Tomorrow I fill out the paperwork to SOES trade. I've been training for weeks. With the silver profits I now have a heathly cushion to lean back on if I need it. I figure if the FED is going to rig this market, I might as well as play along. SOES trading is the only kind of paper that I won't lose any sleep over - you go home flat everyday!!
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Global Intelligence Update
Red Alert
February 6, 1998
Strange Russian Threats Over U.S. Iraqi Policy
On February 7, Iraq's INA news service reported that Bahraini Television
was quoting Vladimir Yakovlev, commander of Russia's Strategic Missile
Troops ( which controls Russian nuclear weapons ) , as stating that the RSMT
are ready to repulse any foreign military offensive against Iraq. Not
trusting INA's report, we searched for confirmation of General Yakovlev's
remarks, not expecting to find any. To our surprise, however, we
discovered the following TASS report dated February 6, 1998, which we quote
in full:
"MOSCOW -- It will take minimum time for the Russian Strategic Missile
Troops to respond to an attack of a possible enemy, troops
commander-in-chief Vladimir Yakovlev said at a meeting of the State Duma on
Friday. Asked about the troops' readiness to repulse an aggression against
the background of a mounting tension in the Persian Gulf and the reports on
the U.S. possible use of tactical nuclear weapons against Iraq, Yakovlev
said "the Russian missile troops are permanently on the alert and are ready
to give an adequate response to an armed aggression of any enemy to order
of the Supreme Commander-in-Chief -- the President of Russia. ( sic ) "
We would discount the importance of this report as well, save that Boris
Yeltsin claimed last week that U.S. actions could well lead to a world war.
We also note that Yakovlev was not making an offhand remark after being
ambushed by reporters at an airport, but was making a formal report to the
Russian parliament. This comment has been ignored by the world press, much
as Yeltsin's prediction of world war was dismissed as merely an indication
of Yeltsin's growing incompetence. However, we are forced to wonder
whether we are dealing with mental incompetence or a clear Russian policy.
It is noteworthy to us that Yeltsin went on to say this weekend that, "I
realize it's not easy to break old habits... but I have to say that the
attempts of some countries to impose a unipolar model on the world, to
assume the role of leader, are unrealistic and even dangerous." The
remarks were made to an Italian newspaper. Yeltsin is scheduled to visit
Italy this week for meetings at the Vatican and with the Italian
government. It is important to note that Italy, still shocked by the
accidental collision of a U.S. Marine Corps EA-6 with a cable car, killing
20, has announced that it would not permit its territory to be used as a
base for launching attacks on Iraq.
As hard as this is for us to believe, we cannot escape the fact that in
addition to mounting an increasingly effective diplomatic effort to block a
U.S. strike against Iraq, the Russian government appears to be engaged in
some old fashioned saber-rattling. Assume for the moment that Yeltsin is
not merely a silly old man but rather the fully functional President of
Russia. This would mean that the President of Russia threatened the United
States with world war if it attacked Iraq and that the commanding general
of its strategic nuclear strike force has declared himself ready and able
to execute a nuclear strike whenever and wherever Yeltsin orders. Senility
aside, that is what happened last week.
Foreign Minister Primakov, busily negotiating with the Iraqis, tried to
soften Yeltsin's blasts by stating that U.S.-Russian relations have not
deteriorated over the Iraqi crisis. However, even Primakov closed his
comments by saying that, "The development of relations can be based only on
such an equality... we will not allow anyone to speak to us in a command
tone." So, while attempting to defuse the more extreme implications of
Yeltsin and Yakovlev's remarks, Primakov not only was negotiating with
Saddam more as an ally than as an adversary, but was also joining Yeltsin
in warning the U.S. to back off on Iraq, and to stop ordering Russia
around.
This may or may not be related to everything reported above, but the United
States itself took a step to cool the crisis. As U.S. Secretary of Defense
William Cohen left for the Persian Gulf, he announced that the USS Nimitz
would be withdrawn from the Gulf on Sunday, following the arrival of the
USS Independence from Japan. There are good reasons for rotating the
Nimitz. Extended tours play havoc with personnel rotations as well as with
maintenance schedules. At the same time, in a genuine crisis, the Navy can
and has permitted extended deployments. The decision to rotate the Nimitz
out of the region leaves only two carrier battle groups with the Fifth
Fleet, cutting available naval strike aircraft from 108 to 72. Given the
fact that neither Turkey nor Saudi Arabia has yet given the United States
permission to use facilities in those countries for launching air attacks
on Iraq, this is a rather startling decision on the part of the Defense
Department.
