Thanks!

Its true. There is no life after Kitco.

and now I can't get the posts prior to 6 PM.

Thanks Bart for getting us back on line. Its kind of a sinking feeling watching gold tank without others to share the nausea with. I think the move this next week will be good for us goldies. I don't think the same will be said of the paper market at weekend.

chaos and flux????
hell yes......just imagine......'the system' not
coming back.....for days....maybe weeks..it will
happen, and soon.....the mold made..the warriors
poured....

who makes ready for war???? it comes in a most terrible
fashion....saudia arabia is fixing to burn from with-in..
the west will be knee-capped and jack-slapped by a long
term vision of the bearded ones....

...awaken peopleo.....the winds of
violent change blow from the east.....and
they slit the throats of those who
surrender....klinton has sold the west
into l'enfant status....those who wish
to spank the baby are waiting in line
with great focus..the baby WILL be spanked.......

'the time has come....a facts a fact......it belongs to them....
........they're fixing to take it back.....' the.wannabees........

cherokee!;...feeling.great.shame.....with.an.un-american.as.president...

Thanks for fixing it!!

Its been a nightmare not knowing what is going on now 36 hours without kitco
withdrawal simptoms gasp

Cpo _ uk

Derivatives....danger, warning Will Robonson.

I was lost but now I am found...WITHDRAWL....UUUGH!

Tom

Cherokee, we knew that WJC was not pro-america when he was a draft dodger. No one wanted to think such of someone who felt all that pain. I would like to see him feeling a bit more of his own pain. Hopefully before it is over.

Wow! Hate those computer problems!!!!!!

Now maybe we can get a Gold Rally going?

Hmmmmmmmmmmmm??????????

I thought I was going to have to see a therapist. I'm feeling much better now. Brief experience of Y2K without Kitco. I don't like it.
Thanks Bart.

back acting PM

MOSCOW, Aug 30 ( Reuters ) - Gennady Zyuganov, whose
Communist Party is the biggest faction in Russia's State Duma
lower house of parliament, said on Sunday his party would not
support Viktor Chernomyrdin's nomination as prime minister on
Monday.

Thanks for getting it going again, Bart.
-EJ

We watch and wait...the currency crisis...not if, but when?

Tom

NZSE 40 ^NZ40 6:22PM 1795.15 -52.58 -2.85%

For what's it's worth I have been watching the Comex/Xau weekly for years and as we continue to make new lows they are un-confirmed by the 14 period rsi. Although I keep daily data also it's the weekly data that I find interesting as these lows are not confirmed. In rsi work ( for those who don't know ) a situation like this when the rsi doesn't confirm is very positive. I trade Gold/silver stocks only.

It was good to see that gold was at least mentioned as a good place for your money in a global depression by Marc Faber this week. Any scrap thrown is welcome.

Thank goodness we're back. Feeling like a Kitco/crack addict. Barrons has some pretty negative stuff this week. Extremely bearish without exception! GO GOLD!!!

Kitco was down so long I was getting ready come up with a conspiracy
theory. I would have but I just couldn't decide who should be responsible. The IMF, NWO, PPT, or the men in black suits in
black helecopters.

I misplaced mine.

It's my impression that we still have more distress sellers than investment buyers of gold in this market. Still, it's hard to imagine the price going lower. But that's been said here at 300 and 290 and 280.
-EJ

I share your shame.

chop-asaki, cherokee, chop-asaki!!!!

http://quote.yahoo.com/m2?u

This will be a tough week for everyone, goldbugs too.

-EJ

I must go and fetch dinner for family however - I do agree that it could go lower, but the longer we get these no-confirmations in the rsi, the bigger the move when it finally comes. That's been my experience with this indicator over the years.

Very nice to have Kitco back - missed y'all down here in Florida.

The Kitco world has not ended.

Hmmmmmmmmm. Silence is NOT GOLDen.

The great wave is beginning to crash - make sure
it doesn't get you. The people who will get
margin calls in a collapsing market are the ones
on the losing side, unfortunately, and anything
which has been going down now is likely to go down
some more.

Although I'm not selling everything ( stocks, that
is ) , I agree with Allen that I probably should.

Summary and Conclusions

The year 2000 software problem is a very difficult technical
issue because software itself is a difficult
topic. Since as this is written we still have almost two years to
go before the year 2000 event, the
exact nature of the damages are still uncertain.

If year 2000 repairs are active and energetic, then it may be
possible to achieve or top 95% defect
removal efficiency levels and hence face only minimal year 2000
damages.

If year 2000 repairs are sluggish and partial, which is the
current situation for many organizations,
then it is unlikely that more than 80% to 85% of year 2000 date
problems will be found, thus leaving
15% to more than 20% of the date problems still latent at the end
of the century. In this case,
damages will be severe.

http://www.year2000.com/archive/proby2k.html

The most alarming aspect of this report is its prediction of a more than 50% chance that regional power will be out for more than one day.

-EJ

I hesitate to bring this system up, as it failed
so badly in the recent up leg. However, the index
is on their track for a crash.

http://members.home.net/inpath/gold.gif

"If" the DOW was to drop another 300 points by tomorrows close, what
would be the impact? Best calls for tomorrows close. Up? Down? How many points?

Personally, I think one more 300 point hit and Joe Sixpack is going to
see the light.

This is my "gut" feeling for the coming week.

1. DOW drops 600 points.
2. Massive riots erupt in Russia.
3. Yeltzin will be "gone" by this time next week. Most likely sucessor?
Alexander "Leadhead" Lebed.
4. Russian troops "crack down" on riots. 1000's killed.

too severe...gulp to ya...

its gone" is so true.

http://biz.yahoo.com/finance/980830/markets_bi_1.html

Market maven and analyst Clif Droke was one of the first to call the
BEAR MARKET.

Analyst Droke observes "The long-awaited bear market has finally arrived. While not making its presence known in singular fashion as we might have expected, it nonetheless has given us every indication that it has wandered into the U.S. equities market and has no intention of leaving anytime soon. It appears to be making itself right at home."

"foreign markets are experiencing the ravages of the bear right along side of us, ( though many countries are feeling its strength more than we are at the moment ) ."

"And the Nasdaq stock index of technology-weighted shares fell even more dramatically to 1635 by week's end, wiping out over 10 percent of its capitalization in only a one week period."

"At the very least, 7700-7800 seems like a reasonable near-term support target before the Dow's next correction."

See his LATEST report at the following URL- as usual it's necessary to delete the extra letters "en" in the word 'golden" before posting to the Internet:

http://www.golden-eagle.com/gold_digest_98/droke083198.html

Paul Samuelson said, "Genius is a rising stock market" and I believe that this is the week when the majority of
buy-on-the-dips and "I'm in it for the long haul" investors decide that their lack genius and bravery is reason to head for
the exits.

I got out of the stock market in April. I am in the process of liquidating all debts and getting into cash in anticipation of a
prolonged deflationary period. I am invested 10% in a fund called The Prudent Bear ( bearx ) that you can buy directly or
through your broker. This managed fund that short sells liquid large-cap stocks and the S&P 500 index has increased
20% since I bought it three weeks ago and I expect will continue to do well in the coming months. I am also 10% in
physical gold and 3% in silver. Currently gold continues to drop in price with other commodities because there are more
distress sellers than investment buyers. However, as of last week the price of gold is no longer completely in the hands of
CB sellers and mining companies forward selling through the futures markets, as has been the case for many years.
Gold and silver will rise when the bond markets begin to look like high-risk investments.

Gold has already risen in price in all currencies except the dollar. The dollar price of gold will rise when the dollar drops
in value: 1 ) US consumers lower spending in the face of a falling US equities markets, 2 ) lowering demand for Asia
imports, 3 ) causing Asian countries begin to sell US Treasuries to raise capital to prop up collapsing economies previously meagerly
sustained through massive exports, 4 ) precipitating a dollar debt crisis, 5 ) causing a drop in the dollar and a rise in the dollar
price of gold. I will buy gold mining stocks when they begin to rise with gold physical demand. Only then can
multiples be earned, otherwise gold mining stocks will fall with or even faster than other equities.

What's happening? The powerful US economy started a worldwide economic hurricane when it kept US government
bond prices higher than in any country over the past few years. High relative bond prices invited flight capital from Asia
and other distressed countries and also allowed the inflated US equities markets to grow unabated. The rising US equities
markets attracted flight capital from other countries to the US equities markets also, fueling the US equities markets
further. At the same time a strong dollar invited flight from other currencies to the dollar.

As the storm spins it sucks up capital from every equity, debt, and currency market on earth, driving the storm every
faster and stronger, collapsing currency values and commodities prices, flattening foreign economies, and sucking up ever
more flight capital. Finally, the storm implodes when the US equities markets collapse on falling earnings from export-
and commodities-dependent industries. With no marginal value on US debt for the purpose of maintaining the US
consumer market for exports, foreign nations that hold 43% of US debt will then begin to sell it. The US, unable to cover
the enormous simultaneous sales of treasuries, extends or possibly defaults on what has been long perceived as the most
safe investment on earth. Finally the world's reserve currency, the dollar, is hammered on currency markets.

A similar although very different process took three years in the 1920s. Then the Pound Sterling was the worlds' reserve
currency, a status it lost in the debacle. Also, the US was the world's creditor in the 1920s whereas it is the world's
debtor today, clearly not an advantage. The events above will happen in fast-forward in the current high-gain global
marketplace circuit, perhaps taking as little as three to six months from now to complete. The net effect is a worldwide
deflationary depression and currency chaos that will last until debt is liquidated and currencies are stabilized. Hopefully,
the recovery will be just as swift as the collapse. However, the recovery scenario is more complex due to political factors
that are hard to guess at. My best guess is that recovery will take two to ten years.

If you thought last week was interesting, you will find each coming day and week even more interesting.

http://news.bbc.co.uk/hi/english/business/the_economy/newsid_160000/160733.stm

-EJ

What happened, Bart? Did your server shut you down for excessive traffic? Were your servers trunk lines drowned by Hurricane Bonny? Did the CB's come and demand gold for internet service? Did the squirrels eat your phone wires? Strikes? Y2k test gone awry? Bears looking for honey in the neighborhood and eating computers by mistake? The list of possibilities is endless? ( 8-^ ) ) IMHO

All: The 583rd anniversary of the Battle of Agincourt is getting closer, 56 days by my count, not counting calendar revisions. Here's a reference so all you soon to be wealthy diehard goldbugs may look up any ancestors who might have been present. Then you'll have something else to tell your grandchildren other than "I lived through that Black Friday in '98." IMHO http://www.familychronicle.com/agincort.htm

KITCO.... Welcome back!

Question to anyone.... Is there any charting or analysis done that plots currencies relative to gold, that is to say, keep gold flat what ever its price, and move currencies relative to gold?

Thanks

http://biz.yahoo.com/finance/980830/canada_col_1.html

All: just to let you know that the August Issue of The Skeptical Investor was posted earlier today:-
http://www.chebucto.ns.ca/~an388/current.html
Max

Hedge Funds are in deep trouble and some of the pecularities in the market can be directly linked to their undisclosed losses. The Mutual Fund meltdown has just begun and it will only be a matter of days till the news hits that we have all been waiting for! GOLD LOAN DEFAULT!!!!!!

http://biz.yahoo.com/snp/980828/fcx_a_bbk_1.html

we need everything we can get! Yen up appreciably vis-a-vis the Dollar...highest value in over a month.

http://biz.yahoo.com/finance/980830/brazil_fin_1.html

If things happen the way you think they will, is there any wisdom in buying gold shares? And if there is ,how soon will it be before gold starts to move up?

MUST intervene today. I cannot imagine them waiting any longer.

If this wave unfolds like the 1st, then we are completing wave -1- of the 3rd wave or we are smack dab in the 3rd and it will be a week that will take your breath away ( and a lot of your money too! ) . The good news is that we got the capitulation in the PM Markets, ( and not a moment to soon ) I might add. You should have seen the article in my fishwrap ...I mean Newspaper Saturday that said "Golds demise as a refuge from political instability is partly the result of sales in recent years by central banks". I just love to see stuff like that down here! Ring the bell, it may be over sooner than we think!............By the way word is the Russian Pact if off!

I should have sold everything when the market had the dead cat bounce a few months ago. And that includes my Gold Stocks!

They have not been worth crap. I have been receiving meintenance/margin calls for sometime now. Have not sold any Gold stocks, I just deposit more cash into the money pit.

It is not fun, for sure.

HighRise

Judging from the improvement in performance, I'm going to guess that Bart did a bit of admin on the server.
-EJ

I had to stop playing on margin because my personality is one that is just willing to risk to much.

I'll say Dow up 147.26 Monday.

Well, on yahoo the past few days there has been a lot of interesting news. Russia rumored to be thinking of gold money, China having INFLATED commodity prices and such food for thought. Then there's always the 'Stralyans selling gold...IMHO

Russia bidding to buy but not sell gold: Could pgm's be far behind?
http://biz.yahoo.com/finance/980828/russia_gol_1.html

Gold Rubles?
http://biz.yahoo.com/apf/980827/russia_gol_1.html

Russia banks propose gold INSTEAD of dollars? How novel an idea! http://biz.yahoo.com/finance/980827/russia_gol_1.html


Possible settlement of Russian Power Struggle?
http://dailynews.yahoo.com/headlines/ts/story.html?s=v/nm/19980830/ts/russia_126.html

What could be more bullish than a government shutdown?
http://dailynews.yahoo.com/headlines/ts/story.html?s=v/nm/19980830/ts/spending_2.html

Chinese flood news +their fight against inflation?:
http://dailynews.yahoo.com/headlines/ts/story.html?s=v/nm/19980830/ts/china_6.html

'Stralyans Sell Gold. So what else is new?
http://biz.yahoo.com/finance/980827/more_austr_1.html

Gold stocks will rise fast but you'll still have plenty of time to get on to catch the ride. Reason is that they are still so far out of favor and it will take a few months of continuously sustained gold price increases to change investor sentiment. It won't kill me to buy gold stocks now, although I bet they will go down more. I bought gold at 280 - 290 and could have bought at a lower price by waiting, but compared to the expected rise, I'm not sweating it. But I will wait on the gold stocks until I see physical rise.

