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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...

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.

ARCHIVED DISCUSSION FROM 5/28/1999
All times are U.S. Mountain Time

View Yesterday's Discussion.

USAGOLD (5/28/99; 20:04:31MDT - Msg ID:6824)
The Latest from Mr. Insider:
Long talk this afternoon with Mr. Insider...our own version of the Friday Afternoon Club.

According to Mr. Insider:

Premise #1...The statistics we see on offical sector gold ownership and gold flows don't come close to telling the story.

Premise #2...Only market action can give you a clue of what's going on in the gold market -- the BOE sale being a prime example.

The holders of the largest gold hoards on earth according to Mr. Insider:

1. ECB
2. Vatican
3. United States, or possibly
4. Saudi Arabia

On the BOE sale, I asked why announce the sale before not after the fact. According to Mr. Insider, they are either:

A. Incredibly stupid, or
B. Attempting to drive the price down.

Aside: The auctions will probably be over subscribed -- a bull signal. The IMF sales and U.S. sales in the 1970s were over-subscribed and touched off a bull market.

On the 265 puts bought by JAron recently:
1. They sold half in the last two days and cleared a tidy profit.
2. Even though the price did not get to the $265 stike, the premiums on the options rose providing a nice profit
3. Forgot to ask when they might unload the rest of their position but I assume it will happen on any weakness.

On gold leasing:
1. Watch rates, this is the key to the gold market. If rates start up, look out! The metal's headed higher.

2. Leasing is a zero sum game, but it adds to the supply side if cb's continue to roll-over bad loans (practice denial)

3. The Saudis and Vatican are big gold lenders. The Vatican insists that all gold loans be repaid in full by midnight Christmas Eve and that all gold is returned to their vaults at that time. I didn't ask about Saudi terms, but I would be surprised if they were any more lenient.

4. Rollovers and defaults may be an addition to supply not quantified by the gold statistic services. At most cb's these numbers are closely guarded secrets, therefore we are forever in receipt of only a partial picture.

5. Gut instinct tells him that the LTCM situation is not behind us with respect to gold.

USAGOLD Comment: All of this pretty much corroborates "The Footsteps of Giants" oil - for - gold scenario, and Mr. Insider doesn't have a clue who Another or FOA are.
After this FAC talk with Mr. Insider, I had the thought that despite all the maneuvering on the part of the U.S. Treasury Department and Federal Reserve, devaluation of the dollar was not an act of the United States. It was an act of the oil producing nations. This adds much credence to the Another/FOA analysis. It will be manifested by significantly higher inflation in the United States.

Food for thought on a long weekend.

beesting (5/28/99; 18:17:22MDT - Msg ID:6823)
Follow up to msg#6819-short sales/long sales.
SteveH great#6820 if a catalogue of outstanding posts is ever started I'll nominate #6820.

My previous post#6819,applied mainly to stocks and bonds. Here are some definitions on commodities'such as Gold:
SELLING SHORT: Selling of a futures contract for a commodity or financial instrument or a stock one DOES NOT OWN, with the intention of buying it at a later time when,it is hoped,its price will be lower. The transaction itself is called a short sale. With commodities and financial instruments, the sale is a futures contract and in most cases the seller covers the sale-that is ,buys the item in question-before the contract expires.
Or ROLL DOWN -Closing out an option and immediately taking out another in the same underlying security(Gold) with a lower strike price (down),and later expiration date (forward).

SHORT SALE RULE: Also,up tick rule. A Securities and Exchange Commission rule that a short sale in a listed STOCK may be made only in a rising market,that is, if the last sale wae at a higher price than the sale immediately preceding it (up tic)or if the last sale was at the same price as the last preceding different price(zero plus tick).
THE PURPOSE OF THIS RULE IS TO PREVENT MANIPULATION OF A STOCK'S PRICE BY HEAVY SHORT SALES,WHICH WOULD DRIVE DOWN THE PRICE'so that speculators could than buy the shares cheaply and make a large profit.This rule may not apply to commodities. From the book;" A to Z of INVESTING."

Mr.CANUCK, if you make the time to read all the back postings and essays at this site its the equivalent of a degree in economics.Good luck in your investing.......beesting


Cavan Man (5/28/99; 17:19:15MDT - Msg ID:6822)
To SteveH
Sir: Thank you for your last post. It has really helped me understand the subject of gold in the context of 1999 US and world economics. You know, I visit this forum frequently. In fact, I have come to believe I have a definite love/hate relationship with it; hate because the theories such as yours presented here are quite reasonable and plausible and therefore to someone like me who is a complete novice, unnerving; love because I am learning survival skills from very good minds for cheap. The more I consider the information posted here the more convinced I am of the veracity of same. The hard part is unlearning conventional wisdom and theory. Just when I think I have turned the corner, there I am struggling again. Thank you.

jls (5/28/99; 14:11:32MDT - Msg ID:6821)
Steve H: I think I have this figured out!
Your post, including FOA post of 08/10/98: lucid, concise,
superb.

