Gold Discussion for Investors and Market Analysts

Kitco Inc. does not exercise any editorial control over the content of this discussion group and therefore does not necessarily endorse any statements that are made or assert the truthfulness or reliability of the information provided.

(Sat Jul 18 1998 00:21 - ID#335190)
Date: Fri Jul 17 1998 23:46 @ JIN
JIN my thoughts go out to you and your's, and your fellow Chinese friends and neighbour's. I expect, and hope, that the madness will settle down and hopefully will pass without further destruction to a standard of life.

Should you personally have to use your Hockey Stick, I do hope you do the bastard's a just and rewarding "Tune Up". A gun would do the trick eh!

I consider your remarks in total, to be a very frightening experience, I have made note of two items, I consider very important, and thank you for taking the time to share.

"You see in Medan every Chinese stood up regardless of how much savings you had before in the banks - from the poorest to some conglomerate quality ones ( no joke !! ) and you know what , it actually made us feel proud to be able to stick together and in a sense it lessen the fear in each of us have inside us !!"

"obviously someone ( political or otherwise ) must have co-ordinated it!"

I will do what I can, to spread the word. Be safe, Take Care

(Sat Jul 18 1998 00:40 - ID#269207)
@Skip tooth
is a chain for saw that every other tooth removed to increase rpm, hence
chain speed when cutting, which is very important if barber shearers are of a concern....full comp. is all the teeth are on chain and is good when
you are bucking, because it will take more abuse before it starts dishing on you in the cut, and, it pulls more chips and cleans the cut,
which is important in bucking because they are laying down and will tend to pinch bar. and full comp, is better for when you are making full bar
cuts that have to travel around a circumfrence, because it leaves a larger cut and doesn' pinch up on fallen timber like skip tooth. K aurator

(Sat Jul 18 1998 00:41 - ID#335190)
Mooney* @ 23:58
Mooney, I got the message. I will do my best.
Thanks Take Care

(Sat Jul 18 1998 00:49 - ID#53235)
George_A Why Wheat?
Why get wheat? To plant it, or eat it in the form of sprouts or flour?

Is golden wheat different than hard red winter wheat?


(Sat Jul 18 1998 00:56 - ID#284255)
From the weatherman
Courtesy of Championship Financial Advisors
Randy Flink, Founder and President


[**** Note: Part B will be posted to the list on Monday. ****]


Heaviest Weighting
* U.S. Treasuries ( emphasize short-term, then intermediate-term )

Modest Weightings
* Precious metals bullion
( larger denominations; emphasize gold, then platinum )
* Short positions in individual stocks or indices
* Numismatic Mint State gold and silver coins

Smaller Weightings
* U.S. banknotes ( $10.00, $20.00, $50.00, $100.00 bills )
* Precious metals bullion
( smaller denominations; emphasize gold, then silver )
* Semi-numismatic U.S. gold coins
( $20 Saint-Gaudens and $20 Liberty gold pieces )
* Semi-numismatic foreign gold coins
( British Sovereigns and Swiss Helvetias )
* Long positions in recession-resistant stocks or commodities
( avoid mutual funds )



U.S. Treasuries

These direct obligations of the U.S. Treasury generally are classified
as short-term ( e.g., 3-mo, 6-mo and 1-yr bills ) , intermediate-term
( e.g., 2-yr, 5-yr and 10-yr notes ) and long-term ( e.g., 20-yr and
30-yr bonds ) . These interest-bearing securities can be purchased
through any securities broker or directly from the Federal Reserve ( a
hassle, but you won't pay a commission and you will appear on the
Federal Reserve books as the owner of record. ) Minimum purchase
requirements are $10,000 for bills ( up to 1 yr ) , $5,000 for
shorter-term notes ( over 1 yr, less than 5 yrs ) and $1,000 for
longer-term notes ( 5-10yrs ) and bonds ( over 10 yrs, up to 30 yrs ) .

U.S. Treasuries are the most actively traded and liquid securities in
the world. If you are fearful of the banking system and the stock
market but don't want to take on the cumbersome task of converting all
of your financial assets to U.S. banknotes, precious metals and other
forms of tangible property, then U.S. Treasuries are the preferred
means of holding wealth. However, even U.S. Treasuries carry a
default risk and can quickly lose purchasing power if the government
adopts a hyperinflationary monetary policy or severe shortages of
essential products and services produce sudden price inflation.

Precious Metals Bullion ( Larger Denominations )

As a store of wealth, precious metals bullion can be held in a variety
of forms. Mint origin and purity are very important factors in
choosing a form of bullion. Gold bullion is the most common form of
precious metal, followed by silver and platinum. However, converting
financial assets to silver is very impractical from a storage
standpoint due to silver's relatively low unit value. ( Converting
$1,000 to gold or platinum 1 oz coins is like cashing a dollar bill
into dimes and quarters. Converting $1,000 to silver 1 oz coins is
like cashing a dollar bill into pennies and nickels. Eventually,
you'll grow weary of the pennies and nickels. This is why we hesitate
to recommend investing in 90% and 40% junk silver coins. )

In North America, the most widely available forms of precious metals
bullion are the American Eagle 1 oz gold, platinum and silver pieces
and the Canadian Maple Leaf 1 oz gold, platinum and silver pieces.
These publicly minted gold, platinum and silver coins are widely known
and accepted. Less well known is the spectrum of privately minted
gold, platinum and silver bars, ingots and rounds ( e.g., Credit
Suisse, Engelhart, Johnson Mathey ) .

Purity of precious metals purity is expressed in fineness. The
Canadian Maple Leaf 1 oz gold piece contains 99.99% gold and 0.01%
alloy. This is .9999 fineness, otherwise referred to as 24-karat gold
or pure gold. By contrast, the American Eagle 1 oz gold piece
contains 91.67% gold and 8.33% alloy. This is .9167 fineness,
otherwise referred to as 22-karat gold, but definitely not pure gold.
( The alloys increase the durability of the coins, but not their
inherent value. ) If your storage space is limited, always buy the
purest precious metal bullion. The purest publicly minted precious
metal coins produced by economically advanced and politically stable
nations are:

Gold ( .9999 fineness )
* Austrian Philharmonic ( 1 oz and smaller denominations )
* Australian Kangaroo ( 32.15 oz, 10 oz, 1 oz and smaller denominations )
* Canadian Maple Leaf ( 1 oz and smaller denominations )

Platinum ( .9995 fineness )
* American Eagle ( 1 oz and smaller denominations )
* Australian Koala ( 32.15 oz, 10 oz, 1 oz and smaller denominations )
* Canadian Maple Leaf ( 1 oz and smaller denominations )

Silver ( .9999 fineness )
* American Eagle ( 1 oz denomination )
* Australian Kookaburra ( 32.15 oz, 10 oz, 2 oz and 1 oz denominations )
* Canadian Maple Leaf ( 1 oz denomination )

As previously mentioned, pure bars, ingots and rounds also are
available from private mints. These forms of bullion generally are
difficult to transport and indivisible, yet are relatively compact for
storage purposes.

In addition, precious metal bullion coins in varying degrees of purity
( .9167 to .9999 fineness ) are publicly minted in the emerging nations
of China, Mexico, Isle of Man, Russia, Singapore and South Africa.
The most well-known of these coins are the Chinese Panda and South
African Krugerrand gold pieces.

Short Positions in Individual Stocks or Indices

There are numerous ways to construct short positions in the financial
markets. Many of them are complex in nature ( exotic derivatives ) and
many are relatively simple ( individual short sales, bear-market mutual
funds, individual stock and index put options ) . We'll stick with a
few of the simpler approaches and leave the rest to your whims.

Selecting individual companies which could fare poorly in an economy
fraught with y2k problems is a matter of personal perception. Where
does one begin to look for short positions? Automotive companies,
semiconductor companies, energy companies, financial institutions,
Internet companies, telecommunications companies, transportation
companies? Perhaps the best starting points are the highest P/E
companies in industries which you perceive to be most vulnerable. The
simplest approach would be to buy shares of a so-called bear-market
mutual fund. Two examples are the Prudent Bear Fund ( Dallas, TX ) and
Rydex Ursa Fund ( Rockville, MD ) . These types of funds tend to have
an inverse correlation to the major market indices, so you lose when
the markets do well and you win when the markets do poorly. You can
also do some options trading by purchasing puts on individual stocks
and/or various market indices.

Numismatic Mint State Gold and Silver Coins

These are old, rare collectors pieces whose values are driven by
scarcity and condition and not by precious metals content.
Notwithstanding the foregoing, a rise in precious metals bullion
prices almost always has a positive effect on the value of numismatic
pieces. Numismatic coins should be viewed as long-term investments.
Examples of this type of coin are Mint State ( i.e., near-perfect
condition ) versions of certain $20 Saint-Gaudens Double Eagle and $20
Liberty Double Eagle gold pieces and certain Morgan Silver Dollar

The vast majority of numismatic coins are graded by nationally
recognized independent services. Once a coin has been graded, it is
encapsulated to preserve the condition of the coin and submitted for
inclusion in published population reports. These reports provide an
important tool in determining the relative scarcity of a coin, which
greatly influences its market value. There are widely published
bid-ask prices for each type of numismatic coin, and the bid-ask
spread generally will be in the 20-25% range. The published prices
change constantly as coins are bought and sold, and the actual prices
realized by auction houses and dealers are submitted for publication.
Hence, it is possible to value numismatic coins on a quarterly or
monthly basis, which enhances their investment liquidity. In today's
market, price points for a single numismatic coin range from a few
hundred dollars to tens of thousands of dollars, with an occasional
coin trading for several hundreds of thousands of dollars.

U.S. Banknotes

A physical supply of U.S. banknotes is necessary in the event of
disruptions to the banking system. One might have to become his or
her own captive bank for a period of time. This means obtaining
supplies of $10.00, $20.00, $50.00 and $100.00 bills. ( Smaller bills
are too cumbersome to store and transport. ) Our rule of thumb is to
convert the equivalent of 3 months net pay to banknotes and hold 25%
of the total amount in $10.00 bills, 25% of the total amount in $20.00
bills, 25% of the total amount in $50.00 bills and 25% of the total
amount in $100.00 bills. We recommend that these banknotes gradually
be withdrawn over the course of a 6-12 month period ( so we don't stand
accused of contributing to the panic ) and that all withdrawals be
completed on or before 6-30-99 ( bank teller lines are a lot shorter
now than they will be next summer, especially if the government
imposes rationing of cash withdrawals in an effort to prevent bank
runs. )

Precious Metals Bullion ( Smaller Denominations )

Smaller denominations of precious metal bullion coins are recommended
as a complement to your physical supply of U.S. banknotes but not as a
store of value. This means obtaining supplies of 0.10 oz, 0.25 oz and
0.50 oz gold pieces and 1 oz silver pieces. As a currency substitute,
the American Eagle and Canadian Maple Leaf gold and silver coins are
the best choices. It is normal to pay 3x the premium for the smaller
denomination coins vis--vis the larger ( e.g., 1 oz ) denomination
coins. Our rule of thumb is to convert the equivalent of 1 months net
pay to smaller denomination precious metal bullion coins, and hold 20%
of the total amount in 0.10 oz gold pieces, 20% of the total amount in
0.25 oz gold pieces, 20% of the total amount in 0.50 oz gold pieces
and 40% of the total amount in 1 oz silver pieces. We do not
recommend the purchase of 90% and 40% junk silver coins due to the
difficulty in storing and transporting this form of bullion.

Semi-Numismatic U.S. Gold Coins

This form of gold is recommended if you ( 1 ) fear that the President
may re-enact the government's 1933 Executive Order which resulted in
the confiscation all private gold holdings with the exclusion of
investment-grade U.S. gold coins and ( 2 ) don't want to report your
gold sales to the IRS. Examples of this type of coin are the common
date, average quality $20 Saint-Gaudens Double Eagle ( 1.075 oz x
.9000 fineness = .9675 oz gold content ) and the $20 Liberty Double
Eagle ( 1.075 oz x .9000 fineness = .9675 oz gold content ) pieces.
This type of coin generally carries higher premium than straight
bullion coins and should be used as a store of value.

Semi-Numismatic Foreign Gold Coins

Ditto the above. Foreign-minted gold coins were excluded from the
1933 Executive Order along with investment-grade U.S. gold coins.
Examples of this type of coin are the common date, average quality
British Sovereign ( .2568 oz x .9167 fineness = .2354 oz gold content )
and the Swiss Helvetia ( .2074 oz x .9000 fineness = .1867 oz gold
content ) pieces. This type of coin generally carries a premium
similar to the 0.25 oz straight bullion coins and should be used as a
store of value.

Long Positions in Recession-Proof Stocks or Commodities

A y2k disruption will cause a flight to quality in the stock market,
which is usually associated with the large-cap blue chip stocks, which
in turn tend to be widely-held by institutions and individual
investors and demonstrate less share price volatility than small-cap
stocks. However, many of these companies have a tremendous amount of
y2k exposure. Again, where does one begin to identify relative safe
long positions? Generally, in times of rapidly deteriorating economic
conditions, the safest investments are in companies which produce
and/or deliver low-priced consumer staples, e.g., food and beverage
items, health and hygiene products. One might call these
recession-resistant companies. The same goes for individual
commodities, e.g., corn, oil, wheat. These are essential products
regardless of the state of our economy. Commodity investments
generally are made via futures contracts.


