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ARCHIVED DISCUSSION FROM 8/12/2000 All times are U.S. Mountain Time (Yesterday's Discussion.) Hill Billy Mitchell (08/12/00; 23:47:39MT - usagold.com msg#: 34845) Confusing Beesting with RossL Beesting @ 34841 and RossL @ 33904Regarding My post # 34822:Sir RossL (Read # 34822) When you see Beesting, replace with your name. I was going by memory and in your message # 33904 (offer of assistance)you also addressed Beesting in another matter. Pure laziness on my part to rely on memory. Please respond.HBMPS: Beesting please excuse my laziness and thanx for the re-direction Hill Billy Mitchell (08/12/00; 23:41:56MT - usagold.com msg#: 34844) Cronkite Shifty, thanks for the response. Maybe some else on the forum will come up with documentation for it.HBM SHIFTY (08/12/00; 23:39:05MT - usagold.com msg#: 34843) Hill Billy Mitchell HBM : on the Walter Cronkite statement, I do remember him saying something like that because it pissed me off at the time. However I fail to remember why he was talking in the first place. If I could remember what the event was that got Walter all dusted off and back on my TV, I would think we could find and read the transcript. May have to watch the talking heads in the AM ,as they will call him on it if they think they can. I don't think they can!$hifty tedw (08/12/00; 23:15:19MT - usagold.com msg#: 34842) Shifty/Al fuchino http://www.usagold.com Shifty, thanks for the link to Matt Drudges site. Pat has my vote.I have met his new vice-presidential candidate,Ezola Foster,and she is a good woman and a good choice.*******************************************Al:Thanks to the link to wallbuilders.check out www.bondinfo.org if you havent seen it, its just as good. BTW, Ezola Foster is a member of BOND. beesting (08/12/00; 22:51:53MT - usagold.com msg#: 34841) Response to Hill Billy Mitchell Msg. #34822 Hi Sir Mitchell,I think you may have me mixed up with another poster on the inverted yields subject. I do remember someone volunteered to work with you on the project you were putting together, but I'd have to look thru archives to see who it was'sorry I can't help more than that.On Subsidies: I do agree with you on that subject that all U.S. Government subsidies should be banned, but I'm looking at the New Zealand system(Americans call Socialist) concerning health care. I have In-laws living in New Zealand and they say "TAXES"(IMHO,THE ROOT OF ALL EVIL) in New Zealand are high just like the U.S. However a large part of the tax money goes for medical and health care for all. They don't need to buy expensive medical insurance(which many in the U.S. cannot afford) because the tax money is used for medical expenses.Hence more spendable income, because of no high medical insurance premiums.IMHO The American Medical Association is a Medical "Labor Union" which has caused all associated medical expenses(Except for hourly employees) to be excessive-ly high in relation to the working classes wages.(NOT FAIR!!!)What would happen if ALL farmers "united", and brought food prices up to be in line with medical expenses?In the "utopian" Gold based monetary system, some here may invision, the huge discrepancy in wages happening right now in the U.S. may become more close-ly in line with each other(wages).( I recently was quoted" $100.00 per hour labor to fix a very small{15 lb.} copying machine, the machine is still un-fixed.) When I was a kid I was tought the more you worked,and harder you worked, the more money you made to spend , or save, or invest,your choice, a good trade off. But look what's happened in the U.S. today, many,many working class people are called"The Working Poor" simply because they don't earn enough to improve their standard of living.Well, I could go on and on about this but, enough ranting! Bring back the Gold Standard, the Only Honest Money, Ever Used!....beesting.Trail Guide/FOA/ANOTHER, "very" glad to see you're back! Hill Billy Mitchell (08/12/00; 22:47:15MT - usagold.com msg#: 34840) Can the Fed lose its grip I am putting this out for comment:If memory serves me correctly one of the baffling marks of the last recession was that people were liquidating debt to the consternation of the economic press. Fed infusions of liquidity did not produce the desired results for quite some time because Joe six-pack turned into a teetotaler for a while and not only refused to increase borrowings but rather persistently reduced his debt for a goodly period.Someone help me. Is my memory any good here?If this did happen we have clear evidence that the Fed can become a wimp in the face of an uncooperative public.HBM Topaz (08/12/00; 22:45:44MT - usagold.com msg#: 34839) The American "third way" Shifty's post below should sound loud and clear to all Americans in the upcoming Elections.Show em the real meaning of "THIRD WAY" Hill Billy Mitchell (08/12/00; 22:27:50MT - usagold.com msg#: 34838) @ SHIFTY (08/12/00; 21:54:12MT - usagold.com msg#: 34834) ...Last fall, the most trusted man in America, Walter Cronkite, said "Americans must have the courage to surrender their national sovereignty to a world government"...This is a rather sobering statement attributed to the hallowed Mr. Cronkite. Do you have a source. I would like to be able to quote this with the confidence that it's validity will not be challenged. Thanks in advanceHBM Black Blade (08/12/00; 22:18:34MT - usagold.com msg#: 34837) MK, Excellent post. Excellent. I have repeatedly said that these buffoons in