Gotta go get some dinner. But I'll be back.
-EJ

Test

You don't suppose that stuff about the BIS stepping in and buying gold at 280 was a typo do you? I bet he meant 208. O goody, not much further to go before help is in sight. Not more than another 60 points or so.

I lowered my market exposure from about 40% to 20% on Friday, and may sell a little more in the morning. I expect North American mining stocks to sell for 1/3 to 1/2 of their present values within 2 months, if we don't see a sharp rebound in gold. We are in uncharted territory in the XAU and most of its component stocks.

I don't know what to think of the South African mining companies, so I'll just hold them through the crash, if it comes. My remaining stock positions are partly hedged by way-out-of-the-money puts on the S&P.

There are gonna be some unbelievable deals on the other side of this spike down - keep some powder dry.

"To the enlightened man... whose consciousness embraces the universe, to
him the universe becomes his 'body',while his physical body becomes a manifestation of the Universal Mind, his inner vision an expression of eternal truth and mantric power." Lama Govinda
Therapist told me to go suck,
Wife told me to get fu-ked,
Kitco said, boy you are outta luck,
So it was back to back nights on
Stuff which ties my brain in knots.

And over what period?

Go Gold

Seeing the top was pretty easy. Now what ? Sentiment - there are a lot of scared folks out there now, will we see a rally soon, will they sell it ? More down-side this week ? Is Abby right ? Yeah, right. Chartist article in Barron's shooting for 4000 to 6000, they right ? Some bears shooting for 2000, they right ? Fear this week ? Greed ? Heading back to 9000 and some change, those guys right ? Volatility is the best - all the market action of the past number of years with all of it's up and down potential, compressed into a few days, weeks, and months. Who will win ? Who will lose ? These are the days of wonder. Heart is pounding in your chest for a reason, what's it tell us ?

Date: Mon Jul 20 1998 18:07
kapex ( JUST REMEMBER!..... ) ID#275194:
At the bottom, things will look the worst. You will think that you are dead wrong. The CRB is doing more to make
people think it will only just continue to go down and take gold and silver with it! The Stock Market is DONE!!!!!! Sell
Now. Most think that we are not yet at an extreme, which is precisely why we are. Also remember that when some
EVENT happens that they can point to as the reason for the debacle most will say, Yeah thats it! The signs are all there.
Good luck and happy Puts...

I do feel that we won't go to $200 an ounce Gold, but you need something to happen to shake out the tree. I bought some physical a week ago friday. Can I borrow some money from you guys so I can buy more ( Just kidding ) .

COMMUNISTS have rejected a Russian political truce ...and will vote against Chernomyrdin for Prime Minister...Nato forces have been put on high alert and are preparing for attack on Serbian forces in Kosovo per Gen. Clark/Sec of State Albright.... All Hell will break loose within the next 72 hours...ABC News Sam Donaldson stated that" we could be facing the Greatest Depression of this century!" Fellow news readers paniced at his statement and said that if the market collapses on Monday it would be his fault.

George Ure offers a target in price and time,
which has been on track so far.

http://www.urbansurvival.com/week.htm

My bank,Coke, Gillette, CP puts are back in the black.
They are alive!!!!!!!!!!

Go Gold

I know it's late!Crisis to-day in Asia.Without Kitco,I will miss the insight to weather this terrible storm. Singlion will now sings you a song:

There was a time when troubles seem so much for us to take, but we did...
We build a nation strong and free....
These are my friends....


We the citizens of Singapore,pledge ourselves as one united people regards of race, language or religion.....

WOW! not Y2K Thanks again!

http://www.psychohistory.com/02a_titanic.html

Kitco withdrawl is miserable. What a relief to have it back.

I have been a baaaad gold bug. I sold the rest of my gold mutual fund last week because I do not think the first stages of a global depression will be good for gold. For now, the money is in Prudent Bear BEARX. I am keeping the bullion, though, and plan to buy more ( maybe at $250? ) .

David Tice's market commentary on the Prudent Bear site was kind of hidden, so for those interested...

MARKET COMMENTARY
Posted by David Tice on Friday, 28 August 1998, at 6:10 p.m.

We are now in the midst of a global financial crisis that seems to gain momentum almost by the day. In Russia, an absolute financial collapse has ensued as the rouble loses most of its value, the banking system implodes and the government defaults on its debt. Russia must now deal with bank runs and inevitable social unrest. For foreign investors, estimates are now that up to $200 billion of losses have been suffered by international banks, hedge funds, and securities firms. Only time will tell who will be left with losses on margin loans, derivatives and other exposure. Shocked leveraged speculators and investors have been forced to dump securities globally. Fearing profound ramifications from Russia, for the week stocks in Poland dropped 18%, Hungary 28%, Czech Republic 13% and Austria 7%. Big declines were seen throughout Europe with losses of 4% in London, 6% in France, 5% in Germany, 11% in Spain, 7% in Italy, and 8% in Switzerland.

Throughout the world,stocks sank with the Japanese Nikkei 225 down 9% to a 12-year low. Investors who believe stocks always "outperform" and are thinking of "buying the dip" here in the US should remember that the Nikkei traded to almost 39,000 in 1989 and closed today below 14,000. Throughout Asia stocks plummeted with New Zealand down 8%, Malaysia 7%, Thailand 9% and Philippines 13%. And as Latin American currencies sink, stocks are also in trouble with declines of 8% suffered in Mexico, 10% in Argentina, 13% in Brazil, and 9% in Venezuela. Up north in Canada, stocks were hit for 8% as the Canadian dollar continues to fall.

One of the most interesting, and potentially ominous, developments this week was the weakness in the dollar. Despite the Russian collapse, the dollar was hammered against the European currencies. Today's decline against the German mark was the biggest loss in almost three years. And even as the Japanese stock market and banking system come under intense stress, the yen now shows strength against the dollar. It looks like we are now seeing signs of a unwind of what could be huge speculative bets on the dollar and we believe that a surprisingly weak dollar could be problematic for US markets and, importantly, could influence the Fed to not lower rates as quickly as the bulls assume. Basically, global currency markets are near chaos and we expect this to continue to unsettle investors.

Investors in the US were certainly unsettled this week as the Dow and S&P 500 declined more than 5%. Fearing an inevitable deep US recession, cyclical stocks were again hammered, losing 7% for the week. Technology stocks also came under heavy pressure, especially towards the end of the week with the NASDAQ 100 down 8%, the Morgan Stanley High Tech index 10% and the semiconductor stocks were crushed for 12%. Even the favored internet stocks were dumped as huge losses in Amazon.com, Yahoo, and America Online led the internet index to a loss of 11%. It really looks like this most amazing internet speculative bubble has been pierced.

It also looks like the entire US bubble is now quickly losing air as the financial stocks, truly the engine for what has been unprecedented credit excesses, are in a near freefall. With leader Merrill Lynch dropping 10 points for the week, the AMEX Securities Broker index was hammered for 16%. And with major losses for the international money center banks Citicorp, JP Morgan, BankersTrust, Chase Manhattan, and Bank America, the S&P Bank index lost 9%. All indications point toward much more selling as investors are now forced to recognize that years of credit and speculative excess are now over and a terrible hangover is beginning to set in. A true panic and crash are now a distinct possibility.

The Prudent Bear Fund gained 13% for the week, vs. a 8.8% decline in the NASDAQ and a 5% loss in the S&P 500. Shareholders can congratulate themselves for being on the right side of the market for a change, being rational and prudent, and finally being rewarded with profits. There will be a lot more of this before we're done. This bear market is only beginning. I am not looking forward to the pain and suffering that will be experienced by millions of families as this historic mania reaches its logical conclusion. It's too bad that our policy-makers let this "bubble" get so far out of control. Tell those you care about that it's not too late to exit this pyramid scheme before they are too badly hurt.

So you don't believe Silverbear's MIB theory? And on another tack, you're not buying stocks right now? Oh, well, to each his own. I've been sitting, figuring how I can get together another ante for another round of SA share purchases and I hope in six months when I open Barrons to be reading conjecture about how far and how high the gold bull will go. Recalling of course the basic volatile, random, chaotic nature of POG... ( 8-^ ) ) IMHO

Lucky for me my job is counter cyclical, depending only on a tax-and-spend government for prosperity...IMHO

Read his comments published on Colin Seymour's
page....he say this is the BIG ONE!

http://www.users.dircon.co.uk/~netking/finan.htm

http://www.elliottwave.com/

After the market has crashed...say another 2,000 points...There will be a host of excuses and blame to go around, i.e. Asian contagion, Russian debacle, Clinton's demise, upheaval in government, worldwide terrorism, etc. You get the picture. What I'm afraid is this may be the last best chance in our lifetimes becuse I suspect many of the rules will change after the market crashes.

Thank You! Withdraw for mainstream lurkers can be pretty testy also. Found a quick fix at SI, but didn't replace the real thing. A warm hello to all, it's a fine evening.

Sorry for the mistake on your handle.

RussiaSlavia could precipitate WWIII...

Myth: People lose money when the stock market crashes

Fact: Individual persons lose money when the stock market crashes, normally those who have "faith" in the market vs. reason. "People" don't lose a dime when the market crashes - it's a zero sum game. All the money that has ever went into the market will come right back out of it in a Bear, it just depends on who cashes in their chips the soonest. The illusion of five people playing the stock market is that their dollar has turned into two dollars, when the fact is that all five people playing are looking at the same five dollars and thinking two of the dollars have their names on them. Cash your dollar out, and take someone elses with you. Take the money and run, avoid the rush. At these valuations, it's just a legal pyramid scheme.

Or we could see DOW 10000, who can really say.

The balance of power in Russia is in doubt, as a political deal to share authority appears to have fallen apart.

ABCNEWS.com

Aug. 30 Just hours after Boris Yeltsins government announced a crucial pact with Communists that ended efforts to oust him, the Communist Party chief about-faced and vowed to oppose even the compromise appointment of Viktor Chernomyrdin as prime minister.
 News Analysis: Back to Communism? The Communist turnabout came just after the government and the opposition said they had reached a deal following days of tough behind-the-scenes bargaining to call a political truce to win quick confirmation of Yeltsins choice for prime minister.
 Communist leader Gennady Zyuganov said the proposed pact was rejected by a meeting of his party leadership because there was no firm guarantee Yeltsin would abide by its provisions. He did not rule out further talks.
 Tomorrow... the whole faction will vote against Chernomyrdin, Gennady Zyuganov told NTV commercial televisions Itogi current affairs program.
 Mr Chernomyrdin is an accomplice with ( President Boris ) Yeltsin in the destruction of the past five years ( of Russias economy ) , he said.
 The news comes as President Clinton is heading into this weeks Moscow summit with Boris Yeltsin.
 The balance of power in Russia is very much in doubt tonight, reports ABCNEWS Ann Compton from Moscow. A political deal to share authority appears to have fallen apart.
 Under that deal, Compton says, Boris Yeltsin would remain as President thru December 1999, but weakened, without the power to fire the prime min or the right to disolve the parliament. In exchange, Viktor Chernomyrdin would get his job back as prime minister. And the communist majority in parliament would get un-precedented authority to approve cabinet ministers, clamp down on the media, and propose economic reforms.
 But tonight those same communist leaders rejected the deal,Compton says.

There IS a multiplier...remember?

S Dollar Index ( FINEX )
Sep
101.71
102.10
99.92
99.94s
-1.93
8/28/98
12:08



Gold ( CMX )
Dec
278.50
278.70
277.90
277.90

8/30/98
16:36

I thought the reason Gold was in the tank was because the US $ was so high?

HighRise

But is proper in a bear market. Fear is about to change into abject terror.

Just watched Brandell Chamblee win the Greater Vancouver Open ( on TV ) which is now a PGA tournament. When the sponsor presented the cheque he said something that kind of brought home to me the sorry state of our Cdn economy. To paraphrase, he said "Brandel, I'd like to present you with this cheque for $360,000 U.S., You would'nt even want to know how much that is in Cdn $".

There is agood column in Sat. Financial Post by Dianne Francis about how three lawyer PMs: Trudeau, Mulroney & Chretien have totally ruined our economy by pandering to the Quebec zealots. They wasted hundreds of billions over 30 yrs & to no avail whatsoever.

Unfortunately, I'm afraid that the old dictum applies "the people get the gov't that they deserve". Our electorate is pretty well brain dead, almost as bad as the U.S, electorate. One of these days they will wake up to the nightmare that they acquiesced to. Then again, we don't really have a democracy in this Country. Every election we are forced to choose between lesser evils who lie & decieve & do everything & even worse that they accuse their opponents of doing.

We have a senate that is a farce. The PMs use it to reward old friends & political hacks. Alberta is demanding that elections be held to replace a retiring senator. The PM will ignore them. I noticed that one of the candidates is described as running for the "extraterrestrial recognition party". I'd vote for him. We have no hope of electing intelligent earthlings. Extraterrestrials are our only hope.

The commies will charge the failed reformers with treason, default on the debt and fall into Anarchy

The mailing of mutual funds statements THIS WEEK.

Thanks, I found the sites. Great read.

Too many competing factions will tear Russia apart. Believe me...This is the End of Russia.

This URL may serve your purpose.......

http://pacific.commerce.ubc.ca/xr/plot.html

FOX-MAN, Do you have Fridays Comex silver warehouse statistics aviliable? Would appreciate posting if you do, and/or coments on any changes if any.
I look forward to your daily listing and find them extreamly informative
Thank you.

WOW!!! is right! I had no idea that I had become a Kitcoholic. Thanks to Bart and his intrepid crew for working this weekend to get us up and running before the 'morrow.
Thanks again to Sharefin for his site:
http://www.cairns.net.au/~sharefin/Markets/Master.htm
and for posting his cryptic note about the alternate SI "Kitcoholic's" site to ease the withdrawal symptoms:
http://www3.techstocks.com/~wsapi/investor/Subject-22656
and to Robert Dirks for starting the thread.
In order to post on Silicon Investor you must register ( fee after initial free trial ) . If the Kitco site goes down again suggest we remember to try the alternate site.
To paraphrase Mr. G. Cheesehead: Last week was the week of "BLOODY BUTTS AND GUTS"!!! What will this week bring???
My comment was and is "Them yuppy fun mangers gots someheavy duty bandages on now iffen they're still awalkin 'roun in one piece".
Good Luck to all.