Y2k Weatherman Comments:

As you can see, Randy has a wealth of helpful information. I'll post
Part B ( Non-financial assets for the suburban dweller ) on Monday.
Randy is more of an optimist about Y2k than I am, but I think there is
a LARGE audience for his message. The goal of the Y2k-News and the is to provide information and education for Y2k

Do what makes sense for your situation. Inform and educate yourself
and get prepared. Being prepared is the responsible reaction to Y2k.

(Sat Jul 18 1998 01:07 - ID#284255)
Maps for Hazardous Areas in the United States
Your Y2K Survival Kit
Eat your Food Storage!
Kurt Saxon's Survivalist's Web Pages
Club 700 audio

(Sat Jul 18 1998 01:11 - ID#255284)
good post! Would add only that 9999 NZ kiwi 1oz have the same advantages as the Eagle, Maple and Kangaroo.

Lan Man
(Sat Jul 18 1998 01:21 - ID#320108)
Dave try Good pic on a site
or try Earthpulse Press at

(Sat Jul 18 1998 01:24 - ID#269207)
Lan Man, there is not a lot going around about the re-activity of the @gulp to you..

(Sat Jul 18 1998 01:35 - ID#350119)
new memeber testing connectivity

(Sat Jul 18 1998 01:44 - ID#93199)
Fidelity Select Gold Charts
Fidelity Select American Gold & Precious Metals Charts:
Five Year Chart
120 market days Chart
30 market days Chart
10 days Hourly Chart

John Disney__A
(Sat Jul 18 1998 02:15 - ID#24135)
Earl ..
Disney's second law states that the
first law does not apply in all cases ..

(Sat Jul 18 1998 03:03 - ID#257148)
Welcome, You named after the car, the horse or the dollar? "- )

(Sat Jul 18 1998 03:58 - ID#33164)
Retrograde Suns etc
JTF- Have just sent this mail off to you, & then thought I should share these references with All. It should make the finding easier.

1]James H Shirley: "When the Sun goes backward: Solar Motion, Volcanic
Activity, & Climate, 1990-2000.
Cycles Magazine, V39 4:113-119 . Reprinted in both the 1988 & 1989
Foundation for the Study of Cycles Annual Conference Proceedings.

2] J.H.Nelson: Cosmic Patterns. Their Influence on Man & his
communications: American Federation of Astrologers, 6 Library Court, SE
Washington D.C. 20003 1974 -
This chap did research on sunspots for RCA Communications . His book
deals with "the part played by the planets in the development & behaviour of sunspots & magnetic storms"[ He is not an astrologer]

Best regards & a Very Good Morning!! to you All@Kitco

(Sat Jul 18 1998 04:29 - ID#386245)
@Bill Buckler

There is no doubt that a large proportion of the population of the world is now desperately
seeking "safety" for the remnants of wealth they have managed to retain. But a decision on the
asset that affords that maximum amount of safety has yet to be made. Historically, the final
decision has always been the precious metals.

(Sat Jul 18 1998 04:31 - ID#342376)
New faces? Sign of change?
This has been said before, but there is a different feel now, isn't it? We shall see.

(Sat Jul 18 1998 05:30 - ID#431263)
Any further word as to the devastation caused by yesterday's tsunami off the northern coast of Papua New Guinea? Did it affect LIHIR island? Heard it was caused by a 7.0+ earthquake centered off the coast and that the resulting tsunami was over 7 meters high or about 23 feet! Can you confirm any of this? Danke!

(Sat Jul 18 1998 05:59 - ID#386245)
G'day Cheesehead
The tsunami hit Aitape over near the Papua New Guinea border with Irian Jaya. A long, long way from Lihir. Apparently, villages near the coast were wiped out. I spent a few years near there ( Madang ) and lived on the coast. Sends shivers down my spine as it reminds me of the Hilo, Hawaii tsunami of 1960 that I witnessed as a kid.

(Sat Jul 18 1998 06:22 - ID#33164)
Morning Nick@C!!
Haven't 'seen' you for ages! Hope you're still making LOTS of money with your golden tradings. And still being @VGoodwiththeLadies, no doubt?!

(Sat Jul 18 1998 06:36 - ID#386245)
@"Good with the ladies"
G'day colleen,
Where is Mike Sheller anyway? I need another reading. Gold this time!!
Haven't seen you around much either. Kitco needs a Den Mother to keep all the yobbos in line. You should have 4/4ths by now---and probably wishing it was 1/10ths. A 'v' bottom in gold would have been nice, but is starting to look more like a 'ww'bottom. In the long run it won't matter as 'paper' is an endangered species. They'll try to get everyone to accept 'cybercash', but Y2K may just put a dent in people's confidence in ethereal money. Hard assets ( pms ) will one day be needed to regain that confidence.

(Sat Jul 18 1998 06:51 - ID#33164)
Papa Bart seems to have kept everyone in line recently....:- ) ) Haven't been on the Net much- overloaded-unseasonal, but glorious Winter here, & lots of planting. Mike's Clarity Resources Inc seems to be doing some exciting things. Has he not posted recently?
Haven't got 4/4's yet-maybe after next week,I hope....
The Wallabies & Springbok game is on- why aren't you watching- or are you?
Local newspaper Personal Finance headline today- " So where are all the doomsday forecasters now"? ' which goes on to say "you cannot plan your investment on the basis of a long-shot forecast, especially when it comes to the gold price. Not only is it a very volatile & unpredictable investment medium, it also has been the worst asset class over the last 18 years". Do you ALSO get that sinking feeling when things don't move with the POG?

(Sat Jul 18 1998 07:01 - ID#255151)
Hi Colleen!

Good to have you back at Kitco. I have done my best to restrain some of the rowdies here, but there's only so much a serious, humble fellow like me can do. At any rate, Nick of C makes a good point about ethereal money. I am looking for a shift out of electronic money like stocks, bonds, and bank accounts as worry over Y2K increases. It will be gradual at first, then a mad dash into things real, like Gold, physical cash, cars, land etc. culminating in "The Mother of All Buying Sprees".

(Sat Jul 18 1998 07:11 - ID#33164)
Morning Auric!
Ethereal cash it is! But many, many people are totally unaware.
Sharefin has been a great souce of info on Y2K, & thanks to him I have collected together a huge file to act upon in the next few months. A formidable task.
The chap who wrote that article in our local Personal FInance seems to have thrown down the gauntlet to the 'local Doomsday Forecasters', so there should be much interesting discussion over the next week. Not much new to be found that hasn't already appeared on Kitco, though!

Steve - Perth__A
(Sat Jul 18 1998 07:18 - ID#284170)
PNG Tidal Wave story

Steve - Perth__A
(Sat Jul 18 1998 07:18 - ID#284170)
Pauline Hanson article in German newspaper (translated)

Steve - Perth__A
(Sat Jul 18 1998 07:20 - ID#284170)
The real Japanese deregulation
Date: Fri Jul 17 1998 19:22
I heard yesterday that Princeton is forecasting that Japan will REALLY deregulate their postal savings system in December 98. They will then require a much greater diversity for those savings apart from cash/lending. This means that up to US$9 TRILLION will start to come onto investment markets from Christmas 98 on. What will this mean for world markets. I am not sure yet. If you have any ideas, please email me at


Steve Blizard - Perth, Western Australia

(Sat Jul 18 1998 07:22 - ID#248180)
Islamic Gold & Silver - How many tons per year each metal???
Does anybody have an idea or facts on the annual or estimated annual consuption of Gold & Silver. The Worldwide Islamic Trade Organizations seem to be growing and gaining solidarity. This site is a very interesting read.

(Sat Jul 18 1998 07:31 - ID#255151)
Colleen--Millennium Bug Awareness

Amongst my family, friends, and coworkers, almost no one has given any thought to this problem. The most common reaction when the subject is raised is, "oh yeah, I heard something about that." Either I am nuts ( a distinct possibility ) , or the other 99% of the population is oblivious to an incoming tsunami.

(Sat Jul 18 1998 07:48 - ID#33164)
Auric, people I know here in RSA have recently shown some stirrings with Y2K- at a "Is it really possible?!" stage...
John Disney is THE most knowledgeable person about the economic situation in South Africa- but IMVHO it seems to me that our recent very high interest rates will keep a lot of people out of debt. I hope. Our situation with Y2K would be really dicey though- there are a great many poor people here, & those who 'have' would be prime targets.

Have a great week-end, you to the garden.

Steve@Perth- Hi!! How's the baby?

(Sat Jul 18 1998 08:00 - ID#24864)
Congrats to ZA rugby followers
Nice present for Nelson ( 14-13 )

(Sat Jul 18 1998 08:50 - ID#207145)
Now might be the time to sell PMs. Along with stock investments. I hold 50% in europe, 50% in utilities. I started selling into strength yesterday. Look for a break in the market very soon. We are looking 3 months of poor performance from equities. ASIA'S RALLY IS CLOSE TO FIZZELING. So is ours. Japan 7300. That will tell us to bail out.

(Sat Jul 18 1998 08:54 - ID#207145)
Would be a buyer
Of PMs, Oil equities as of late October thru 1 Jan.

(Sat Jul 18 1998 08:58 - ID#207145)
Last post should read
A buyer of Gold, Oil, and stock equities from late October thru a least 1 January. At that time I would drop all stock equities save gold.

Steve - Perth__A
(Sat Jul 18 1998 09:03 - ID#284170)
Nathan the growing bub

Nathan is now 7 months. Doesn't time fly when you change nappies & watch gold go nowhere. I will have to get a new photo of him on our web page. He is being dedicated in our Church tomorrow. ( A Baptist version of Christening ) . Nathan is nearly cutting his first tooth. Can wriggle & roll over, but not crawling yet.

Steve Blizard

Steve - Perth__A
(Sat Jul 18 1998 09:03 - ID#284170)
Nathan the growing bub

Nathan is now 7 months. Doesn't time fly when you change nappies & watch gold go nowhere. I will have to get a new photo of him on our web page. He is being dedicated in our Church tomorrow. ( A Baptist version of Christening ) . Nathan is nearly cutting his first tooth. Can wriggle & roll over, but not crawling yet.

Steve Blizard

(Sat Jul 18 1998 09:05 - ID#207145)
The basis of my proposal
Is that late October will end a correction I see starting late next week. The problem is that there is a short investment window from late October to 1 january. 1999 will be a suspect ( bear market ) year as it progresses to the end. 2000 will continue to be bearish through the 1st quarter. Gold will be a great investment vehicle with a weak dollar, strenghtening Yen..
That's my take.

(Sat Jul 18 1998 09:15 - ID#207145)
Starting in 1999 money will flow out
Of the US, and to a slight degree Europe. It will go to Asia. Japan will benefit first. The slumping dollar will be a boon to gold. Not much else except silver will prosper. Demand will take backseat to investment demand. 30 per cent is my take on the fall in the dow.

(Sat Jul 18 1998 09:18 - ID#346248)
Y2K Hype Building
CNN just did a spot on Y2K. I sense the media hype is starting to build. Soon we should see gold start to respond as the masses begin to fear for their financial security. Time to re-read the book Rumor Fear and the Madness of Crouds. My only question is, what will PM stocks do as the recession sets in and the funds start to bailout. As gold increses in value will ABX plunge with the market?

(Sat Jul 18 1998 09:21 - ID#207145)
lllllllLater in 2000
Oil starts it's price rampage. Demand for natural resourses is steadily picking up as Asian Tigers start to make early noises. The US will start to have problems with increasing intrest rates to defend the dollar. The cycle ends. The bear is chased, the bull is born. Welcome to 2001. Speaking of bull, oh well it was fun. Later guys.

(Sat Jul 18 1998 09:24 - ID#373284)
sharefin, Namaste' Could you dig up a map or scenario where the Island that is
Long does not sink into the Atlantic. I have checked the maps in your posts and each instance provides is that tequila...
when in doubt and fearing for your life...drink heavily...uh huh...

Steve - Perth__A
(Sat Jul 18 1998 09:34 - ID#284170)
Pentagon preparing for the crash
From Cliff Droke site:

Banks and businesses aren't the only ones preparing for a major financial collapse. Apparently, the U.S. government is also expecting a meltdown on Wall Street soon, the ramifications of which could spread to Main Street.

On 16 June 1998, the Navy and Marine Corps were conducting their annual strategy meeting entitled "Current Strategy Forum". This year's meeting was held at the U.S. Naval War College in Newport, Rhode Island. A source who was in attendance at the meeting reported that he was shocked by a sentence uttered by the Under Secretary of the Navy, if only for its remarkable candor.

Our source reports, "After speaking for about 30 minutes from his prepared notes, the U.S. Under Secretary of the Navy, the Honorable Jerry MacArthur, then began to answer questions. After answering several questions, Mr. MacArthur made this statement, apparently off the cuff: "Senior Military Pentagon officials have been working closely with senior officials at Wall Street to perfect severa scenarios that could quickly be put into action once Wall Street crashes."

Notice the Under Secretary did not say "could crash" or "may possible crash." He emphatically stated that the Pentagon is fully expecting it to crash. Food for thought for the still-bullish among us. With that in mind, we will proceed to lay out a financial blueprint, so to speak, that should enable the prudent investor to safely navigate the monetary minefield that lies ahead.