SteveH (5/28/99; 12:22:00MDT - Msg ID:6820)
I think I have this figured out!
Permission granted to repost the heck out of this.

Major Currency Battle Now Underway Masked by Equity Bubble
by
SteveH

Current economic events boil down to a two economic forces at work that
essentially divide the world into two camps: debt holding countries of
the US dollar and countries who are distancing themselves from US debt
by way of physical gold possession and the Euro. All current world
events seem to be explainable when viewed in this manner. The two camps
are the US/IMF faction and the Euro/BIS faction. The US/IMF camp is
dollar based paper and debt; the Euro/Bis camp is gold-based currency
and gold bullion and oil.

The current run up in the US dollar and equities market is a result of
the skewed influence of the US dollar in world economic events and shows
its strength when viewed from its holding the existing role of the world
reserve currency. It is this role of 'reserve currency' that is the
center focal point of a currency war currently in progress. This war is
masked by the power and control of the media of the US/IMF faction and
by the apparent strength of the dollar and the dollar stock markets. It
is this apparent strength that blinds all of us to the hidden currency
war now playing in the world's markets. But it is this media influence
that hides the battle from our view. Yet knowing that the battle is
progress does provide a perspective from which current economic events
become crystal clear.

The strength of the dollar might be its aquilles heel, though. The
equities market in the US has been fueled apparently by two major
sources of funds: baby boomer 401K mutual funds and Yen and Gold-carry
money. It is this latter source of money that has just now come into
question as legitimate and healthy -- just look at Japan's economy and
what the YEN carry trade has done there. It is the gold-carry trade that
maybe the David of the dollar Goliath or the hair of Samson, the dollar.

Carry trading in Yen and Gold is simple to understand. It is borrowing
Yen or gold at a low interest rate, selling it into the market -- which
drives the price down and the dollar up -- then buying US bonds or
equities at a higher interest rate. The loan is repaid and the
differential interest is pocketed, and the process is repeated for as
long as the price of the YEN and gold drop. Not long ago, the YEN carry
trade was essentially stopped. More recently the gold carry trade has
been slowed or stopped to, but in the case of gold-carry, many of the
many borrowers of gold rolled over their loans and NEVER paid them back.
This is because they didn't have to until NOW. Now the gold price is at
or below production cost for most mines. Once the Central Banks (mostly
Europe) stopped leasing gold a short while ago, the estimated 14,000
tons of gold that has been involved in the gold-carry trade needs to be
paid back. It is impossible to pay it back in gold as most of the
Central Bank loans demanded so now it would seem that the financial
parties in the gold-carry business need a source of gold to pay back
these loans. It appears that only two escape hatches exist for the
gold-carry players. Keeping the price of gold down by shorting it on
COMEX (this is akin to naked shorting as insufficient gold bullion
doesn't appear to exist to cover the 200,000 open interest contracts) or
repaying the loans in a medium acceptable to the banks who loaned the
gold in the first place. It seems as though the Euro may become the only
accepted means of repayment.

One can see that the carry trades have driven the Yen and gold to all
time recent lows. In the case of the YEN more can be printed or made
available for repayment. In the case of gold, only 2500 tons of gold are
mined each year. To cover the 14,000 (alleged) shortage of gold would
take over five years at current production levels.

The remarkable thing about the carry trades is the shear number of
financial institutions who have participated in it. In other words, the
carry trade is pervasive and to unwind it will affect major world
financial institutions.

So back to the war of the Euro/BIS and the dollar/IMF. Two anonymous
representatives of the Euro/Bis camp have for the past two years come
forward with their interpretation of events. They have used the Internet
as their medium of discussion and have provided a tome of information
and opinion on this hidden war now unfolding. I believe they believe
they came forward after the cards, have been played that will ensure the
outcome of the currency war for title of world reserve currency ends up
in the Euro/Bis camp.

Let me explain. They claim that the BIS and the European Central banks
allowed the gold-carry trade to go on for years to proliferate
gold-based debt and ownership worldwide, using leasing as gold leverage.
Now it has become so pervasive that much of modern financial
institutional debt is a direct result of the carry trades, especially
gold-carry. Simply put, gold is the payment due in short order.
Insufficient physical gold stock exists free and clear of central bank
vaults and mining production of many major mining companies is hedge up
to 10 years hence that the only way to pay back without gold appears
destined to be Euros.