Silverbaron...wholeheartedly agree with your 19:56 post...When Joe Sixpack looks at his mutual fund statement and finds that he's down 15% to 20%...it will be an avalanche!

The Americans never cease to amaze me........

Blame the "Commies"........

I do believe that the Russian "failure" is indeed a Capitalist plot.......

When the music stops......give us your GOLD.......

Aye,

Haggis

COMEX inventories were unchanged on Friday.

thoughts please...

Just traded at 277.60 I'M down to only gold stocks,least i can get some on margin...had to turn in powder keg for beer keg at these prices...

points. 1677 points below Dow 8750= 7073 area. That is not a prediction but a fibonacci estimate.
Here is a scenario that may unfold this week. AG lowers interest rates and the dollar declines. With the dollar weakening, foreign money then has doubts as to where to turn next, and Gold begins to rise from the bottom.

It appears that fundamentals are not driving the market, if they ever have, and I expect that few of the silver bulls ( like me, for example ) will buy into a waterfall decline. Instead they will wait and see where the bottom is, before buying.

On top of that, we may see the forced liquidation of speculator positions, which were heavy on the long side of the market at last report.

Having said all this, I expect that silver prices will fall, regardless of the fundamentals or the COMEX stocks. Which will mean, of course, that they will rise. ( ;^ ) )

Myth: People lose money when the stock market crashes

Fact: They lost their money when they gave it away to hold stocks instead. All they lose is the illusion of what they thought they could get back when they traded it back in.

No gold stocks yet. Soon, tho. Ah, but which ones? Lowest technical cost of production? Lowest labor cost of production? Lowest political risk? Hmmmm. Your favorites?
-EJ

Prices will fall at least till we get past the margin calls.

http://www3.techstocks.com/~wsapi/investor/reply-5623186

Buy the ones in the steepest uptrend. ( ;^ ) )

Sorry, guys - but this whole thing with gold declining in the face of a financial armageddon is just something I can't deal with.

Japan Nikkei 225 ^N225 8:22PM 13944.61 +28.98 +0.21%

during the blackout. Didn't anyone post the link yet? Anyway, if Kitco goes down at some other time, bookmark this link as a temporary substitute. It's over on Silicon Investor and the thread is called "KITCO GOLD-DISCUSSION"

http://talk.techstocks.com/~wsapi/investor/Subject-22656

Is that the first wave down? What would be a final bottom for the DJIA?

letting you know what I think!

Then by 8:25 it reverses its move and is trading down 40!!! This could be a very painful night in Asia.

Bought Dec Gold Fri at 277 and Dec Silver at 4.75 with stops just under Friday's lows. I maybe a day or two early we'll see. My last silver trade long at 5.03 stopped out at 5.06.

.

Gold lease rates for one month gold hit an all time low of 0.40%
this past week with one year gold leases also new lowing at 1.38%
THERE HAVE NEVER BEEN LEASE RATES THIS LOW BEFORE! These extremely
low lease rates explain the liquidity behind the short attacks of
Thursday and Friday last week.

The source of this new cheap gold is ( you guessed it ) Russia.
Apparently, Russia has used a huge chunk of her gold reserves
as collateral for new loans from the Swiss. Although many CBs will
not lease gold at under 1%, Russia is so desperate for any hard
currency that she is willing to loan gold at only .4% on a one
month basis. This means the gold carry now has a forward rate of
over 5%!, and shorts also get to pocket the profits from the
short trade.

I repeat, there will be no gold bull until lease rates turn around
and head north, not south. I have never even heard of lease rates
this low! The ultra low 1.38% lease rate for one year gold indicates
that producer hedging is at an all time low too. At least the gold
mines themselves believe we are bottoming!

Thanks again Bart for turning the juice back on. I am an info junkie
and Kitco is the best source around.

People, keep your powder dry. Lease rates are saying that the bear
in gold is still on.

Spoke to my brother tonight. He too is distressed about falling gold prices in a time of political instability and economic turmoil. From the 1970s point of view, he's correct. But market sentiment is heavy against gold. It's like a sailboat. Right now the boat is turning into the wind. The sail is luffing. As the boat turns, the wind will catch the sail. Off we go.
-EJ

If not this week , then soon. Could put the Dow back over 9000 & POG over 295 very quickly. I don't think that AG wants to preside over a global financial meltdown. We'll see.

A few differences between the next depression and the last one:

1. In 1929 the U.S. Government was not in debt. Today, 1/2
of government revenues go towards interest on the government debt.

2. During the last Depression, the fact that the government was not in
debt was what gave it the resources to create the massive
hoover dam, golden gate bridge, style public works projects.

These projects gave millons of unemployed something to do other than overthrowing the Government.

In the next Depression, the Government will not have the resources
to do anything. All it would take is for Government revenues ( taxes )
to be cut by 1/2 due to widespread unemployement and the
Government would have to shut down every Government function
( including the military ) . How do you think the U.S. Population will
react to having to pay the same taxes and get nothing in return
except for funding the few employees at the office of "debt repayment"?

Needless to say, the Government will not just shut down like this.
It will just print money. The massive resulting hyperinflation will
wipe out the life savings of everyone in the U.S. or at least those
who hadn't already lost everything in the stock market.

3. The sense of patriotism that got the country thru the last Great
Depression no longer exists. Somehow I just don't think
the "fireside chats" of Bill Clinton will do much to calm
an angry nation. In the next Depression Washington
DC will be burned to the ground.

4. As if things won't be bad enough, toss Y2K, China, and
Russia into the picture and you are looking at a "Mad Max" style
hell on earth.

I don't know much about it except from the perspective of some regular guy who has invested money like everyone else, but, it seems to me that Gold will rise when - 1 ) the bond market looks risky and 2 ) the US dollar looks like it's at a top. Bonds don't look risky just yet, and the dollar seems to be holding it's own.

The reason I say that is just from a personal investment point of view, risk management - if I can't put my money in the market, and I can't put my money into bonds, and there isn't a currency out there that looks safe in the face of a falling dollar, then where else can I put my money and have it retain it's value ? Precious metals and real estate is it, and real estate doesn't have liquidity, something you want in times of turmoil. I think Gold is going to be the perfect investment when it appears that the dollar is ready to take a dump.

If you've got a dollar and you can't put it in bonds, or stocks, or foreign currency, where the hell else are you going to put it but PM ? Just my 0.02$US ( which I'll turn into gold when the time is right ) .

It's an interesting idea the Russians have. They need to restore confidence in the currency, so they think maybe mint some gold rubles. Assuming everyone is willing to make change and trade goods for a paper ruble to the same extent as a gold ruble this might work. Unfortuneatley 1 ) they don't have the reserves and 2 ) Gresham's law.

FYI: was looking thru some old Commodity perspective charts.in may 1979
gold left a gap from 260-262. that sure is a long way to look back but
it's there

Can someone please call 911.
I was driving home and ran over a dead bull in the road.

Someoe call 911, there are bears running amuck on the S&P freeway.

This is the way of gold, for this brief period of time:a real-time example

( 1 ) Sat, Apr 26, 1997
POG/USD=342.1004; POG/DEM=590.8920; USD/Dem=0.5790; DEM/USD=1.7272; PPP/POG=342.1265

( 3 ) Tues, Apr 29, 1997
POG/USD=339.8995; POG/Dem=587.2480; USD/Dem=0.5790; DEM/USD=1.7272
PPP/POG=339.8995

So what? Please pay CAREFUL attention to the price of gold in DEM on those two days:
It moved from 590.8920 on Saturday, 4/26/97 to 587.2480 on Tues, 4/29/97

BUT THE DEM QUOTES FOR THOSE TWO DAYS ARE EXACTLY THE SAME!
Usd/dem=0.5790; dem/usd=1.7272
What had been managed? By Tuesday the PPP/POG had been brought back in sync with the POG/USD.
The round-eyed magicians hands are faster than our eyes!

There many clusters of this sort of "happening". They do happen in clusters, over a period of days, and all the currencies I'm tracking are effected ( XEU, USD, DEM, JPY, XAU ) . Nor is it quite as simple as this example leads one to believe. But XAU is the spinal cord. {:- )

Do not make many projections but my gut tells me that the powers to be are going to blindside gold this week and we will close in the 260-265 range! Market is very short of buyers and the lease rates make shorting our beloved currency far too easy! Brace your attitudes for another blow that may even push a few goldbugs over the edge!

Taiwan bars deals linked to Soros funds - report http://biz.yahoo.com/finance/980830/taiwan_sor_1.html
Also hints of Hong Kong exchange controls from S.I.
Thanks for putting us back on line bart.

Thanks for all your efforts and for hosting this great site. We know you guys have been up to your elbows in aligators ( even in Canada ) . Thanks again.

Thought maybe Bart had packed up for left for the NWT
as I was getting Nunavat....

Still think Bob woulda been a good name for the rest
of it.

Man, was I feeling it. I certainly have missed all your presence and contributions here.

Thanks for your last response.Another question if you don't mind. Do you think the gold stocks will move up in a reasonable manner or are you thinking we are going to go into a hugh, fast inflation cycle?

What is PPP and XAU? I assume that this is not the same as the Phil. Gold/Silver index.

Who wins when a currency collapses? The debtors or the creditors? In 1929 the US lost when a few months later the pound sterling went down.

In europe, in the big debtor countries, the depression was relatively mild. It was in the US which had been the big creditor that what would otherwise have been a recession turned into the great depression.

Listened to Wolanchuck's weekend update. He's still a bull, but he has a correction low of 7900 and if we go into crash mode he has a target of 5300. 5300 is approx. 650 on the SnP and would bring the Dow back to the 4th wave of the advance from 1987.

bbml

Socialism and currency controls..The people will welcome it.. It is Wall St and The greedy corporate Cheiftains that have much to fear. This Depression will be rightfully blamed on excessive Capitalism. And the right wing conservative economic era comes to its appropriate death. I hate to say it but it is possible Castro will become a kind of hero to some in America for his independent course during this period. If any of you think statism is going to take the blame for this you are smoking something and, unlike BC, are inhaling.

The US took so much currency out of the other countries that their economies went down. Japan bought billions od dollars worth of treasuries. That is billions of dollars worth of wealth that did not go into keeping the Japanese economy going. The similar situation occurred in the rest of the world too.

As the world economies spiraled down the various producers tried to stay alive by producing their way out of trouble. This led to lower prices.

Now the dollar is reaching an all time high. The gret "debtor" nation can now use the world's flight money to buy the world's treasures at firesale prices.

Eventually we'll give them all the paper they want back, but where doe you think commodity prices will be realtive to the paper?

Oh, I'm sure we'll have grand Keysian reasons for how it all came about,
but we'll have all the goods and they'll have all the paper.

On Thursday 08-27-98 I purchased 12000 oz of silver at 4.86. The next day it went down 22 cents ( scary!!! ) I will have a margin call at 4.51 I think, should I expect to shell more money this week or will I be alright at that price. Any comment will help I'am to the silver investment. Thanks

Let's view this hiatus as practice for Y2Kaos when communications die.
Conspiracy theory #1063 ( Centigrade )
Meltdown of the Gold Discussion Group caused by Klinton's Krowd.
They set up a bunch of computers to do repeated downloads of a full day of posts. Nothing so overt as shutting this group down - but effective.
Yes?

-

there may be some to make a wiggle against the buck, but when the big chesse hits the skids, whats left?
They sure don't want their US paper investments to vaporize, but as those investments approach the rotating blade, the choices will be limited.
Sure hope I'm right about this, as recent events hint otherwise.

Hedge your gold losses by charging us addicts for use of your site.I'm too cheap to pay ... so just plain thanks... for what its worth...

Let's say you buy a 10 year bond at 5%. You paid out $10,000. Then the interest rate jumps 86 basis points on you in one day. What could you sell that bond for on the open market?

Well, let's look at yeild. The 5% bond would yeild $500 per year. The 5.86% yeild would give $586 per year. In order for someone to want to buy your less attractive bond you will have to give up enough of the capital ( $10,000 ) in order to make that 5% bond actually yeild 5.86%. How much capital do you lose? Try a loss of $1468, or 14.68% on your capital invested.

The buyer would only give you $8532 for the $10,000 bond. This would mean he is still getting $500 in yeild but doesn't have as much tied up in the investment so the real yeild for him/her is 5.86% on the money paid.

This is why a 86 basis point jump in interest rates can spell disaster for a bond holder. When bond rates jump in Russian bonds, those who hold bonds take a very real hit and can lose 20, 30 or even 75% of their money in a very short period of time. Bond traders do not sit idle. They are constantly buying and selling for just this reason.

And you thought bonds were dull. Anything but dull! And these games are played on margin all the time.

The chaotic movement of bond yeilds can literally create a financial explosion like a nuclear bomb: a chain reaction of margin calls and stunning losses which can bancrupt a trading organization in minutes. And you thought internet stocks were jumpy!

Only one area is more vulnerable to losses then bonds: derivatives, the supposed insurance of international commerce.

We are about to witness the fiery destruction of decades of risk management. The system will be overwhelmed by the need to cover. The system will literally meltdown like Chernobyl; a run-away implosion/explosion.

The fun has only started.

It's true. I'd rather default than be defaulted on. But the relative strength of the dollar depends on the belief that the US can good on it's debt. If the US defaults on foreign debt, then the borrowers are in deep doo doo. After all, we have their money. But, what happens to our assets priced in dollars?
-EJ

I do not think it is likely that the first phases of a global depression will be good for the price of gold. From the supply side, cheaper labor due to currency collapse makes mining cheaper. From the demand side, people will stop buying jewelry in a depression. I think it is something like 90% of all new gold that goes into making jewelry. When price of gold goes low enough to put 95% of all mining companies out of business, then it will be time for a big rally.

This are just some thoughs that I want to share for constructive feedbacks, that I would appreciate
OUTLOOK FOR A CYCLICAL DEPRESSION CRISIS

1.- The MONETARY MASS is never DESTROYED Normally. CONTINUALLY IT IS RECYCLED.

2.- WITH THE PASSING TIME THE MONETARY MASS INCREASES DIRECTLY IN PROPORTION WITH THE
TIME, OR FASTER AT TIMES.

