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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

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ARCHIVED DISCUSSION FROM 2/14/1999
All times are U.S. Mountain Time

Gandalf the White (2/14/99; 21:49:21MDT - Msg ID:2408)
Love it "Babe" !!
The Hobbits are all singing your new "hit" song, Goldfly, while I attempt to study the essays of both Steve and Peter AND hope to hear from Aragorn III and the PhD of LA soon. Then hope to hear from more of the "Lurkers" before the holiday ends and the markets beckon like the sirens of yore. The Hobbits send a golden Valentine to all aboard the USAGOLD FORUM.
<;-)

Peter Asher (2/14/99; 21:39:09MDT - Msg ID:2407)
Michael
You left me speechless for awhile. Your comments are so much appreciated and encouraging. Thoughts and concepts do not take place in a vacuum. So much of what I write comes from the interchange and debate with all the others on this forum. This experience could not take place without the unique website that you have created.

Goldfly (2/14/99; 18:35:41MDT - Msg ID:2406)
For the Hobbits......... Got Music?
(To the tune- "I got you babe")

HER: They say we're dumb and we don't know
....The NASDAQ is the only way wealth grows
HIM: Maybe that's so, but I tell you what
....When it comes to Gold- I'll take a pot.

HIM: Gold
BOTH: I got Gold babe
.....I got Gold babe

HER: They say our Gold won't pay the rent
....That barbarous relic, it ain't worth a cent
HIM: Well I don't know if all that's true
....'Cause they don't know what Y2K can do

HIM: Gold
BOTH: I got Gold babe
.....I got Gold babe

HIM: Those short-sales are hasslin' me
....Makes me wonder what the future will be
HER: When the dollar's flat and the market's down
....Then they'll get scared and come around

HER: Don't listen to their Siren song,
....'Cause I don't care, with Gold I can't go wrong
HIM: Then I'll stake a claim- we'll make a find!
....There ain't no hill or mountain that we can't mine

HIM: Gold
BOTH: I got Gold babe
.....I got Gold babe

HIM: I got Gold that's fine for me
HER: I got Gold to shine for me
HIM: Gold in my hand- that really counts
HER: Financial security by the ounce
....I got Gold- I won't let go
....I got Gold and it's yellow glow
....I got Gold- I'll hold it tight
....I got Gold- I sleep at night

BOTH: I Go-o-o-o-o-t A-U babe
.....Got A-U babe
.....Got A-U babe
.....Got A-U babe

GF

Peter Asher (2/14/99; 18:22:00MDT - Msg ID:2405)
Steve
Spots down and up 20 cents on kitco.

As to Newton, remember he didn't ponder gravity till an apple wopped him on the head while he was napping.

USAGOLD (2/14/99; 18:21:29MDT - Msg ID:2404)
Peter & Stever........
Just got back...I want to contratulate both of you on two outstanding posts. I would encourage all lurkers to spend some time with both. They are storehouses of accumulated knowledge and important interpretations of the gold scene.

Peter Asher (2/14/99; 18:14:50MDT - Msg ID:2403)
Hi Steve
I truly appreciate the praise. Your counterpoint is true IF the demand for gold is mainly protection of value. if however the coin boom is Y2K "trading vehicle" driven, (which was an assumption in my analogy) then I don't know what effect a coin shortage will have on bulk gold. At this moment, I don't see much demand building for ownership at 30k per. I was mainly addressing the existing discrepancy between coin and bullion activity.

SteveH (2/14/99; 17:56:41MDT - Msg ID:2402)
more...
April gold not trading yet on my chart... so while we wait.

This from Kaplan on the 5th. Note he was one week ahead of indirectly predicting a fall in the bond market. Keep that in mind and be sure to read him when he gets back on the 19th (www.goldminingoutlook.com):

The enormous rise in Japanese long rates will continue to undermine the world financial markets by pressuring long-term interest
rates worldwide to rise in tandem to prevent an outflow of funds into Japanese bonds. Higher long-term rates means increased
borrowing costs, eroding corporate profits and inevitably a corresponding decline in the stock market.

