. Harmony also has high costs and neither are hedged. I have recently purchased them as a SA play because of the leverage and their current price - but I now wonder if gold breaks down from here how can these companies stay in business. I am not concerned with immediate price appreciation for I am purchasing them for the long haul, but I am concerned whether they will still be around when gold turns if there is a prolonged slump as some contend.

(Fri Nov 28 1997 22:37 - ID#267276)
Richard gardner wrote that article in a 1974 edition ( april, I think ) of foreign affairs magazine, which is put out by the Council on Foreign Relations. He used the terms trade agreements and treaties as vehicles to do an end run around soverinty.
Remember if you can break someone economically you can regiment them. Look at the people in the impoverished countries spending their days standing in line waiting for a handout. This , does not happen to strong self-sustaining hearty people, it happens to people who have been weakened by consistent usurpation and embezzelment of their rights and livelyhood. That is going on right now all around the world, and it is happening to us in the first world. The United States is the PRIZE and it will be last to fall, but it has not yet! I believe that several great things are on our side that will help us prevail. There are still an enormous amount of strong intelligent people who will identify their enemy and take strong action to protect their GOD GIVEN RIGHTS from being stolen by evil people. The people who perpatrate these actions themselves are mere mortal humans themselves, already weakened by letting their minds give way to perversions and delusions of granduer. They do not understand life themselves and are mear followers and cowards. The tides can easily be turned on cowards and their plans can be ruined.

(Fri Nov 28 1997 22:43 - ID#348286)
@BIG TROUBLE at ST. GEN Gold Companies. Where did $120 Million go? Not a BRE-X but still very ugly.
KWG Resources Inc
Shares issued
1997-11-26 close $0.37
Friday Nov 28 1997
Also Ambrex Mining Corp ( AMBX )
Also Explogas Ltd ( XPG )
Also Emerging Africa Gold ( EAG ) Inc ( EAGI )
Also Spider Resources Inc ( SPQ )
Also St Genevieve Resources Ltd ( SGV )
Also Genoil Inc ( GNOL )
The Financial Post reports in its Friday edition
that KWG Resources has filed for court
protection against creditors and said it is
reviewing the circumstances surrounding
unauthorized borrowings from two of its
affiliates. Reporter Peter Kennedy says that in
a statement released shortly after stock
markets closed on Friday, KWG, a
Vancouver-based mining junior, said the
review involves more than $20 million
borrowed from Calgary-based Genoil and a
second affiliate, Emerging Africa Gold. KWG
is part of Montreal promoter Pierre Gauthier's
St Genevieve Resources mining group. The
money was used to finance a Russian gold
project known as Ametistovoe, according to
KWG. Company officials including Mr
Gauthier were unavailable to answer questions
on Thursday. An analyst says that St
Genevieve raised $120 million last year from
six financings and shareholders will be
interested to know where and how that was
spent. KWG says its problems are due mainly
to recent declines in the price of gold and base
metals. Doug Leishman, a mining analyst at
Yorkton Securities, says he stopped following
the companies because he had no confidence
in management.
( c ) Copyright 1997 Canjex Publishing Ltd.

(Fri Nov 28 1997 22:43 - ID#222167)
Donald: What date and time was your Russian posting?

(Fri Nov 28 1997 22:45 - ID#255190)
Its taken two hours for me to catch up w/ Kitco chatter!
Told my wife that we needed to keep an eye on runs on Japnese banks. Here we are. I am being a absolute *pest* again about 'cash'. Do you have what you are comfortable with? Do you think this can not happen here? It did in recent memory. Peel out a few hundred and put it somewhere safe ( with your bullion, I know you've got it now, eh? ) .

(Fri Nov 28 1997 22:45 - ID#31868)
I post things of that nature to make people think about the government and the President that leads them. Talk of economic growth and words like expansion, New Era, Paradigm, lead me to continually ask at what cost.

This forum is constantly discussing gold, markets and utilizes many different scientific and non-scientific approaches to arrive at conclusions through which they hope to thrive and prosper.

Clearly Mr. Rubin and the President are unaware of the Consitution and the Bill of Rights. WIthout these documents being enforced the entire context of this forum is null and void.

When people realize what is going on, right now, in this time frame, maybe they will better understand what I have been saying when I state that they have you thinking about your wallets, but that is not what they are after.

(Fri Nov 28 1997 22:45 - ID#257148)
Aurum non olet
Skylark John Disney has strong views on DD, I am sure he'll help you out.

Any lurkers in Europe got anything to say about silver or gold, banks or bankers, Politics or kayaking? been a while since we heard from Europe?

(Fri Nov 28 1997 22:48 - ID#222167)
Skylark: The CPM story was about central bank gold-sales. The Wall Street Journal article today was about gold-loans. They are 2 completely different things. It seems that central banks have been loaning out a lot more gold than they have been selling.

(Fri Nov 28 1997 22:49 - ID#255190)
LGB___2A you are ..
Fiddling while the world burns, buddy. Play louder so we can't hear em screaming. Thanks.