3.- The MONETARY MASS THAT REPRESENTS PAST GOODS AND PRESENT AND GOVERNMENTS WASTES,
GET ACCUMULATED IN CENTERS OF RICHES ACCUMULATION LIKE

BANKS,
GOVERNMENTS WITH POSITIVE BALANCES OF PAYMENTS,
COMPANIES OR PRIVATE INDIVIDUALS

4.- THE HOARDING OF MONETARY MASS , PRODUCES AN EXCESS IN THE
HOARDING CENTERS WITH THE TIME, PRODUCING NEED TO INDUCE LOANS, THAT WITH THE PASSING
TIME AND THE INCREASE OF THE MONETARY MASS, PRODUCES AN INCREMENT OF THE RISKS TAKEN AT
GIVING LOANS, THIS IS, EASY LOANS OR JUNK BOND LOANS.

5.- THE EASY LOANS, INDUCE IRRESPONSIBILITY ON THE PART OF THE BENEFICIARY OF LOANS.

6.-THIS RECYCLING OF THE MONEY IN DE FORM LOANS PRODUCE BESIDES AN APPARENT PROSPERITY.

7.- THE LOANS, SHOULD PRODUCE AN INCREASE OF THE MASS OF WEALTH CONCENTRATED BASED ON
LOANS BESIDES INCREASING THE MONETARY MASS, AND

8.- The INCREASE IN THE CONCENTRATION DE THE LIQUID MASS PRODUCES A
ACUTE INCREASES IN THE LOANS AND THIS IS A VICIOUS CIRCLE.

9.- THE INCREASE OF THE INTERESTS FROM THE GOVERNMENTS CENTRAL BANKS IN ORDER TO
CONTAIN THE INFLATION PRODUCED BY INCREASES IN THE MONETARY MASS MANY TIMES BY
IRRESPONSIBLE GOVERNMENTS, PRODUCES A WITHHOLDINGS OF THE LIQUIDITY, THAT DOES NOT
EXPAND INTO GOODS PURCHASING AND IN PRODUCING WIDESPREAD EVEN INFLATION, BUT RATHER
STAYS RETAINED BY THESE SECURITY DIKES.

10.- THESE DIKES MAKE WORSEN THE NECESSITY TO LEND THE MONEY AND OF COLLECTING TAXES
FROM THE DEBTORS, WHO ARE OBLIGED TO PRODUCE FOR DIMINISHING THEIR DEBTS AND MAKING
THEIR PAYMENTS ON TIME.

11.- THIS PREVIOUS PHENOMENON , PRODUCES A FEIGNED INFLATION, THE INCREASE OF THE PRICES
ARE IN THE HIGH INTERESTS OF THE WIDELY USED DEBTS. INDEBTEDNESS IS PROMOTED, THE PRICES
INCREASES ARE MASKED IN THE INTERESTS AND BESIDES THERE IS A REAL BUT VERY SELECTIVE
INFLATION ON THE FINANCIAL VALUES, MODERATE OR NOT, AND AN APPARENT PROSPERITY.

12.- THE LOST OF THE BALANCE TAKES PLACE WITH THE CONTINUOS INCREASES OF THE DEBT, WHEN
THE DEBTORS COULD NO LONGER PAY THE TAXES FROM THE DEBT THAT ARE THE INTERESTS AND
THEY CAN NO LONGER BUY AS CANNOT GET MORE INDEBTED . THE ALREADY SURPASSED THEIR LIMIT
THEIR VITAL NEEDS AND THE LIMITS OF THEIR FINANCIAL CAPABILITIES.

13.- THE COLLAPSE ARISES WHEN BUYING STOPS WITH MORE DEBTS. THEN, THE DEFAULT OF
PAYMENTS ARISES, AND THE RUIN OF THE DEBTORS AND THE CREDITORS. ( AND THE DESTRUCCION OF
THE MONETARY MASS CREATED BY THE BANKS IN THE WHOLE PROCESS ) .

14.- THE INTERVENTION OF THE INTERNATIONAL MONETARY FUND, AND THE GOVERNMENTS OF THE
RICHER COUNTRIES , WHEN THEY SOLVE THE PROBLEMS OF THE DEBTS, THEY DO IT THROUGH
CREATING MORE INDEBTEDNESS, OR PROLONGING ITS REPAYMENT . THEIR ACTIONS ARE NO
SOLUTION, THEY ONLY GIVE TIME TO THE COLLAPSE TO HAPPENS FURTHER AHEAD, AND POSSIBLY
WORSE.

15.- THE SOLUTION OF THE PROBLEM MAY BE THE GRADUAL DESTRUCTION OF THE LIQUIDITY THAT
REPRESENTS PRODUCED GOODS AND FIAT GOVERNMENTS MONEY CREATED TO INDUCE DEMAND OF
GOODS AND OTHER POLITICAL REASONS CAN BE ACHIEVED THROUGH ALLOWING GRADUAL
INFLATION AND GRADUAL REDISTRIBUTION OF THE CONCENTRATED LIQUIDITY THROUGH HIGHER
COLLECTION AND HOARDING OF TAXES TO THE RICHEST SPECIALLY, SO THAT THE EXPLOSIVE
DESTRUCTION OF THE LIQUIDITY MONEY DOES NOT HAPPENS THROUGH THE COLLAPSE OF THE
DEBTORS And CREDITORS AND THE DESTRUCTION BY INFLATION THAT WILL BE CREATED BY THE
GOVERMENTS, TO SAVE THE ENTERPRISES OF THE COUNTRY.

16.- THE EXPLOSIVE DESTRUCTION TAKES PLACE AT FIRST WITH A GRADUAL COLLAPSE, AS THE
INCREASING DEBTS ARE ABOVE THE COLLECTIVE NEEDS AND THE COLLECTIVE REPAYMENT
CAPACITY. AT THE CRACK OF THE DEBT SYSTEM, THE FLOW OF MONEY DIMINISHES FROM THE
INDEBTED AS THERE IS A CHANGE , A DECREASED NEEDS OF THE CONSUMERS OF GOODS, THAT IS THE
WHOLE POPULATION, AS NO LONGER IS ABLE TO MORE INDEBTEDNESS. THAT ON THE OTHER HAND
STOPS THE FLOW OF MONEY FROM THE CREDITORS. THE DESTRUCTIVE EFFECT INCREASES
GEOMETRICALLY AND IS EQUAL TO AN EXPLOSION WITH GREAT OR MINOR DAMAGE, DEPENDING ON
THE SPEED IT HAPPENS. THE NEW TECHNOLOGIES MAKES THE SPEED RATHER FASTER THAN SLOWER.

17.- THE CENTERS WHERE LIQUIDITY ACCUMULATES, NOT TRUSTING WHERE TO
DEPOSITING THEIR WEALTH , THEY JUMP TO THE TANGIBLE GOODS TO PRESERVE IT AND THEY
PRODUCE OTHER KIND OF SELECTIVE INFLATION INTO OTHER KINDS OF GOODS THAT HAVE SIMILAR
PROPERTIES TO THEIR CASH THEY TRY TO PROTECT: ANOTHER CURRENCIES, PRECIOUS METALS,
COMMODITIES , REALTY ALL OF WHICH FALL FIRST AS THE PROCESS OF DESTRUCTION OF THE
LIQUIDITY IS GRADUAL AT THE BEGINNING OR WHEN IT HAS JUST STARTED , OR FOR EXAMPLE WHEN
THE IMF OR OTHER GOVERNMENTS INTERVENE IN ORDER TO SOFTEN THE PROCESS.

CONCLUSION

THE LOGIC IS THAT IT IS NECESSARY TO BE READY AHEAD TO THE FACTS. AND KEEP THE CASH AS IT IS.
AS THE PRICE OF COMMODITIES COLLAPSES HAPPENS, INVEST THE LIQUID CASH IN GOODS THAT ARE
HARD AND REAL, THAT ARE SIMILAR TO CASH. SAY COMMODITIES THAT ARE USEFUL IN THE MODERN
ECONOMY, THAT ARE EASILY TRANSLATED INTO LOCAL CASH. EASY CONVERTIBLE, THAT CAN BE
FRACTIONATED , AND THAT DO NOT DETERIORATE.

Can you corelate these 'distortions' with specific periods of stress in the financial system???

Anybody here really think the dow is going to 4500 nrxt month? If this is true we are in big trouble. I am in big ticket sales and I know most of my customers will stop buying when they stop I stop buying and so on down. We will be in a whole different USA than we have today.

Socialism and currency controls? So after the 'collapse'', we're going to emulate the Eastern Bloc/Communist/Command and Control economy? I don't think so. Then again Mad Max wasn't a bad guy either... :- ) ) He did manage to get revenge.

How will this play out? Is this America winning an economic global war? I live in Canada and I just sold a cottage to a U.S. citizen. He will pay for it by selling a lousy 25 foot trailer in a park back home. Weird.The world is cheap in U.S. funds. How long will this last. Don't bother trying to argue the reality of this fact.

From "CAJI News Service-Washington,DC.

Pentagon suspends press, Big brass in meetings.Armed forces Germany on DefCon2-

Israeli forces on full alert-

Several US naval vessels diverted from ports.

Twister

Shhhhh, don't let Bart know many are addicted to this site. When the site goes down, it does make you appreciate what's here. I bought some mounties from Kitco to show appreciation. Most here probably have bought some, but if you havn't, I'd recommend it. You can show appreciation for the site and get a beautiful gold coin.

Don,t know which way gold will go but I just bought some more

.. like gold? You are among friends here. Many here see things as you express them. One addition. Here in American, and I believe this is true in many ohter parts of the world, the banks can loan out many times the 'reserves' they carry. This is a multiplier effect. Otherwise I think you are on target.

Go gold!

We don't have to default. Merely use normal Keynesian methods to "stimulate the economy by monetary expansion" ( aka inflalate ) . In any case the dollar value of our real assets go up.

Not that it matters. A house is still a house, a barrel of oil is still a barrel of oil, and an ounce of gold is still an ounce of gold regardless of the dollar price tag is you put on it.

The losers will be the holders of dollars and bonds and all the things the flight capital has gone to to be safe.

They just don't get it. The buying power, that is to say how much real stuff you can get, of paper can be changed by a stroke of the pen. But real assets are real assets no matter what.

Holders of gold feel like they are losing something. And they are in terms of the US dollar. And they are. They would have done better by holding dollars. But hey haven't lost anything in terms of real goods, or in terms of foreign currencies.

Before too long, it will be the holders of dollars who will wish they had held gold or Swiss Francs instead.

I say before too long, but we still have many a mile to travel before this tale spins itself out.

There are some who never forgave the Europeans for what they did to us in '30 and '31.

4500? In a month? I don't think so. Anything is possible, but let's be realistic here. First, let's see if there a retest of 7000. Remember, the underlying market has been getting hammered for weeks now. The generals have to play catch-up. The generals make up most of the indexes. Nothing goes straight up or down, with one exception, gold. :- ) )

Well put. If you hold the cash he paid for it with, it won't be too long before you won't even be able to buy that trailer with it.

Would we all be surprised if the dow jumps next week, it's happened before just when we thought a fall was immenent.

http://www.rahul.net/iti/kzpg/Current/Newsgroups/index.html
then specifically the newsgroup
alt.politics.economics

The first Kitcoite there starts a header entitled KITCO something

Check out the newsgroup to see if the decor meets with your satisfaction. If not there is also
alt.politics.libertarian

Here's some revised instructions for the next time we go down. Just in case the problem has not been entirely fixed....



step 1 - Keep trying for at least twenty minutes before sending an email. If you cry wolf too often the techies at our ISP will ignore the mail

step 2 - send an email to Matt at dedicatedsupport@wipc.net. He has instructions to reboot our server if there are numerous requests to do so coming from many different people. So send a message yourself. don't assume someone else will.



Ask him not only to reboot the Kitco dedicated server, but also to verify that the web server services are working properly after it's back on line. Remind him that the server should respond to requests to www.kitcomm.com because they don't necessarily keep that info handy.



step 3 - If it's not back up within an hour, send another email. To Matt, not to me. Don't be shy. It's in their best interest to ensure that you recieve good service. Tell them about your brother-in-law who just started his own company offering high standard web hosting services at deep discount rates.



step 4 - Keep repeating step 3 until you've had enough.



Anyway, enjoy whatever remains of the week-end. This coming week should be an interesting one for the metals.

To me the words " when the buying stops" rings true. When you owe money and you must pay your creditor yet people have stopped buying what you have to sell at any price... This is difficult. Been there done that got the T-shirt.Antiques... rare things... art ( not beannie babies ) will store wealth and are also transportable. There will always be the rich and they will always value what is rare.They won't give merde for your used computer.If they find out that human excrement is worth something the poor won't have any. Go Gold!!!!!

I believe I can. {:- )

Hey Bart, thanks for your site and support.....

Yes, it's not that the price of gold is going down, it's the buying power of the dollar keeps rising. And this will continue until the demise of the perception of the dollar, and all paper denominated in dollars, as safe. This will happen if the US does not pay foreign or domestic holders of US treasuries -- but it's a safe bet who gets paid first, as we learned from the Europeans. A government that prints lots of a currency that is believed to be unsafe as a store of value creates inflation. I'm still not sure how the Keynsian US Fed gets the new money into circulation in a deflation. They can't lend it because no one wants debt ( the US lent at negative interest rates in teh 30s to no avail ) . A socialist government will create jobs and hand the new money to people.
-EJ

No body get hurt out there!

because an apocalypse would follow. About 2/3 of the US national debt is held by foreigners. If these people all suddenly lost their US gov't investments, they would immediately try to flee the US. They'd sell their real estate holdings, they'd liquidate their subsidiary companies. Countries that have their gold stored with the Federal Reserve Bank in New York would probably try to get thier gold back.

The sudden flight of capital and investment buyers would cause a collapse of the economy.

The other thing you have to remember is: fiat money is only created by creation of a debt. The Fed creates money by loaning money to a bank or other borrower such as the US gov't. If the US gov't were to default on its debt it would destroy the ability of the Fed to "print" money, and a deflationary collapse would occur.

steve

PPT up and running in Japan. Will the PPT have continued success in Hong Kong, anyone?

http://www.crbindex.com/story2333.html

Do you think anyone believed that Europe could default on its debt? But it did. It's simply a case of liabilities rising faster than assets. What else can the US do if asked to pay back more debt than it can? It may reschedule or perform any number of other tricks, but the effect will be to cause a massive loss in confidence in the dollar. The severe consequences of such an occurance do not preclude it.

