Gold Market and Precious Metals Commentary

What a day! Goldman Sachs sat on the gold market (what else is new?), as gold rallied only $1.10 while the dollar swooned again, bond yields rose, and the stock market dived. Silver put in a better performance and rallied 7 cents.

Behind the scenes there was all kinds of news.

The lease rates rose again today, with the one-month rate soaring to more than 4 percent. The six-month rate is about 3.6 percent; all of a sudden the lease rate market is inverted. A bullion dealer acquaintance told me that the physical gold market is on fire and there is just not much gold around. One-week rates are even higher than one-month rates. There was actually alarm in his voice. All this comes after the August gold contract was almost squeezed. That will give you some idea of what the gold market manipulators are up against.

This is only the beginning of their angst and it is what I have been harping about for months now. The shorts have been relying on less formidable supply/demand deficits than is the case. Midas relies on Frank Veneroso's supply/demand forecast. He tells me that the deficit is now about 160-180 tonnes per month. (I have known Frank for 20 years and he is always early and almost always right.) That is a big number and may be 100 tonnes more per month than the bears comprehend. Thus they are being blindsided here if they are listening to less-informed precious metals services.

And that is why I have said over and over that we have the shorts and the "Hannibals" right where we want them.

Desperate they are and back to their old tricks. All of a sudden they are floating talk that the International Monetary Fund is finalizing plans that outline a proposal for central banks to buy some of the fund's gold reserves, freeing about $2 billion to ease the debts of the world's poorest countries.

Well, three cheers for Le Metropole Cafe's John Brimelow. Here is what he had to say about this latest IMF scheme:

"New York, Sept. 2 (Bloomberg) -- John Brimelow, director of international equities research at Donald & Co. in New York, comments on the International Monetary Fund's plan to possibly sell gold to direct buyers rather than in the open market. The IMF is considering gold sales from its reserves to finance debt relief for the world's poorest countries.

"`If the IMF takes an `off-market' approach, that means instead of going to the marketplace and offering the gold to all and sundry, they will negotiate with a specific buyer,' Brimelow said. `Any large party could negotiate directly -- a central bank, a hedge fund, or another parastatal institution. Its rather like a block trade in the securities business.'

"This approach `can avoid pressuring the market, although that's assuming the person who buys the stuff hangs on to it,' Brimelow said. `If they don't sell it or they don't lend it, then it's a transaction that won't damage the market.'

"The problem is that `central banks don't report what they are lending. There's no way of tracking it,' Brimelow said. If the IMF sells gold to central banks that lend it to the market, `through the back door, the IMF would be achieving the same effect as selling the gold' directly to the market, he said.

"`It seems to be a thinly camouflaged version of the original plan and I don't think it's going to fly,' Brimelow said. The key obstacle would be getting consent from the U.S. Congress, which has so far blocked direct market sales. `I think the IMF bureaucracy is displaying extraordinary arrogance and even stupidity in its dealings with Congress. At a very deep level, it doesn't understand how the American political system works.'"

John has it nailed. The IMF and their Hannibal Cannibal cronies don't give a tinker's darn about the poor. For 36 out of the 41 poor gold producing countries have already asked them not to sell this gold. Yet they persist in the charade. Why? Because their buddies, the bullion dealer, big-money crowd gold shorts, are desperate to have gold supply hit the market, and all they care about is keeping the gold price down. These devious crumb-bums need the IMF gold supply to cover their gold shorts.

Our team will do what we can to shut them out of their nefarious plans.

All my contacts in the Joint Economic Committee and Senate Banking Committee, etc., have left for the Labor Day weekend. I will contact them next week and send them Brimelow's comments along with a few of my own.

Bank Scandals. One after another. Why there aren't more people looking into the biggest banking scandal of all time -- the manipulation of the gold market and orchestration of low prices? It blows my mind.

Credit Suisse has been shown the exit from Japan, the Bank of New York is under siege for moving the money of the Russian elite and Russian mobsters out of that country, and today came word of two more big banking scandals.

The first was First National Bank of Keystone in West Virginia. They had been touted as one of the most profitable banks in the country with a reported capital ratio of 16.5 percent. That ratio had them one super sound bank. But lo and behold, the Office of the Comptroller of the Currency just shut them down. It turns out that half of their $1.1 billion in assets was phony.

One day a banking king, the next day a banking disaster. What was the difference from one day to the next? Simple: The truth came out.