There are several possible explanations here. First, the United States may
not be planning imminent military action. Certainly no action is likely
until the Turkish and Saudi positions are clarified. But the U.S. must be
expecting it to take several weeks to extract this permission, if it is to
be forthcoming at all, since it will take at least that long to get another
carrier battle group into position. The idea of delay jibes with reports
that the Japanese government is asking the United States not to launch an
attack while the Winter Olympics are under way. A UN resolution asking
that the Olympic period be considered a truce period for all conflicts is
in place. That would mean no attack prior to February 23, which gives
enough time to move another carrier from the Pacific into the Fifth Fleet.
Another explanation is that the United States does not expect the crisis to
escalate to a major air campaign because it is encountering extraordinary
resistance to its plans. Within the region, the inability to access U.S.
facilities in either Turkey or Saudi Arabia makes an extended air campaign
difficult to carry out for both technical and political reasons. Cohen
will be working that problem this week. But even if the regional problem
is solved, the most important fact appears to be that Yeltsin has decided
to challenge American power directly on all fronts including, astoundingly,
engaging in nuclear brinksmanship reminiscent of the worst days of the Cold
War. We assume that the U.S. government is taking these statements more
seriously than the mass media and may be trying to cancel or delay military
action.
Certainly, reaching an accommodation with Russia is becoming indispensable.
It is not clear that such an accommodation is possible. But it is clear
that the clock is now beginning to move backward more rapidly than
previously expected. The Russians are nowhere near as powerful as they
were ten years ago, but they are still a major power. If they ally with
China, the New World Order will be as dead as the old Cold War once was.
Correction: In a previous GIU, we wrote about F-111s being based in
Incerlik. A reader has kindly corrected us: the U.S. Air Force no longer
flies F-111s. However, land based aircraft such as F-15s and F-117s remain
indispensable for carrying extremely heavy burrowing bombs, and therefore
we stand by the basis of our report. Our apologies for this error.
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Considering the traditional investments of these financial behemoths, we may quite imagine them sitting all day long watching over THEIR INVESTMENTS on this Intra-Day chart page - YOU NEED TO DELETE THE LETTERS "en" in the word "golden" of the URL:
http://www.golden-eagle.com/intra-day.html
P.S. Your father's poetry is good!
The FV essentials I think are the following:
1 ) CB gold sales are over, barring panic sales from bankrupt CB's
2 ) The equilibrium price of gold is about $600/oz, taking inflation into account of over the period of FV's study ( about 150 years? ) . This does not include investment demand.
3 ) The big EURO banks, Germany and France, will not sell any gold, because they need it to support the EURO. However, the EURO as it currently stands will not be firmly linked to gold, and will be weak compared to the dollar. The effective deadline for the EURO currency alignment is April 1998, so gold sales from EURO hopefuls after this time have little practical value.
4 ) Gold loans are at 8000 tonnes currently, and as noted above, are unlikely to increase.
5 ) Derivatives trading of gold ( paper gold ) has not materially affected the price of gold, so the nearly 2000 tonnes traded per day at the LMBA will not cause paper gold to decouple significantly from the price of physical gold. So- what you see price wise is still essentially what you get, despite ANOTHER's concerns.
6 ) Drying up of SEAsian gold demand will only reduce the equilibrium price of gold about $40 -- minimal in FV/s opinion. And -- when SEAsia recovers, US dollars will head our way ( inflation ) and demand for gold will be higher than ever!
So -- if you are an investor like myself, it is clear that gold has bottomed, and will rise to nearly $600/oz even without increased investment demand.
There is one risk is investing in gold/gold stocks that you are undoubtedly aware of. And that is that if the US markets collapse ( possible ) gold stocks will collapse also. Given the behavior of gold, and the fact that the big CB's still have considerable control over the price of gold, a market collapse could push the price of gold bullion down as well. Our Fed Chairman AG knows very well the contrary nature of a rally in gold bullion, and the need to 'seal off the exits' if the markets take a turn for the worse.
Thus -- the most secure time to buy gold/gold stocks would be after a major market downturn. Until that time, you may be able to make alot of money in gold stocks, but you must be nimble. Hope this helps.
I have a Yen for higher gold prices. $ 320 end of Feb.
How nice if the financial world would be this simple.Warren Buffett is still invested up to his eye balls in equities and has not liquidated his holdings in stocks. Don't forget that the equity market has managed to fool most of the experts in the past few years ( I am not talking about Buffett ) and will continue to do so for the foreseeable future. I keep telling everybody who wants to listen that there is far too much pessimism for equities out there. No market collapse has ever materialized under these conditions. Only few weeks ago Asia was supposed to terminate us all. Now we are not so sure anymore... Stay invested and make money. Frightening yourselves every second day will do you nothing but financial harm.