Foreign nations hold 43% of US treasuries.
-EJ

Absolutley true. Of course there would be no need to default. We would honor all our obligations.

I watched the Dollar Index get hammered on friday and gold went down. IT is reported that producers were sellers. What is troubling me is the reason for the lower Dollar Index. I think that the holders of dollar instuments started to sell big time on friday. Look at the currencies that were up for the week. This action is not affecting gold because the sale benefited the currency that liquidated. I am concerned that if gold continues to due nothing while the dollar goes down ( is lowering of the dollar by any means the start of reflation? ) then it has lost all use as money. Does this mean that currencies are better than gold because a system exists for exchange. Did the Swiss Frank appreciate due to convience of trade and settlement or gold content.

I feel the next two weeks will be the most important weeks in our lives. If the masses panic and sell there will be 1000 to 3000 point drop in the Dow that will affect gold stocks and gold. If your in the market you should be short, in cash or treasuries. I have been long gold stocks for some time and have large losses. I own physical and am short the market.

I plan to sell my gold stocks if gold and gold stocks do not respond to further dollar weakness. Any coments on these observations.

Dear Sir,

A very perceptive view of the Y2K issue.

In my opinion, there should be a newsgroup that deals exclusively on the topics of economics with relation to the Net Economy, and the IT world in
general. This is an emerging field in which ignorance is still rampant. And we, as economics scholars, IT professionals or even observers, should play a keen part in bringing this awareness to the lay public.

On my part, I never gave a thought about the Y2K bringing about a scenario of stagflation akin to what happened during the Great Depression. After reading your article, it has struck me as being very possible.

I would wish to discuss this issue with you in greater detail, if you would.

Thanks and warmest regards,

Hin Chin Qui
Singapore

P.S. The group can be found at:
http://www.rahul.net/iti/kzpg/Current/Newsgroups/index.html

Dollar still declining:

http://www.bloomberg.com/bbn/topww1.html

S&p's are up 2, were up 10 friday.

So much for any PPT, government or otherwise. Markets win in the end.

We'll find out tomorrow if Hong Kong went down with or without gov't help. It's estimated they spent US$1,800 per capita last week to support the market.
-EJ

with regard to Russia, etc. and the possibility of a nuclear event.

http://bbs.rowlandnet.com/cgi-bin/WebX?14@@.ee745f9/0>http://bbs.rowlandnet.com/cgi-bin/WebX?14@@.ee745f9/0
( sorry about the double entry...this is weird, can't eliminate it )

BART..glad to be back on line "witcha".
Merriam Webster Dictionary:
Addiction: compulsive need for habit forming "gold forum".

*chuckle*

Japan, Hong Kong, South Korea. Like a musical round they fall in predictable succession these past several months.

Whether you like it or not some sort of command economy approach is necessary and will arise in order to establish stability. What is happening today in the world is an example of what happens when capital is allowed to run amok. Democratic Socialism rescues the market from itself and preserves order democracy and the rule of law. Socialism forestalls chaos. Of course where socialism runs amok as in the former USSR there instability has also occurred. There timing for turning capitalist was bad as it was when capital was beginning to run amok. In sum they have caught the extremes of two system cycles in a very short time. If we have collapse people will be demanding the stability of Socialism even if they forego some economic freedom to ensure democracy and SOME economic freedom not to mention a civil society..

loss of confidence among the public whenever credit is overextended. This debt has to be liquidated when it extends beyond the ability of the borrowers to repay.

Usually in this situation the govermnet is the biggest borrower, and it has no hope of repaying either. For example, the national debt of Japan is greater than the country's GNP! These people are not going to repay their national debt. Japan is in deep deflation. Governments try to avoid openly defaulting on such debt though, because it leads to economic chaos. This has been demonstrated in the past whenever countries have defaulted on their sovereign debt. The sneaky way to default on debt is to steal the money by means of inflation.

Governments therefore try to stave off the final reckoning by inflating, and sometimes they can inflate successfully, but sometimes they can't. Japan has been trying to add massive liquidity to their system, with interest rates going down to a ridiculous 0.5%, but they've had continuing deflation anyway. When there is enough confidence among the populace, adding liquidity works, but the ability of the economy to support repayment is still inadequate. The debt then ends up being liquidated by means of hyperinflation that drives the currency down enough to effectively default on the debt.

An experiment is underway in Malaysia right now. The gov't is trying to add massive liquidity to their banking system, and we'll know in a few weeks whether they can turn the deflationary tide or not.

What will happen in the US & Canada? Too early to predict, but rest assured that they will find themselves desperately trying to inflate, and it wouldn't surprise me if they discover that deflation is out of their control.

Steve

In a news story dated aug 28 from Reuters and dow jones it
describes a plan by The Association of Russian Banks to ease
regulations on the public ownership of gold as an alternative
to there demands for foreign currencies.

A spokesperson for the banks said they felt demand would
amount to 270 tons of which 250 would come from central bank
reserves - the rest would come from commercial banks.

One proposal by the association was to issue "chervonets"
gold coins, each worth 10 roubles up to a total
of one billion roubles.

In order for them to do this they called on the government
to eliminate the 20% added tax on gold ingot sales

In my view this sounds like a great idea, that would go
along way to restoring confidence in the monetary system it
would also reduce there mad flight into foreign currency and
its disruptive effects on there economy.

they could also test the waters for gold backed bonds

I would like to hear what others think about this plan and
the ramifications that would result both within Russia
and the world at large.

This could be the reason that IMF spokesperson appeared so
angry when speaking about Russia and it's need to follow the
plan laid out for it by the IMF

I would think that other countries in the same predicament
would find this idea interesting

If I was short gold I know this proposal would make me very
nervous - cjk -

ps - I found a link to the central bank of russia in english
on the bbc web site - on it they offered to answer questions
by email - so I sent one asking about these news stories and
if they were accurate - I will be surprised if I get an
answer

Global Intelligence Update

The End of the New World Order

Last week marked the collision of the "New World Order" with reality.
Toward the end of the week, reality was winning.

Proclaimed by George Bush after the collapse of communism, the New World
Order was neither an empty phrase nor a hidden conspiracy. It represented
a radical vision of what the world had become, now that U.S.-Soviet
confrontation had ceased to define the international system, and it was a
vision widely shared by much of the world's elite. According to this
vision, fundamental political disagreements between nations had
disappeared. Rather than being ideologically divided, all major nations
now agreed on fundamental core principles. Reasonable people everywhere
accepted the proposition that economic growth and prosperity were interests
that transcended all others. That being the case, it was essential to
maintain international stability in order to facilitate that prosperity.

Because all major nations agreed on the desirability of prosperity and
international stability, fundamental international disputes, like those
that led to the two World Wars and the Cold War, were no longer a
significant problem. The only international problems faced by the United
States and its allies were the management of marginal outlaw states like
Iraq and North Korea, internal instability as in Yugoslavia and Somalia,
and outbreaks of international terrorism. Because all nations were now
reasonable, and any reasonable nation could see the need to prevent outlaw
nations, civil wars, or terrorism from spreading misery and upsetting
financial markets, it followed that all nations would be prepared to
cooperate in managing these marginal problems. These were, after all,
marginal issues. What really had to be managed was the international
economic system, especially the integration of former Communist nations
into that system.

In Bush's view, an effective mechanism existed which could achieve all
these goals, one that derived from the Cold War itself. During the Cold
War, the Western powers had created a complex of alliances designed to
contain the Soviet Union, from Norway's North Cape to Japan's Hokkaido.
One part of this alliance system was military, including institutions
ranging from NATO to the U.S.-Japan Mutual Security Treaty.

But another part of U.S. strategy was economic. The United States
understood that maintaining the prosperity of the Western alliance was a
fundamental part of containing the Soviet Union. Prosperity persuaded
allies to remain in the alliance, persuaded neutrals to work with the
alliance, and undermined the legitimacy of the Soviet-led alliance. The
maintenance of the West's prosperity was placed in the hands of a group of
multilateral organizations, including the International Monetary Fund to
manage financial relations, the GATT ( now replaced by the World Trade
Organization ) to manage trade, the World Bank to develop the Third World,
and so on. There were many other such organizations. All of them had the
same purpose. They did their jobs extremely well.


* The New World Order and Transnational Institutions

At the heart of Bush's New World Order concept was the idea that these
transnational institutions would not be abandoned now that the Cold War was
over, but would in fact have their role expanded to include the management
of international economic relations with the former Soviet empire. Indeed,
Bush went so far as to envision a world in which states that hadn't
abandoned Communism formally, such as China, could be included in this
global, multilateral system. After all, the Chinese, whatever they said
officially, wanted the same thing as Belgium or Canada: a stable business
environment in which to develop their own economy. Bush expanded this
multilateral vision to include the United Nations, which had previously
been paralyzed by U.S.-Soviet competition, but which could now fulfill its
original mandate as global policeman.

Obviously, the United States, as the world's leading nation, would play a
special and decisive role in defining the mission of these multilateral
organizations. However, since all nations now had the same basic
interests, it followed that no reasonable nation would object to U.S.
leadership. Indeed, the world would welcome it. And for a while it all
worked. There were no major international conflicts. The world accepted
U.S. leadership in dealing with outlaws like Iraq and Serbia. The
international financial system was well served by the IMF, by G-7 meetings,
and so on.

Then reality set in. Asia, which had postponed the inevitable as long as
it could, buckled under the weight of its own inefficiency, and no
multilateral organization could do anything to prevent it. However, it
was still possible to fantasize that the Asian crisis could be contained,
that it would have no lasting political repercussions, or that it was not
as bad as it looked. None of this was true, but it was possible to
fantasize.


* The Russian Collapse and the New World Order

Then last week, reality mugged the New World Order with some brutal
finality. As the Russian financial markets collapsed, Russia passed beyond
the help of the IMF, the World Bank, or anyone else. The financial
meltdown in Russia is irretrievable. There is nothing that the West
possibly can do to resurrect the Russian economy. It is not a matter of
money.

The problem is that in Russia, money does not turn into capital. All
investments are hopelessly squandered through a combination of inefficiency
and theft. For money to turn into capital, for investments to flourish,
institutions must exist which guarantee such things as the lawful,
predictable enforcement of contracts, reliable transportation of goods from
one point to another, government neutrality in economic competition, and so
on. None of those things exist in Russia. Contracts are unenforceable,
basic reliable infrastructure is non-existent, and the government is not
only unpredictable in its treatment of participants, but is at times
deliberately destructive.

Russia is a different place. But the ideology of the New World Order held
that there are no different places, that all reasonable people behave in
the same reasonable way and that, therefore, given advice by Harvard and
Goldman Sachs, Russia would evolve economically. It was also assumed that
Russia would evolve politically, because it was assumed in general that,
with a growing economy, all reasonable people would come to look like
everyone else. Thus, prosperity would yield liberal democracy, and liberal
democracy would make Russia an enthusiastic member of the international
community, just like people from Wisconsin but with more beets in the diet.

Instead of this happy scenario, last week saw the re-emergence of the
Communist Party as the decisive force in Russian politics. The political
issue last week was not what Yeltsin or Chernomyrdin would do, but what the
Communist Party, the largest party in the Duma, would permit them to do.
The fact is that Yeltsin can no longer govern without the support of the
Duma, and power in the Duma lies in the hands of the Communists and the
nationalist parties, including the strange fascist Zhirinovsky, as well as
other factions. On the surface, this would seem to create a split in the
Duma that the Yeltsin/Chernomyrdin faction should be able to exploit. In
fact, there is a much closer bond between the Communists and the
nationalists than one might think. Indeed, it is this commonality of
interest that brings us to the end of the New World Order.

The Communist Party speaks for the lost Russia. It was a Russia of
relative poverty, but not the utter misery that has gripped most of Russia
since the collapse of the Soviet Union. More importantly, Russia was a
land in which the misery was shared, on the whole. The fantastic gap that
has opened between a tiny oligarchy of wealthy men who have used the new
regime to enrich themselves, and the masses who can barely feed themselves,
powers the Communists' claim that, as bad as the past might have been, at
least it was better than the present.

Thus, it is the Communists who are pressing Yeltsin to reject the demands
of the IMF and the West that economic reforms be maintained and even
expanded. Arguing that Western help hurt Russia rather than helped, and
also that no further help is being offered anyway, the Communists are
demanding that reforms be rolled back. They want to re-nationalize the
economy, impose wage and price controls, re-institute central planning, and
end the convertibility of the ruble. In other words, they want to return
to the status quo ante.

Implicit in the Communist position is a rejection of the assumption that
Russia's salvation lies with the West. This technical anti-Westernism
among the Communists is reinforced by the visceral anti-Westernism of
Zhirinovsky's Liberal Democrats, the third largest party in the Duma. For
Zhirinovsky and other nationalists, the economic disaster is coupled with a
geopolitical disaster. Under communism, Russia was a superpower, with
equal standing to that of the United States. Today, Russia is seen as a
vassal of the United States, with any Deputy Assistant Under Secretary of
anything having the right to lecture and scold Russia's leaders as if they
were school children. Even more infuriating, the great Russian empire was
given away, in return for nothing. Not only Eastern Europe, but also the
Baltics, Ukraine, Central Asia, and the Caucasus were lost. Even parts
of Russia itself, like Chechnya, can barely be contained.

The economic anti-Westernism of the Communists combines with the
geopolitical anti-Westernism of the nationalists to create a powerful
ideology that used to be called Stalinism. Central planning together with
powerful internal controls and a deep sense of the geopolitical interests
of the Soviet Union was, after all, Stalin's greatest achievement.
Personalities aside, this Stalinism will now reemerge, as it is the only
logical outcome of the current situation. Because no meaningful Western
help is possible, and thus mild internal reforms cannot possibly contain
the situation, power will devolve to the Communists and nationalists.

The logical bridge between the two is, of course, Alexander Lebed. We wrote
in our forecast for 1997 that, "If the Westernizers surrounding Yeltsin
manage to squeeze Lebed out or into irrelevancy, they will have sown the
wind. The whirlwind will be a counter-revolution of epic and bloody
proportions. If Lebed is given room to maneuver, he may manage a
restoration that keeps the vestiges of democracy and capitalism alive. In
either event, liberal democratic capitalism in Russia will fail in 1997 --
and its replacement will be the traditional Russian alternative to
Westernizing businessmen and intellectuals: xenophobic, Slavophile
bureaucrats and policemen." We were premature on our date, but believe we
were correct on our core prediction. Lebed was forced out. The whirlwind
is at hand.