(Fri Nov 28 1997 22:50 - ID#222167)
Ray: Today's Wall Street Journal article on gold was on page 1 of section C. It stated that central banks loaned out $25 billion of gold during 1996. ( More than 2,000 tonnes. )

(Fri Nov 28 1997 22:52 - ID#255190)
Problem: Finding qualified borrowers
The problem is not producing enough 'money' ( credit ) , but in finding qualifiable borrowers. When the whole world is bankrupt, who ya gonna lend the 'money' to anyway?

(Fri Nov 28 1997 22:58 - ID#30116)
Wall Streets Week Loui
Well Loui had to gleefully bash gold again. Just be careful Loui, you might get what you want, REALLY CHEAP gold. Oh my! I wonder what that would mean for financial assets?

If we consider gold as nothing more than a commodity, then can commodities 'crash' and financials rocket up? Unless I'm missing something, either the cost of production for commodities must go to zero or the demand must go to zero. Hmmm, such a choice!

(Fri Nov 28 1997 22:59 - ID#267276)
You are absolutely right! The wallet is the door to the rest of the prize. If you ever read Eustice Mullins book secrets of the federal reserve, you would have read the elder rothschilds list of things to be carried out in order to gain complete control. Things like introduce drugs and alcohol and promote them among the children of the masses.
Lower the moral standards by promoting sex and hatred for others, starting race wars. Tear down any strong good character and rebuild a weak immoral character that will do what it is told.
I learned a great lesson, the lesson was played on me. INFILTRATE, DIVIDE AND CONQUER. Fortunately for me it was just a lesson. Thanks and
keep up the good work. Remember, the price of liberty is eternal vigilance.

(Fri Nov 28 1997 23:05 - ID#35767)
A friend of mine works in Russia and we discussed the situation there based on the news I receive in the US and what he receives in Russia. He said our news is completely out of touch and emphatically stated that the situation in Russia is grave. Hypotheticaly he asked me how the American govt or corp workers would act if half werent paid and were expected to continue to work in the name of reform dictated by a foreign international organization like the IMF or World Bank. ( he said ask Pat Buchanan and the third party movement if they tried that one ) . Needless to say the popularity of the Communist Party has never been better especially among the massive relatively unskilled YOUNG unemployed. He noted how the Communist Party is really starting to take hold as the party of the young. He told me if things dont improve dramatically and fast alot of the young people he knows are beginning to understand Karl Marx. The West better get massive amounts of money to Russia quick as the people are now experiencing Capitalism as a plague but not for much longer unless the West infuses billions of dollars now or there will be a new cold war. This means higher taxes and more govt spending in the US. We have to do it.

(Fri Nov 28 1997 23:05 - ID#25588)
Oldman - Good advise, I agree the Dow will be at 9500 by late 1998.

(Fri Nov 28 1997 23:05 - ID#263133)
So, if Japan doesn't want Platinum, who will.

"One Tokyo dealer said he does not expect spot platinum to break below support at $380. However, he said that if platinum breaks clear of the support, he does not see too many support lines for spot platinum.

Speculators in the TOCOM market are relatively bearish for platinum, but fears of a further surge of the dlr/yen have kept them cautious about opening fresh short positions, another Tokyo dealer said."

With Russia's cash/credit problems, are they dumping it at any price?

(Fri Nov 28 1997 23:09 - ID#206379)
All currencies are like sinking ships it's just that some are sinking faster than others....

(Fri Nov 28 1997 23:11 - ID#30116)
Gold loans and such...
If the central banks are loaning gold and not PHYSICALLY selling it, then is it really a 'sale'? If the end buyer of loaned gold is a short seller and more gold is sold short than exists physically, who loses if the short can't cover the imaginary gold position? I doubt very much that the central banks will be the losers here. A more likely scenario is a lot of bankrupt short sellers. The sixty four dollar question becomes, "What would trigger this event?"

Yes, I would hold off on celebrating the low inflation numbers just yet. Low cost goods are fine but, when you lose your job because of them and have no income to pay the bills with, who are you going to be mad at? This is why the printing presses and credit creation will be running full tilt. Getting shot is painful... Much better to inflate. :- )

(Fri Nov 28 1997 23:14 - ID#411149)
Steve Puetz- thanks! I guess I was not smart enough to go to Section C
page 1- on line. Will try again. Thanks again!!

APH and oldman- I am slow! Did I get this right, you both are lookin for
higher DOW in 98, OK. and oldman, did I understand that you are lookin
to buy gold shares, is that right? Sorry I am slow!

APH- what is your IMHO on the gold share outlook. and further, do you look for the shares to be taken up by the general stock market or are you lookin for higher AU prices. Thanks!


(Fri Nov 28 1997 23:19 - ID#31868)
They are already running the press at gear melting speed. There is no way out now.

Tantalus Rex
(Fri Nov 28 1997 23:22 - ID#295111)

(Fri Nov 28 1997 23:29 - ID#60253)
If you had oil in the ground, that over time

could be worth over one trillion US$,

would you buy gold for all to see? No.