the investment community are good contrary barometers. I have viewed these clowns with suspicion as they tout certain stocks within their portfolios. I found it strange that no one ever gives a sell recommendation, as a code for sell is now "accumulate, hold, long-term buy", or even just "buy", or some other nonsensical drivel. I saw Eric Gustafson of Stein Roe mutual funds on both CNBC and CNNfn in a pathetic display, practically begging the public to stick with the Bull Market. The new paradigm is that the Bear is dead. On Friday, I caught only a few seconds of some portfolio manager on CNBC telling the public not to purchase gold. That gold will never perform any function, ever again. These buffoons are frightened. It is quite visible even when they are begging all to keep buying into the "New Economy". They exclaim that it "really is different this time". It looks as if the tide is about to turn. The day trader is pretty well out of the market now, and the individual investor is just standing on the sidelines. The "Greater Fools" may end up being the "New Economy" mutual fund managers before this is all over. They simply can't unload a position without depressing the stock price. Janus Funds, for example, have so many overlapping positions that by buying almost any two Janus funds would not likely increase one's diversification. The largest holding is Nokia, the Finnish cell phone manufacturer. When the price of Nokia stock tumbled over the last couple of weeks, the Janus funds tumbled as well. Hier apparent to being the Big-Dog at Janus, Tom Marsico left after heading up Janus Twenty Fund after an internal squabble. Jim Craig, a leading manager is leaving Janus Funds after 17 years to head a private trust. The smart ones are leaving while the leaving is good. The rats will leave these burning ships in short order. I have been and still am an investor in Janus Funds myself, but I recently took profits after a few years of stellar returns. I have a nominal position now. When I withdrew a substantial portion of my position, I was asked why. I didn't have the heart to tell them it was because I saw the writing on the wall. The Bull is about to become hamburger and served up on a sesame seed bun. Don't get me wrong here, I do have other investments in select areas of the market and defensive stocks such as Energy, Energy Services, Drillers, Utilities, REITS, telecoms, etc. but my positions in the so-called "New Economy" is greatly reduced. The more desperate these buffoons become, the more convinced I am that they are trying to save a sinking ship. I grabbed my life preserver (PMs) and all that I can say to them is "Good Luck!" and "I'm outta here!" Hill Billy Mitchell (08/12/00; 22:15:35MT - usagold.com msg#: 34836) Correction of post # 34835 Dad gummit, I meant prolonged bear market, not bull market.Pitiful aren't I.Sorry.HBM Hill Billy Mitchell (08/12/00; 22:10:18MT - usagold.com msg#: 34835) Dow Jones Industrial Average http://www.mrci.com/djindus.htm Week ending August 11, 2000:Dow stands @ 11,026.70The percent change from 52 weeks ago is zero!Very interesting, no?This "Titanic" market will not turn on a dime but once it has turned, even if a collision with the iceburg is avoided, it will not be able to turn back on a dime either.We could be looking for a steep and prolonged bull market in the not too distant future. This will likely occur before the recession hits. Why? Although I do not think a crashing market causes recession/depression I do think it almost always occurs in anticipation of looming upheaval.HBM SHIFTY (08/12/00; 21:54:12MT - usagold.com msg#: 34834) Death Sentence for the New World Order (odor) http://www.drudgereport.com/flash.htm Excerpts from Reform Party nominee Patrick J. Buchanan's speech tonight. Note the jab at Goldman Sachs! The link above " Drudge" has the entire text of the speech.$hifty===========================================================After Mr. Clinton launched one of his drive-by shootings with cruise missiles, Ms. Albright was asked to justify it. ``If we have to use force,'' she said, ``it is because we are America. We are the indispensable nation. We stand tall. We see farther into the future.'' Talk about the arrogance of power. George III could not have said it better. Friends, I am ashamed to say it, but we have begun to behave like the haughty British empire our fathers rose up against and threw out of this country. That, then, is what our party, our campaign, and our cause are all about. We are Americans who say with our fathers: To hell with empire; we want our country back. Yet, both Beltway parties today conspire to kill our beloved republic. Both colluded to create the WTO. Both voted $18 billion more for the IMF to make the world safe for Goldman Sachs. Last year, a new U.N. international war crimes tribunal was established with the power to arrest and prosecute our soldiers. This year, U.N. Secretary General Kofi Annan thundered that we Americans do not pay our fair share of foreign aid. Last fall, the most trusted man in America, Walter Cronkite, said Americans must have the courage to surrender their national sovereignty to a world government. Let me tell you where the Reform Party stands. We believe ``independence forever.'' We will reclaim every lost ounce of American sovereignty. We will lead this country out of the WTO, out of the IMF, and I will personally tell Kofi Annan: Your U.N. lease has run out; you will be moving out of the United States, and if you