* Western Strategy Toward Russia After the Communist/Nationalist Revival

It is therefore time for the West in general, and the United States in
particular, to begin defining a post-reform policy toward Russia. Russia's
foreign policy will be eminently clear -- first, and above all else, the
reclamation of the Soviet Union to its old borders. The key to this, of
course, is Ukraine. Russia is already in a close confederation with
Belorussia, and the reintegration of Ukraine is therefore critical. Here,
of course, the Bush-Clinton obsession with Moscow's nuclear weapons will
cost us dearly. Rather than strengthening Ukraine to resist reemerging
Russian imperialism, the United States focused on strengthening ties with
Moscow, hoping to encourage reform. This leaves Ukraine vulnerable to
Russian pressure. We believe that it is too late. The Ukrainians will not
be able to resist.

It is the West's good fortune that recovering the Soviet empire will take
the Russians a generation. But that process leaves the West with critical
decisions to make. The United States has made massive investments in
Central Asia. To what extent will the U.S. resist Russia's return? Will
the U.S. extend NATO protection to the Baltics? If not, what policy does
the U.S. propose? Iran and Turkey will both oppose Russia's return to the
Caucasus. What will U.S. policy be there? If the Russians become more
assertive, should NATO be further expanded to include utterly strategic
Slovakia? If not, should we attempt to include Poland and Hungary in NATO,
or are they too exposed?

And then there is the return of the abysmal and eternal German question:
should the U.S. shoulder the burden of defending Europe again, or should
Germany be forced into that role, recreating the problem that has burdened
Europe ever since German unification in the nineteenth century?
Fortunately, Russia's strategic position is such that it will not readily
return to global eminence. Many Armenians, Lithuanians, and Uzbeks will
have to die before that moment comes. But even a regional imperialism by
Russia poses a critical question to which Madeleine Albright and Sandy
Berger appear not to have given any thought: what is U.S. policy on a
thousand issues if Yeltsin falls and, for example, Lebed takes power?

These and endless other questions are political and military in nature.
They are not economic. The New World Order assumed that political and
military questions were now marginal. Therefore, strategic planners in the
Clinton administration, which inherited and celebrated the strategic legacy
of the Bush administration, continue to ignore these questions in favor of
familiar issues like IMF bailouts and reforms. These questions are closed
as far as Russia is concerned. Clinton doesn't seem to realize it. These
critical questions are being ignored in favor of a fantasy: that the
Russian experiment in economic liberalism is not yet dead.

Therefore, Clinton's visit to Russia will be disastrous. First, he is
meeting with the wrong leader. Yeltsin leads nothing. Clinton is meeting
with a political corpse, and infuriating the leaders who have already
usurped power in every sense but the official. Second, Clinton will be
discussing economic issues that can no longer be managed, rather than
posing the difficult political and military questions which now frame
Russia's relations with the world.

The new Stalinism cannot be stopped. Communists and nationalists will form
a coalition to govern Russia, sooner rather than later. They have a very
different agenda than the old regime. Clinton's summit makes no sense,
save that he believes that the economics-centered New World Order can still
be saved. We expect Clinton to meet with Lebed and perhaps others. But
what is he going to say to them? What is America's strategy? Thus far, it
appears to be to avoid the obvious and to pretend that what is impossible
can happen if we close our eyes and wish real hard.


* Asia and the Return to Politics

It is not simply a matter of Russia. Asia's problems are no more amenable
to economic solutions than are Russia's. The core issue in Asia is
political. Asia is no longer economically viable. It cannot compete with
the United States except by exporting at or near a loss. Asia is being
forced to take political measures to protect its economic security. Asian
countries can solve their economic problems internally only through
political action. Externally, they can stabilize their economies only by
forming a regional trading bloc that protects their weakened economies and
by creating a new reserve currency to substitute for the dollar. This is
not only an economic decision, but also one with profound political and
even military consequences.

The current economic crisis is forcing the world back to politics. In the
very long run, the return of politics will resurrect war in the traditional
sense of Great Power conflict. In the immediate future, this crisis has
demonstrated the impotence of multilateral organizations to manage the
world. The United Nations can't deal with Iraq, the IMF can't do anything
with Russia or Indonesia, and the WTO can't stop the trade war that will be
the inevitable consequence of Asian export surges and protectionism. The
multilateralism of the New World Order has shown the hollowness of these
institutions by revealing that it really isn't a small world after all, but
a very complex, variegated and dangerous one.

Like the Congress of Vienna, the New World Order tried to freeze in place
institutions that had meaning only in the context of a great struggle.
Whether that struggle was against Napoleon or Brezhnev, the fact is that
when the war ends, the institutions that made the alliance function must go
away. This crisis shows the impotence of such institutions in the face of
reality. It also shows that the New World Order, rather than being a
brilliant vision or a dark conspiracy, was merely a failure of imagination.
Or more precisely, it was imagination run wild, believing that politics and
war would be replaced by economics and good feelings.

So, now the history of the post-Cold War period finally begins in earnest.
It is not, in our view, the Russian question that will be the most
important. That is merely the first question. The most important question
is the relationship of the United States to Asia. More precisely, the
question is the relationship of the United States to the genuine if
reluctant leader of Asia: Japan. First, a redefinition of Japanese
politics is going to occur, with a more political and nationalist view of
the world emerging. Then, just as economic reality is prying U.S. and
Japanese interests apart, political reality will divide their interests as
well. As American and Japanese interests are forced apart, a new global
politics, the politics of the 21st Century, will be defined.

How does the Fed get new money into circulation without lending it?
-EJ

S&P's up 1.

http://quote.yahoo.com/q?s=^HSI&d=5d

I went flat on the close on Friday. I'm thinking that they have to rally it here or its curtains, but I'm too chicken to go long. The whole thing seems to be getting out of hand. We are falling at a more rapid pace than in 1929. Transports seem to suggest an upside correction while the NASDAC looks like more downside risk. The direction tomorrow may rest on what happens in Japan and Europe tonight or some concerted effort by the big boys to slow down the pace of this decline ( maybe drop a turd in the punchbowl by lowering rates ) . I plan to see what happens after the morning low before reentering. I see support for the SnP at 1032, 1025, and 1000.

I'm sure the lads at the US Treasury Dept. were patting themselves on the back after staving off a market crash in Oct. '97. Of course all these people do is allow the pressures of market imbalances to build up to such an extent that when the markets do return to reasonable valuations, they do so explosively.

The original PPT'ers were the Japanese in the 1980's. The crash of the Nikkei was probably made much worse by their activities.

The Hong Kong PPT is a little weird. They're not doing the most effective thing if their goal were to just stop market crashes. I think there's a hidden agenda there. In mainland China the government is deeply involved in many of the most profitable companies. I'm wondering if the goal of all this share purchasing is to get a large stake, even controling interest, in many Hong Kong companies so that he gov't can get a large say in their operation, and possibly start to use them other purposes, much like COSCO.

- Steve

To: Stitch ( 5969 )
From: Worswick Saturday, Aug 29 1998 11:44AM ET
Reply # of 6033

You wrote, "I have to say that Asian leaders wouldn't give a rat's ass if Clinton shagged every secretary in the White House."

NO. No. No. These women around Clinton aren't the Secretaries... rather they are the low paid "believers", that and the the volunteer political ladies in our government strutcture. The are called called "Muffins". They are Muffins. Slick has been boffing the Muffins. Got that?

The Third Shoe

For Private Use Only

"There's a monster out there

By Paul E. Erdman, CBS MarketWatch
Last Update: 12:25 PM ET Aug 28, 1998 See StockWatch

SAN FRANCISCO ( CBS.MW ) -- In the face of what may become the most severe global financial crisis since World War II, so far the world's key financial institutions have been able to cope rather well. To be sure, some, like Credit Suisse, have taken big-time haircuts, but nothing that would threaten their survival.

So far only the first shoe has dropped, involving, for example, writedowns of bad loans to Russia and of Russian notes and bonds. If the situations in Eastern Europe and Latin America deteriorate further, more writeoffs of this type will gradually become necessary. But the nature and size of these risks are generally known, and are deemed manageable.

However, there is a related type of bank exposure that is essentially invisible. It is off the balance sheet, and basically uncontrolled. I'm talking about derivatives, especially hedges in the form of forward foreign exchange contracts and interest rate swaps.

Such exposure in Russia alone is more or less "known" to be in the $65 billion range.. What is unknown is who is at the end of the daisy chain where such transactions are concerned. If too many end up at the same institution, the question then is whether that institution will be able to cough up when these contracts come due.

And if not, then what? ( See related story. )

We found out way back in 1974. The bank involved was Bank Herstatt of Cologne, Germany. It had to close its doors because it was on the wrong side of too many forward foreign exchange contracts that had suddenly come home to roost. Its closure took place after the settlement of the deutsche mark leg of foreign exchange transactions, but before settlement of the dollar leg.

In other words, American banks doing business with Herstatt did not get the dollars they were due after they had already paid the marks they owed the German bank. Some of Herstatt's trading partners, faced with nonpayment, then refused to make payments on their own account or for customers.

The result was a chain reaction that, in essence, froze transfers between banks, and brought the whole global financial system to a halt.

This became known as "the Herstatt Effect."

With today's volume of such transactions immeasurably greater than it was back then, and with currencies under increasing pressure on every continent on earth, one has to wonder whether another Herstatt is lurking out there.

And....in case you missed it.

Excuses abound, but the U.S.-led boom is over

Check out the DM and SF for last Friday. They both had a sharp spike up as the DX fell. It may be nothing more than people exiting the dollar in anticipation of a rate cut by the Fed. ...... Rather than a flight to safety in something other than PMs.

There are a variety of ways but they all amount to spending newly created paper. They can buy bonds which would also serve to lower rates, they can buy gold, they can buy other currencies. If need be, they can create jobs through public works or increased defense spending and so forth.

.

Precisely. The time for a government to inflate is when there's already inflation. After deflation has begun, it's too late. The mistake the Fed has made is to see a greater threat of inflation than deflation and not raise rates. Actually, the Fed may have seen the greater risks of deflation but for political reasons -- to avoid tanking the stock market -- did not act. Of course the markets tanked anyway, but at least no one is pointing a finger at the Fed and blaming them. They will instead be blamed for not inflating us out of the deflation, even though that's impossible. They were blamed for this in the last depression too.

Soon the Fed will drop interest rates to try to stimulate the economy. They will have less success than the Japanese because a deflation psychology is growing among a savingsless and indebted population that's swimming in the world's goods. I take it back. It's not that they have no savings, it's just that they are at this moment losing their small savings in the stock market. Soon after they will lose their perceived real estate wealth.

Where did we all get the notion that governments control economies? We are all mere servants of a great machine. The machine, alas, is busted.

-EJ

Good night !

" ....if they forego some economic freedom to ensure democracy ...."

It's the modern implemetation of bogus democracy that's, in large measure, responsible for our present position. If it be your intent to run the zoo from the monkey cage, why not drop all pretense of democratic institutions entirely? They would, after all, serve only as an annoyance to the new demo/soc order. There is no question that order and implementation are far more efficiently done without the distraction of disorder in the ranks.

Of greater curiosity is the question of serious objectors. How will they be dealt with under the demo/soc order?

I seriously doubt that a major bawling and whining from the general electorate, for additional socialism, will seriously affect the outlook of many of us. We will remain permanently and irrevocably inclined and committed to personal liberty. Regardless of what others may think of us. Or what you may attempt to legislate to the contrary.

In Japan lowering rates and making more money available did not work because the money fled to the US and/or became savings.

In the US it's different since there is no place for the money to go ( except perhaps to pay off credit card balances :- ) ) .

They need to push liquidity back out into the world instead of acting like a black hole that sucks everything in around it. I think the Japanese should raise rates simultaneously to bring some of their money back home. This is needed to slow or stop the deflationary forces that are definitely gaining momentum.

Technically, the US dollar index failed again at the recent 102.50 high. A significant break below 99 would signal the end of the bull run of the last three and half years. It may come just in time for gold.

There are two ways to access the SI thread.
http://talk.techstocks.com/~wsapi/investor/Subject-22656
or
http://www3.techstocks.com/~wsapi/investor/StockTalk-17

One requires registration
The other is free.
----------------------------
Email chatter:
Don't mean to be pessimistic and gloomy but reality came through loud and
clear last night on PBS, Jocelyn Ford from Tokyo says with the Japanese
market declines 18 of Japan's 19 major banks were "insolvent". Since Japan
is the number two economy in the world - Russia after all only has an
economy the size of Denmark's - this is a major economic event.
If you recall in 1990 Paul all the major money center banks in the US were
"insolvent" as a result of soverign loans to South America. So. The
situation is not irretreviable in Japan. The government can put together a
super agency to help the banks But then you have to add the insurance
companies, pension funds, et. in Japan.
On a quite somber note.
Today going to town to take out some money in my village where I live I
noticed that the tellers who are usually very nice... were very grumpy this
am. I asked why? I had evidently come in during a lull and was the only
person to enter the small bank when I came in. The teller pointed behind me.
I now noticed a line of ten people behind me. Outside there were 15 cars
where one car usually waits for the drive-in-teller.
This is happening at this moment.
I asked the teller why she was grumpy. "Everyone is taking out money. Lots
of money. These are not small withdrawls," she replied cautiously.
If the market here goes down next week we are in for very bumpy times.
Forget Japan. Forget South America. That is where the pain will come from
next week. Our markets here.

.

with trying to put money into circulation via public works projects or defense spending. Those functions of the US or state governments. Remember, the Fed is not a government agency- it is private and separate from the US gov't.

When a gov't wants to inflate by spending money on defense or public works projects, it has to borrow the money ( remember, fiat currency *only* comes into being via the creation of a Fed asset and a corresponding borrower liability. )

This adds to the national debt, and governments are torn between wanting to ensure their continued re-elections by spreading dough all over the place among the voters, and realizing that their political futures will be imperiled in the long run if they destroy the economy by letting debt get out of hand. It seems that every government eventually takes the debt-getting-out-of-hand route, because give a politician the choice between greasing some palms now to ensure his re-election and behaving responsibly toward future generations, and you know what choice he'll make!

