From Gold-eagle.com

link at:-

http://www.gold-eagle.com/gold_digest_99/joubert080299.html

[snip]

The overall picture that develops is one that is bullish for gold. Given normal market behaviour, the question really is not whether there will be a bull market, but whether it is at a point where the gold price could reverse its long term bear trend or whether we have to wait another month or two while POG declines to the next level of firm support at about $240 on its long term chart.

One key to this question lies with the chart of the POG in Yen. There is scope for  and a chart requirement  for a decline of about 25% in the yen price of gold. For that to happen, with gold support at $240, the Yen would have to firm to about %90 to the dollar. That development, again, would place the US bond market  and Wall Street!  under strong pressure. So the question now becomes:

"Can POG fall to and remain near $240 if the US dollar and US markets should decline substantially in value?"

IMHO the answer to this is in the negative. If US bond and equity markets fall sharply, while the dollar rapidly loses value in its new bear market, enough paper wealth would be looking for any place that promises a safe haven for gold to take off.

Gold might only get the leavings from the Japanese stock market and other paper towers where the downside risk is seen as much less than in US markets, but the gold market is very thin by comparison  even a small diversion of US paper wealth into gold would send the price of the metal and the shares skyrocketing.

So, while a decline to $240 can not be excluded, it seems more likely that gold may have found a floor just above $250 and might now be preparing to begin a recovery  one that could easily become explosive.

The second question asked at the beginning can be answered irrespective whether gold takes off now or later. We use two estimates from the charts to provide an answer. The first is that there is a really long term bull channel for gold and that this channel is indicated by lines T-X-Y-Z on the chart of the dollar price of gold.

Line T currently has a value of $755 and corresponds closely to the answer one would get if the rule of thumb for breaks from pennants and triangles are applied  i.e. that the extent of the new trend equals the length of the "flag pole" from which the triangle or pennant is suspended. This is the length of the rise, in this case, of the market into the high from where the triangle or pennant developed.

To find another answer we assume that the inverse line F on the chart of the Yen price of gold is also a reasonable target. It appears in fact to be more reasonable than line T on the dollar chart. Line F currently has a value of %76700/oz. To reduce that to a dollar price we have to make an assumption of what the yen-dollar rate will be.

Now the longer term Yen dollar rate has good support at around %100, with the potential to move down to %55 or below if the large wedge formation completes normally. If the Yen price of gold does recover as far as line F, it would imply that the dollar price of gold can be calculated to lie somewhere in the range of $76700/100 up to $76700/55, or in the range $767 up to $1400/oz.

Even at the current exchange rate of %114 to the dollar a POG of %76700 implies a gold price of $670!

It turns out that the apparently optimistic target on the dollar price of gold  line T  is actually very much lower than the apparently much more conservative target on the Yen price of gold!

This shows that in what could become a climate of a weak dollar, foreigners buying gold in terms of their own historical experience might push the dollar price to levels not easily imagined today. And definitely not by the institutions with a very much vested interest in a lower gold price!

It also shows that gold can be expected to present more than an opportunity for very good profit  for holders of dollars it presents one avenue of preserving their wealth in what appears to be a very uncertain future for the US currency.

The one negative is that the story told in these long term charts  great upside potential for gold, substantial weakness for the dollar before support is found, steeply rising US bond yields with 10% as a first target for the yield on the US 30 year Tbond, and of course a POG probably moving well above $1000/oz  will not take place without great hardship and even catastrophe for many people riddled with debt and with whatever assets they retain stuck in rapidly declining markets.

A subsequent analysis will examine a range of market variables against the background painted in this essay.

2 August 1999

) August 1999 Daan Joubert

[end snip]

-- Andy (2000EOD@prodigy.net), August 02, 1999

Answers

Andy, I think you know who I am so I won't identify myself in order to keep my anonymity. As you know from my posts in January I have been purchasing PM's in one form or another since January, after I finally got totally self-sufficient in my preps. I left this forum to follow the money through 99 as I feel this is the once in a lifetime opportunity to financially set up future generations of my family. I have spent everyday since, at the financial boards, including kitco.com that I believe you turned me on to. Thus far I have invested over $80K on PM's in one form or another. 70K of the money invested was in bullion that I have taken actual physical possession of.

I have found that the markets are being manipulated by the powers that be in order to keep the price of gold down. As soon as gold is ready to break out someone like the Bank Of England or the International Monetary Fund announce their intentions of selling, driving the markets back down. Some of the largest gold producers are part of the manipulation as well in order to drive out their smaller competitors. I also believe Goldman Sucks is a major player as well. I believe they are the go between for the US goverment and the markets.

When gold breaks out it will collapse the entire world wide fiat currency system. The debacle with Long Term Capitol in October of last year displayed the inherent weakness of the entire woldwide currency system. If the Fed would not have cut the interest rate three times in a matter of about 10 days the entire fiat system would have collapsed in October. These rate reductions were made in order to bail out Long Term Capitol. LTC is heavily short in the gold market. Their survival as well as Goldman Sucks is reliant on a low gold price. What they are doing is leasing the gold at a very low interest rate of around 1.5% and then selling the gold and taking the money and investing it in treasury bonds and getting a higher interest rate with the proceeds. Then pocketing the profits. The same process happened with LTC. Instead of leasing gold, they borrowed Yen at .05% and went through the same process. (yen carry trade)

When gold rises, the lease rate will go much higher, forcing the manipulators to purchase gold to cover their leased gold that is being called in by the buillon banks. So, it is in their best interest to keep the price as low as possible so the public will not continue buying, forcing the price up.

Demand for Gold and silver is at its highest since the beginning of time yet the price of the PM's is at its lowest, factoring in inflation, since the beginning of time. This fact alone is a no brainer to anyone with the IQ of a teenager to see that the fiat system is ready to collapse and gold is getting ready to skyrocket.

The puppeteers can not hold out much longer. As soon as the stock market tanks over the next three months, gold will blast off as it always does during times of great turbulance, forcing the world wide fiat monetary system to collapse. I'm sure the puppeteers already have a new system ready to go when it all falls apart soon. Will you take the CHIP? I won't!!

Mike

-- BUYGOLDANDSILVER!! (goldandsilver@bull.com), August 03, 1999.

Yerp - I agree - what next?

-- Andy (2000EOD@prodigy.net), August 03, 1999.