are not gone by year's end, I will send you 10,000 Marines to help you pack your bags. Hill Billy Mitchell (08/12/00; 21:34:03MT - usagold.com msg#: 34833) The present interest rate inversion Noteworthy:There is not much argument that our last recession was brought on by the Fed tightening policies during 1989. The rate inversion first appeared on 12-28-88 and continued on in a progressive manner during all of 1989. The recession which ushered in Clinton lingered on up through the date of the national election I believe. We now have a nearly five month period in 2000 which can be compared with the inversion period which occurred in 1989.During the 1st five months of 1989 the following occurred: Average spread (Fed Funds rate vs 30 yr bond) = negative 63 basis points Average spread (10 yr bond rate vs 30 yr bond)= negative 14 basis points Average spread (3 mo. bill rate vs 30 yr bond) = positive 14 basis pointsOn March 22, 2000 the rate inversion first appeared and has continued on in a progressive manner up to now, August 10, 2000 (12 days short of five months)During the nearly five months from March 22 thru August 10, 2000 the following occurred: Average spread (Fed Funds rate vs 30 yr bond) = negative 40 basis points Average spread (10-yr bond rate vs 30 yr bond)= negative 20 basis points Average spread (3-mo. bill rate vs 30-yr bond) = negative 4 basis pointsWe watch and wait. I suspect that the Fed will slow the process of inversion as much as possible up until the election. After the election I expect that the Fed will begin to tighten the screws until they have the desired result (a landing) whether soft or not. Let us in anticipation begin to dig up the best information we can find on the recession of the early 90's and post it on the forum. So far the inversion pressure from the Fed has been very similar with that of 1989. Should this pressure continue for a full year we should expect some sort of recession similar to that of the early 90's. If there is a temporary relaxation of Fed tightening between now and election time which appears to be the buzzing hope and possibly self-fulfilling prophecy of the liberal press, I should think that the whole scenario will just drag out longer but with the same hoped for results.We will watch these developments with our eyes wide open. Much more in the way of comparison are to come as we go along.A note for ORO: I have data for the following Treasury issues in spreadsheet form for all years from 1972 through August 10, 2000:30-yr /20-yr / 10-yr / 7-yr / 5-yr / 3-yr / 2-yr / 1-yr / 3-mo / Fed Funds I can pull averages and comparisons with this information. As I work on the raw data, my unlearned condition leaves me with the realization that I do not know how to read it. I noticed from some of your posts that your knowledge in this area far exceeds mine. Please help us along in any way you can with your thoughts and knowledge. Also please continue to let us know what is happening in the non-treasury markets, as I am unable to go beyond the study of the Treasury instruments.My skin is not nearly so thin as it was when I first began to post on the forum. I will take no offence from any negative criticism or correction or comments. My desire is to enjoy the journey along the well-lit path of truth. I am very selfish as I am putting forth much effort in hopes of receiving plenty of help from this forum in return.One other comment to all on this forum. One does not have to be highly knowledgeable in this area to make comments, or to express opinions or to ask questions. I'll bet that when we get down the road and the economic upheaval ensues we will be more prepared than we were in the 70's. Respectfully,HBM Hill Billy Mitchell (08/12/00; 20:04:06MT - usagold.com msg#: 34832) Correction to msg # 38423 ...I am a heretic on this point, you see, for I preach a doctrine that is not contrary to the generally accepted beliefs on this forum...Leave out the word (not) before the word contrary.SorryHBM Al Fulchino (08/12/00; 18:11:46MT - usagold.com msg#: 34831) Leigh Sounds like you shouldn't be on the fence at all <smile>. Good luck! Leigh (08/12/00; 18:04:15MT - usagold.com msg#: 34830) Al Fulchino Dear Al: Wallbuilders is a wonderful organization with an uplifting message! Thanks for posting the link so that everyone can have a chance to look into it.I'm on the fence about whether to continue homeschooling my son or send him to the gifted school. The office staff at the gifted school has time after time shown itself to be incompetent and arrogant, and yet terrified of displeasing the Nazi inspectors from Social Services. They have several times now neglected to send me health and other forms and then acted outraged when I failed to get them in. They actually threw my son out of camp because he didn't have the proper forms (which we had no idea were required). They have made gross errors on our invoices and were indifferent about correcting them. We keep hearing wonderful things about the school, and maybe the teachers are good, but the office people are going to drive me nuts! NEVER have I been so distraught over a school/camp/activity that my son was involved in.MK, I'm getting very worried about things on the economic front. Is the special on British Sovereigns still going on? Hill Billy Mitchell, thank you for remembering about Mr. Pink. I can't wait to hear what you have to say! Al Fulchino (08/12/00; 17:44:14MT - usagold.com msg#: 34829) Leigh/TedW/All http://christiananswers.net/wall/frame3.html