(Sat Jul 18 1998 09:38 - ID#280245)
Mining Finance Derivatives---a time line of sorts

Prior to 1980-nada
1981-First gold loans associated with mining industry reporte1982-South African Reserve Bank gives local producers overall permission to hedge output
1983-No entry
1984-No entry
1985-No entry
1986-17 Gold-related bonds issued between January and September
1987-Another 49 Gold-related bonds issued during the year
1988-Peak in gold loan draw downs: 92 new loans totaling 181 tonnes
1989-July: Reuters News Agency launches the GOFO page quoting daily gold lease rates. Another 27 bonds are issued into November price rally
1990-Producers in N America and Australia sell forward heavily into Middle East driven price rally.
Net outstanding gold loans peak at 278 tonnes. Final quarter: lease rates rise sharply in response to Drexel.
1991-Australians take full advantage of high local interest rates. By end 1991 hedging in North America and Australia was as follows: 1993, 20% @ $416; 1994, 16% @ $427; 1995, 8% @ $447; 1996, 11% @ $481
1992-Newmont Mining closes out early its 1 million oz gold loan. Monetised in 1988 at $449/oz, Newmont realized revenue of around $40 million on the remaining loan.
1993-14 gold-related warrants issued involving 20 million oz of calls and 3 million oz of puts
1994-Reserve Bank of Zimbabwe gives local producers permission to hedge up to 15% of output. Gold loan repayments exceed draw downs for first time.
1995-November 28 & 29: 1 month contango slips into backwardation. JCI and Gengold announce the two biggest price protection programmes in the history of hedging.
1996-Spate of producer hedging buy-backs early in the year, spear headed by Barrick Gold.
1997-JCI restructures its western areas hedge involving a buy back of part of its forwards

This is an interesting site. Of particular interest is the Mitsui input. Remember them? {:- ) ) FT, incidentally, had a small blurb this week on Mitsui link-up with Prudential.mmmmm, as Tolerant1 would say

(Sat Jul 18 1998 10:14 - ID#147201)
Steve in To, Jtf, Aurator et al Freq.
There is hardly any definition from hard sources on the frequencies assoctiated with quake activity. It IS known to exist by several good sources, but the definition is scarce. The EMF emissions have been detected by the USGS and by Antony Fraser-Smith at Stanford. Smithhas 7 locations now monitored, but no activity yet. His work shows the freq to 1 Hz or less. As far as I know he is the pioneer in this work at a reliable institution. The reference I made previously to Bell Labs ( about 85 ) has been lost, but since they would not confirm their admission of EMF results on long lines I gave up on them.
I would like to have questions and comments on this. The emissions can load a power line to the extent that it shoots transformer breakers-Duke Energy

(Sat Jul 18 1998 10:39 - ID#411112)
Steve-Perth...Can you say Martial Law.....Sen.Bennet asked this of Ast.Sec. of Defence Hamre...his

answer in a word Senator yes.....

(Sat Jul 18 1998 10:57 - ID#373284)
robnoel_A, Namaste' There will certainly be major problems with Y2K and I must
say from my own personal experience I have zero desire at this point to be anywhere near populous areas. I have spent several hundred dollars making copies of all sorts of articles, lists with web sites, etc and given them to a wide range of members, friends, etc.

I can tell you that these people will not be prepared as they have a nonchalant attitude. These same people are never prepared for blackouts, storms and other emergencies let alone the prospects within Y2K combined with a massive market correction...

Plain and simple they will be rewarded with pain and suffering for their lack of desire to take a few minutes away from their "busy" days to take the time to do a little reading and take, at the very least, minimal precautions.

My thoughts in this regard have solidified greatly during the past two weeks...there will be martial law imposed and the people will get their just rewards...

This kid will be long gone and watch the smoke from a very long distance...

(Sat Jul 18 1998 11:01 - ID#411112)
tolerant1...rather than be said to be a nut....I will be taking a 6 month vacation starting Nov.99

a litle wilderness travel

(Sat Jul 18 1998 11:04 - ID#220325)
Silver prices for the last 600 years, worth a look!

(Sat Jul 18 1998 11:22 - ID#280245)
WHAT is it all about? Breaking eggs?

When the agenda is critical, "needs must", and surely no global agenda was/is deemed more critical than the mending of the financial system. To that end, it long ago became apparent that, among other ancillary needs, another global, key currency was desperately needed. It is not hyperbole to suggest that planning began the Monday after the infamous Nixon Camp David weekend, which de-linked the dollar from gold.

To the earliest planners, the gold conundrum presented an ironic, and central, planning contretemps: gold, the stabilizer, their rudder, had to be discredited for any new currency to successfully be brought forward.
Were gold to retain its historical "safe-haven" role, assets would flee fiat and flock to gold; were this allowed to happen, the "new currency" would be abandoned on the launch-dock, never to be set afloat.
So, step one, central to all, was to publicly discredit gold as a monetary asset, thus protecting all fiats but, more specifically, allowing the new currency to be introduced.

From the Jamaica Accords in 1976 [which prohibit the PUBLIC linking of a currency to gold], to the Reserve Bank of South Africa's sponsorship of gold producer hedging, to the "bright young things" at Central Banks deriding gold as a "non-productive asset" not worth digging out of the ground to bury in the vault ( S. Salvant, e.g. ) there has been concentrated purpose over decades: keep a nervous public OUT-OF-GOLD and firmly committed to paper. It has been a policy that has, in the mysterious way of Life, linked disparate players with disparate goals. It has been successful. That its success has caused grievous wounds to the financial system that "They" seek to repair is, when researched, a logical consequence of the policy followed. Lack of a stable key currency lead to currency instability; currency instability lead to derivatives; derivatives lead to currency chaos. Currency chaos leads to gold.

John Disney__A
(Sat Jul 18 1998 11:25 - ID#24135)
Didnt you Hear ??
Cheesehead ..
All dat gold was washed out to sea ..
Achtung ..

Go Boks ..

(Sat Jul 18 1998 11:27 - ID#413156)
What the future holds ?
Great weekend reading

(Sat Jul 18 1998 11:30 - ID#280222)
JTF: Yesterday you alluded to impending $500 cash withdrawal restrictions. Can you elucidate or expand? Thank you in advance; I appreciate your tireless efforts to add to our collective knowledge.

John Disney__A
(Sat Jul 18 1998 11:34 - ID#24135)
A curious observation..
On Currency ..
In my travels .. I spent 5 years in
Turkey .. a wonderful country ..
I arrived in 1974 and left in 1979.
When I arrived the exchange rate
was 12.5 Turkish Lira to the $ and
100 to the $ when I left in 1979..
Nineteen years have passed .. the
rate is now 270,000 to the dollar.

(Sat Jul 18 1998 11:50 - ID#280222)
SNOWBIRD: Interesting chart.

(Sat Jul 18 1998 12:11 - ID#147201)
Colleen re your 3:58
Good references. I know about Nelson's work. Lost my copy. He was called on by RCA to eliminate radio transmission blackouts. He did it. Wish I could find a copy today, thanx, Charlie

Rising Sun
(Sat Jul 18 1998 12:11 - ID#411331)
John Disney

Regarding RANGY, I was wondering if you heard any news about the the Syama deposit.

(Sat Jul 18 1998 12:23 - ID#57232)
$500 cash limit on checks deposited at your bank
Savage: I'd be glad to elucidate. Unfortunately I am at work, and Don McIlvaney's most recent newsletter is at home, so I am doing this from memory. He had an extensive financial crisis management section that began with how FEMA has been quietly charged with authority to work with the executive department, rather than its original authority coming from Congress. Amazing how once a executive section of Government has been formed, it develops an autonomy all of its own! Congress and the judicial seem to be getting less and less power these days.
What Ron M said was that some sort of emergency executive order has quietly been written stating that you can cash only $100 of actual physical currency when you deposit a check ( of any amount ) in a bank, and a maximum total of $500 cash withdrawal 4 or so days later when the check clears. Apparently there was no restriction on check writing or other electronic transactions, as that would not require the use of actual paper currency. He then went on to speculate that this $500 cash limit would presumably be declared during a financial national emergency to prevent bank runs. My take on this is that during a real financial emergency, this would mean that actual physical paper currency would be a very scarce item. It does not take much imagination to think what an angry bank customer would think if the US government declared that cash withdrawals would be limited during a financial emergency -- the very time when physical currency of some kind would desperately be needed. This information fits well with the rumor that the US Government has huge stockpiles of paper money -- just in case. Highly populated areas would already be under martial law by the time such a directive was enforced. My guess is by that time, few people would want to use anything for transactions except cash. What about all of that automatic billing for your house loan, etc? My guess is by that time virtually all mortgage creditors would be desperately trying to collect -- but noone would be able to pay. Not much a mortgage company can do if no one is buying real estate. So mortgage companies and their ilk would be the first to go belly up -- food stores could demand cash and get away with it.
This presumed executive order must be on the books somewhere - hopefully our Kitco sleuths can dig it up. Looks like someone in the Federal Government expects a financial crisis fairly soon.

Anyone know if the US Federal Reserve is y2k compliant? Are they planning to be y2k compliant, and if so, what have they actually done? It will be of little value to have the private US banks y2k compliant, if the FED is not.

(Sat Jul 18 1998 12:27 - ID#190411)
Disney's forgetfulness..
He forgot to wish Mr. Mandela connubial bliss in his new matrimony.

Perhaps Slick Willie left him with a lifetime supply of Viagra whe he defiled Africa.

Is Winnie still coaching her team?

The Hermit
(Sat Jul 18 1998 12:54 - ID#372248)
FEMA & Executive Orders
Just for what it is worth. Power that is now in FEMA's hands through Clinton's executive orders.

EXECUTIVE ORDER 10990 allows the government to take over all modes of transport.

EXECUTIVE ORDER 10995 allows the government to seize and control the communications media.

EXECUTIVE ORDER 10997 allows the government to take over all electric power, gas, oil, fuels and minerals.

EXECUTIVE ORDER 10998 allows the government to take over all food resources and farms.

EXECUTIVE ORDER 13083 effectively abolishes the 10th Amendment to the Constitution that reserves to the states and people all powers not expressly delegated to the federal government. Under Clinton's new Executive Order, which takes effect August 14, 1998, state and local authority would be revoked, wherever local laws would undermine federal regulatory goals.

There is TROUBLE ahead!


The Hermit

(Sat Jul 18 1998 13:04 - ID#330209)
John Disney
That's what happens when your main preoccupation is invading neighbouring countries, quelling internal disagreements and building up what can only be described as a potentially offensive military machine.

Justice is blind and so is the market.

The policy hasn't changed, so you can look forward to even more exotic rates.

(Sat Jul 18 1998 13:13 - ID#28593)
JTF--re: $500 limit & gov't control...some things never change {:-))
"All salt that salt makers had produced, were monopolized by the government. Salt makers were not allowed to sell their product to anyone other than the official who being in charged of the salt monopoly affairs."

(Sat Jul 18 1998 13:20 - ID#330209)
Anyone know South African Law well enough to tell me whether the majority shareholders in RANGY can legally unbundle the company's assets in such a way that is advantageous to them but detrimental to minority shareholders?

(Sat Jul 18 1998 13:25 - ID#215208)
A great week for platinum longs! A fingernail-biter for silver.

Gold - In limbo. See silver.

Silver - Broke through the bottom of my new up channel, which was defined by the first two low points in this upward move. Not good! But, after studying the charts carefully and consulting my chicken bones, I decided to give silver another chance ( despite APH's prophecy ) . I ignored the first low, which was really a spike, and redrew the channel based on the next low and the recent low. The slope is somewhat shallower than the slope of the previous up channel, but still impressive. Since then, silver has barely broken through the top of the previous down channel, but has pulled back. It is now very close to the apex of the wedge formed by the top of the previous down channel, and the bottom of the new up channel. It can't procrastinate any longer. It must make its move in the next day or two. Silver will be the next big opportunity to make big bucks. The question is, long or short? I'm still long, but with close stops. I think gold will follow silver, one way or the other.

Platinum - Yesss! The London close was at 394 on Friday, a couple dollars higher than my channel had predicted ( I had set the channel width equal to the width during platinum's last up move. ) So I adjusted the channel top upward slightly to reflect this higher price. Personally, platinum hit my pre-set limit at 398 on Thursday, and closed out my long trade ( my most successful metals trade to-date! ) . After watching the action Friday, I decided this new channel top is probably valid, and took a small short position, just to keep it interesting. I expect PL to either move sideways from here or to pull back. If PA really weakens, it may drop back to the channel bottom. On the other hand, if PA really goes crazy, PL might run up further, so I'll keep tight stops on the short.

Palladium - Glad I no longer trade PA! Quite crazy. My guess is this run will peter out, and it will drop back to its long-term up-trend line.

(Sat Jul 18 1998 13:35 - ID#57232)
Electromagnetic emission below 1 Hz -- will get back with you later
chas: Interesting post. This fits with a very weak piezoelectric effect from earth movements. Many crystals are capable of carrying a static charge, and ones with piezoelectric properties ( as we know ) can generate electricity. My guess is that the best detectors of such earthquake-precursor related signals would be high DC impedance, ultrasensitive voltmeters with very long leads or antennae ( for near field capacitive coupling. One would need to be very careful with lead contact potential problems which could cause artifacts in the measurement. Just the movement of the leads could generate a false voltage. You might get useful clues on construction by studying the design of electroencephalographs. I do not know how Smith does his measurements.
One problem with such measurements is that you would have to look out for magnetic induction currents in long unshielded cables, and fluctuations in the Earth's potential from ionospheric and weather effects -- I think there is a diurnal one -- measured it once.