Re: SA, On a related topic, SA Minister of Mines says that with those 13 ( or 14 ) mine closures will come not only the loss of approx. 130,000 jobs but also what he said was an AVERAGE of 8 dependents per employee ( which adds up to over a million people ) living in destitute. He is making an appeal to the CB's to this end, in an effort to relieve selling ( thereby giving POG a break and staying those mine closures ) .
It seems to me that Gov'ts have done a heckuva lot more for far fewer people suffering far less than what Mine Minister was talking about.
c.a.
Looks like Russia is very close to an implosion. I think we are in a quiet period before we hear about the spread of the 'Asian currency flu'.
Rudiger Dornbusch's comments about Japan's financial nightmare, with an apparent imminent mainland Chinese devaluation also makes me think that the resurgence in SEAsia markets is premature.
Have you heard anything concrete about Japanese banking reform? I am sceptical that Hashimoto will be able to wrestle the Japanese bureaucracy to the ground, even with the threat of financial immolation. We need to be cautious about how all of this effects gold and gold stocks -- this would be bearish, not bullish. But -- civil war in Russia would be bullish for the dollar and gold. Makes you think that the Saddam Hussein crisis is a minor problem in comparison to the other things that are or may happen soon. The threat to peace in the ME is not coming from Saddam. Hopefully we goldbugs will not get caught in the turbulent crosscurrents of history in the making.
On a different subject, anyone hear any more on which Canadian mine might be shorting silver?
What I'm wanting to do is make a nice, little presentation 'scrap book' like a photo album with nice mattes and a little right up on each currency and how it was debased, etc. Then at the end have a gold coin and a little blurb desribing its inherent stability ( vis a vis US $ ) etc.
Any comments about Chinese devaluation, or Japanese bank reform? What we hear about China is that 25% devaluaation is imminent. My guess about Japan is that real banking reform has not started, and it is costing Japan over 25 billion $US/day until the problem is fixed.
Hope all of you are safe and sound with good hiding places.
you sir, this is the most inspiring post, I'have read in a long
time, your astute observation especially re: international fore
caster it is the most precious nugget I've gleaned from this site.
in a long time. Being in time!
---------------------------------
Predictions on Gold:
Who wants to hear what is really going to happen in the gold market? The answer is more simple than you would have thought.
First, this talk about a conspiracy having to do with oil is ridiculous. People who believe in conspiracies are paranoid. There is no gold conspiracy just like there was no UFO over Phoenix.
What is going on is a smart market play. SOME of the central banks DO want to sell SOME of their gold. They also want to get the best price possible. How will they accomplish these goals?
1. Just like any other market, the gold marked is controlled by supply and demand. Emotions may override this in the short term, but supply and demand will always rule in the long term.
2. When gold was $400/oz., production and exploration were going crazy. The supply would have soon been increased to meet the demand. The central banks knew that if this happened, they would never be able to unload some gold at a decent price.
3. The central banks have time on their side. In order to reduce the supply, they simply have to reduce the price for now. To keep the price down, all they have to do is sell some token amounts of gold or, even better, just announce that they are going to sell.
4. If they can hold the price down to about $300/oz. for at least 2 more years, the production by the mining industry will decrease about 30%. There will be a lot of consolidation and mine closings. Exploration will cease.
5. Once people realize that the demand has exceeded the supply, the price of gold will rocket to about $500/oz. This is when the central banks will come in and save the day by selling some of their reserves over a period of about 4 years.
6. After the 4 years, the mining industry will be stronger than ever and will have increased production enough to cover the demand. The price will equalize at around $400/oz.
What does this mean to the small investor? Buy gold stocks or funds over the next few months. Make sure you buy large companies that can survive for a while at these low gold prices. Also, use some dollar cost averaging.
Why buy now when the big returns will not happen for at least 2 years? First, there is nothing else to do with your money anyway. The stock and bond markets are going to be lame over the next few years. Second, you must hold at least 18 months to reduce your capital gains tax. Finally, it is not going to get much cheaper, and where else are you going to have a shot at a 100% return over the next 3 years?
( Fred Filskov, November 1997 )
To steve of perth: Speaking of advertising... never mind, you know what I'm going to say. Thanks for your cooperation.
Find out more about Kitco at info@kitco.com, or call 1-800-363-7053.
Copyright © 1996 Kitco Minerals & Metals Inc.
Strange that you should reprimand my brother Oris for
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that you very unlikely to check out in public.
Brother Oris has been working on machine ( Givatron ) that
can check out 45 secret places an hour. He has reported it
on this site. Where you been bro??
I am one of his agents. Family model sells for 100$ plus
20$ mailing - allow 2 weeks for delivery. Order NOW and
receive free pair sunglasses and 2 pair sandshoes.