ONE CANNOT REPEAL THE LAWS OF PHYSICS: It should be remembered that Isaac Newton bought stocks during the
previous equity euphoria (in London in 1720) and lost most of his savings thereby. According to records of the time, he knew
the market was overvalued but figured there was nowhere else to put his money.

THE MOST DANGEROUS GAME: The average American mutual fund investor was stunned late last summer when the
market suddenly declined. Not knowing what to do, most became nervous, fretted, did nothing, and survived. In other words,
when confronted with a minefield just ahead, John and Jane Doe closed their eyes and kept walking, and lived to tell about it.
The next time they are confronted with another minefield, they will no doubt do exactly the same, confident that doing nothing
and hoping is the best solution. Should the market not rebound so fantastically the next time around, or decline further, John and
Jane Doe will close their eyes even more tightly and keep on walking. Tick, tick, tick . . . .

THE LEMMINGS ARE APPROACHING THE CLIFF: Investors' Intelligence most recent poll shows 60.7% of respondents
bullish on the stock market.

-end-

A local friend and coin dealer told me last Friday, after my accident, that this stock market downturn was going to wipe out the US middle class. He was a coin dealer during the 1979-1981 gold and silver surge. He sees the same signs of a catapulting gold and silver prices that he saw back then. I asked him what was causing the silver lease rates to go through the roof. He said, "I presume it is because of the one million ounces that Merrill Lynch is looking to fill when they closed down their bullion department. There ain't no silver out there."

I asked him, "That would be the cause of the silver rates going up?" He said, "I told you, there isn't any silver."

Steve

SteveH (2/14/99; 17:35:47MDT - Msg ID:2401)
Peter...
I am in awe. Your post inspires.

Two points. Gold, in my opinion, isn't like oil with only 50% of the refineries working because the wealthier gold-bug-to-be can buy the 100 ounce bar instead of the coin. In your oil analogy, a person could not make use of crude, not so with gold. So when all the coins get bought then COMEX reserves will get squeezed, deliveries will pressure prices higher. Y2K will actually stress the future-trading system such that gold will rise because of it and inspite of it.

As you said, "...This is why precious metal is the primary form of money. Regardless of the dilution of value resulting from monetaristic folly, asset-based money retains wealth. Gold functions as money because it is the most redeemable commodity. Value in = Value out. Nevertheless, gold is an intermediary asset when it is functioning as money."

Inspite of it because of your first argument that stated gold is a form of indirect monetary unit. How insightful. Gold is an intermediate. It can easily be changed. It is recognized like any currency with a daily-quoted value by which any properly setup exchange can convert it at a recognized value.

I can't remember the source of this information, but I remember that public demand for gold is the number one pressure on gold's reason for hitting $800 per ounce in the early eighties. Y2K will give us this. Add the uncertainty of fiat money with the dominoe recession country by country we are compounding uncertainty, compounding reasons for gold to rise again and maybe never to return to these low altitudes.

I propose that even without Y2K, gold would rise to new highs. Y2K is a random event that might move the Kondratieff 54 year cycle from 2008 to 1999, creating a hybrid stagflation in which commodities will or have bottomed and then rise to new highs. In this information age, computers have introduced a technological variable of high speed information and communication that Kondtratieff could not have known about in Russia in the 20's and 30's. Y2K has turned the clock ahead and actually created a spur in an otherwise steady course of events. This is why so many pundits have not been able to predict the effects of this event on all events around it.

From Friend of Another -- perhaps you will remember this? He said, "As gold is allowed to drift upward to the $320/$360 area, the real gold wars will begin where they left off in the early 80s. The paper gold market is still controlled by London, and we will see tremendous paper spikes up and down as this monster is killed! That's why Warren brought silver for BH, it won't move anything like gold percentage wise, but it's the best they could do in a
public company. The poor traders don't think physical can move much, so they trade for a few dollars up and down. Michael, We are looking at a sea change of biblical proportions, that, if it can take down London, it will most certainly eat any and all traders. CPMs included! Not a good thought, yes?"

You see the prophetic knowledge (or insider knowledge) of such thoughts. Your triad factor of paper traders are holding gold back at all costs to prevent these thoughts turning into reality.