(Sat Jul 18 1998 13:39 - ID#228128)
Black and Schoels Options pricing model
I just sent this to a freind and thought I'd post this here as well. I know that there are a couple of posters here who use SAS statistical software. This is an options pricing model written for index options so it does the adjustment for fair value of the futures price, something that the canned programs don't do. It can be used for XAU options. It can also be modified for stock options by taking out the fair value ( fv ) adjustment portion of the program

/*current and striking price of the option */
data option1;
input quote sp @@;
1184.02 1200
1184.02 1190
1184.02 1180
1184.02 1170
1184.02 1160
1184.02 1150
1184.02 1140
1184.02 1130
1184.02 1120
1184.02 1110
1184.02 1100
data option1; set option1;
/* Standard Deviation, Fraction of Year, Interest Rate % */
/* Futures Price, Dividend Yield % */
/* Adjustment for Futures Price */
fv=quote* ( 1+t* ( r-y ) ) ;
/* Black and Scholes Options Pricing Calculations */

d1= ( log ( price/sp ) + ( r*t ) + ( s**2* ( t ) ) /2 ) / ( s*sqrt ( t ) ) ;
d2=d1- ( s*sqrt ( t ) ) ;
delta_c=probnorm ( d1 ) ;

pv_sp=sp*exp ( ( -r ) *t ) ;
loan=pv_sp*probnorm ( d2 ) ;

/*Black and Schoels Call and Put Prices Adjusted for Futures Price */

pv_call= ( price*delta_c ) -loan;

proc print data=option1; var price sp delta_c delta_p adj pv_call pv_put;
title 'Black and Schoels Model';

(Sat Jul 18 1998 13:42 - ID#228128)
I forgot. If you have questions e-mail me at

(Sat Jul 18 1998 13:43 - ID#200235)
bye-bye american pie
In the summer of l998, the worlds most successful and preeminent and well known corporation became a shadow of its former self. It was a long and bitter acrimonious strike by the United Auto Workers, an equally revered american institution, that led to the dimise of both these venerable dynamic institutions. It had something to do with the auto workers wanting to be paid for the entire days work whether they were at the job site or at home. It was a complicated formula dating back to the late l970's when the US auto industry was on its last leg and the union had a production clause allowing the rank and file to leave for the day once the production for that day had been reached. This clause was widely recognized as costing GM about $l000.00 more per car than the other domestic producers. At any rate, the union stood steadfast to this clause in the contract not knowing that GM had anticipated the long strike and had began a strategy of downsizing and possibly closing the entire US production lines.

GM developed 7 different wildly successful mid sized models based on the popular Toyota frame and running gear. Not only were these models very popular, they were wildly profitable. Some of these models returned as much as 30 % profit as opposed to l0 % average profit on the US line.

The real problem was that these models were manufactured exclusively outside of the US but maintained the popular name plates like Cavalier, Monte Carlo, Riveria, Century, Cutlass, Catera, Intrigue, etc. .

GM had done its homework and knew that at this time the US population would buy anything. ( the Dow Jones index had a earnings multiple of 50 at this time ) The initial success of this program led to the complete elimination of all production in the US. Indeed, GM became a marketing company exclusively and eventually contracted the entire production to such oriental manufacturers as Hundai, Suzuki, Isuzu , Toyota, Honda , Mitsibishi etc.

What limited north american production that remained was relocated to Canada and to Mexico. This consisted mostly of the heavy duty truck and industrial divisions where they enjoy a trade advantage under the NAFA treaty. GM is now the worlds most profitable corporation and has located its headquarters in Bern , Switzerland.

l998 was a long time ago, but it is easier to remember that it was the year that congress mandated that everyone in the US on Medicare or Medicade was entitled by act of congress to an erection.

My sincerest apologies to crazy times.

(Sat Jul 18 1998 13:47 - ID#339212)
John Disney, re: Turkish Lira (11:34 post)

Turkish Lira relative to the USD

12.5 Lira = 1 USD in 1974, 270,000 = 1 USD in 1998!

Money always grows FROM trees, some trees grow 52% more
each year, so does the Lira.

It is only 52% Annual Compound Growth Rate!

(Sat Jul 18 1998 13:57 - ID#147201)
JTF re 1 Hz+/-
I am real ignorant on electronic circuits. I do understand your post. I will get Smith to send a copy of his circuit, if possible. From my previouys conversations with him he is pretty savvy. I am familiar with Piezo. I have, some where, a partial copy of a Russian study in English by Eleanora Parkhemeno. This is "Electrfication Phenomena in Rocks". It is extremely intensive and has the supporting data. Also, there is a stidy by Brian Brady at BLM in Denver. He set up a lab to crush a variety of rocks and record the results on film. Very informative. If you would like a copy, let me know. Charlie

(Sat Jul 18 1998 14:03 - ID#373284)

(Sat Jul 18 1998 14:28 - ID#252355)
update of securities y2k testing
i'm new on this computer stuff so i'm not sure about cutting and pasting but here is the link.

(Sat Jul 18 1998 14:35 - ID#252355)
securities y2k update
sorry about that try again

(Sat Jul 18 1998 14:58 - ID#57232)
Quiet today on Kitco -- wish I were home right now - beautiful day.
Colleen: Saw your earlier post! Glad you're back, gracing this site. I will get that reference to retrograde solar motion when I get a chance. Hope all is well in South Africa.
All: I was listening to a recording of Rush Limbaugh this morning. Did you all know that there is fairly substantial evidence indicating that WJC used the Secret Service agents to recruit women for his sexual exploits? This is exactly what he was doing with his own personal group of Arkansas State police bodyguards while he was governor. Denied by most involved, of course. However, to me it sounds much more degrading when it involves the more exalted Secret Service. There have been numerous occasions where WJC has assumed that what he could do in the totally Democratic controlled state of Arkansas he could also do in the White House.
Rush Limbaugh mentioned specific names of individuals not related to the Kenneth Starr investigations who knew about WJC's illicit use of the Secret Service. I'm sure WJC's excuse will be the President Kennedy and other presidents before him have done this. My comment is that president Kennedy did have affairs, but it was nowhere near as indiscriminate and as numerous as those of WJC. I cannot think of any member of government with a security clearance who could keep his/her job with such frequent sexual exploits. Four other 'girlfriends' while he is having an affair with Monica? Think of what a foreign power could do with a Mata Hari type.
All: Another thought -- did you all know that the federal grand jury members can ask just about any question of the Secret Service agents? The questions do not need to be limited to MonicaGate. That is why Clinton etal are so worried. No more secrets if the grand jury asks the right questions to the right Secret Service agent. These fellows are trained to tell the truth, unlike most other members of the White House Staff.

(Sat Jul 18 1998 15:05 - ID#187109)
DJ - thanks mate. I think PL looks toppy too. I peeled some longs friday and will hang loose and enjoy the action. It still has much room to go over 400 though ( after a dilly-dally ) . The fundamental factors will prove to be the impetus to make it so, maybe? ;- ) go plat... I am still long Sep. silver just waiting to turn over to Dec. ( eh kuston? ) HumDeeDum........which way will it run? ( silver pisses me off most out of all these metals....dardburnit! )

Bought ALOT more Oct. azucr...... ( in case Earl wanted to know ) ;- )

Now....... what does this chart say?? hmmmmmmmm...... a traders dream........aaaaaaahhhhhh ( $ )

Bart......ya had us all scared for a shake............ ( whew! ) ....good show
Ron-in-the-sack - Giddeeeyup!! yeeeehaaa! got sugar? tick-tock......
Hat's off the the young ( 17 ) Englishman ( Mr. Rose ) playing in his first Open............hang in there fella........there are some 'heavy' yanks breathin' down yer neck......can ya feel it? ( he'll be sleeping with one eye open tonight.....if he sleeps at all ) .........Go Mark O'Meara ( ! ) ( $ ) the most beautiful weekend of the summer ( in central cal ) so far........................ ( whacking the white ball ) ..........ohmy!

birdy-boy - keep the concentration whilst inlining and's a dangerous sport........I know, I know........someone's got to do it.............. ( buxom-o-betties-abound ) !!


(Sat Jul 18 1998 15:18 - ID#187109)
kinda reminds me of the life of a goldbug......
they keep getting shat upon........


PADERBORN, GERMANY - Overzealous zookeeper Friedrich Riesfeldt fed his
constipated elephant Stefan 22 doses of animal laxative and more than a bushel
of berries, figs and prunes before the plugged-up pachyderm finally
let fly -- and suffocated the keeper under 200 pounds of poop!

Investigators say ill-fated Friedrich, 46, was attempting to give the ailing
elephant an olive-oil enema when the relieved beast unloaded on him like a
dump truck full of mud. "The sheer force of the elephant's unexpected
defecation knocked Mr. Riesfeldt to the ground, where he struck his head on a
rock and lay unconscious as the elephant continued to evacuate his bowels on
top of him," said flabbergasted Paderborn police detective Erik Dern.

"With no one there to help him, he lay under all that dung for at least an
hour before a watchman came along, and during that time he suffocated.

"It seems to be just one of those freak accidents that happen sometimes --a
billion-to-one shot, at least."

The heartbreaking tale of constipation and tragedy began April 23 when the
conscientious zookeeper noticed that his prize, 8,000-pound African elephant
didn't seem to be producing his usual poop aplenty. "Friedrich had actually
been concerned for several days because he knew that severe constipation can
kill an elephant," assistant zookeeper Kurt Herrman recalled.

"He told me he was going to stay late that Thursday night to treat Stefan with
laxatives and possibly give him an enema. "I offered to help, but he sent me
on home, saying he had everything under control."

But two hours later, horrified night watchman Walter Pleuger found Friedrich
lying lifeless under a mound of muck, his body visible only from the knees

"I had never really thought about it before," Det. Dern said" but obviously,
giving an elephant an enema can be a very dangerous
activity -- and not something that should be attempted alone."
away....from the flies
outtahere ( ! )

(Sat Jul 18 1998 15:18 - ID#147201)
JTF re your 14:58
Your ref to Colleen: be sure to get the Nelson reference. I liked your exposition on WJC and the implications of the SS.

(Sat Jul 18 1998 15:24 - ID#411259)
..... Platinum and Fundamentals .....

Some Kudos were offered to me on these pages for a really good platinum call.

First, it was not all that good of a call, platinum at $350 - $390 is almost always a good buy, so it is not surprising that people are making profits on the trade.

Second, remember, I was the guy saying platinum was the buy of the year near $400 a few months ago before it took the kamikaze dive back to the lows. I had several clients hang in through the frightening drop, convinced the recovery would be soon and fast. Some others, after seeing the lightning fast decline in prices, bailed before platinum had a chance to recover.

My call for platinum to rise as the June contract approached was the right call at the wrong time. By October we will see highs for the year.

There is quite a lots of talk hereabouts regarding the fundamentals of the gold market. Many believe than gold is in short supply, others believe the percentage of gold versus fiat currency is so out of whack that a crash is inevitable. Others ( myself included ) see many piles-o-gold everywhere we look and see the fundamentals supporting lower gold prices - at least near term.

The point to this is the fundamentals. If anyone has noticed, over the last year, Ive done pretty good on calling these markets. Got creamed in some silver shorts in December, and had to suffer through the drop in platinum, but all in all, not bad indeedy.

This is not a self pat on the back, but an explanation of why, when all is said and done, I tend to do pretty well. It the fundamentals. When I say that, Im not speaking of trading fundamentals, but supply and demand. I have been reading through the archives of this sight going back a year, and only really noticed this myself in the last couple weeks.

I watch the charts, I hear the stories, I look for turnarounds to flip long to short in a flash but, by and large, I look at how much metal is available and how much is needed.

Gold will serve well in a crisis. Until then look towards supply and demand for direction. When doing this, dont let you mind be clouded by your emotions. Yes, we all love gold, but the supply / demand picture is all out of whack right now. The possibility of more CB sales before the end of the year, and producer selling has flooded the market with gold. Witness the falling lease rates.

I guess what Im trying to say is that, long term, gold makes sense to buy and hold here. Short term the fundamentals say wait. Read that last sentence as wait to trade, but not to buy for delivery. I read USA Golds blurb the other day about their long term philosophy and I found the advice to be sound - for the person who wants to hold gold. For those that trade, the supply numbers are the surest stars to navigate by and they will rarely let you down.


(Sat Jul 18 1998 15:30 - ID#411259)
..... copyright .....

That the copyright thingies disappeared Monday?


I wonder why?

(Sat Jul 18 1998 15:34 - ID#57232)
Executive Order 13083
The Hermit: That one interests me. How does any President get the power to suspend the 10th Amendment? Is the War Powers act so broad reaching that anything normally under the jurisdiction of the States goes by the wayside during a national emergency?
Here is another item. Lets say there is a national emergency. If all state and federal government legislatures are disbanded, how is the function of government to be maintained? Does FEMA get all the administrative power? My point is this -- even if the emergency is a genuine one where we would want the executive section to have all the power -- extremely unlikely -- just imagine how inefficient that would be . We have enough trouble with State governments as it is.
I think it is time for the US Supreme Court to reexamine the War Powers Act for Constitutionality. The Congress can always pass an emergency measure if it is needed, but leaving something like this on the books is an invitation for Tyrrany. Good thing WJC is not up to taking control -- he's too distracted with other things -- I guess -- to be a Tyrant. Good thing also that the Supreme Court still has some power left. Our day of reckoning will come when someone like William Rehnquist is ignored.

Another item: I find it very interesting that the very time when our government wants us to go to 'paperless' money may be close to the time when 'paperless' money has a critical meltdown, and everyone demands physical currency instead. My guess is that interest in the 'National ID/money card' will fade if we have a serious loss of confidence in the US dollar.
So -- there may be some good things to look forward due in the Millenium, not just bad ones. One other item about the Millenium is that we all get just exactly what we 'collectively' ask for. No political leader has any power, unless he/she gets it from the people ( us ) . So our future is whatever we make of it -- within the limitations of our abilities and resources.