That is what is going to happen in the gold market. When the scam is exposed (along with the true size of the gold loans, 10,000 tonnes or more) and the shorts try to cover, the price of gold will go from $250 to $500 practically overnight, and for the same reason. The truth will come out. That is why it is time to focus and to invest in the gold and silver markets.

The second big story of the day was about GATA critic Martin Armstrong and his Princeton Economics International. Martin has decried GATA. He is a mega-bear on gold in the short term, looking for sub-$200, and on silver, putting his money where his mouth is, as far as we can tell. Sources tell us that one of his hedge funds is short 20 million ounces of gold. He is the most vociferous silver bear in the world and constantly expounds that the price of silver is headed for $2.80. He says silver ranks among the world's worst investments.

The funny thing here is that when the price of silver shot up last year to $7.80 after the Warren Buffet silver-buying news, Armstrong complained that the silver market was being manipulated. Then he called for an investigation by the Commodities Futures Trading Commission. There was no basis for what he had to say and the CFTC told him so. Not that the CFTC would have a clue what is going on in the metals markets anyway. How quick were they to pull the trigger on the big Sumitomo copper scandal?

Months ago I said Cafe sources told me that Armstrong's operations were under scrutiny. This is what the press had to say today:

"New York, Sept. 2, Reuters -- New Jersey Firm lies at heart of Republic probe.

"At the heart of a regulatory probe that ie expected to stall a merger between Republic New York Corp. and Britain's largest banking group, HSBC Holdings PLC, are the U.S. bank's dealings with affiliates of a New Jersey economics forecasting firm.

"Republic's brokerage unit came under regulatory scrutiny for allegedly mispricing investments for one of its clients, Princeton Global Managements and Princeton affiliate Cresvale International, sources close to the situation told Reuters on Thursday. The company that owns these two entities is Princeton Economics International, a forecasting and derivatives trading firm based in Princeton, N.J.

"The bank, which is cooperating with Japanese as well U.S. regulators, said it fired the management of its futures trading operations and suspended the head of its Philadelphia-based securities unit, James Sweeney.

"Princeton Global is an investment company owned by Princeton Economics and helps Japanese institutions hedge their foreign currency transactions. Princeton Economics, which employs 300, also owns futures broker Cresvale Investments, whose Tokyo office was investigated by Japanese authorities in May."

Cafe members might like to know that Republic has been the silver and gold floor broker for Armstrong. Plus you might also like to know that that Armstrong's prediction is that the yen will go to 278 to the dollar.

Get the picture? Princeton is mega-short the yen, gold, and silver. We know what is happening to the yen shorts. Armstrong has berated us for our views of what is going on in the gold market. What goes around comes around. Boomerang time here, and only a matter of time before this guy blows up and is carried out.

Bloomberg reports that "Martin Armstrong is considered to be the biggest individual silver futures trader on the Comex division of the New York Mercantile Exchange." I will send the stretcher to the Comex for him.

Seriously.... The question that needs be answered here is: Why was Republic marking up the value of the hedge fund? What is there to hide? Is Armstrong's group in serious trouble? Certainly he has big problems. How easy will it be for him to cover his massive gold and silver shorts if he has to? Does he call Alan Greenspan as everyone else does?

More soon. Get long. Be strong.

Bill Murphy ( Midas )

Midas du Metropole

After graduating from Cornell University, Bill was a starting wide receiver with the Patriots of the old American Football League and has been around the financial and commodities markets ever since. He owned a futures firm in N. Y. that specialized in precious metals and was a contributor to Veneroso Associates, a global strategic investment firm and producer of the 1998 Gold Book Annual.

Midas: http://www.lemetropolecafe.com

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-- andy (2000EOD@prodigy.net), September 04, 1999

Answers

IF GOLD WERE JUST ANOTHER COMMODITY

Through its severe bear market phase, commentary about gold has been pretty negative in the financial press, which is typical of bear markets. Quite often we hear that gold has no monetary value as currency, it has lost its luster, a fad of the past, gold is dead, gold is now just another commodity.

These people either do not have clue what they are talking about or have sold gold short.

If these pundits were correct and gold is just another commodity, we would only have to look at supply and demand to determine its price direction, it would be so much easier. We would just have to watch for fundamentals that either increase or decreased inventories with the resulting price movement. Not so easy with this 'just commodity' gold, we have to consider many other things not present in your everyday commodity such as central bank policy/leasing, politics, FED and government policy, hedge funds activity and the carry trade.