I note with distinction the use of the word "allowed." This denotes manipulation or control by a party or parties. I presume he refers to the Bank of International Settlements as to the allowee. Or does he? Frankly I don't know. To much smoke and mirrors. The only thing for certain that you and I can put our fingers on are all the indicators that keep cropping up. Some of those are gold has been moving sideways. Jims from kitco puts it best, "Even an untrained eye can see that gold stopped falling 14 months ago and has been going sideways ever since."

The question, is gold done moving down and ready for a permanent move up? Jims again says, "The telltale signs are there of a market reversal of the 4+ month decline off the Oct high. There have been three declines into this triple bottom. The first began oct 97, thesecond apr 98, and the third oct[sic]98. the last one was at less of an angle (less momentum/conviction ) than the previous, which was less than the first. Each of these has lasted about the same -- 4 months. If we get as much of a pop off this third decline it will carry us above the apr98 [sic] high and clearly signal that a bottom is in even to untrained eyes, who will then buy at the high and get blown out by the retest of the bottom."

You see even Jims senses that gold is in a technical bounce scenario trading in a tight range. He mentions that those buying at the high of this next bounce will loose some money as it, he infers, will retest previous lows. We all know that to be $274-$282. So is this expected bounce caused by a rising long bond yield, Y2K coin squeeze, falling domino economies ending what will likely be the US and Europe, going to be permanent or as Jims said, "...a retest"?

Bill Fleckenstein discussed bonds recently. He said, "Trouble ahead for U.S. bonds... Looking at the bond market and the news out of Japan, I would say that we're definitely seeing some repatriation back to Japan. And if that's the case our bond market is in big, big trouble."

His words drawn to their natural conclusion would mean a flight away from the dollar to Japanese bonds. He sees this starting right now. Others have spoken of the Euro as competition for the dollar as the reserve currency. Be it the Yen, the Euro, or the dollar. The dollar is coming under pressure as Mr. Fleckenstein pointed out. Oil is priced in dollars, gold is priced in dollars, silver is priced in dollars. Dollars, dollars, dollars.

The indicators of gold rising in value increase every day. We see the indicators previously mentioned, others that you know that aren't mentioned and we see counter indicators spun by the information meisters painting a bleak picture for gold, 'gold is dead.' These indicators in the intelligence parlance of Operational Security are stronger than ever. The stronger they become the closer we arrive at the juncture that Michael asked about: is this the one, the final move from these levels?

I propose that the answer will only be known, in fact, after the fact. Jims thinks it but a triple bottom bounce with a potential for a retest. Others believe that the long bond rising yield is the portender of bad news for the strength of the dollar. We all know that as the dollar grows weaker so gold grows stronger.

Yet, the traditional time for gold to rise has been reported to be the time when inflation is rampant and the money supply loose. I suggest that, as some have said, the stock market is our inflation. As it falls monies will seek safety not in bonds, but in gold, gold related investments, and the Euro and maybe even Japanese bonds as Mr. Fleckenstein pointed out.

This brings up some of the thoughts of Another when he said, "Few do grasp what is happening and why! They think the holding of gold reserves by the Euro is of a little point, as to what good are gold reserves? One cannot use gold as Marks or Yen to intervene in currency market to support the Euro. My friend, the BIS has played the, as you say, "big poker hand"! The holding of large reserves by the ECB and the withholding of sales from the market will not only bring the end of the London paper gold market, it will, thru a high USD gold price, "make the dollar weak in gold"! From this position, the dollar will lose the "oil backing" from the Middle East! At first, all oil for Europe will be in Euro's, then all producers want "strong currency"!

So Mr. ANOTHER says that the Euro is strategically positioned to be the benefactor of a week dollar and that the Euro will become the reserve currency of choice for the oil countries. He further says that the BIS is somehow at the center of this big "poker hand."

Kodratieff and his followers would surmise that we are the end of a six-year down cycle in commodities. They support the thought the commodities are testing their lows now. Further, Y2k is stressing the system. World economies are faltering; printing presses are running full bore to inflate out of depression. Stagflation, where we have low commodity prices and high grocery prices and medical costs is amongst us. Gold isn't reacting to its normal stimulii because inflation, the standard gold-buying trigger is masked by the inflated stock market bubble, and hidden by low oil costs. Risk is being factored into the long term bond prices. GATA is accusing the Feds and Goldman Sachs of running a PPT or plunge protection team to extend the boom cycle of the last several years. The temperature gauge of gold popularity is rising. Peter Asher covered it well when he said gold is a a monetary unit in an intermediate way. So is gold going to bounce now?