I was sleeping late this afternoon, when I awoke to an infomercial for an organiztion that I had never heard of. It was called Wallbuilders. I was captivated by its stories about what our Founding Fathers thought concerning some very important subjects. I just checked out its site and would strongly recommend you look it over especially if you have home schooled youngin's hangin around. And if you don't there are some real nice stories that challenge many modern arguments. Best to all. Golden Truth (08/12/00; 17:36:34MT - usagold.com msg#: 34828) TO F.O.A Hello F.O.A I just wanted to say welcome BACK! :-) and thanks for not forgetting, about all of us also! My Sword stands at the ready by your side. G.T wolavka (08/12/00; 17:19:30MT - usagold.com msg#: 34827) KLEIN ANALYSIERT, KLEIN KRISTISIERT, NUR DAS GEFUHL Isolation and intolerance has caused the gold market much grief.Christian faith will only save you!!!!!!!!!!!!we are close to a new beginning. watch globex sunday nite, break over 281.60 and the gold rush is on.enjoy. JavaMan (08/12/00; 16:58:21MT - usagold.com msg#: 34826) Your hard earned tax dollars at work... Our guests just left and I thought I would share part of the conversation that took place which I consider to be very much on the level. It seems that some time ago, one of them used to work at the Community Action Center of Carthage in North Carolina. This place gets funds from HUD among other sources to distribute to needy people for home repair, as a result of storm / flood damage, etc. They left because the director was / is embezzling the money and using it for herself and to finance, at least, one of her other business ventures. Here's the scam...she opens a file on someone who applies for assistance, for say, a new roof or an indoor bathroom to replace the outhouse. Then she gets a contractor to present an invoice (for work that is never done), and disperses the funds to the crooked contractor which they then split. Meanwhile, the designated recipients just go through life wondering why the government isn't helping them which means this scam will probably go on forever.A typical audit at the center consists of the auditor being given a "random" sample of files (determined by the center) to be audited. They are audited by a firm (independent, I believe) who has indicated they will not do the next audit unless they are paid more. Hmmm. If something like this is going on in podunk ville, USA, its probably going on all over the place. Looks like some who have bellied up to the trough are taking more than their share... gidsek (8/12/2000; 13:40:13MT - usagold.com msg#: 34825) test test Hill Billy Mitchell (8/12/2000; 10:49:35MT - usagold.com msg#: 34824) Horse chestnut vs Chestnut horse I should given credit to "Honest Abe". When involved in the great debates with the distinguished gentleman from Illinois, Lincoln made this analogy concerning the argument offered by his opponent. It was sufficient to cause his opponent to mark his shorts and destroyed, in my mind, any credibility his opponent had to offer on the subject.Logic, Get you some!HBMPS: I suppose the precious metals that receive in exchange for the sale of my soon to be worthless paper money would be considered a subsidy also. Hill Billy Mitchell (8/12/2000; 10:35:01MT - usagold.com msg#: 34823) Lady Leigh etal Leigh, have not forgotten that I promised a response concerning A.W. Pinks, etal views on gold and the 70'Th Week of Daniel. I have been derailed with ditch digging projects and will still be tied up on them for a while.Also I have not written lately on the subject of subsidies. To tell the truth I have been pouting because my thrust on the subject was basically rejected by all. For example, ORO, I believe, made the statement that I have been accepting subsidies via the international route due to the trade deficit situation. I could not disagree more vehemently; however, I have not had the time to put my thoughts together in such a way as to influence anyone else's thinking in this regard. I believe that Journeyman even agreed that we are receiving a subsidy by choosing to buy foreign made products. I consider this to be hogwash but cannot find the time to expose the logical fallacy involved here. Even one of my hero's, Aristotle, is a putter forth of this orthodoxy. I am a heretic on this point, you see, for I preach a doctrine that is not contrary to the generally accepted beliefs on this forum.I will try to score just a small point on the matter and will someday prove my point with a logically valid argument.To say that the purchase of international goods at the lowest prices possible or to say that taking advantage of that price because of international politics is the same thing as accepting a subsidy is tantamount to calling a horse chestnut a chestnut horse.The whole thing has gotten my blood to the boiling point. One day when time and wit permit I will expose this idiotic notion for what it is, A LIE.Please do not misread this diatribe. My love for this forum and those involved stands undiminishedRegards,HBM Hill Billy Mitchell (8/12/2000; 10:09:01MT - usagold.com msg#: 34822) Beesting and Journeyman Sir BeestingHope I did not spell your handle incorrectly.Just wanted you to know that your offer of help on inverted yields was not snubbed. I hope to work with you, Journeyman, etal. by e-mail and or fax in the near future. My e-mail address has changed since I first signed on with this forum and USAGOLD needs to get the