BTW- Both Hoover and Roosevelt tried massive public works programs in the 1930's, and boosted defense spending, and they couldn't get any inflation to happen. Deflation ended in 1939 when the war changed everybody's psychology.

- Steve

Question:
Who or what are these groups going around the world attacking every countries currencies? Is there objective to make money trading, or what? How do they target a specific country, and what do they do to cause these declines in countries economic systems? I've never seen anything like it, and every day it seems like some new country is having to defend its currency.

Answer:

, The chief group destroying the country's currency is called its government. Speculators do have a part in killing a currency, but it is more like piling on in football. They can't cause it, though they can make it worse.

It works like this. The govt. of Lower Slobovia prints too much money relative to the real growth of its economy. The end game starts when those who sell real merchandise object when you hand them yet another bunch of funny colored paper you call yuks. At first, they grab the trash and run, don't walk, to the bank, to turn it into something more palatable. Lately, that has been dollars, though it has often been yen, swiss francs, d-marks or gold. Once these financial institutions themselves find they are up to here with the crap, they exchange it for real currency of some sort from the country's central bank. Those banks then have to decide whether or not they want to part with something of real value for this make believe money. At some point, they get swamped and decide they'd rather pay pennies on the dollar. Or nothing. That is extreme.

Somewhere during this time period, a Georgie Peorgie Soros looks out and says, "hey, dey be in deep kimshee on da Yuk." So, he shorts some yuks against something better. Leveraged and pyramided. That hurries the yukky decline. But, even without George and his pals, that sucker be headin' south.

I have seen this in person. I was living in Germany during the late 1960s and mid 1970s. I was being paid in a yuk currency called a dollar. Every time I got my paycheck of yuks, I tried to turn it into something valuable, called d-marks. Meanwhile, the mass of folks like me, who wanted real buying power, attracted the elves in Switzerland, who shorted the buck against everything. I remember in Germany in 1967, when we played poker instead of working, a d-mark and a quarter was the same bet. By 1975, you had to put two quarters and a nickle or a dime into the pot when somebody else bet a mark. That sucked. I highly recommend never getting paid in yuks and paying for rent and food in something better.

So, the currency speculator vultures ( these are not all currency traders, most of whom are decent people and couldn't spot a disparity in rates with an interpreter ) are not without sin and IMHO, they are only one step above pond scum, taking advantage of other people's lousy govts. However, the real problem is the govt. and not the speculators. Printing money is easy and it works for awhile. But when it stops working, the punishment is far too severe

The Dow did not seem to recognize support at 8150 formed in October and December '97; this may be because the S&P 500, more representative of the higher order of "blue chips" actually has no support until the 960 to 980 level corresponding to the same time frame. This is another 8 to 10 percent DOWN! If no rally tomorrow, that is the target. Sorry yuppy fun mangers! We will soon know. Gold may have to wait 'till the dust settles. Good luck to all; hold that powder high!
Best Regards; Mtn Bear Rollin th Rock

Yessir! The new money goes first to cover the liabilities incurred in the previous expansion -- e.g., credit cards. Any money left over for investment goes... where? Equities markets? Maybe in the next generation. Bonds? Not this time. Bonds will tank with the equities markets. I say: property.

Gold is a form of property.

At least that is my mad vision! Ha! We shall see.

So, I've brought along a coupla extra barf bags for tomorrow's flight. First I'll get a little sleep.

G'Nite!

-EJ

Wondering what you think of gubernatorial candidate Sizemore
of initiative fame. My comment-- I've never seen or heard a positive
press story on him. On the other hand, I've never seen negative
coverage on the incumbent governor.

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

Long Term Chart shows that Precious Metals would have to gain
250 % from it's current value to reach it's previous Peak value!!!!!

http://www.washingtonpost.com/wp-srv/WPlate/1998-08/26/060l-082698-idx.html

If the banking and brokerage system hold, we'll look back on this as another '87, if not, another '29.

Many so called "sound" institutions are sound because they are well hedged. Well, that only works if the guy on the other end of the deal is solvent.

http://decisionpoint.com/DailyCharts/DOW.html
and
http://decisionpoint.com/DailyCharts/SPX.html

I think Ben Franklin ( you remember him, don't you? ) said something akin to, "Those who would give up a little liberty for some safety deserve neither." Not an exact quote I'll grant you, but close enough.

As for what you see in Russia... Those are your Demo/socialist buddies who were tossed out of work now making things miserable for everyone. Can you say former KGB? Once a crook... The first thing that is always gone after is your ability to defend your property. Once that is taken, you are a slave................

ALL: Just wanted to sieze the opportunity before the markets open to post up a concert announcement. anyone in the LA Area can hear me and my Trio perform a concert of lovely and unusual ( golden ) American music next Sunday at 4 PM ( Pacific Time ) to be broadcast live over KUSC ( 91.5 FM ) and its affiliates in Santa Barbara and Palm Springs. ( I forget the call letters and frequencies of those. ) It's our annual live radio broadcast from the LA County Museum of Art on Wilshire Blvd. near Fairfax. Last year RJ came, as well as a lurker who doesn't post, and I'd be delighted to meet any Kitcoites who want to come and visit backstage afterwards. The concert is free but the doors close before 4 ( due to the radio broadcast ) so it is best to get there around 3:30. Hope you can at least listen in if not actuallby join me.
Gotta go put the kids to bed but will return soon.

You are quite right. When EJ said Fed I was thinking government.

Hoover and Roosevelt really didn't try hard enough. Just like always the government tend to work a day late and a dollar short.

When the German's started marching across Europe though....

Sorry, had to go for a pit stop and the computer was grabbed by an endless sucession of children. My favorite gold stocks are big fat senior SA issues. The only NA issues I have are SWC and SSC, neither of which is a big player in gold mining. I've been buying on dips and accumulating, sort of a modified dollar cost averaging method. IMHO

IDT - I'm with Mtn Bear on this one. The only positive thing the mkt has going is the week before Labor Day tends to be positive. I think any rallies will be held at 1040, maybe 1060 and at the very most 1080. I don't see any meaningful support until 950. I'm trying to get short tonight or tomorrow at 1040 or better.

excited about a market collapse happening in under 5 minutes... Here is the Dow Industrials. Another longer term one will coming shortly ( I hope ) . Whoops! The green line is the 200 DMA................ DOOOOOOOOOOOOOOH! To quote Homer Simpson. :- ) )

tonight against the Yen and Mark.

Do you sell Platinum or silver coins? thansen@cris.com

The right of property is important. One of the precepts of maintaining a proper system of rule of law and order which preserves property is the right of the masses to:

minimal economic security if not a job
Housing
Medical care
Retirement
Child Care
Sustenance
some income in exchange for work

All of these contributory from the recipient to some extent. The ability to pay is a necessary factor in determining the appropriate contribution.. This creates an ordered society, this is someting to work towards in North America. Abuse of the system should be punished severely as an economic crime.Thoughts?

I agree with you on both counts. Oregon's newspaper of record could not find fault with the present gov under any circumstances. He is also lucky to be in office during the great eco expansion of recent years. Marrying a photogenic lady and whelping a kid while in office ain't hurt him any either. Both are warm woolies to average knot head voter.

He and his demo/soc colleagues have managed to spend evey nickel and bleat their little hearts out for more. Now we'll see how he is as business begins to wind down and tax receipts fall off.

We was lucky on the property tax rebate last year. I hope you made a copy of the check to hang on the wall. It will be awhile before any of us see another.

Sizemore cannot buy good press. But then again, he seems to be his own worst enemy. He has an uncanny facility for stepping on his own nut bag, every time he turns around. Worst of all, he is proposing fiscal responsibility while his personal finances have ( apparently ) been in constant disarray. McIntire would have been a better choice. Every politico in the state hates him. ...... so he can't be all bad.

oleman . . Sun, Aug 30, 10:00PM CST ( -0600 GMT )
fozzie: O Neill says dont try it in a bear. He oughta know. I have looked at this thing from every possible angle over the weekend. This is a bear market. I will use every rally as an opportunity to establish shorts until there is a "washout" selling climax. I expect a day with volume in excess of 1 1/4 billion shares on NYSE, with Dow down at least 600 points. It will either come this week, or at the bottom of the next slide a few weeks from now, after hum1's rally has faked out the bulls. The trend is DOWN. Support is non-existant. The bottom will have to come on a panic collapse, IMO. Properly positioned shorts will be "made for life" on the climactic slide to the bottom. The trade of the decade is near.

oleman . . Sun, Aug 30, 10:07PM CST ( -0600 GMT )
Greenspan will either cut rates this week or the big slide will surely hit. Odds that the cut will do the trick are considerably worse than even. He has waited far to long. The man is obviously senile.

oleman . . Sun, Aug 30, 10:20PM CST ( -0600 GMT )
I hope we get a rally this week. I also hope that all my friends use it to get positioned for what is coming. This will be the worst debacle in the history of financial markets. Its scary to contemplate the full ramifications of this thing topping out and collapsing at a time when the long bond was at all time highs. but it did. It fooled me for that reason, as I've said here msny times. I am fooled no longer. The day of reckoning is at hand. The 401k money of the yuppie-dippie-boomer-soccer-mom-Klintonista generation is going to disappear as the morning fog over the ocean. And they STILL wont believe it. Not until it is irretrievably lost. Then they gonna be pissed. Mightily so.

See if you can guess the countries with PPT intervention.
http://quote.yahoo.com/m2?u

Japan may have no choice but to support at 14,000. They know that if they fall below that level, it is game over.

Along with that 'day' in '87.... The negative for the market this week was the -114 close for the Dow on a Friday after a big sell-off. Not the stuff of confidence inspiration. I wouldn't put much stock ( no pun intended ) in the Globex numbers either, atleast not until about nine A.M. Eastern time. If we are dealing with mass fear here, then all bets are off. So look at the chart and ask your fertile imagination as to what it sees or does not see....

dec99 2300 crude oil calls are $200.......

http://router.minot.com/~bohl/

go here and look at weekly crude..1991 specifically...
1 2300 call would have paid for a summer cottage in
vail.....

who has their tickets? 99 350 gold calls are cheap toooooooo...
bbitmcitdotssmfatimmb..

cherokee....catcher.of.the.crude.calls...war.is-a-comin.....oowwwwwww..

I'll repost some links I posted earlier re Russian turning to gold in crisis. They may be pertinent to your discussion.

Russia bidding to buy but not sell gold: ( Could pgm's be far behind? )
http://biz.yahoo.com/finance/980828/russia_gol_1.html

Gold Rubles. ( rubbles? )
http://biz.yahoo.com/apf/980827/russia_gol_1.html

Russia banks propose gold INSTEAD of dollars. ( How novel an idea! )
http://biz.yahoo.com/finance/980827/russia_gol_1.html



BTW, if man in 1938 split the atom in a squash court at the University of Chicago, when did he first split the infinitive and where? ( And what is the difference does it make? )

Where has Kitco been? I been trying to get on here and say something for a long time. Finally made it. We have started the great Klinton bear market and worldwide deflationary depression. I am short and getting shorter. I dont know how low the Dow will go. There is now no meaningful support. The bottom will be made on a "washout" panic day, with at least 1 1/4 billion shares traded on the NYSE, and the Dow down at least 600 points. There may be a powerful "relief" rally to fool the dippies one more time, but dont count on it. The misguided souls among the Kitcoites who have been praying for this for years, in the foolish hope that it would cause the value of their kruegerrands and Morgan dollars to skyrocket, are in for an unpleasant surprise. Gold will easily break $250 and most likely $200. In fact, I'm betting real money on just that. Cash is KING. And SHORTS. Short everything except US debt, I am. Very long ED and US and very short everything else on the board. Especially big Banks and brokerage stocks. JP Morgan already down about 30% from its highs, with another 30% coming in a few days when the next slide gets underway. Good luck all. We're gonna need all the luck we can get. And DEEP moats around the castle. ps: Where the hell is Puetz when you need him?: )

Yup.

Rebate-- like they say, possession is 99% of the law. ( HAR thingy )

Sharfin Try using your own brain? If you have one? Better copy another 10,000 words of none Gold related fecal matter.


sharefin ( Lots of words of wisdom this last weekend. ) ID#284255:
-
Global Intelligence Update

The End of the New World Order

Last week marked the collision of the "New World Order" with reality.
Toward the end of the week, reality was winning.

Proclaimed by George Bush after the collapse of communism, the New World
Order was neither an empty phrase nor a hidden conspiracy. It represented
a radical vision of what the world had become, now that U.S.-Soviet
confrontation had ceased to define the international system, and it was a
vision widely shared by much of the world's elite. According to this
vision, fundamental political disagreements between nations had
disappeared. Rather than being ideologically divided, all major nations
now agreed on fundamental core principles. Reasonable people everywhere
accepted the proposition that economic growth and prosperity were interests
that transcended all others. That being the case, it was essential to
maintain international stability in order to facilitate that prosperity.

Because all major nations agreed on the desirability of prosperity and
international stability, fundamental international disputes, like those
that led to the two World Wars and the Cold War, were no longer a
significant problem. The only international problems faced by the United
States and its allies were the management of marginal outlaw states like
Iraq and North Korea, internal instability as in Yugoslavia and Somalia,
and outbreaks of international terrorism. Because all nations were now
reasonable, and any reasonable nation could see the need to prevent outlaw
nations, civil wars, or terrorism from spreading misery and upsetting
financial markets, it followed that all nations would be prepared to
cooperate in managing these marginal problems. These were, after all,
marginal issues. What really had to be managed was the international
economic system, especially the integration of former Communist nations
into that system.

In Bush's view, an effective mechanism existed which could achieve all
these goals, one that derived from the Cold War itself. During the Cold
War, the Western powers had created a complex of alliances designed to
contain the Soviet Union, from Norway's North Cape to Japan's Hokkaido.
One part of this alliance system was military, including institutions
ranging from NATO to the U.S.-Japan Mutual Security Treaty.