Technically, it is bouncing. It gapped on Friday in the daily gold chart. In my opinion it all depends on how big the short counter attack is and how much ammunition they have left. Since gold has been moving sideways for a while, shorts can't continue to prosper from an ever declining gold market. I believe that we are winding down the gold carry trade. Silver is the leading indicator (there is that word again) for gold. Silver lease rates are at a recent high, almost 8%. Gold lease rates haven't risen the likes of silver's. I believe that this would seem an appropriate indicator to gold's rocket rise, if it is here. But it is not reflected in the rates. Silver is.

So, jims may be right. We are getting close and this is the one before the final one. Silver's turn is now. Gold is next.

Finally, I leave you these prophetic words of Another (who by the way has not graced these pages recently): There is more: Many say, how to defend Euro without much currency reserves? If gold go to many thousands US, what will be
used to bid for Euro as defense? I say, these persons will find a problem on their computer screens! You see, the Euro will start as "nothing", no holdings of size, anywhere! The dollar is held as reserves as "the stars in heaven"! It is to say, "the dollar will bid for the Euro", not "the Euro will bid for the dollar"! All currencies will "flow into the Euro for trade". But, if the Euro becomes so strong, how to compete in world trade? It will be the price of oil that will make the "trading field" level! The soaring US$ price of gold will make even a 10% Euro reserve be as 100% today, in USD! Oil will become, very, very cheap in Euros and allow that economy to do well! Many other countries will see this and also want to join the new "world reserve currency" that has become"the new world oil currency"!

The key for this "new gold market" is found not in the process of gold loans and sales, but in the "who is the new owner of this metal"? Noone did see clearly, "the other side of this". Always the view was, "see how the fools sell the gold and drive price low", not "who is buying all of this new supply at such cheap prices and giving up interest on currency also"? One should consider, "how much currency has flowed thru gold" over these past years! It is a great deal of wealth! Can not one see the clear view, "has not gold made the dollar strong as world reserve currency"? This happens in a time that all say the dollar would fail! Perhaps, "this new gold supply", it was for the purchase of "time".

Some say, "gold fall because noone was buying it". I say, "gold fall because many were buying it"! They buy as the "trading market" was made "much fat" with added paper! Understand this: The US$ price of gold could only fall if a market existed for paper gold priced lower each time of offer! If the price did not fall, this paper market "could not function" as "it would not be profitable to the writer"! It was, for many years, in the good interest of all, for the dollar to find a gold price close to production cost. That time has now much passed!



Peter Asher (2/14/99; 14:34:01MDT - Msg ID:2400)
"Electronic Alchemy" will hold gold to *$295.80*
Friday's one day wonder of bonds down and gold up may well be a harbinger of things to come. But the forces of the status quo, I suspect, are not going to pack up and go to the seashore leaving us with a New Gold Order next week. However, there could be enough traders scared "shortless" to push GCJ9 up to $295.80.

When I step back from the closeup view of gold charts, Dow S&Ps, LTCM, Greenspan et al; I see two basic opposing forces at work. 1) The massive shift in the global economic picture, which consists of a vast consolidation of major corporations simultaneously with an explosion of individual enterprise via the WWW; and 2) the incredible volume of nonproductive profiteering in the various currency and carry trades. The threat of the latter is, of course, the reason for the ownership of gold; and it also would be the cause for a substantial, or even dramatic, rise in the price of all precious metals.

I see three separate aspects to the reasons for owning gold. First is to hold value when other forms of equity collapse. Second, for the potential of profit from the return of the price of gold to higher values and beyond. Third is to have money when all other forms cease to be valid. Any or all of these reasons need to be motivating more people in order for there to be a substantial rise in the POG.