If these pundits are correct, why is gold the only commodity Central banks hold as a reserve?

If gold was just a commodity, why is its price among the data that Alan Greenspan watches according to a past Rueters article "Among the data he looks at, Greenspan said, are money supply, gold prices and the Treasury's new index-linked debt?"

If these pundits are correct, why do the Swiss have to hold a referendum before they can sell their gold?

If gold was just a commodity, why to we baste ourselves in its beauty as jewelry or a coin to hold in ones hand? Why don't we just have a brass or copper wedding band?

If these pundits are correct, why has so much gold been sold short in the paper market than there is available in the physical market and when the fundamentals are so bullish? Any other commodity would never have this kind of short position with over whelming positive fundamentals of supply and demand unless it was being manipulated.

If gold was just a commodity, why did Korea, ask its people to turn in their gold in time of crisis?

If gold was just a commodity, why the fascination, why am I writing about it and countless others. You can find new articles on the web about gold on a daily basis?

If these pundits are correct, why has it become so difficult to locate and buy a gold coin?

If gold was just a commodity, why in times of war does the enemy walk right past your banks vaults full of paper money and steal your gold. No this isn't a thing of the past, it happened in the 1990s with Iraq and Kuwait?

No, gold is a lot more than a commodity, it is in a field of its own, it is an Institution, it is money, beauty, wealth and power, it is durable and long lasting, it is sought after around the world and at the same time it is feared by many bankers and politicians, it has a much longer history as money than any paper currency. No other commodity has a monetary value that can be used as world currency, other than perhaps, silver, poor man's gold. At the same time, no currency has the same unique qualities of gold.

When I hold a gold coin in my hand, I can feel its weight and beauty, I think of the long history of gold, the Spaniards and Incas. I know people toiled to find the gold and mine it. I know it was weighed carefully and the coin was minted with care and precision. Hand a gold coin to anyone, they are in awe, they hold it, feel it and examine it carefully.

Give them a $5, $10 or $20 dollar bill and they barely glance at it before it is stuffed in a wallet or pocket and passed on to someone else. When I think of paper money, I think of a press going Chunk, Kachunk, Kachunk turning out millions of duplicates at a push of a button. I see its value continue to erode. I know that no paper currency, in the history of earth has ever retained its purchasing power over time, because it is just to easy to make and exploit.

There is no doubt, gold is different and unique, it is not just another commodity and it is no where near dead.

Inflation, Deflation and Gold

Unlike paper currency, gold has survived the test of time and is well known and talked about as a good hedge against inflation. This is true, but the problem with the price of gold lately is that there is no inflation. In fact gold is a good leading indicator of inflation and is one of the reasons the FED watches its price. What the drop in gold has been telling us in the past two years is inflation is heading down which is a documented fact now. What many fail to recognize is with golds drop down to $300 and less it has been screaming deflation. The central bankers or generals are still worried about the last war called inflation. They have been way too slow and have not acted enough to easy monetary conditions, particularly the U.S., I have been critical of this in the past and still remain so and is one of the main reasons that I am bearish on the economy and markets. While the U.S. economy has been doing well, the rest of the world is crying for more dollar liquidity then the FED is supplying. This is very evident with the plunge in commodity prices that you seen up until a month ago.

Other Pertinent Observations

Gold remains the only objective money in the world Greenspan himself believes gold is a currency and watches it closely. Last May his comments were "Gold still represents the ultimate form of payment in the world and is always accepted. Gold is perceived to be an element of stability in the currency and the ultimate value of a currency".

The demand for gold is setting records. According to the world Gold Council this past week, gold demand climbed 16% in the 2nd Quarter, a record for any three month Quarter ever.

The numbers are not on whether or not central banks have been net sellers of gold in 1999 - the press is mainly feeding us the sell side of the story only.

Whether or not the BOE sales were used to hold gold prices down, it has now become very clear the BOE sales took place because the market is running out of physical gold and these sales were a necessity to provide liquidity. If the market understood this it would be a huge plus and a bullish factor for gold, but instead the huge short players and the gullible taking heads of the media put a negative spin on it as CBs unloading unwanted gold when in fact they sold in a desperate act to provide gold to a market that is in such huge demand there is little gold left. The CB sales have been receiving huge negative press this past year when in fact CB sales last year were lower than as recently as 1996 when we seen the peak in the gold price at $420. The press is only emphasizing the sell side of the story and there is little news on CB buying that has been obvious from public statements in China and Japan and perhaps others that received no press at all.