update before I give permission to pass it on to you. I now have the data from 1972 to the present (28+ years) loaded on Lotus 97 spreadsheets.I am quite certain that these files can be transferred to Excel, however I am not at all familiar with Excel and have done the work with Lotus because of my learning curve has become somewhat "inverted". I may be able to get these files to you for transfer to Excel and let you do the fancy charts and graphs. We must get to know each other better before taking this step.I would like to get the communication process going without our e-mail addresses, telephone and fax lines exposed to any and every one on the internet. Maybe Michael can give you my telephone # which has not changed since I signed on with the forum.No hurry, just wanted you to know that I have not snubbed your offer.Journeyman, I would appreciate your involvement in this at some point. Will be in touch.RegardsHBM CoBra(too) (8/12/2000; 10:04:48MT - usagold.com msg#: 34821) USAGOLD - Hear ye, hear ye ... loud and clear - great posting Michael - not IF but WHEN, SOON! Kudos MK -cb2 USAGOLD (8/12/2000; 9:28:17MT - usagold.com msg#: 34820) "No longer IF but WHEN" The previous post left off the end of my post for some reason. Please read this post not the one that follows. Sometimes I think I put too much emphasis on the actions of people who actually make a living in the investment business across the boards, but I really do think that if you watch carefully what the investment business professionals do, it can serve as a useful barometer, and an indicator of things to come. At the moment, the name of game seems to be cut and run, but the question hanging over the tense investment killing fields is what are they running from? If I could reduce the reason to a simple word, it would be "stymied." To me it has been significant that key players in the once most lucrative and capitalized hedge and mutual funds are throwing in the towel. What's telling is that these highly paid masters of the financial universe are quitting for pretty much the same reason: They have found that their trading positions have gotten so large that they cannot vacate them. Of course, this is all a function of the massive money creation that has occurred over the past several years. What none of us understood, as this bubble inflated, was how it might deflate. Few would have guessed it would be because these huge funds with their seemingly inexhaustible capital flow would be blind sided. And what was the nature of the blind side: An inability to sell out of the huge positions they acquired because the market realized that once their support was withdrawn; there was nothing to support the future viability of that position. In a market driven not by value but by the hope that someone would appear to pick up a position that had reached its zenith, the buyer "saw" the seller coming, and didn't want to have anything to do with the wares.Stymied, with nowhere to turn, the fund manager took the second of the primal alternatives: He fled.When the head of Soros Quantum fund stepped down, he alluded to the inability to sell out positions as a prime cause for his departure. The same thing with the main man at the Tiger fund when he stepped down. Mutual fund operators, including two at Janus funds, have also stepped down complaining of the inability to find a buyer for stock positions when they went to sell -- at least at anything approaching the posted market prices. Quite often, stocks fall 50% or more in a single day on bad news simply because there are not buyers when the thundering herds led by fund managers look to sell. The thundering herd is in fact looking around for buyers at a time when all are sellers. The situation has become regressive -- a danger sign. The Red flag is out, as our favorite Fed watcher, Adrian van Eck, has so aptly put it.I watched the rare coin market traverse a similar slippery slope years ago, and what I see going on today in the stock market, particularly with respect to the fund operators, has an eerie familiarity. Believe me, my fellow goldmeisters, this will not be a pleasant affair to watch even though we feel safely protected by our gold holdings.When a trader bought a rare coin, or group of rare coins, he would immediately discover that the price had dropped further when he went to sell. Bids dropped as soon as the coins were offered, and the standing bid had to be discounted further to find a buyer, and then again, and again, and again. Each taking a loss as he sold to the next buyer (assuming he could find one) until prices in some cases stood at 10% of the market peak-- and it seemed to happen overnight. The mission became to cut losses, not make a profit and of course that is the driving force in a panic market. I wouldn't be surprised to see the same thing happen with stocks. . .and for the same reasons. The fellows at the top see it coming. They know they've been stymied not by friend or foe, but by market forces. And that inability to influence the direction of one's career has produced a predictable result. They constitute the First Wave out in the coming bear market in financial instruments. Whether the public as a whole realizes it or not, the flight from paper to hard assets, particularly gold, has already begun. Now let's take this one step further:Why couldn't the same thing happening in the financial markets be happening in the gold market -- only in reverse? Yesterday, we saw someone come into the gold market