What I find helpful in understanding the current antics of gold fluctuations is the realization that in addition to supply and demand, the factor of paper trade and manipulation creates a triangulation of forces in which gold doesn't necessarily behave as we believe it should. This third factor is why we often see the opposite of what we expected from the supply and demand of the moment. The trade-manipulation factor creates ARTIFICIAL supply/demand ratios, skewing the technical numerology and confounding chartists and related theorists. Therefore, a trend reversal requires a greater magnitude in events than might have been necessary before the age of "Electronic Alchemy"

For example, The Mint statistics posted recently pencil out to an additional 21 tons for the second half of 1998 and a projected 66 additional tons in 1999. As to why the price of bullion is not responding to this, maybe the quantity is not great enough to reverse the tide of the other factors. To get a further perspective on this, imagine Oil. Suppose, say, 50% of the refineries in the USA where knocked out by terrorists. The price of crude would drop while the price of diesel and gasoline would skyrocket. Likewise, if there is a limit on how much stock can be produced for stamping blanks, or if the mint simply decides to hold down production, coins will continue to escalate in price while the cost of bullion will languish. [This plan of the Mint to ration coins is incomprehensible, since the aftermarket will skyrocket and they lose out on a huge profit potential.]

This explosion in coin prices is only one piece of the overall situation with gold. More significant is the secretive goings-on with the CBs and the gold carry trade. To attempt to analyze and predict the future of gold, it behooves one to really look at Gold's function as money. Money appears to break down into three categories: coin, earned credit and created credit. The latter two are both, by definition, fiat money. However the difference between those two is important in understanding the chaos of monetary economics.

If the government records the delivery of goods and services by issuing money to the account of the provider, that is fiat money, but it represents real product. When it is exchanged for the product of others, all is well. However, when government issues money to be loaned into existence, that is the fiat money (or more accurately fake money) that we see devastating economies throughout history. The basic concept is workable; issuing credit for the purpose of purchasing before the fact of production. A monetarist would argue that an economic system works that way no matter how vast, national or global, but history tells us otherwise. There must first be enough affluence to afford to lend (advance) products, and secondly there must be a direct response in the form of valid production which will repay that advance.

This is why precious metal is the primary form of money. Regardless of the dilution of value resulting from monetaristic folly, asset-based money retains wealth. Gold functions as money because it is the most redeemable commodity. Value in = Value out. Nevertheless, gold is an intermediary asset when it is functioning as money. Theoretically, in a sound fiat money system (credit money, not created money), gold would not be needed.

Unfortunately, even gold as money can be turned into the other forms. Receipts for gold can be used as paper money. Then, by considering that all gold owners will not all draw out their inventory at any one moment, the keepers of the gold can write more receipts than they have gold on hand, thereby inflating the money supply despite a Gold Standard.

So here we are with Central Banks holding gold reserves and an old refrain from a song of the 40's is running through my mind. "Money burns a hole in my pocket." Maybe that gold is burning a hole in all those C.B. pockets, and that's the supply part of what's holding the POG down. Even so, its just a matter of time. All of the world's C.B. gold inventory is not really that big a chunk of the gross global product. Furthermore, as more wealth is created, more value will be stored in gold. Gold WILL move from weak hands to strong. Gold is as inexpensive in real terms as it will ever be.

Y2K has caused a runup in the price of coins but that has not caused a runup in the price of bullion. And, Y2K may cause a collapse in economic activity but that may not cause a collapse in the global economy. The question is, will it tip the scales the other way by being the weight in the pan that reverses the balance? As Michael says about Y2K itself, all you can do is prepare for it.

pa kua (2/14/99; 12:31:47MDT - Msg ID:2399)
GOLD ******293.6******


Indications of a bottom for gold.

1. Three declines to a triple bottom, the last lacking momentum. (October, 1997; April, 1998; October, 1998). To confirm the uptrend, a rise above the April high would be definitive.

2. 30-yr Treasuries and the Dollar indicated tops in August, 1998, and have been trending down since. The downward trend of 30-yr Treasuries was confirmed (or close to it) last week. This correlates with the upward trend in gold.

3. The majority of common stocks have been falling since April, 1998. This decline has continued in 1999, enhanced by decreasing profits, suggesting more to come. This should support the demand for gold as a store of value.

Prediction for February 19th: 293.6.