(Sat Jul 18 1998 15:39 - ID#195260)
RJ - Do you have any thoughts on the supply/demand situation in silver? The price sure doesn't seem to move with Comdex inventories.

EB - I missed the Pl thing again. I didn't get filled at 372. Greed. Very upsetting, Pl gives a few good trades a year and I sat here and watched this one!

(Sat Jul 18 1998 15:49 - ID#195260)
JTF 14:58
Very interesting about the grand jury asking questions. But, I don't believe any SS agent would tell the truth if it hurt WJC. Unlike the generation before me ( I don't know if your in it or not ) I have no faith in the law enforcement people of this country. I also believe the generation behind me has even less. I've always wondered what the future holds relative to this?

(Sat Jul 18 1998 16:08 - ID#256326)
ROCLOL!!! It's tempting to see the elephant's output as similar in effect to internet gold posts.;- ) )

I do believe we are in a rocky transition from a strong US$ era to a weaker $ era. Since gold is a quasi-indpendent alternative currency, better days are ahead for gold as well as commodities, real estate, and stocks.

If you look at 12 January and 15 June, you see that nearly all markets ( including actual interest rates bottomed together. Since the dollar and
stocks are in raging bull markets, their charts look quite different coming out of those dates than the other investments mentioned, but the transition is on.

Of course a lot of pepole and institutions get wiped out during transitional periods as they assume the current trends will continue ( disinflation ) or becsue they position contra-trend too early. We have seen a lot of the latter in the gold world.

Nevertheless do not fear, re-inflation is coming.

(Sat Jul 18 1998 16:09 - ID#256326)
sorry, turned off the spell checker.

(Sat Jul 18 1998 16:12 - ID#43349)
For measuring/detecting low frequency electric fields which one ( as well as one's measuring apparatus ) is surrounded by, one might make better use of an electroscope. Voltmeters measure the difference in potential between the two leads. If one's ground is charged to the same ptotential as one's probe one will measure no difference even is one's hair is standing on end.

(Sat Jul 18 1998 16:24 - ID#255226)
I have been of the option that we would see a high in the metals around the 24th of July. Now I'm not so sure. They look to be setting up for a drop instead maybe into the 24th. Sherm McClellan thinks a bottom will be made in the metals between next Wed and Fri with a scary price drop into those days. Seasonally metals have an 80% + chance of going down between July 17 and Aug 10. I'm short Dec silver at 5.42 and short Dec gold at 299.

(Sat Jul 18 1998 16:28 - ID#147201)
Gollum re your 16:12
How can you apply this to the field where we are trying to measure EMF from a fault line?

(Sat Jul 18 1998 16:29 - ID#57232)
Perception of Truth - alas, there is no Gold Standard
kuston: Good point. I am not sure I am a member of the 'older generation', but I believe in telling the truth, and the fact that loyalty to my country comes before my loyalty to the President. Even a Secret Service agent trained in the ways of my belief would have a hard time deciding how to respond to the grand jury. I know I would. But -- I would still tell the truth. Part of the problem is that the grand jury already knows alot about what is happening in the White House. It is one thing not to volunteer information of possibly criminal acts that would hurt the President, but it is quite another to lie about them when asked to protect the President. If my code of honesty does not apply any more to the Secret Service, heaven help us.
Notice the stirrings in the FBI? All is not lost. And -- people still obey Supreme Court Justice William Rhenquist.

(Sat Jul 18 1998 16:31 - ID#286224)
Could you please say more about the GOld supply and the lease rates? Do the lease rates lead by adding supply or is the supply causing the lease rates?

Could you tell me please your idea about where the CB's gold is going? I may have missed your earlier mention of this subject.

If the CB's are selling why are they setting the lease rates so low. If they are really interested in dishoarding Gold wouldn't it be better to forgoe the small income from leased gold and force the price up? Or is there soem reason - in your opinion - that thing can't work that way.
I appreciate you possts and felt these questions were skipped over; perhaps you assume we all know your answers already, but I, for one, would like to hear your opinion ( again? ) .

SO: Why are the lease rates so low and where goes the Gold? Is all this supply you see leased; dishoarded from non-CB stockpiles; or mined?

What is wrong - if anything - with the notion that the CB's could pull the plug on the leased supply and drive up the price?

One more thing: You didn't mention the Euro and how you think that comming into play will affect the dollar/Gold equation. Or perhaps you meant all that is part of the fundamentals and you were only talking about trading in your last post. None the less - what`cha think?

Thank you

(Sat Jul 18 1998 16:33 - ID#411259)
..... Silver .....

Kuston -

Rather than retype it, my latest take on silver can be found here:

(Sat Jul 18 1998 16:35 - ID#43349)
When I was reading about the EMP from solar flares
inducing voltages in power lines, it reminded me about
one old farmer who had a fence which ran parallel and
underneath some power lines for several miles. He was
tapping enough of the induced current off his fence to
to power the lights in his house.

The power company in tallying the difference in power
they were charging thier users for against what their
wattmeters said they were putting down the line found
too big a dicrepency to account for from normal leakage.
They discovered what the farmer was doing and took him
to court.

Despite his protests that he had made no physical
connection to the poer company lines he ended up losing
his case.

(Sat Jul 18 1998 16:41 - ID#43349)
The elctroscope measures field intensity. If one looks at the periodicity of the field intensity as a function of time the EMF
is immediately apparent. One might want to place their electroscope
in some deep location ( an abandoned mine perhaps ) shielded from the
effects of atmospheric phenomenon ( like passing thunderclouds! )

(Sat Jul 18 1998 16:48 - ID#147201)
Gollum re yours
Many thanx. Sounds good. How to power the electroscope in a remote location. Sometimes it takes a long wait ( months ) . Atmospheric interruptions are a problem

(Sat Jul 18 1998 16:51 - ID#247273)
I have in the past worked on detectors and instrumentation for measuring the sub-Hertz ( and higher, up into audio range ) electromagnetic fields that are present in the earth, for the purpose of characterizing deep earth formations and composition. The field of magneto tellurics is a specialized study of electromagnetic propagation within and through the earth. As I recall, we filtered out the power line frequencies and their harmonics, in order to collect only lower frequencies, in the seconds per cycle range. In all cases, we used both an electric field detector, and a magnetic field detector that essentially used the long wavelength radiation from space impinging upon and penetrating through the earth. Signal analysis would yield the likely composition of the very deep earth structures. Long wavelengths are required to penetrate this deeply. However, variations of this technique can be used for shallower depths, using higher frequencies. Other techniques can inject the reference frequency electromagnetic energy into the earth, with detectors placed over a wide area. This is interesting science. It perhaps relates to the discussion about detecting EM energy in and on the surface of the earth.

(Sat Jul 18 1998 16:54 - ID#57232)
Keithley Electrometer
Gollum, chas: Interesting point, Gollum. One disadvantage of a simple voltmeter is that both leads are active if they are very long. So -- you may get spurious signals from both leads. That is ok if you know where to put them, and don't have spurious signals to block. Many years ago I used a Keithley electrometer, which measures an voltage relative to an reference voltage. This is like putting one lead at the site of the voltmeter, rather than far away, as even an electrometer must measure voltage relative to something.
So, really what we are getting at is that it would be best for one lead to be very short, so that it could act as a stable reference, connected to a large conducting mass ( big piece of copper ) . Another thing that an electrometer offers is high impedance shielding, as it can drive the shield ( coaxial outer tube ) of a coaxial line at the voltage of the signal. This minimzes the effect of stray voltages along the length of the line. One disadvantage is that only very slowly changing voltages can be detected ( 1 cycle per second or less ) .
Hope this helps - I have not used a Keithley electrometer in over twenty years. Expensive, but very well made instrument. Hopefully someone still makes these, or something like them. By the way, you could also use a waveform eductor to pull out very weak signals from noise ( 100x+ enhancement ) , but this requires that the signal be periodic, and that you know the frequency.

(Sat Jul 18 1998 17:00 - ID#57232)
Ground reference point
chas: Good point again from Gollum -- put the reference point underground, and/or near a large conducting body such as the Ocean. Then you will have the most stable reference voltage possible.

(Sat Jul 18 1998 17:00 - ID#288369)
@AUH2O.............a "memorable" passage from your.......
earlier post today.

"l998 was a long time ago, but it is easier to remember that it was the year that congress mandated that everyone in the US on Medicare or Medicade was entitled by act of congress to an erection."

Veeeery good..........very goooooooooood! yes, rockin' 'n rollin' in the great USA.....salud! GO GOLDBUGS!!!

(Sat Jul 18 1998 17:09 - ID#43349)
That sounds fascinating. An intersting field that, magnetotellurics. One intersting point you make is that measuring something is often not the problem but rather measuring too much. The one has to decide what is due to what and how to reject the noise from the signal. ( Sort of like trying to figure out what gold or silver is going to do next :-} )

(Sat Jul 18 1998 17:34 - ID#402131)
The Hermit
I and many friends had many, many business dealings with FEMA last year. If we have a crisis and FEMA is in control all will be lost!!
I swear if one could somehow add a line that every FEMA employee had to jump in front of a speeding bus every Friday you could expect massive deaths. Common sense is foreign to them in all respects. Also, like the IRS, their advice is not binding. If they change their minds you are screwed. It is just another US government welfare program. One thing they do for sure is to make sure the local governments survive.

(Sat Jul 18 1998 17:49 - ID#147201)
JTF re EMF,s
The way it appears is that pressure can cause emissions. Precursor breaks also get a little bigger. The quake itself is "massive". And after shocks can be monitored. I'm still waiting on the translations of Jap work in this field. When Smith answers, I'll let you know.

(Sat Jul 18 1998 17:53 - ID#147201)
AZAU re 1 Hz +/-
When you were working in this range, was it for quake emissions or geophysics for oil or minerals? You are the closest to this phenomena that I have found. To keep any off-topic problems from arising, how about emailing me. Thanx, Charlie

(Sat Jul 18 1998 18:04 - ID#373284)
finally somebody is saying that WJC and Janet Reno are full of it and worse...

(Sat Jul 18 1998 18:05 - ID#287186)
Snowbird - thanks for the historical perspective on Silver
In your 11:04 post which included:
I notice the chart begins at $4.
It would be interesting to see it with the bottom
series of the semi-log scale beginning with $1

So might we view today's price as a minor upturn
within a several hundred year downward trend?
When digital photography goes decreases demand
( the same thing for stills as happened to movies )
why not continue the downward trend to $1 or less.

Silver is of the same order of magnitude as common as cadmium.
What does cadmium sell for per ounce?
( the market likley sells it by the pound or kilo
and I have not found a price for it on the net - yet )

(Sat Jul 18 1998 18:16 - ID#285392)
Squirrel: Sorry I can't read your post
It comes up 404????

(Sat Jul 18 1998 18:16 - ID#147201)
tolerant1 re your 18:04
That should spell it out. Let's get on with it!!

(Sat Jul 18 1998 18:50 - ID#285392)
RJ, APH: your advice is always appreciated
This is a learning experience and you are both great teachers. THANKS

(Sat Jul 18 1998 18:51 - ID#228128)
Gold next week
APH - A drop, perhaps a sheer one this week or next would make my analysis make some sense. I've been waiting but it hasn't happened as yet. Also, didn't Mike Stewart post earlier in the week that his McClean ( spelling? ) oscillator was indicating that the rise in the gold price was a fakeout?

Steve in TO__A
(Sat Jul 18 1998 18:52 - ID#209265)
JTF, Chas et al. - 1 Hz wavelengths are
huge. The lowest frequency propogating waves I've ever heard of are 10 Hz. These circle the earth rapidly because their wavelength is approximately equal to the 1/2 circumference of the earth!

It would take huge amounts of power to generate a 1 Hz wave that would radiate, and it would have to be generated over a huge distance. I don't know whether it would just radiate into space, since its wavelength would be approx. 186,000 km. To detect it you'd need an array spread over hundreds of square km..

I'm sure 1 Hz. electric and magnetic fields are generated during quakes, but their radiation would be insignificant, and would not be picked up even by power lines 100's of kilometers long.

There are some very low-frequency components in earthquakes. Should you happen to be outside watching ( not always a recommended activity, but there are lots of people who do it : ) you can see faster "ripples" travelling along which are higher than 1 Hz. There are long 0.5 - 1 Hz waves which are hard to see because they are so "spread out."

I had a unique chance to experience the 0.5 - 1 Hz waves during the 1989 Loma Prieta quake. I was working in a building in Berkeley on a very steep hillside when it started, and the little rapid "vibrating waves" hit first & started increasing in intensity, so I rushed out into the parking lot to see what I could see. When the big waves hit the hillside their motion was translated into a "swaying" of the hillside, almost like it was pulsing in and out. By fixing my eyes on a distant point and maintaining my head in a steady position while my feet rocked back & forth under me ( like a pendulum ) I was able to estimate that the ground was shifting in and out about 1' at first, reaching a peak of about 2', then dying back down as the quake passed by. The frequency was ~0.5 - 1 Hz, in my guesstimation. Fortunately everybody's car was in "Park" and none of them started rolling around the parking lot while this was going on.

I wonder is we'll see another post-El Nio quake in California this year or next? There always seems to be a 6 or a 7 somewhere in the state within 2 years after a big El Nio winter.

- Steve

(Sat Jul 18 1998 19:03 - ID#287186)
Snowbird - did you say it comes up $4.04? (for Silver
On my screen the $1 line is about 3 centimeters below $4.04.
If we extend the chart down yet another series to 10 cents...
Nah - it couldn't get that low!!!!!
But it does lend a perspective doesn't it?