at the very end of the session obviously to cover a short position, or at least part of a short position. This may have been an indicator and the fact that it happened quickly, almost on the sly is telling. I suspect that someone wanted to get the drop on the market -- cover their position before someone else did. I suspect we will see much more of this ":jumping the gun" in the future. Certainly there are those Masters of the Universe who believe that they can stem the tide, but like their brethren in the financials on the long side, they may find the going a bit rougher as time goes on until they too find themselves stymied -- once again not by friend or foe but unforeseen market forces.In each of the instances noted above both long stocks and short gold, the root cause of the problem has been the creation of massive paper positions built tenuously on momentum buying (the greater fool theory), easy money and a imprudent psychology that there could never possibly be an end to any of those new paradigm wonders. How have things changed? It seems that now the greatest fools (both short gold and long financials) have been burned enough to show some caution (in fact momentum is swinging in favor of selling stocks and buying gold), the easy money's drying up, and the new paradigm psychology is running out of gas. The pros see this and are re-evaluating their participation in the paper bubble. Many are either getting out or looking hard for a way out. Those not devising at least a temporary exit are either asleep at the wheel, resigned to a very negative fate,foolishly optimistic or stuck with positions they do not have a clue how to get out of. The same type of massive paper position long stocks has been piling up short the gold market. We all know about the massive derivative positions held by all the momentum players on Wall Street. If there is a psychological shift -- if the players are concerned that what has happened in the stock markets in terms of liquidating positions -- could happen with gold, we could see some panic buying as players try to garner an advantage. Yesterday's action in the gold market -- the $3 up tick at the end of the session -- though largely unnoticed could have been telling in that regard. It in fact stands out like a sore thumb. Why would a trader decide to enter the market in this way? And who was it? Though this sort of thing -- a quick hit at session end -- has happened before, it has not occurred before at a time of extreme nervousness among market players in general in all markets -- most of whom are sitting on a massive paper position in the gold market, a short position, that is, as well as other positions in other markets, many of which are now taking a pounding. Whereas, trader behavior was predictable in the past, perhaps with CYA the name of the game, it is becoming dangerously unpredictable.The extent of the damage may show up as the new accounting standards on option reporting go into effect both here and in Britain.What is happening in stocks as long positions are unwound could very well happen to gold as short positions are bought back and the players looking to buy cannot find sellers. Whenever a gold position is taken, it could be bid up immediately by hungry buyers. (My view is that we have seen this psychology quietly at work over the past year, and the BOE sales and almost panic search for lease pool gold are examples.) We've already had a wave of players getting out of the gold market at the big Wall Street firms, that wave could grow in proportion as we move into fall.So stay the course. Acquire physical as you can. And consider the above something to think about. . .Note: Over the past three weeks we have been advising our readers and visitors here to purchase physical in this summertime trough. Many have responded. We are experiencing a wave of gold buying the likes of which we haven't seen for since the first half of last year. We may or may not be right on this (we think we are), but we doubt gold will go low enough from here to raise more than a passing concern among prudent investors concerned about the decay they are beginning to see in the stock markets, as well as the building inflation problem. As a matter of fact, if it does, it will likely encourage the exact opposite -- even more physical buying. The larger economic concerns causing the buying are not shrinking in dimension, they are growing.A good friend and meister in his eighth decade, put it to me this way:"Mike, we both know the question is no longer 'If' but 'When'" USAGOLD (8/12/2000; 9:25:57MT - usagold.com msg#: 34819) "No longer IF but WHEN" Sometimes I think I put too much emphasis on the actions of people who actually make a living in the investment business across the boards, but I really do think that if you watch carefully what the investment business professionals do, it can serve as a useful barometer, and an indicator of things to come. At the moment, the name of game seems to be cut and run, but the question hanging over the tense investment killing fields is what are they running from? If I could reduce the reason to a simple word, it would be "stymied." To me it has been significant that key players in the once most lucrative and capitalized hedge and mutual funds are throwing in the towel. What's telling is that these highly paid masters of the financial universe are quitting for pretty much the same reason: They have found that their trading positions have gotten so large that they cannot