I chose this, because I think if gold crosses 293.7, it may go to 310-320, quickly; and come back down to test 293, before continuing to rise. This might occur in March.

Folly, Frenzy and Fear, those Careless are
The fates that mould our destinies, and shape
The grave dishonesties, deceits, that mar
Our work, our very loves, our art
Stir the dark anxieties, the mortal pains
The dark and deadly pride that stains
The living dying heart.

Only that man,
Who steadfast stands apart
And cries his manhood, cries aloud - I AM
Will be free of such dire fates
Only thus be saved,
Be his own man.

USAGOLD (2/14/99; 11:30:08MDT - Msg ID:2398)
Peter...
Right on...What people do about Y2K is their own business. Who would want to be responsible for telling someone not to prepare, especially when the cost of doing so is not burdensome, and then have to answer to those people if there actually was a problem? The awesome silence from Washington with respect to Y2K is telling in that regard.

Peter Asher (2/14/99; 11:18:53MDT - Msg ID:2397)
Micheal
Like minds think alike again. From my "to be posted" notes earlier this week. "Gold will be in demand when people buy it to prevent loss rather than to acquire gain. But when that occurs, the gain will be there anyhow, due to the magnitude of the occasion precipitating that trend.

USAGOLD (2/14/99; 10:29:27MDT - Msg ID:2396)
Farfel...
I don't know if you are aware of this but Armstrong was written up by one of the wire services -- I believe it was Reuters -- as one of the hedge funds having LTCM syle problems related to its silver position. Armstrong, if the article was correct, is short the silver market and, judging from his rhetoric, probably gold too. As we all know silver has been on a steep incline of late and physical gold demand is skyrocketing. Armstrong in response takes the tone of a desperate fund manager to the public venue. Perhaps he should under the circumstances.

Knowing the facts behind the Armstrong rhetoric explains the urgency of his tone and why he has resorted to personal attacks on gold advocates and owners. In the past he has been a good indicator as to the level of pain being shouldered by the shorts. The shrillness of this latest outburst signals pain deeper still.

What Armstrong is beginning to understand is that 99 out of 100 people who buy gold these days are more interested in it as currency insurance than a profit generator (as Alan Abelson of Barron's pointed out in his column this weekend). That's a frightening thought to somebody like Armstrong because it implies a strong foundation to the market built on fundamentals not a trading mind set vulnerable to his brand of persuasion. In other words, the yellow is going into strong hands, not weak hands, where it will not be easily pried loose. The realization that he has been barking up the wrong tree these past six months has reduced Armstrong, as we see, to a frustrated rhetorician who can't get the market to do what he wants it to do. If I remember right, in some of his writings, he has even tried to paint Warren Buffett as a shaky silver trader who is likely to unload on a moments notice when anybody who knows anything about Buffett's investing style knows that nothing could be further from the truth. (Warren Buffett's father was an advocate of the gold standard and a Congressman from Nebraska.) As a result of this discomfiture, he has resorted to the oldest of polemic tricks: When you can't attack the argument, attack its advocate.

Bravo, Farfel. I look forward to your next installment. I offer this though it appears to me you do not need much help.

USAGOLD (2/14/99; 09:28:56MDT - Msg ID:2395)
Hear ye....Hear ye....A Contest is Called!
USAGOLD (2/13/99; 09:36:30MDT - Msg ID:2373)
Hear Ye...Hear Ye....A Contest is called.............
My Fellow Goldmeisters from far and wide.........

The financial winds blow from the four corners of earth, collide in a swirl at a single point and place in time, and settle to an
eerie calm at the center of the storm -- this place we call the gold market; this place in which we find ourselves. There is
nothing here but clear thought and a vision for the future. Let us make our amends and find solace in our golden thoughts,
and
exchange our courtly niceties now while we can.... for the contest is about to begin in earnest. Welcome all to this table
round
where we sit as equals in the pursuit of knowledge and elusive wisdom for it is here we hope to find truth. These are not the
simplest of times; nor are they without danger for those who witness and understand the nature of the disturbances rotating
around us..................