If you had this much wealth, would you

want others to see you as getting rich

from oil sales? No. How could you

hold and build your massive wealth over

many years, but still have everyone view

this people as in debt and just making it?

The answer comes from the distant past.

Take in gold as the CBs force it to fall against

all other forms of value.

But, how can 100million + ozs of gold be

equal to all the oil in Arabia? It all depends

on how its valued, simple yes?

If a CB says gold is $300oz, we say he is

nuts! But, if $300 or $250 gold buy $19 oil,

perhaps the CB is smart!

It is far better if $19/oil buys $300 gold than

$100/oil buy $5,000 gold!

What if the oil states offered to buy gold with

oil, OUTRIGHT? No currencies involved.  We

will produce flat out, all the oil you want. And, we

offer this oil as payment, per barrel, to buy ( say? )

25US dollars or gold priced by us, at ( say? ) $10,000oz.!

The answer is very simple, the world would sell them

gold for oil. I tell you now, this almost happened!

You think long and hard on this as the outcome would

have been far different from what all think.

Instead, the BIS set up a plan where gold would be

slowly brought down to production price. To do this

required some oil states to take the long side of much

leased/forward gold deals even as they bid for physical

under a falling market. Using a small amount of in ground

oil as backing they could hold huge positions without being

visible. For a long time they were the only ones holding

much of this paper. Then, the Asians began to compete on

the physical side.

How will this all end? As the CBs never sold much

of their gold, they are still locked to the deals thru

the BIS. In the real world it was stocks of gold

outside the governments that got traded. And that

trading multiplied many times. Today, more gold

is traded than exists! This paper today, has become

the gold pricing standard without backing. There

is no way out! As we have now reached production

cost, we have reached, THE END! Without real

physical to supply the oil states, they WILL bid for

gold with oil! The BIS will do the only thing they

can, halt all trading and declare gold a

world oil currency! To that end, all forms of paper

gold will burn.

How long till this starts? I understand that the CBs

are slowly winding down lending, then sales. This

will, no doubt start a paper panic at some time. It

could take weeks or a year, I do not know.

As for the old agreement of oil/gold ratio, it went

out the window after the gulf war.

More later.

Tantalus Rex
(Fri Nov 28 1997 23:29 - ID#295111)
The Event Trigger
Panda, I've been trying to guess what the media/analysts will say when gold rebounds, in order to save face. I don't think they'll say, the CB's were ONLY threatening to sell their gold. Probable scenario would be something like the European Central Bank decided to back their currency with gold. Then the media will jump all over it and say that gold is important again. Despite what that English CB said that he would be surprised by it.

CB's should shut up or sell. Threatening to sell is like a bluff.

(Fri Nov 28 1997 23:44 - ID#411149)
Skylark- Those are legitmate concerns shared by me to but let me say again. THESE COMPANIES AIN'T GOIN OUT OF BUSINESS, SA gold mines are like a giant grocery store warehouse, they can go to the proper shelf and mine whatever grade is necessary to make money with the prevailing gold price. and in the case of Harmony, they have just acquired the richest
.gold deposit in SA with the acquisition of Cons Modder. In SA gold nuggets do not exhist, the gold has to be extracted from the ore deposit,
the Cons Modder mine has the closest think in SA to gold nugget status.
The old management wassa tryin to mine this rich ore with a 55 gallon drum hoist and a mule, now with the resources available through Harmony and Randgold I hope that this righ stuff can be mined with more gusto.

A long low gold price will not be good for any mining operation but I an pretty sure these will survive. There is another posibility if the price stays low, the SA government will lower the Rand to make them profitable.
Whether this was planned or not it did happen in 1996 with a low Rand the mines were makin a killin and many of the shares doubled or more. Lately the Rand has been on a downard drift. Iffin we ever get a positive AU price in combination with a lower Rand, heck I might be able to retire
close to CapeTown and be a neighbor to John Disney.

I had a friend that latley commented that iffin 10 years ago he had bought a condo in CapeTown he would be WEALTHY now. Course winners like Bob Bishop can afford to pay the current price which is what he has done this past year and loves to write from that part of the globe.

I am goin to bed, see ya in the mornin.

Damn Tally Ho

(Fri Nov 28 1997 23:46 - ID#344308)

very interesting scenario-------

where would it put the price of gold?

(Fri Nov 28 1997 23:46 - ID#286410)
bej or anyone
I was thinking of adding to my gold call options some platinum options this coming week. Could you please explain the price direction of platinum in contrast to the further surge of the dlr/yen. Is there any news about the Russia dumping platinum at this time or is this your opinion? Thanks for any information in advance.

(Fri Nov 28 1997 23:54 - ID#31868)
So what you are saying in a nutshell is that the BIS has taken it upon itself to decide that there are no sovereign nations. All exist to satisfy the BIS and the holders of the oil.

Neither of which has been freely elected by the people of any nation.

Therefore a central organization that can only exist by living off the interest on loans that can never be repaid has decided what is best for the world.

Did I miss something.