vacate them. Of course, this is all a function of the massive money creation that has occurred over the past several years. What none of us understood, as this bubble inflated, was how it might deflate. Few would have guessed it would be because these huge funds with their seemingly inexhaustible capital flow would be blind sided. And what was the nature of the blind side: An inability to sell out of the huge positions they acquired because the market realized that once their support was withdrawn; there was nothing to support the future viability of that position. In a market driven not by value but by the hope that someone would appear to pick up a position that had reached its zenith, the buyer "saw" the seller coming, and didn't want to have anything to do with the wares.Stymied, with nowhere to turn, the fund manager took the second of the primal alternatives: He fled.When the head of Soros Quantum fund stepped down, he alluded to the inability to sell out positions as a prime cause for his departure. The same thing with the main man at the Tiger fund when he stepped down. Mutual fund operators, including two at Janus funds, have also stepped down complaining of the inability to find a buyer for stock positions when they went to sell -- at least at anything approaching the posted market prices. Quite often, stocks fall 50% or more in a single day on bad news simply because there are not buyers when the thundering herds led by fund managers look to sell. The thundering herd is in fact looking around for buyers at a time when all are sellers. The situation has become regressive -- a danger sign. The Red flag is out, as our favorite Fed watcher, Adrian van Eck, has so aptly put it.I watched the rare coin market traverse a similar slippery slope years ago, and what I see going on today in the stock market, particularly with respect to the fund operators, has an eerie familiarity. Believe me, my fellow goldmeisters, this will not be a pleasant affair to watch even though we feel safely protected by our gold holdings.When a trader bought a rare coin, or group of rare coins, he would immediately discover that the price had dropped further when he went to sell. Bids dropped as soon as the coins were offered, and the standing bid had to be discounted further to find a buyer, and then again, and again, and again. Each taking a loss as he sold to the next buyer (assuming he could find one) until prices in some cases stood at 10% of the market peak-- and it seemed to happen overnight. The mission became to cut losses, not make a profit and of course that is the driving force in a panic market. I wouldn't be surprised to see the same thing happen with stocks. . .and for the same reasons. The fellows at the top see it coming. They know they've been stymied not by friend or foe, but by market forces. And that inability to influence the direction of one's career has produced a predictable result. They constitute the First Wave out in the coming bear market in financial instruments. Whether the public as a whole realizes it or not, the flight from paper to hard assets, particularly gold, has already begun. Now let's take this one step further:Why couldn't the same thing happening in the financial markets be happening in the gold market -- only in reverse? Yesterday, we saw someone come into the gold market at the very end of the session obviously to cover a short position, or at least part of a short position. This may have been an indicator and the fact that it happened quickly, almost on the sly is telling. I suspect that someone wanted to get the drop on the market -- cover their position before someone else did. I suspect we will see much more of this ":jumping the gun" in the future. Certainly there are those Masters of the Universe who believe that they can stem the tide, but like their brethren in the financials on the long side, they may find the going a bit rougher as time goes on until they too find themselves stymied -- once again not by friend or foe but unforeseen market forces.In each of the instances noted above both long stocks and short gold, the root cause of the problem has been the creation of massive paper positions built tenuously on momentum buying (the greater fool theory), easy money and a imprudent psychology that there could never possibly be an end to any of those new paradigm wonders. How have things changed? It seems that now the greatest fools (both short gold and long financials) have been burned enough to show some caution (in fact momentum is swinging in favor of selling stocks and buying gold), the easy money's drying up, and the new paradigm psychology is running out of gas. The pros see this and are re-evaluating their participation in the paper bubble. Many are either getting out or looking hard for a way out. Those not devising at least a temporary exit are either asleep at the wheel, resigned to a very negative fate,foolishly optimistic or stuck with positions they do not have a clue how to get out of. The same type of massive paper position long stocks has been piling up short the gold market. We all know about the massive derivative positions held by all the momentum players on Wall Street. If there is a psychological shift -- if the players are concerned that what has happened in the stock markets in terms of liquidating positions -- could happen with gold, we could see some panic buying as players try to garner an advantage. Yesterday's action in the gold market -- the $3 up tick at the end