Gold import statistics released for June show that South Korea's imports of gold skyrocketed to 72 tons from 44 tons a year ago (that is one month only, June). The January-to-June total for this year for Korea gold imports is 264 tons, up 38% over the same period last year.

In Taiwan, June imports were 94 tons, twice that seen in May of this year, and more than twice the previous year. Year-to-date, Taiwan's gold imports are 368 tons, up from 155 tons at this time last year. Imports are also up in India.

Gold may just be a commodity to many in the U.S. who have experienced a strong $ in the last decade, but that is not the view in many other parts of the world, especially in the 1997 currency crisis when those with mighty US$, had those accounts frozen or their banks closed in time of need.

Struthers Future Tech Report http://www.sentex.net/~resource 7 September 1999

-- andy (2000EOD@prodigy.net), September 04, 1999.

Andy, do you perceive that the gold market is a great pyramid Ponzi scheme which will tumble when the US stock market crashes?

Batra has no real use for gold certificates, does he?

He mentioned physical gold might be worthwhile as a long term investment, but he did not recommend obtaining gold mining futures, did he?

-- Randolph (dinosaur@williams-net.com), September 04, 1999.

The Shorts! The Shorts! Or, is Barrick a Miner or a Hedge Fund

by Ted Slanker The Slanker Report

There's been a lot of talk recently about gold market manipulation. And since I'm not big on the secret conspiracy angle, manipulation, because of a hidden agenda involving central banks, seems farfetched to me. Rather than think in terms of manipulation, I like to think today's extreme market action is due more to mass insanity than it is to secret meetings. Oh sure, oh sure, there are times when folks get together and concoct some kind of scheme where they hope to manipulate the market. And, when it comes to the stock market, there are more mini manipulations going on all the time than you can shake a stick at. But manipulations can only hold water for so long if the fundamentals don't eventually back up the play. And most market manipulations involve "concept belief" which dupes even the perpetrators, rather than outright fraud. Of course, by manipulating the beliefs of the masses stock corners (shortages) or (very rarely) selling panics (supplies) are created. Therefore, market manipulations via concept propagation create excess supplies or shortages.

Currencies Don't Need Gold?

When it comes to gold, there is a belief that has been gaining credibility. It is being parroted by the talking heads in many different quarters. Ever since gold started falling after hitting its $850 peak in 1980, folks have pointed to that high-water mark and used it as a benchmark for comparative "rates of return." In other words, they do not point out that at $255 gold is more than 12 times its 1933 official price of $20.67, and that in constant dollars gold has exactly the same purchasing power value now that it had 66 years ago. Instead, folks are saying that gold is a bad investment and that it is losing its old fashioned monetary role. A related belief has been building that currencies do not need gold backing because they are not really liabilities, but actually assets. Paper money is called money. Paper money (or credit cards and checks) is used almost almost exclusively in the exchange of goods and services. And for sure paper money is the world's most popular store of value and standard of payment. Coupled with this is the fact that some central banks have sold some or most of their gold. The first ones to sell have been able to brag to the others that their currencies are performing just like they did when they held the gold, and that their total reserves have increased because their paper money assets earned interest. Then along came the idea that if gold is a waning asset and unnecessary for currency backing, why not lend it out and earn some interest on it. This became a popular notion because a bank could earn some interest on the gold while it waited for an opportune time to sell it. Interest rates on gold loans are much lower than interest rates on currencies. So a lot of folks, especially mining companies for startups, decided they'd rather borrow gold than borrow currency. Then some speculators took a look at the gold loans and they had a more souped up take on it.