But another part of U.S. strategy was economic. The United States
understood that maintaining the prosperity of the Western alliance was a
fundamental part of containing the Soviet Union. Prosperity persuaded
allies to remain in the alliance, persuaded neutrals to work with the
alliance, and undermined the legitimacy of the Soviet-led alliance. The
maintenance of the West's prosperity was placed in the hands of a group of
multilateral organizations, including the International Monetary Fund to
manage financial relations, the GATT ( now replaced by the World Trade
Organization ) to manage trade, the World Bank to develop the Third World,
and so on. There were many other such organizations. All of them had the
same purpose. They did their jobs extremely well.


* The New World Order and Transnational Institutions

At the heart of Bush's New World Order concept was the idea that these
transnational institutions would not be abandoned now that the Cold War was
over, but would in fact have their role expanded to include the management
of international economic relations with the former Soviet empire. Indeed,
Bush went so far as to envision a world in which states that hadn't
abandoned Communism formally, such as China, could be included in this
global, multilateral system. After all, the Chinese, whatever they said
officially, wanted the same thing as Belgium or Canada: a stable business
environment in which to develop their own economy. Bush expanded this
multilateral vision to include the United Nations, which had previously
been paralyzed by U.S.-Soviet competition, but which could now fulfill its
original mandate as global policeman.

Obviously, the United States, as the world's leading nation, would play a
special and decisive role in defining the mission of these multilateral
organizations. However, since all nations now had the same basic
interests, it followed that no reasonable nation would object to U.S.
leadership. Indeed, the world would welcome it. And for a while it all
worked. There were no major international conflicts. The world accepted
U.S. leadership in dealing with outlaws like Iraq and Serbia. The
international financial system was well served by the IMF, by G-7 meetings,
and so on.

Then reality set in. Asia, which had postponed the inevitable as long as
it could, buckled under the weight of its own inefficiency, and no
multilateral organization could do anything to prevent it. However, it
was still possible to fantasize that the Asian crisis could be contained,
that it would have no lasting political repercussions, or that it was not
as bad as it looked. None of this was true, but it was possible to
fantasize.


* The Russian Collapse and the New World Order

Then last week, reality mugged the New World Order with some brutal
finality. As the Russian financial markets collapsed, Russia passed beyond
the help of the IMF, the World Bank, or anyone else. The financial
meltdown in Russia is irretrievable. There is nothing that the West
possibly can do to resurrect the Russian economy. It is not a matter of
money.

The problem is that in Russia, money does not turn into capital. All
investments are hopelessly squandered through a combination of inefficiency
and theft. For money to turn into capital, for investments to flourish,
institutions must exist which guarantee such things as the lawful,
predictable enforcement of contracts, reliable transportation of goods from
one point to another, government neutrality in economic competition, and so
on. None of those things exist in Russia. Contracts are unenforceable,
basic reliable infrastructure is non-existent, and the government is not
only unpredictable in its treatment of participants, but is at times
deliberately destructive.

Russia is a different place. But the ideology of the New World Order held
that there are no different places, that all reasonable people behave in
the same reasonable way and that, therefore, given advice by Harvard and
Goldman Sachs, Russia would evolve economically. It was also assumed that
Russia would evolve politically, because it was assumed in general that,
with a growing economy, all reasonable people would come to look like
everyone else. Thus, prosperity would yield liberal democracy, and liberal
democracy would make Russia an enthusiastic member of the international
community, just like people from Wisconsin but with more beets in the diet.

Instead of this happy scenario, last week saw the re-emergence of the
Communist Party as the decisive force in Russian politics. The political
issue last week was not what Yeltsin or Chernomyrdin would do, but what the
Communist Party, the largest party in the Duma, would permit them to do.
The fact is that Yeltsin can no longer govern without the support of the
Duma, and power in the Duma lies in the hands of the Communists and the
nationalist parties, including the strange fascist Zhirinovsky, as well as
other factions. On the surface, this would seem to create a split in the
Duma that the Yeltsin/Chernomyrdin faction should be able to exploit. In
fact, there is a much closer bond between the Communists and the
nationalists than one might think. Indeed, it is this commonality of
interest that brings us to the end of the New World Order.

The Communist Party speaks for the lost Russia. It was a Russia of
relative poverty, but not the utter misery that has gripped most of Russia
since the collapse of the Soviet Union. More importantly, Russia was a
land in which the misery was shared, on the whole. The fantastic gap that
has opened between a tiny oligarchy of wealthy men who have used the new
regime to enrich themselves, and the masses who can barely feed themselves,
powers the Communists' claim that, as bad as the past might have been, at
least it was better than the present.

Thus, it is the Communists who are pressing Yeltsin to reject the demands
of the IMF and the West that economic reforms be maintained and even
expanded. Arguing that Western help hurt Russia rather than helped, and
also that no further help is being offered anyway, the Communists are
demanding that reforms be rolled back. They want to re-nationalize the
economy, impose wage and price controls, re-institute central planning, and
end the convertibility of the ruble. In other words, they want to return
to the status quo ante.

Implicit in the Communist position is a rejection of the assumption that
Russia's salvation lies with the West. This technical anti-Westernism
among the Communists is reinforced by the visceral anti-Westernism of
Zhirinovsky's Liberal Democrats, the third largest party in the Duma. For
Zhirinovsky and other nationalists, the economic disaster is coupled with a
geopolitical disaster. Under communism, Russia was a superpower, with
equal standing to that of the United States. Today, Russia is seen as a
vassal of the United States, with any Deputy Assistant Under Secretary of
anything having the right to lecture and scold Russia's leaders as if they
were school children. Even more infuriating, the great Russian empire was
given away, in return for nothing. Not only Eastern Europe, but also the
Baltics, Ukraine, Central Asia, and the Caucasus were lost. Even parts
of Russia itself, like Chechnya, can barely be contained.

The economic anti-Westernism of the Communists combines with the
geopolitical anti-Westernism of the nationalists to create a powerful
ideology that used to be called Stalinism. Central planning together with
powerful internal controls and a deep sense of the geopolitical interests
of the Soviet Union was, after all, Stalin's greatest achievement.
Personalities aside, this Stalinism will now reemerge, as it is the only
logical outcome of the current situation. Because no meaningful Western
help is possible, and thus mild internal reforms cannot possibly contain
the situation, power will devolve to the Communists and nationalists.

The logical bridge between the two is, of course, Alexander Lebed. We wrote
in our forecast for 1997 that, "If the Westernizers surrounding Yeltsin
manage to squeeze Lebed out or into irrelevancy, they will have sown the
wind. The whirlwind will be a counter-revolution of epic and bloody
proportions. If Lebed is given room to maneuver, he may manage a
restoration that keeps the vestiges of democracy and capitalism alive. In
either event, liberal democratic capitalism in Russia will fail in 1997 --
and its replacement will be the traditional Russian alternative to
Westernizing businessmen and intellectuals: xenophobic, Slavophile
bureaucrats and policemen." We were premature on our date, but believe we
were correct on our core prediction. Lebed was forced out. The whirlwind
is at hand.


* Western Strategy Toward Russia After the Communist/Nationalist Revival

It is therefore time for the West in general, and the United States in
particular, to begin defining a post-reform policy toward Russia. Russia's
foreign policy will be eminently clear -- first, and above all else, the
reclamation of the Soviet Union to its old borders. The key to this, of
course, is Ukraine. Russia is already in a close confederation with
Belorussia, and the reintegration of Ukraine is therefore critical. Here,
of course, the Bush-Clinton obsession with Moscow's nuclear weapons will
cost us dearly. Rather than strengthening Ukraine to resist reemerging
Russian imperialism, the United States focused on strengthening ties with
Moscow, hoping to encourage reform. This leaves Ukraine vulnerable to
Russian pressure. We believe that it is too late. The Ukrainians will not
be able to resist.

It is the West's good fortune that recovering the Soviet empire will take
the Russians a generation. But that process leaves the West with critical
decisions to make. The United States has made massive investments in
Central Asia. To what extent will the U.S. resist Russia's return? Will
the U.S. extend NATO protection to the Baltics? If not, what policy does
the U.S. propose? Iran and Turkey will both oppose Russia's return to the
Caucasus. What will U.S. policy be there? If the Russians become more
assertive, should NATO be further expanded to include utterly strategic
Slovakia? If not, should we attempt to include Poland and Hungary in NATO,
or are they too exposed?

And then there is the return of the abysmal and eternal German question:
should the U.S. shoulder the burden of defending Europe again, or should
Germany be forced into that role, recreating the problem that has burdened
Europe ever since German unification in the nineteenth century?
Fortunately, Russia's strategic position is such that it will not readily
return to global eminence. Many Armenians, Lithuanians, and Uzbeks will
have to die before that moment comes. But even a regional imperialism by
Russia poses a critical question to which Madeleine Albright and Sandy
Berger appear not to have given any thought: what is U.S. policy on a
thousand issues if Yeltsin falls and, for example, Lebed takes power?

These and endless other questions are political and military in nature.
They are not economic. The New World Order assumed that political and
military questions were now marginal. Therefore, strategic planners in the
Clinton administration, which inherited and celebrated the strategic legacy
of the Bush administration, continue to ignore these questions in favor of
familiar issues like IMF bailouts and reforms. These questions are closed
as far as Russia is concerned. Clinton doesn't seem to realize it. These
critical questions are being ignored in favor of a fantasy: that the
Russian experiment in economic liberalism is not yet dead.

Therefore, Clinton's visit to Russia will be disastrous. First, he is
meeting with the wrong leader. Yeltsin leads nothing. Clinton is meeting
with a political corpse, and infuriating the leaders who have already
usurped power in every sense but the official. Second, Clinton will be
discussing economic issues that can no longer be managed, rather than
posing the difficult political and military questions which now frame
Russia's relations with the world.

The new Stalinism cannot be stopped. Communists and nationalists will form
a coalition to govern Russia, sooner rather than later. They have a very
different agenda than the old regime. Clinton's summit makes no sense,
save that he believes that the economics-centered New World Order can still
be saved. We expect Clinton to meet with Lebed and perhaps others. But
what is he going to say to them? What is America's strategy? Thus far, it
appears to be to avoid the obvious and to pretend that what is impossible
can happen if we close our eyes and wish real hard.


* Asia and the Return to Politics

It is not simply a matter of Russia. Asia's problems are no more amenable
to economic solutions than are Russia's. The core issue in Asia is
political. Asia is no longer economically viable. It cannot compete with
the United States except by exporting at or near a loss. Asia is being
forced to take political measures to protect its economic security. Asian
countries can solve their economic problems internally only through
political action. Externally, they can stabilize their economies only by
forming a regional trading bloc that protects their weakened economies and
by creating a new reserve currency to substitute for the dollar. This is
not only an economic decision, but also one with profound political and
even military consequences.

The current economic crisis is forcing the world back to politics. In the
very long run, the return of politics will resurrect war in the traditional
sense of Great Power conflict. In the immediate future, this crisis has
demonstrated the impotence of multilateral organizations to manage the
world. The United Nations can't deal with Iraq, the IMF can't do anything
with Russia or Indonesia, and the WTO can't stop the trade war that will be
the inevitable consequence of Asian export surges and protectionism. The
multilateralism of the New World Order has shown the hollowness of these
institutions by revealing that it really isn't a small world after all, but
a very complex, variegated and dangerous one.

Like the Congress of Vienna, the New World Order tried to freeze in place
institutions that had meaning only in the context of a great struggle.
Whether that struggle was against Napoleon or Brezhnev, the fact is that
when the war ends, the institutions that made the alliance function must go
away. This crisis shows the impotence of such institutions in the face of
reality. It also shows that the New World Order, rather than being a
brilliant vision or a dark conspiracy, was merely a failure of imagination.
Or more precisely, it was imagination run wild, believing that politics and
war would be replaced by economics and good feelings.

So, now the history of the post-Cold War period finally begins in earnest.
It is not, in our view, the Russian question that will be the most
important. That is merely the first question. The most important question
is the relationship of the United States to Asia. More precisely, the
question is the relationship of the United States to the genuine if
reluctant leader of Asia: Japan. First, a redefinition of Japanese
politics is going to occur, with a more political and nationalist view of
the world emerging. Then, just as economic reality is prying U.S. and
Japanese interests apart, political reality will divide their interests as
well. As American and Japanese interests are forced apart, a new global
politics, the politics of the 21st Century, will be defined.

I printed those stories out as soon as I saw them a few days ago. Sometimes they have a funny way of falling in to cyber oblivion. :- ) ) I showed them to a couple of people. I got this most astounding look of, " What the Hell does this mean?" They were really clueless. No concept of what 'money' really is versus what we use as money ( debt instruments ) .

Homer Simpson to the MAX. Mad MAXX that is! They just don't get it, but they will get IT when the quarterly statements come out....

I agree with you 100%. The bear is here and it will not be good for gold. I would like to hear from Puetz also. And where is Golden Cheesehead? I miss that guy.

I know Kitco is getting slower by the second, but I have one question. Why do you expect the dollar ( or bonds ) to survive this debacle? The thought that keeps running through my mind is where will the tax money come from to service the debt?

The nikkei website is http://www.nikkei.co.jp/enews/

Also, all indices on yahoo: http://quote.yahoo.com/m2?u

Cheers

Thanks for the post! We've been following you a bit on avid trader. I wasn't happy to hear your take on gold but I respect your knowledge and experience tremendously. Any take on gold for the longer haul? Do you see the EURO launch as bullish for gold?

They wont survive. But that's further down the road. What we're faced with immediately is the rapid disappearance of 1/3 to 1/2 of the liquid wealth of the society. Deflationary to the extreme. "Free" money will come later as the politicians try to put humpty back together. Your gold will be very valuable by the turn of the century. Right now, tho, CASH is KING, IMO.

BUY:
Dec Gold - 8/31-9/1 for 75% success rate
Jan Crude - 9/1 for 75%
Nov Beans - 9/1 for 80%
Dec Wheat - 9/1 for 78%
Dec Silver - 9/10 for 77.8%
Dec Yen - 9/3ish for 77.8%

SELL:
DOW JONES - 9/3-9/5 for 78.6% ...... ( hmmmmmmmmm ) ......
Dec Treas. Bonds - 9/2 for 76.5%
OCT Plat - 9/5 for 77.8%

NOT A RECOMMENDATION.....just food for thought....these seasonals go back to mid 60's to early 70's..........

away...to the couch






go gold..... ( so I can sell the rallies ) ......