(Sat Jul 18 1998 19:07 - ID#217208)
Re: need a reference
I need to find Claire Wolfe's Amerika Amerika if anyone can post a URl for it, to copy, away from my office. TIA

(Sat Jul 18 1998 19:12 - ID#287186)
Nevertheless - I do need to by more Silver MLs
Too bad the US Silver Eagles run a US$ more expensive!

(Sat Jul 18 1998 19:15 - ID#93199)
Fidelity Select Gold Charts
Fidelity Select Gold & Precious metals Charts
5 Years, 120 day, 30 day and hourly charts at:
Click on Gold Sectors

(Sat Jul 18 1998 19:20 - ID#252391)
Silver and lease rates
APH is bearish on silver, a wicked sudden decline is either eminent or will follow in the early part of August, I conclude from his recent post. Look at the weekly chart of Silver, it is screaming to go down one more time - a crash spike down to $4.80. I suppose the only thing and its only a minor matter: Inventories are at all time lows ( under 85 million RJ ) . Big deliveries/acceptances are expected - hell the month of July is almost over they better hurry.

This is the most illogical set of circumstances and predictions I can imagine. How could it be. Falling silver stocks, low price for silver, and perdictions of more downside.

I see one way this could be: I bet there is one large multi-derivative trade causing this phenomium. Here's how it goes: Big buyers want to take delivery, shorts are squeezed, shorts ask for and get generous loan from leasing parties of silver but are required to buy a call from the party letting out the silver to insure the silver comes back. Hence the leasing out party can conduct the lease for the small sum of interest plus the call premium and have limited exposure to not getting the silver back in the event of an unexpected rally. And the shorts who take the leased silver provide the silver and hope their call expires worthless.

Now the acquireres of the silver form the shorts suddenly have new inventory which they hedge with puts - don't want the value of a deflating investment like silver going down on the balance sheet. Somebody has to sell them a put - how about the original leasing part. After providing this extra service here's his position: he has leased silver for a small sum, he has sold a call at a slightly higher than current price strike, and he has sold a put. He'll get his silver back if it goes up because the party that leased his silver has a call that will return it to him and the original leasing party. Our leasing out party also has a short position by virtue of selling the put to the party that took delivery and doesn't want a deflating commodity on his books. Should the price of silver go down - heck, our wheeler dealer will stop leasing or buy and the price will come back up.

In the gold market the CB's may play a similar game. Now I read somewhere on a URL pasted here some time back that the European C Members have an important valuation milestone at the end of the year through which it is very benefitcal to them to keep the dollar up. After that point it won't matter - hence, the CB's and their allies purposely keep the preasure on gold to keep the dollar up and will so continue till year's end if they can, at which time, South African gold sales or whatever will not matter. The price will rise to a new equilibirum. Probably $380/ The low lease rates in my opinion are indicative of how anxious the leasing out parites are to have somebody do their dirty work for them - selling physical into the market, depressing prices in dollars, maintaining the dollar strenght while it is needed. I think the CBs are smart enough to protect themselves and have done so through the sale of calls to the parties accepting the lease - this also raises their total return on a transaction whose purpose is to maintain the high valuation of their paper assets into the January 1st '99 transition to the Euro.

So there - its as simple as ABC.

Steve in TO__A
(Sat Jul 18 1998 19:26 - ID#209265)
Squirrel - The best retail price for Cadmium
I've been able to find is $119 for 20 grams ( = $168/oz. ) I don't know how much markup the refining companies take on a product like that, but I'm sure they mark it up at least 100%, so let's say a wholesale price might be $85/oz.

The price of cadmium, and the retail markup, has to be high though, because cadmium is very toxic. Mining it, refining it and transporting it are all much more expensive than for a non-toxic substance like silver.

Also, cadmium is marketed solely via commercial channels. There are no individuals out there with hoards of cadmium like there are with silver. After all, who wants a bunch of stuff that'll poison you sitting around the house, or in your safety deposit box. You couldn't bury it in your yard, even though it's more valuable than silver, because if the container ever leaked, you could poison the ground.

- Steve

BTW- this applies to nickel-cadmium batteries too. Get rid of 'em, don't let the kids toss them out in the back yard, or whatever. The sooner NiCad batteries go the way of the 8-track tape and the dinosaurs the better.

(Sat Jul 18 1998 19:30 - ID#287186)
Atmospheric - around the world electromagnetics
Regarding EMP warfare and other considerations

Regarding broadcast power

(Sat Jul 18 1998 19:34 - ID#287186)
Steve in To - that's a relief!
Cadmium's price makes Silver look better.
( though most of the price is Hazmat overhead )
Not likely to have any cadmium coins, eh!

(Sat Jul 18 1998 19:39 - ID#252391)
Squirrel - no cadium
Yes we have no cadium today....

Seems the relation of elements on the chemisty charts. Value seems more circumstantial related.

Ask the man the value of air in gold when the former is in short supply.
Go Cadium

(Sat Jul 18 1998 19:44 - ID#411112)
Prometheus....if you bookmarked my web you would have it :)

(Sat Jul 18 1998 19:46 - ID#411112)
Prometheus....Sorry why it always leaves out the last four letters beats me just do it the old way


(Sat Jul 18 1998 19:54 - ID#255284)
Cadmium, the coin of Camdessus, eh Tol1?
Cadmium aint no friend of Newmont and its insurers some poison. This is from my archive, sorry if it is long and unformatted:

A legal fight to make your head hurt
By Jim Carrier
Denver Post Business Writer
Sept. 22 - The greening of some of the worst mine dumps in Colorado - tailings remade into mountain meadows - pales
compared with the battle of greenbacks going on in
Courtroom 8 in Denver County Court.
For four years Newmont Mining and a couple dozen insurance companies have been fighting over who will pay
for some of the best success stories in mining history - the cleanup of the Idarado Mine in Telluride and California Gulch near Leadville.
At stake was $80 million dollars in damage and cleanup costs, an amount that was halved by a judge's ruling Friday. The case, simmering since 1993, pitted the $700 million Newmont Mining Co. against Aetna, INA, Allstate, Lloyd's of London and other huge insurers. Legal fees to date are estimated at well over $1 million.
To see the file - 65 volumes, 10,000 exhibits offered by 50
lawyers, all part of what the court clerk's office says is the most voluminous case in Denver County Court history - is to understand why County Judge Robert Fullerton wakes up at 4 a.m.
"I lie awake at night thinking about what I'm going to do," he said last week with a dozen motions spread across a long desk. "It's been a real chore." A nine-week jury trial is scheduled a week from today, but nine of the original 22 defendants settled out of court and more are expected before trial date.
Like a frustrated homeowner trying to collect on water damage, Newmont sued 22 insurers who refused to pay the company's claims.
The insurers covered Newmont's mines as far back as the 1950s. The silver and zinc mines became polluters of rivers, killing the Arkansas for many miles and poisoning fish in Red Mountain Creek and the San Miguel River in Telluride
and Ouray. The state sued for cleanup in 1983 under the federal Superfund law.
"We feel the insurance companies are responsible for our ... liability," said Blake Rhodes, assistant general counsel for Denver-based Newmont.
But in motions that fill a bookshelf, the insurance companies claim they're not responsible.
Their answers might sound familiar to someone who's tried
to collect insurance: The statute of limitations ran out; The fine print of the policy excludes pollution, etc. In one motion, Lloyd's of London says it didn't agree to pay for the release of hazardous waste.
They are not frivolous defenses.
Late Friday, in a key ruling on just one of the pretrial motions before him, Judge Fullerton eliminated half the
battle - the $40 million California Gulch case against the insurers.
Fullerton said that Newmont did not notify the insurers soon enough after the pollution was apparent. Pollution was known as long ago as 1948, he said, and the mine became a candidate for Superfund cleanup in 1982.
In February 1983, Newmont employees unplugged the Yak tunnel, sending billows of heavy metals into the Arkansas. But the company did not notify insurers of this "occurrence"
for 11 months, in early 1984, the judge ruled. He relieved the insurance companies of any liability.
All this arguing comes as Superfund cleanup proceeds near Leadville and Idarado literally blossoms as a national example of what can be done to reclaim century-old mining
In the California Gulch case - which Newmont may now have
to foot by itself - a complicated plan is being written to stop the heavy metal flood from the Yak and Leadville tunnels
into the Arkansas River, and to clean up the heaps of black slag that seem to fill every vacant lot in Leadville. When the site was made a Superfund, the Arkansas was
devoid of fish for five miles downstream from Leadville. For 60 miles beyond, no trout managed to survive more than
three years. The biggest problem was cadmium, which accumulated in fish organs.
By 1995 the river had been cleaned enough to allow fish to live more than three years.
In Telluride, huge mounds of tailings - one was called "toxic Twinkie" - that seeped heavy metals into rivers and groundwater and blew brown dust into town have become
grass and flower-covered meadows grazed by wildlife.
"At the present time there is no health risk from the piles," said Howard Roitman, director of hazardous materials and waste management for the state Health Department.
The reclamation is the work of Ed Redente, a Colorado State University professor who demonstrated that 18 inches of manure and hay tilled into the tailings surface and planted with grass stops water from leaching metals out.
Over 100 acres of land, in six piles above Telluride and four piles along Red Mountain Creek next to Highway 50 above Ouray, have become grasslands. The tests show that the manure and hay bind the metals and that water that falls onto the soil is used by the plants. The plants don't pick up the metals to any toxic level, he said. The planting replaced a clay cap first proposed by the state.
"Instead of being a large, brown, barren tailings material, what we have is rather lush mountain meadows of diverse communities of plants," said Redente. Among the species planted for high-altitude reclamation: mountain brome, slender wheat grass, yarrow and red clover.
Newmont is so proud of its work at Telluride that it scheduled a press tour on Sept. 11. When Fullerton learned
of the possible positive publicity just before a jury trial, he suggested it was inappropriate, and it was canceled.
"It will be a complicated case for a jury," he said. "Newmont will have to show that certain pollution occurred when the various insurance policies were in effect." Fullerton, whose grandfather mined gold in Colorado, said the case was the tip
of the iceberg of pollution litigation that he expected to hit in coming years.
In Telluride, meanwhile, the 15-year chore of monitoring the rivers has just begun. Only after a clean bill of health will
Newmont be released from additional liability.
The state's cost of enforcing the case has been paid by Newmont, along with $1 million for natural resource
damages. That money will be used to restore fish habitat. Return to Top
Return to Today's News
Return to Post Home

(Sat Jul 18 1998 20:01 - ID#217208)
@Robby Noel
Thank you!
I do have your excellent site bookmarked at home, and have sent it to friends via EMail. I am, however, not home and wanted to share this news with a health-care professional.

(Sat Jul 18 1998 20:18 - ID#287186)
aurator - I could send you some of California Gulch
How much would you like?
The water might have medicinal benefits.
Maybe I'll walk down and collect a few gallons.
Nah, maybe not.
It's too hot out - all the way to the upper 70s today.

I've been familiar with the California Gulch doin's since
the Colorado Attorney general started it all in 1985.
Locals view the EPA as worse than IRS, ATF & Klinton combined!

I live about a half mile from the Gulch and
have walked many miles up and down and side to side in it.

Personally, I think the mining companies should pay up but
- since they and all Americans benefited from mining here.
I've done atomic absorbtion analysis of agricultural soils
which received irrigation water from California Gulch.
Nasty - nasty! Don't need any fancy analytical apparatus
to see the effects in some areas - nothing grows there!

(Sat Jul 18 1998 20:31 - ID#263254)
Dr. Ed Yardeni
will be interviewed by Matt Lauer on the Today show Monday morning 7-7:30am

(Sat Jul 18 1998 20:45 - ID#257148)
Regret, but must decline your kind offer to ship your Cadmium pollution down under. However, I do suggest you speedily despatch all your gold to my safe keeping. I shall give a PromissAury Note by return.

(Sat Jul 18 1998 21:10 - ID#269207)
@ prometheus
am not sure if the reference you are refering to is here, but you may find it has information leading to what you want

(Sat Jul 18 1998 21:10 - ID#269207)
@ prometheus
am not sure if the reference you are refering to is here, but you may find it has information leading to what you want

(Sat Jul 18 1998 21:11 - ID#269207)
@sorry about double post
but first had error in url

(Sat Jul 18 1998 21:21 - ID#341234)
To: Bingo
Thanks for the info. about the Today Show.

To: The Hermit, JTF, tolerant1, robnoel__A, Steve - Perth__A, Rumplestilskin, Auric
Great Y2K discussion this morning. I thought it was good enough to e-mail to some friends. One more note, under Martial Law, Clinton would probably cancel the election and have Ken Starr executed. Starr better finish the investigation soon.

(Sat Jul 18 1998 21:28 - ID#257148)
Anyone interested in 16th Century gold mining/metallurgy?

Excellent reproductions of Ercker's Treatise on mineralogy and metallurgy
( 1598 )>

(Sat Jul 18 1998 21:29 - ID#434108)
Freedom is
the very law of life,
life itself
is rooted in freedom.
We are not
we are not
we are utter freedoms.

Now it is up to us
what to make of it.
You have to take
your life into
your own hands,
and you are
responsible for it.
No fate is responsible,
no destiny is responsible,
you have to
create yourself
by your own effort.
The total responsibility
is yours.
( BSR )


On the material plane of reality:
Gold is the uniting unit,
the equalizing, enduring essence,
and the innate integrity of freedom .....
reflected in humanity's work, risk, service.....
sacrifice, production & celebration.....
of one, to another,
upon this earth.