Cheap Capital

The speculators could see a cheap source of investment capital. They could also see that the central banks were ruminating on the idea that gold should be phased out of the system. So they figured that if they borrowed the gold at a low interest rate (1% or 2%), sold the gold, and reinvested the proceeds in stocks, currencies, bonds, and/or options which would earn 15% or more a year, they could make a killing. And then they extrapolated the gold price action from the 1980 peak and worked that into their rate of return calculations. By then, they ended up licking their chops and drooling all over themselves in glee. They were in line to make a double killing and get two birds with one stone. So, as the speculators borrowed the gold and sold it for currencies they could invest in other intangible assets, vast quantities of official gold flooded the market. Maybe more gold came to the market from loans than from official gold sales. The gold price continued to drop and that fueled even more borrowing and selling. The central banks watched as their borrowers made money by the handfuls and the gold market continued to fall. This inspired the bankers to get with the "sophisticated investors" (formerly the speculators) who were really outsmarting them and making a killing. So quite a few central bankers decided to off load as much gold as possible and get on the paper-money-income-earning bandwagon. Therefore, as central bank gold sales and gold loans/sales increased, the gold price fell. How will this end? Badly, I'm sure. Does that mean it will end badly for gold holders or paper money pushers? Well, it may be bad for both sides. First it may be bad for gold holders, then eventually for paper money pushers. For sure it's been really bad for gold producers, their shareholders, and gold holders. And it is entirely possible that it could get worse. One never knows about these things. When the mob is on a tear, it goes until it shocks itself with a concluding act. There is no way to predict the mob and its actions. Don't ask me to define the concluding act. It could be a bank failure, a stock market crash, a war, an earthquake, or a drop in the price of gold to $105 an ounce! When it occurs, even though we are looking for it, we may not recognize it as the watershed event. The market meltdown in 1987 wasn't the concluding act. So actions will have to be viewed from afar before we know. As for the consequences, I think they will be easier to predict. The consequences will be the beginning of the end of the currency/credit system as we know it. It will include massive economic dislocations and changes in asset valuations. It will be a tumultuous time.

Barrick the Miner?

An interesting example of how speculators have used the gold market comes from none other than Barrick Gold Corporation (NYSE ABX), North America's premier gold mining company. I looked over its annual report very carefully. I even read the (ugh) footnotes. As everyone knows, Barrick hedges its gold production (three years worth) with "forward sales." In its annual report, Barrick describes the sales as "our Premium Gold Sales Program" and "spot deferred contracts." One note described part of the hedging process as follows: In connection with the management of the interest component of its gold hedging activities, the Company has entered into derivative financial instruments with a total notional amount of $570 million or approximately 14% of the value of the gold spot hedge position of $4.1 billion. The instruments comprise a portfolio of total return swaps whose underlying investments are bond indices with diversified credit exposure. Total return swaps generally represent the contractual exchange of LIBOR interest payments for a return equivalent to the future performance of a specified investment instrument based on a fixed notional amount. The swaps typically have terms of either five or seven years and mature at various times in 2003 and 2005. I must confess I can't figure out what Barrick is doing from that explanation. Years ago I saw an explanation of its hedging activities in a paper Barrick published, which is long gone now. All I remember is that it was confusing and that it did not make sense to me. Since I'm confused, I tried Barrick's Internet site. Here's what it reported:

The Facts The Past Ten Years

Consistently exceeded spot gold prices. Realized price on average yielded a $56 premium over spot price. $1.1 billion in additional revenue. The Present

11.5 million ounces sold. 3 years production at $385 per ounceminimum price locked in. Mark to market gain$750 million (value today if we closed-out contracts). The Future

Our 11.5 mil. ounces sold creates a $4 bil. asset (which generates $200 million per year in interest income). Actively manage the asset to maximize interest income. Barrick will continue to earn a superior return than others because: 1. We add to the program consistently. 2. We have longer and more flexible contract terms. 3. We actively manage the $4 billion asset to maximize interest income. These words were copied right off Barrick's own Web page. What they say to me is that some years ago Barrick sold 11.5 million ounces of gold at $375. (Today Barrick is hedged to the tune of 12.5 million ounces.) The 11.5 million ounce sale brought in $4.3 billion! That money has been invested in bonds or something. To do this, Barrick must have borrowed the gold at, let's say, 1% interest. Then it sold the gold and invested the proceeds in bonds paying 6%. The difference is 5% on $4.3 billion, or $215 million a year in interest income. Barrick produced 3.2 million ounces of gold last year, so its "hedge" brought in an additional $67 an ounce. In actual fact, its hedge earned interest. This income is reported as if gold was delivered at the higher price closing out the hedge. And Barrick's books don't show the $4 billion dollar cash asset, it claims "it is managing," anywhere in the asset column. Also, there is nothing in the annual report about borrowing $4 billion worth of gold. There are some inconsistencies here and they have been created by Barrick's own words.