Consider this, my friends: Today the bond market signalled impending evil........and the mighty NASDAQ quaked....The
news was of capital flight from the United States to the Land of the Rising Sun as bond investments are repatriated..
.....Meanwhile gold and silver lease rates have begun to rise and the commercial long postition in gold has grown
exponentially in recent weeks both reflecting the strong physical demand we've discussed here before......The glittering
yellow metal finished a promising $1.90 higher today amidst much optimism.....Even perrennial gold bear, William O’Neil
of
Merrill Lynch, said today "If it could move a little bit higher, you could get into an area where you'd see some of these heavy
fund shorts start to cover. While it's hard to pinpoint just where this might happen, $293 might be a possibility. The higher it
goes, the more vulnerable it is (to short covering)," the Merrill Lynch official said."

Is it my imagination or has the feel for things drastically changed in just the last few days?

So the contest is this:

To answer in a comely way (after all this is Valentine's Day) the following questions:

Have we reached the major turning point in gold we have waited for.... or this another false start?

Secondly, based on your analysis where will the price of gold end by Friday's close on the April Comex , February 19th,
1999?

Predicting the price alone is not enough. One must tell why in thirty words or more.

Whoever lands the closest gets the gold -- a handsome one-tenth ounce Austrian Philharmonic for the treasure chest. The best
post in terms of style and substance gets three Silver Eagles. There will three runner's up who will get a single Silver Eagle
--
seven coins in all, a lucky number indeed.

'Tis the sort of thing that would warm the good St. Valentine's noble heart. So who will be the Cupid that pierces the heart
of
this matter with his or her well aimed arrow?

Let the contest begin. The first to post a price claims it as his/her own. Please post your price somewhere in the title
surrounded by ******'s, so all can see.

All first time posters will receive their choice of one of two books, either the ABCs of Gold Investing or In the Footsteps of
Giants, free of charge. Just post and e mail us your choice and its out the door to you.

We will be monitoring the e mail for new registrants and will get an entry code to you as soon as we can.

Have fun, my fellow goldmeisters and may the best poster win.

Let me end with a piece of writing that somehow seems appropriate. Perhaps it is the day we celebrate. Perhaps its
something
else.....It comes from Mary Stewart's First Book in the Merlin Trilogy which is also the story of Arthur. It is one of my
favorite passages in literature for what it portends:

"Throughout Arthur's long reign Merlin advised and helped him. When Merlin was an old man he fell dotingly in love with a
young girl, Vivian, who persuaded him, as the price of her love, to teach her all his magic arts. When he had done so she
cast
a spell on him which left him bound and sleeping; some say in a cave near a grove of whitethorn trees, some say in tower of
crystal, some say hidden only by the glory of the air around him. He will awake when King Arthur wakes, and come back in
the hour of the country's need."

Happy Valentine's Day to This Table Round for Not All That Glitters Is Gold

Comments on the passage above will be considered toward the contest as well...

You can make as many entries as you want for the silver but only for the gold.

Contest ends Monday, February 15 at Midnight.

pa kua (2/14/99; 01:41:18MDT - Msg ID:2394)
Gold
Indications of a bottom for gold.

1. Three declines to a triple bottom, the last lacking momentum. (October, 1997; April, 1998; October, 1998). To confirm, a rise above the April high.

2. 30-yr Treasuries and the Dollar indicated tops in August, 1998, and have been trending down since. The downward trend of 30-yr Treasuries was confirmed (or close to it) last week. This correlates with the upward trend in gold.

3. The majority of common stocks have been falling since April, 1998. This decline has continued in 1999, supported by decreasing profits, suggesting more to come. This should support the demand for gold as a store of value.

Prediction for February 19th: 293.6.

I chose this, because I think if gold crosses 293.7, it may go to 310-320, quickly; and come back down to test 293, before continuing to rise. This might occur in March.

. Folly, Frenzy and Fear, those Careless are
The fates that mould our destinies, and shape
The grave dishonesties, deceits, that mar
Our work, our very loves, our art
Stir the dark anxieties, the mortal pains
The dark and deadly pride that stains
The living dying heart.

Only that man,
Who steadfast stands apart
And cries his manhood, cries aloud - I AM
Will be free of such dire fates
Only thus be saved,
Be his own man.

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