And freedom is......
the work, the beauty, the love...
and the soul
of all humanity


(Sat Jul 18 1998 21:32 - ID#257148)

(Sat Jul 18 1998 21:40 - ID#257148)
Invoking the rodents of disbelief....
scroll down to Lazarus Ercker, images from Treatise on mineralogy and metallurgy ( 1598 ) at bottom of page

(Sat Jul 18 1998 22:04 - ID#233209)
@RJ: So - who do YOU think is buying al the gold and why...
don't the CB's raise lease rates to force the price up if they really want to sell?

I apologize for my ingnorance. Maybe the whole thing is too complicated for me or maybe we're just getting hosed by those who nose..

(Sat Jul 18 1998 22:12 - ID#202123)
A thought for a summer's evenging

There is a new world and it has no room for PM of any type. Those of 'True Grit' are left behine. Right, does not always win over---wrong
But from my gut, it does anger me because good IS right and paper IS wrong. And so it seems that everything else is upside down also.

(Sat Jul 18 1998 22:23 - ID#434108)
Mining shares's reluctance to increase volume on 'down-days',
while -even-tho-begrudgingly-.... adding volume on 'up-days';
over many weeks, and several months, now....
is/are one of the most valuable pieces of evidence...
of the unfolding bull-market in precious this very time.

Commitment of Traders pattterns/values...
offered us the possibility of a new bear-chapter for gold/metals;
but - by 'hindsight', we will see this as the final "head-fake"...
the bull-market in gold and precious metals markets, is here/now.

The world's liquid/hot capital is nervous, and almost frightened.
Asia has already nose-dived.
So. Africa & Russia have demonstrated that this is not
a regional problem.
My 9/97/ post of "the collapsing tent"...
continues to be confirmed
by all world and local events.

More & more commoditiy markets - PHYSICALS - ( -as in REALITIES ) , are confirming bottoms, mapping out their early stages of new bull markets:
one by one,
the physical commodities, that are real, in a real world,
where humanity lives on the earth,
an earth of of air and land and fire and water.....
humanity is re-discovering it's basic essentials,
for survival, and life.

The basic shift away from paper-dollar denominated/defined assets,
to assets-more-real....
is upon us.

The U.S. dollar will decline/collapse,
as will its dollar-defined investment markets, and economies.
( Pride goeth before the fall. )

'Foreign' Currecnies led by the D-Mark,
will live in a new bull market of ....of....of...
of alternatives.......
to a dollar-nation that has sold out its soul
to the highest bidder
of ready comfort, convenience, and denial....

The buy of the century will be Yen-calls in the weeks just ahead.

Asia will rebuild, as the West collapses in upon itself.

If we are to survive, civilization must have food,
and we must have energy - fuel for our factories, furnaces, and autos

Civilization does not need 'paper' to survive, nor to thrive...
unless it is a receipt for something real.....

Civilization would best do away with paper-for-paper's-sake....
lest suicide
would be it's bequest

(Sat Jul 18 1998 22:42 - ID#287114)
What kinda whiskey u drinking? Gotta get me some.

(Sat Jul 18 1998 23:04 - ID#207145)
Long term rates headed up
Dollar peaking. Market peaking NOW. Gold is on the threshold, but must endure the markets fate perhaps. Must wait to see trend reversal.

(Sat Jul 18 1998 23:04 - ID#255190)
Though wrong, it is still used. We need to know the nature of it so that we may not be ambushed by it. Hang in there.

Out for the night.

(Sat Jul 18 1998 23:06 - ID#207145)
Watch the US dollar. Nothing else. It is poised for a reversal.

(Sat Jul 18 1998 23:09 - ID#207145)
Anyone thinking rates to drop
Must also think the market is poised to rise further. Higher than 9300.
My wacky tobacke ain't that good. It's the dollar stupid!!!!!

(Sat Jul 18 1998 23:12 - ID#207145)
Gold is on the pad
But it could stay there as long as Jan 1. So I don't think the time is here until I see the trend reversal in the US dollar.

(Sat Jul 18 1998 23:22 - ID#207145)
5 year chart says bottom in
For gold. Now who will believe it. Rates headed up. Donald Radajack at Georgia State agrees in Sunday business section. He says rates are headed up. I am before my time, and usually late. This time I am early.
If you are thinking lower rates, there is no way.

(Sat Jul 18 1998 23:23 - ID#240316)
Baron's Article - Hard Assets to go Up
[Barron's Online]
July 20, 1998

Features - Other

Loaded Guns

Trader's system says commodities are ready to run-up, for a change


An Interview With Michael Williams ~ The proprietor of Genesis Partners, a
commodities research boutique, and Genesis Trading Group, both of which
just hitched up with the Price Futures Group in Chicago, started out
trading stocks. Mike picked up his Series 7 securities license in 1982 at
the tender age of 22, quickly set up his own investment firm, managed
portfolios for wealthy individuals and institutions and did mega-deals. But
since 1990, even though he's kept his hand in equity management -- his
research has been riveted on commodities, which means this awesome bull
market in stocks has largely passed him by. But, insists Mike, the research
he and partner Mike Ferguson have done in the interim has positioned them
to catch the next big wave. Would you believe in commodities? Read on.

Barron's: Just what is Genesis Partners, Mike?
Williams: Genesis, for the last 10 years, primarily has been a research
effort. I have done all the backlogging of data and research necessary to
refine our method of comparing certain data streams, so that we can
understand -- and help traders and/or investors understand -- how
commodities trading can be used on a regular basis in their investment
portfolios. In a larger sense, our primary focus has been on figuring out
what makes commodities markets move in trends; how you can find that
information, and creating a way to project what is most likely to happen
next. While that has taken a great deal of time, we have been able to
catalogue a number of very clear-cut signals that go into analyzing the
underlying supply and demand, which -- in commodities -- is the primary
issue. In that sense, the commodities markets are a little different from
stocks and bonds, where we can always print more paper or have another
company go public: Only a certain number of soybeans are grown.

Q: So you're tracking crop reports, weather patterns and such?
A: Not at all. What Genesis has been able to do is create a process
through which we can now track, every day, what the major investors in the
commodities markets are doing -- so we can understand the supply and demand
situation in any commodity market -- and therefore understand where we want
to take our investment risks.

Q: Nice theory. But how does it work in practice?
A: I have been using it for quite a while for myself and for a few private
accounts -- using it more in what I call a campaign style, where you may
not be trading every day -- in fact, most of the time you are not. But
we've used it a few times to establish metals positions. We've done it a
few times in grains. We've done it a couple of times in the bond market.
Still, trading hasn't been our main focus -- research has been. Now we have
a broad enough base of data that we can sit down with just about any type
of investor, understand his or her goals and then show them how to
understand the data and use it advantageously.

Q: If it's such a great system, why are you still working for a living?
A: An excellent question. I believe it is -- and we are -- that good, but
only because we've spent these 10 years researching the data. The
commodities business is a different kind of game than stocks and bonds. You
have to do a lot of research. Now, I will say this, for the past six months
the principals here at the Price Group have watched all of our data. While
they didn't trade large accounts, they used it to trade with their own
money and the returns have been substantial -- which is kind of why we

Q: We have to ask. Your background is in equities. Why in the world have
you spent the last decade researching commodities -- in the midst of the
most marvelous bull market ever in stocks?
A: Another good question. I did well during my time and still invest in
stocks and bonds. All three asset classes can usually be used quite well
together in portfolios. But I've always been fascinated by the thing that
everyone hates. Being contrarian in perspective, it's dynamic to watch
these two asset classes work against each other. In the mid-'Eighties no
one thought we'd ever again see no inflation and interest rates of 5%. If
you had told someone that in 1984, they would have thought you were nuts.
Which is what they think today when you tell them something different than
that inflation is a non-event. But our research is telling us that we are
at a real inflection point.

Q: How so?
A: There's a true sense of change happening in the underlying mechanisms
that make these markets work. Where you might think inflation is dead
because of all the news stories saying that it is, those are basically just
reports of what has happened, not what is about to happen, or what's going
to happen next. In the 1980s, you thought inflation was never going away;
now you certainly don't think it is coming back. But 15 years from now,
people will not be checking their mutual funds. They will be checking how
much soybeans are selling for. This very interesting change is happening
right now -- quietly. Just like we didn't wake up 10 years ago to find
interest rates were low. It starts slowly when no one thinks about it.
Today, for example, commercials have never been more short bonds. Yet
everyone in the world will tell you interest rates are going down.

Q: Commercials? You're not talking about the sort on TV, we take it.
A: No. This gets to the heart of reason commodities are different than
stocks or bonds. Why it's a different kind of game. Someone uses every
single thing that is grown, or mined, or somehow brought out of the ground.
Which means that you can understand the value of that real asset --
determine what the demand for it is -- by watching what the major users are
doing with it. They are the commercials. What's more, there is no other
market, no other asset class, as dynamically related to mass psychology.
What our research has shown us is that mass psychology in the speculator
camp is almost always incorrect in commodities. By contrast, mass
psychology in the commercial camp is almost always correct. In other words,
when the small traders and the hedge funds are extremely bullish, that's
almost always when the commercials are very short. Because the commodities
business is a zero-sum game.

Q: By definition.
A: Right. But think of psychology and emotion as the driver, the gasoline
of the buying or selling decisions in a commodities market. Eventually,
when every speculator is bullish, there is no more gasoline left. There is
no one left to buy the next contract. And since the commercials have sold
all of the contracts the speculators have bought, the pressure is on. No
one can keep up against the commercials. There is not a group of
speculative traders that has enough money to fight a commercial position.
What is so fascinating about this is the psychology. While most people
naysay the role of emotion, we've developed a very dynamic set of
statistics that show that speculators make their choices about what they
buy and sell in commodities on emotion -- and that's why most of them lose
money. They make the decision to buy based on emotion. They get out of the
position based on emotion. And usually it's incorrect.

Q: What statistics?
A: The data streams we've put together in our charts, which show, for the
last 10 years, every time commercials and speculators/hedge funds have been
on opposite sides of the market. The top lines on the charts trace the
commodities prices, the bottom two lines track the commercials' -- the
heavy black line -- and the speculators' positions. When they get to
extremes, we know that market is about to change -- at least, that the odds
are very high that it's ready to change. Not overnight. We don't catch
these things on the day they happen, but we do catch the trend. We can see
what is going to happen next. And these trends typically last from three
months to a year, maybe two, depending on the market.

Q: Why do emotions hold such sway?
A: That is important for the trader to understand. The fact that
emotion drives the speculator is a complete result of the leverage in a
commodities contract. Let me put it in terms stock traders will understand.
Let's pretend for a second that I could buy Citicorp tomorrow, and let's
assume it's trading at $100 a share. Let's also say that my broker will
allow me to buy Citicorp for three bucks. Now that's leverage, 30-to-1
leverage. Well, let's pretend that tomorrow the price of Citicorp goes down
by $3. I've lost 100% of my money. What people don't understand -- they
hear commmodities and they think, "Oh, my gosh, you can lose all your
money." Well you can -- but as a result of leverage, not because the
commodities market is that different from a stock or a bond. If you could
employ the same leverage to buy stocks, the risk would be identical. It's
the leverage that is the danger. That's what people need to understand. Our
research shows that if we combine money-management techniques to tame the
leverage with our data on the commercials versus the speculators, we have a
reasonable way to manage capital in commodities markets.

Q: What about worrying about
freezes in Brazil, or droughts in
the Great Plains?
A: That's the fascinating thing
about it. We're entering the
freeze-risk period in Brazil right
now. But we don't have to worry
about what that means for the
supply/demand balance in coffee --
all we need to do is follow the
commercials. And right now the
commercials are holding a
multi-year long position in coffee. Which is telling you that the data they
follow imply a risk to growing conditions. Because they are buying coffee
at these lows in prices. So I don't need to have 50 weather guys and four
geologists and a whole staff of people following the growers of coffee or
the miners of copper. What I do is follow the data on the commercials. Say
to myself, okay, if the guys who actually use coffee every day are taking
their buying of this market to extremes, and if, at the same time, the
speculators are short, then I want to be on the opposite side of the market
from the speculators. I want to be long coffee, or I want to be looking for
low-risk entry points. Because the next likely trend in coffee is not down,
it is probably up. You won't hear about weather scares until the market
actually rallies. By then, it'll be too late to be buying coffee. You want
to be buying it when no one is talking about weather scares. Just like
grains. Just a few weeks ago, no one was talking about weather problems.
Yet only days after we got our latest very bullish data on commercials'
positions in grains, soybeans rallied over $4,000 a contract inside of 10
days. So you don't have to worry about hundreds of different pieces of
data, just what the commercials and speculators are doing.

Q: "Just." How do you track what commercials and speculators are doing?
A: In part, by reading Barron's statistical section. Every two weeks the
government requires all commercial users of commodities to report what
contracts they hold. They have to tell exactly what they've sold or bought,
the government accumulates the data -- and you print it.

Q: You assume that speculators hold everything that's left over?
A: Yes, but our speculator data stream is a proprietary combination of that
calculation, which we do by using the information in your pages, with data
on the large hedge-fund positions, which aren't normally reported in the
press, and some proprietary data on the mass psychology of the very small
trader. So our speculator data stream is basically a connect-the-dots
theory. But if you take a long period of time and watch the ebb and flow of
the commercial and speculator positions, you can see the extremes in
emotion set up very easily.

Q: Can you be a little more specific about how you gauge speculator
A: We deal with a whole series of outside contractors, who literally go
from one end of the spectrum to the other of ways to understand what the
small trader is up to. Some of the psychology-driven data sources actually
sample, every day, 200 or 300 traders across the country. They literally go
down a checklist:

"How do you feel about corn today?"