Barrick the Hedge Fund?

Obviously Barrick's short position is held off the books in some kind of bank trust deal. So, maybe to get its interest, Barrick delivers its gold to the bank trust for the average price of its total short position, then books additional high-priced forward sale contracts using the accumulated interest to boost the average price of the gold it sells. This slowly, but very slowly, lowers the average short sale price and gives the appearance of a smart hedge. In effect, Barrick is short 12.5 million ounces of gold (just over three years of its gross production, or an amount equal to all of the gold the Bank of England plans to sell) and is holding $4.7 billion in currency denominated investments offsetting its short. This is just like the hedge fund LTCM and all the other hedge funds that have borrowed gold to gain cheap dollars to invest elsewhere. What is crazy here is that Barrick thinks it is in a very safe position because it has a mix of options and derivatives that are supposed to offset a drop in currency values, which would be a rise in golds value. It brags that all of its derivative contracts are with A-rated companies like itself. Throughout history, there have been a lot of A-rated firms that went under. And if A-rated firms are betting against money (gold) and creating offsetting hedges for others in the billions of dollars, then somebody is probably getting cornered. In my book, Barrick is more hedge fund than gold miner. Its plan has certainly worked so far. But it does not give me a lot of confidence about our position in the stock, which we received when Barrick acquired Sutton. For the short-term, Ill keep in the portfolio, but its not my favorite gold stock holding. Editors Note: Ted Slanker is editor of The Slanker Report, 1 year, 12 issues, $195, a highly acclaimed conservative financial newsletter for "real money" investors. Mr. Slankers hard hitting, entertaining editorials on economics, politics, and market trends have earned him the title of being a mavericks maverick. In spite of being "ahead of his time," Mr. Slankers insights into newly evolving investment opportunities in stocks, bonds, currencies, and gold have been highly regarded for over 30 years. Mr. Slanker is offering Bull & Bear readers a Special Trial Offer of 4 issues for $40. Write: The Slanker Report, RR 2, Box 175, Powderly, TX 75473

-- andy (2000EOD@prodigy.net), September 04, 1999.

Somebody bought 1 million shares of Barrick's on Friday at $28 a pop...

Hmmmm, $28 million....

Follow the money...

Randolph - I'm just as confused as you are... I'm a betting man occassionally so I'm holding bullion and buying goldmining shares, if I make a "profit" before rollover I may liquidate and hold cash and/or bullion...

developing... :)

-- andy (2000EOD@prodigy.net), September 04, 1999.

Andy,

I'm beginning to wonder if its not better to be invested only in physical Gold and Silver. I am starting to believe that the Ponzi Scheme with the Dow will continue until the rollover at which time it will crash. I also am starting to believe that Gold and Silver will be kept at an artificially low price until the rollover. If I'm right then all the speculative option players will lose their bets as well as all stock players. This scenerio has never happened. I am presently one of them players as well. I am short the December dow strike 7000(puts) and long December gold 310 (calls) I am completely out of the stock market except for 100% gold stocks, mostly DROOY and BMG with 200,000 very speculative shares of CALVF. If the computers go down then who's going to be able to exercise their options in 2000?

I'm beginning to feel that I need to explore getting out of all paper and strictly in 100% physical in which I am already heavily in too... If you follow the money, Soros' platinum, Buffetts' silver and Goldmans' gold you have to wonder why their getting PHYSICAL. I believe all paper will burn by 2001. So whats left? Physical Gold and Silver of course. Its getting to the point now that buying physical is beginning to become obvious to the masses. If their not seeing it, they have blinders on.

"Lets get physical..physical..I wana get physical" Olivia Newton John

-- Flierdude (nospam@spam.net), September 05, 1999.

Yesssss Flierdude, what to do, what to do???

LOL - we used to call her Olivia Neutron Bomb in England :)

I've given this a lot of thought too - we don't want to waste our money, on the other hand we don't want to miss out on what may be a once in a lifetime opportunity...

A few jumbled thoughts...

I've been reading a lot on gold-eagle and kitco lately and am getting thoroughly confused... no sooner did I buy 6,000 shares of DROOY than Disney on Kitco says it's all over-hyped and the mines' figures are all wrong... :)

I think it's gonna come down to whether you think the "system" (banking, futures, the markets) will survive or not - intellectually I think it will hose up monumentally, emotionally I hope it doesn't and that we all sputter through 2000 and beyond...