of the session -- though largely unnoticed could have been telling in that regard. It in fact stands out like a sore thumb. Why would a trader decide to enter the market in this way? And who was it? Though this sort of thing -- a quick hit at session end -- has happened before, it has not occurred before at a time of extreme nervousness among market players in general in all markets -- most of whom are sitting on a massive paper position in the gold market, a short position, that is, as well as other positions in other markets, many of which are now taking a pounding. Whereas, trader behavior was predictable in the past, perhaps with CYA the name of the game, it is becoming dangerously unpredictable.The extent of the damage may show up as the new accounting standards on option reporting go into effect both here and in Britain.What is happening in stocks as long positions are unwound could very well happen to gold as short positions are bought back and the players looking to buy cannot find sellers. Whenever a gold position is taken, it could be bid up immediately by hungry buyers. (My view is that we have seen this psychology quietly at work over the past year, and the BOE sales and almost panic search for lease pool gold are examples.) We've already had a wave of players getting out of the gold market at the big Wall Street firms, that wave could grow in proportion as we move into fall.So stay the course. Acquire physical as you can. And consider the above something to think about. . .Note: Over the past three weeks we have been advising our readers and visitors here to purchase physical in this summertime trough. Many have responded. We are experiencing a wave of gold buying the likes of which we haven't seen for since the first half of last year. We may or may not be right on this (we think we are), but we doubt gold will go low enough from here to raise more than a passing concern among prudent investors concerned about the decay they are beginning to see in the stock markets, as well as the building inflation problem. As a matter of fact, if it does, it will likely encourage the exact opposite -- even more physical buying. The larger economic concerns causing the buying are not shrinking in dimension, they are growing.A good friend and meister in his eighth decade, put it to me this CoBra(too) (8/12/2000; 8:41:24MT - usagold.com msg#: 34818) ORO - interesting observation on lease rates, which brings my thoughts to last August, where following new lows in the POG, the WA of Sept. 26 shook not only Cambior or Ashanti, but much more so some of the Bullion Gangs, sorry Banks. Could a replay - this time with no more mercy for the forwarned -still not forarmed, as some loaded on heavily once more - of last year be in the bush (not jr.)?Thanks - cb2 CoBra(too) (8/12/2000; 8:27:01MT - usagold.com msg#: 34817) Sir Aristotle - you certainly have style! And scholarly understanding, as it was I, who was slow to fully grasp your meaning. Your analogue of pre 1971 bonds, and of course in gold convertible US$, to gold derivative markets, waiting for the (for once) incorrigible accident to happen and happen it will. As you, I feel this is the one to watch, since it will be the only place where the underlying asset, (gold-) money cannot be created from thin air. Can't we already hear the frantic scraping for a few forgotten coins/bars/nuggets at the bottom of the barrel? Thank you - cb2PS: Boxman - thanks for the Murray Pollit article - might have missed it. Hill Billy Mitchell (8/12/2000; 7:26:35MT - usagold.com msg#: 34816) Spelling correction The facts without the wisdom and style are needed but that style makes it all palatable. (not pallatable)HBM Hill Billy Mitchell (8/12/2000; 7:22:45MT - usagold.com msg#: 34815) Aristotle SirYou have style. You have a writing style of your own. One of the things that drew me to this forum to stay is your simple way of expressing complex matters.There is more to writing than just putting down the facts. The facts without the wisdom and style are needed but that style makes it all pallatable.Kind regardsHBM Knallgold (8/12/2000; 4:46:52MT - usagold.com msg#: 34814) Rubin What Bob_Rubin posted on Gold-eagle:"gold is not going anywhere (Bob_Rubin) Aug 10, 12:03 To all of you who have been addressing "they:" They, orshould I say we, have won. Precious metals are dead. Isthere any doubt? Have a nice day."There is another one,Aug 10,14:10.The day after,BOJ raises rates,Gold is up 3 bucks,"XAU" 4.58%,FOA (not as TG) comes back.What a call (or trap?)There are a lot of Eastwood movies on TV in Europe,esp. all of the Dirty Harry episodes.FOA likes them I think... ORO (8/12/2000; 2:23:19MT - usagold.com msg#: 34813) FOA - Lease rates FOAWelcome back.You have been sorely missed.AllLease rates, which have been dropping rapidly over the last few days, are moving up sharply. Watch for the 1 year rate hitting above 1.8% and covergence of short term lease rates as a sign of renewed tightness in the market. Expect an attempt to raid the "official sector" gold vaults again. This time, Andy Smith and friends will be much less confident of the results. As rumors circulate of this or that bank sending representatives to central banks to grovel for gold, our confidence in the "running out of reserves" in the gold banking system should rise. The 10 year note is up on the 20 year, indicating the appearance of what may be fresh liquidity. ViewYesterday's Discussion.
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