"Well, I feel bearish or bullish."

But you'll get some markets -- like coffee right now -- where they say,
"Don't even talk to me about coffee, I hate that market."

Well, when the speculators hate a market and the commercials are long, we
want to be looking for an entry point to buy. That's what we see as a
loaded gun for a change in trend. At any one point in time you may have
half a dozen of those unfolding. What this proves is that trading on
emotion is exactly the wrong thing to do. You must trade on a fundamental
understanding of the position of the market. If you cannot do that, you
might as well go to Vegas, where you'll have a little more fun losing your
money. Nonetheless, Mike and I have watched, for years now, as speculators
literally kept fighting a war they can't win.

Q: Why is that?
A: I think it has to do with the emotional makeup of a trader, when he's in
a position that isn't working. The one thing it's difficult for the
speculator to do is admit that he was incorrect. I mean, he becomes married
to a position in the commodities market much more strongly than he becomes
married to, say, IBM.

Q: Because of the mesmerizing effect of leverage?
A: Good point. What I've observed is that a trader will do a lot of work to
decide if soybeans are a good buy at $5.25 a bushel. Once he's decided
that's a good value, he's made a subconscious decision that soybeans are
the right thing to invest in. If he's not willing to admit to being wrong,
what does he do when they hit $5? Unfortunately, the small trader most of
the time decides beans are an even better value, and buys more. Quite
rapidly, the financial pain turns into emotional pain -- and becomes quite
awful, because of the leverage. And when they get emotional, I can't tell
you how many times they'll sell right at the bottom. The most difficult
thing for most traders to do is to cut their losses when they're small.
That's why a very common mistake people make is going into the commodities
market with the idea, way in the backs of their minds, that just like Uncle
Harry -- or better yet, Mrs. Clinton -- they'll turn $1,000 into $100,000
in a trade or two. They think it's almost like the lottery, yet the true
odds of it happening are like those of winning the lottery -- almost zero.
So they hold on for the wrong reasons, buy and sell for the wrong reasons.
The easiest way to deal with that difficulty is to decide -- before you
make your trade -- that you're willing to lose X-dollars to find out if
you're correct. Because the commodities game is a game of staying alive. If
you lose all your money in two trades, you didn't give yourself a good
chance of succeeding. And -- I can tell you -- even with the best research,
most of your trades will still get stopped out at a loss. It's just the
dynamic of the market. You have to be able to say, "I'm willing to take
small losses to stay alive for the possibility of the future big gain."

Q: Are you implying that even when you see speculator and commercial
positions at extremes, you can't tell when -- or at what level -- a price
trend will reverse?
A: Commodities prices can take volatile swings and the trends can take a
long time to unfold. The reason is that the commercials are taking
positions based on the supply and demand fundamentals of the commodity.
They don't particularly care about price. They're not there to make money
on cattle. They're there to buy it when it is valuable because they know
what their clients are demanding and what the available supplies are.
Whatever the price, they are going to pass it on to their customers. So
only the speculator is buying a commodity based on price. And there are
only four possible outcomes in a commodities trade: We can lose a great
deal of money. We can lose a little bit of money. We can make a little bit
of money. Or we can make a very large sum of money. So the first thing
we've structured our research to do is negate, as much as possible, the
possibility of losing a lot of money. If we can do that, the odds are very
high we'll be successful in the long run. We can take small losses because
the small losses will be offset by the small gains. Then we'll be around to
catch the trends, which we know exist. So we don't take a position until
these emotional extremes set up on the charts. And even when they do, still
use very short-term entry techniques to trade. For example, after our
charts showed the emotional extremes setting up in the soybean market
recently, we entered the market three different times -- and got stopped
out three different times for very small losses -- before we finally
entered at the right time and made those losses back, plus three times as
much, in very short order. So clearly, once you have the loaded gun, you
have to be willing to practice very dynamic risk management. Commercials
can be long for a long time before the market turns around -- and if the
market sinks another 10% in the interim, the leverage inherent in
commodities contracts could kill me. I'd rather get stopped out for a small
hit, clear my senses, look at the market again for another entry point.

Q: Then your indicators tell you nothing about timing?
A: Not nothing. The longest I've ever seen something go before it turned in
the direction of an extreme long or short position by commercials is
probably 90 days. An interesting thing about the commodities markets is
that they spend a good part of their time in range-bound trading, at a top
or a bottom. Then they'll rapidly move between the two. When a trend
starts, it moves fast, which is why you have to get positioned ahead of it.

Q: Where are your charts telling you the next major moves will
A: What our research is beginning to tell us is that all of the stories
about no inflation and continuously dropping interest rates are about to
prove fairy tales. We've reached the trough in psychology about inflation
now -- the opposite of that extreme back in the mid-'Eighties. Now the
theory is that productivity will lick inflation forever. But what I'm here
to tell you is that while I'm no wizard, and Mike and I don't know anything
more than anyone else could, if they studied it long enough, there is
something different taking place here.

Q: But virtually every commodities market is still trending down, much as
it has been for at least the last decade.
A: What's different is that on all these lows, almost across the board, the
commercial users are buying more than they have ever bought -- and they are
selling bonds. I'm no market guru, but I can tell you that's not a good
sign for the bull market in stocks. Our charts show commercials selling
more bonds than they have in 12 years -- at the same time the financial
press is telling us that rates are going to 5% or even 4 1/2 %.

Q: Not all of it. But so what?
A: I like that -- I can't tell you how many times the press chorus has
gotten loudest, just as the market's direction was about to change.
Meanwhile, what's fascinating here is that this short in bonds by
commercials isn't just a fairly large position, this is a huge position. As
you can see on the chart, it is about twice the size of their largest short
position in the last 10 years. That's a pretty strong statement about
interest rates.

Q: The bull market in bonds is kaput?
A: I can't say that. The chart could be pointing to a change in the
direction of rates that lasts only four or five months. This could be a
four-point correction in bonds -- on their way to 3%, who knows? But the
position of the commercials says that they don't see rates going to 4 1/2 %
right now. They may go back to 7% first. I'm not calling an interest rate

Q: It sure sounds like you are.
A: What I'm telling you is that they are putting their money on interest
rates going up, for the foreseeable future, until they change that
position. And I wouldn't bet against them and hope the commercials are

Q: So you are short bond futures?
A: Yes. In fact, we shorted them up at 123.26, to be exact, which was about
a point off the high. Not only are the commercials extremely bearishly
positioned, but speculators have only been this bullish on one other
occasion -- and they were wrong then. So I would not be going long bonds
today. There's just too much evidence that you either stand aside or go
short. This is not going to end well for bonds. And until bonds trade back
above their high, say clear 125, this signal won't be negated.

Q: And you see similar disparities in the commercials' and speculators'
positions in other commodities?
A: Yes. Take the deutschemark, which has just experienced three or four
little legs down. We were looking for that move a month ago. It happened
almost on cue. There's been hardly any notice of it, but it amounts to
several thousand dollars a contract. We knew the odds were good for a good
move when the commercials reached a 10-year extreme in being short the
deutschemark about six weeks ago, while the speculators just loved it. Now
they are not buying it any more. In fact, they are selling it probably at a
bottom. The even bigger story is what's going on in the yen.

Q: The intervention, you mean?
A: Well, it's interesting that while many market watchers say the yen went
up because [U.S. Treasury Secretary Robert] Rubin stepped in and protected
it, our research says that's putting the cart before the horse. Long before
Rubin stepped in, the commercials -- who know more about the dynamics of
the yen than we're ever going to know -- had placed an extreme bet that the
yen had gotten low enough. In five days, that move was worth over $6,000 a
contract. Especially in currencies, these moves can happen very fast. We
saw the same sort of thing in silver, well before Warren Buffett's position
was announced. I suspect that we've probably heard the last of the really
bad news about the yen. The more people talk about how bad it can get, the
more likely it is not to get worse -- that's what the commercials are
saying, not just in the yen, but in about every hard asset.

Q: They are?
A: Our gold chart is actually frightening to me because I like to watch the
stock market go up. But our data are telling us that the commercials are
very long gold and very short bonds. That tells me that they don't see
these deflationary trends lasting for the next 10 years. Money is flowing
into crevices that are saying interest rates might have gotten about as low
as they are going to get right now. They may get lower in the long term,
but not right now. And gold isn't going to $200 an ounce. In fact, it may
not go much lower than it is right now. We are long gold and profitable.

Q: What about the ag commodities?
A: The same sort of interesting picture is starting to form, whether you
look at sugar or coffee or soybeans or all the grains-commercial positions
at or near long extremes, while speculators can't stand the stuff. In
coffee, for instance, these current price lows are being bought by the
commerical users. That implies that the next trend in prices will be
bullish. The same with sugar, where the move has already started. We read
the commercials' position as at a long extreme when sugar was at seven
cents a pound. It's already almost nine cents, producing a gain of a couple
thousand dollars per contract.

Q: And oil?
A: It's funny, but the one thing that fixes low prices is low prices. A
natural dynamic unfolds when a price gets too low. If I'm an OPEC country
and the price of oil gets too low, I'm going to do one of two things. I'm
going to stop selling it, or I'm going to have a meeting and convince all
the other producers to stop selling it, too, because I can't make a profit
at current levels. So we are going to stop getting so many barrels out of
the ground. Then psychology changes, people start fearing a shortage and,
bang, prices go up. Right now, commercials are buying the dips in oil,
heating oil, natural gas and unleaded gas -- they're not at bullish
extremes like in some other hard assets, but the speculators absolutely
hate these markets. They've been beaten to death in crude for the last six
months as every $2 rally has been followed by a $2.50 drop. It's a classic
bottoming. These markets are setting up for trends to the upside, not the

Q: Are you long?
A: We're long crude oil. Went long about a dollar ago. But most speculators
are short -- and probably will be until we get back up to the $15-$16 area.
I'm making the bet because I can't find a place, in any market, on any
chart, where speculator sentiment has been above 90%-95% in one direction
where betting against their position hasn't been the right thing to do.

Q: Thanks, Mike.

URL for this Article:

Copyright  1998 Dow Jones & Company, Inc. All Rights Reserved.

(Sat Jul 18 1998 23:24 - ID#207145)
Where are all you lower rate guys ?
If you're snoozing you're losing.

(Sat Jul 18 1998 23:43 - ID#207145)
ol" Paint
What a dynomite posting. I am no gold bug. I am a speculator. I know the dollar is ready to turn down, rates up. But I felt like a voice in the wilderness because so many thoughtful people here keep talking lower rates. Looks like gold is the bet. A little at a time.

(Sat Jul 18 1998 23:48 - ID#434108)
surely, here - I cast pearls, but not before swine.....?
Date: Sat Jul 18 1998 22:23
goldfevr ( GOLD BULL IS HERE.....NOW. ) ID#434108:
Mining shares's reluctance to increase volume on 'down-days',
while -even-tho-begrudgingly-.... adding volume on 'up-days';
over many weeks, and several months, now....
is/are one of the most valuable pieces of evidence...
of the unfolding bull-market in precious this very time.

Commitment of Traders pattterns/values...
offered us the possibility of a new bear-chapter for gold/metals;
but - by 'hindsight', we will see this as the final "head-fake"...
the bull-market in gold and precious metals markets, is here/now.

The world's liquid/hot capital is nervous, and almost frightened.
Asia has already nose-dived.
So. Africa & Russia have demonstrated that this is not
a regional problem.
My 9/97/ post of "the collapsing tent"...
continues to be confirmed
by all world and local events.

More & more commoditiy markets - PHYSICALS - ( -as in REALITIES ) , are confirming
bottoms, mapping out their early stages of new bull markets:
one by one,
the physical commodities, that are real, in a real world,
where humanity lives on the earth,
an earth of of air and land and fire and water.....
humanity is re-discovering it's basic essentials,
for survival, and life.

The basic shift away from paper-dollar denominated/defined assets,
to assets-more-real....
is upon us.

The U.S. dollar will decline/collapse,
as will its dollar-defined investment markets, and economies.
( Pride goeth before the fall. )

'Foreign' Currecnies led by the D-Mark,
will live in a new bull market of ....of....of...
of alternatives.......
to a dollar-nation that has sold out its soul
to the highest bidder
of ready comfort, convenience, and denial....

The buy of the century will be Yen-calls in the weeks just ahead.

Asia will rebuild, as the West collapses in upon itself.

If we are to survive, civilization must have food,
and we must have energy - fuel for our factories, furnaces, and autos

Civilization does not need 'paper' to survive, nor to thrive...
unless it is a receipt for something real.....

Civilization would best do away with paper-for-paper's-sake....
lest suicide
would be it's bequest

Return to Kitco Homepage

(Sat Jul 18 1998 23:49 - ID#207145)
This may be too positive for Kitco
Might be a shock to their systems. Wolf has been cried here 999876443
times. People have knives sticking outta them in numerous and countless places.

(Sat Jul 18 1998 23:50 - ID#341234)
To: ol'paint
Great article. Sounds a lot like Steve Kaplan.

To: blooper, goldfevr
I hope you guys are right. I also think the tide is about to turn. The bear market would have already started if not for the stupid foreigners sending all their money into our over valued market.

Off to watch Saturday Night Live. Sure it's lame, but it has its moments.

(Sat Jul 18 1998 23:51 - ID#227238)
ol'paint: An excellent article. ....... They are never too long when they're useful. Thanks.

(Sat Jul 18 1998 23:53 - ID#207145)
ol' paint
Do you think I could play that 60% gold, 40% energy-drillers, in a mutual fund?