I asked this question recently on gold-eagle and scruffy replied that he was diversifying - a little of everything,....

They say that if gold goes to $1,000 then DROOY will be worth $300 a share, times 6,000 = $1.8 million... go figure...

For the reasons you explained and feared above, due to the manipulation, I can't see the POG and POS rising dramatically until after rollover - UNLESS there is a devastating crash... if that happens and I make a profit I will be tempted to get out of shares completely... however I will also be tempted to stay in...

So at the moment I'm gambling on DROOY, I'm probably gonna buy some Harmony, maybe some SWC, some GOLD fields,...

My 401k is in the prudent bear and again I may withdraw all just prior to rollover, also have some physical gold...

If the markets survive and we enter a depression then I believe Gold will rise in 2000 to at least $5-600, and could go wildly higher - people will be scrabbling to put their wealth ***somewhere***, and if you have shares and are patient then you will have cracked it...

In the meantime in that scenario you would need cash too to get you through, and physical would be more than advisable...

At the moment I'm staying out of gold puts and calls because it is a rigged game - only Hillary seems to have won anything recently!!!

am I making any sense?

-- andy (2000EOD@prodigy.net), September 05, 1999.

Andy

No

-- Porky -- not in D block (Skepti@whereever.com), September 05, 1999.

Ah, Olivia Newton John -- I used to be "in love" with her. So sweet looking and such a sweet voice, but you just KNOW she could've turned you inside out.

Now to metals -- options and stocks -- if everything falls apart, so will the electronic records. Then what? And if you call it just right, make your killing just before everything falls apart, you sell the stocks or offset your options, then you got currency in your account and what are you gonna do with that? What could be worse than having your money in a bank? In a brokerage account? Bonds?

If you cash out or withdraw from account is more than US$10 000 or $20 000 or more that's a lot of coins to put in a midnight garden, even several plots. And to take home from the local coin dealer in the first place. Or to have delivered to you from a distant dealer (especially in the US since the US Post Office wants your actual physical residence in its database -- see recent US Postal Service threads on this forum).

Ditto if you're not even in the stock/options markets, and just have a buncha money in cash, savings accounts, money market funds, etc.

Now, say you do convert everything into coins, and do a LOT of gardening, and Y2K turns out to be less than 9 or 10 so that our fascist governments are still operating. I can just see requirements that all sales back to dealers be tracked. You can buy anonymously, at least from dealers where it's cash and carry. But in the past, in the U.S., at least, sales back to dealers required ID. So we're left with the black market.

Fun, fun. Thanks a lot, Republicrats and your sheeple.

-- A (A@AisA.com), September 05, 1999.

Sorry to have confused you Porky :)

A, you are pretty much right on all this. Whatever you do to try and protect yourself financially will not exactly be easy - we will all probably be caught unawares at what eventually transpires...

And she still looks good now :)

-- andy (2000EOD@prodigy.net), September 05, 1999.

"Now, say you do convert everything into coins, and do a LOT of gardening, and Y2K turns out to be less than 9 or 10 so that our fascist governments are still operating. I can just see requirements that all sales back to dealers be tracked. You can buy anonymously, at least from dealers where it's cash and carry. But in the past, in the U.S., at least, sales back to dealers required ID. So we're left with the black market."

I just sold $3k of silver to a dealer. Had to show ID, SOSEC #, the works - or no deal...

-- andy (2000EOD@prodigy.net), September 05, 1999.

Why would you be selling if the price is ready to explode?

-- x (x@x.org), September 05, 1999.

To buy goldmining shares with 5 times the leverage... sell before rollover at a profit and buy five times more physical

sounds good in theory - probably won't happen but hey, nothing ventured... :)

-- andy (2000EOD@prodigy.net), September 05, 1999.

Obviously (from your posts , which I follow closely) you know way more than I do, but a bird in the hand...

-- x (x@x.org), September 05, 1999.

Andy,

I get the impression you buy your bullion in bulk. [grin] Maybe, you could help some of us out by selling off a couple of those shiny yellow and silver american eagles at a generous bulk bullion price.

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), September 05, 1999.

Stan,

If you looked anything like Olivia Neutron Bomb - you're on! :)

-- Andy (2000EOD@prodigy.net), September 05, 1999.