In other words, somebodies were suckered. Nearly risk-free (or so they
thought) interest money was available through the carry trades that
everyone got on board that knew about and cashed in. The result? The
Central Banks are owed an alleged 14,000 tons of gold with interest by a
wide-variety of institutions. Now you can see why they believe that the
dollar/IMF faction has lots. They can't pay back their debts without
converting to gold or Euro's and that means converting US bonds and
equities into Euros or gold. Since their is virtually no physical gold
to be had, we see gold continuing to be held back in price and kept away
from the $300 number that could trigger a failure of the COMEX exchange.

Now, light has been shed on the hidden battle for reserve currency. Up
until the Euro was introduced the only possible competitor for world
reserve currency status was gold. Gold doesn't lend itself freely for
exchange. (hard to email it) But with the introduction of the Euro with
nothing near the debt load of the US dollar and 15% in reserve
currencies being that of gold bullion, a proxy for gold was born that
can now compete with the dollar for the reserve currency status.

So, look now at recent world-wide financial events using the above as a
filter:

--Gold approaches $292. Bank of England announces a sale only available
to members of the LBMA (London Bullion Market Association). Price of
gold drops to a 20 year low.

--IMF announce a sale of gold to help poor countries (who would have
benefited more if the price of gold was higher as most them were
countries with producing gold mines.

--Swiss vote on a national referendum to delink gold from the Swiss
Franc and it passes.

--Major TV and printed press publish countless stories about gold is
dead, gold is no longer a modern requirement for currency. People become
confused by this. Gold's popularity falls to an all time low. Gold no
longer acts normally during major world crisis. Normally it would rally
in the event of war or inflation.

--Major rumors of Goldman Sachs and other investment banks heavily
shorting gold on Comex further holds gold down during these major
world-crisis.

--Formation of GATA (Gold Anti-Trust Action) committee to investigate
the apparent manipulation in gold markets. --Recent announcements of
copper and drug company price fixing.

The list goes on and on.

Where are we today? If you asked the two anonymous person called ANOTHER
and Friend of Another who post at the www.usagold.com web site and who
used to post on the www.kitco.com web site, they would tell you that in
their opinion, we are seeing the last leg of the dollar as the world
reserve currency and that the Euro will soon replace it in that
capacity. The would further tell you that when that happens, in their
opinion, that the COMEX gold exchange that trades in gold futures will
cease to function or become totally ineffective in establishing the true
value of gold in US dollars as the open interest contracts that trade
their can not be satisfied by physical gold as it is all spoken for.
Because of that, they would say that gold will rise to over $10,000US
per ounce. They have said that owing physical gold is the only true
measure of secure safety for ones wealth.

As extreme as that opinion is, recent events behind the scenes seems to
point to their theory of current gold markets events as the only one
that plausibly explains why gold and the dollar are behaving as they
are, why it seems that gold is being held back no matter what the cost.
I for one am open to any suggestion as to what else could really be
happening. But for now, I think Mr. ANOTHER and Friend of ANOTHER have a
message worth understanding.

Some of discredited Another and FOA (Friend of Another) because they
made a few predictions based on a timeline that in hindsight wasn't
entirely under their control. Because humans can't predict the future
rather only report it when the future is past, we shouldn't really
discredit the A and FOA message because a timeline is tampered with or
changed due to events beyond their control. If we remove the predictive
or human element of prediction or surmise from the A and FOA message
what remains?

I believe that what the A and FOA message represents is the inside track
of a powerful group of nations that have difficulty with the debt load
of the US/IMF faction and the negative influence this debt will
ultimately play upon them. The A and FOA thread then becomes one of
viewpoint within the larger realm of world economies that essential have
two major influences: the US/IMF faction with the dollar as the reserve
currency (major players are US/England/Japan) and the Euro/Bank of
International Settlement (BIS) with the European Union Countries and the
Bank of International Settlements. From their standpoint, they believe
the Euro has already won because gold is owed by so many institutions in
the US/IMF camp that it is too late for the dollar not to succumb to its
own debt load. They believe that what we are witnessing now is the last
act of the dollar as a reserve currency. Like it or not, their opinion
deserves to be heard if not for the sole purpose of the US/IMF faction
to gracefully deal with its current situation with the full
understanding of what exactly might just be going on.

SteveH

The following is an actual exerpt from Friend of Another. You can see
within this text much of the substance I address above. The introduction
is by the Michael Kosares who was the editor of the "In the Footsteps of
Giants" and the system operator of the Gold discussion group at the
www.usagold.com web site.

8/10/98 Friend of ANOTHER

(Editor's Note: Please read what's below carefully. This is an
extraordinary analysis from the Friend of ANOTHER at a time of much
confusion and uncertaintly in investment/currency markets. We are told
at the outset that the largest pro-gold groups -- the Europeans and the
Gulf states -- want a world currency "not subject to the performance of
the American economy." In other words, a currency not tied to American
treasury obligations, or the percpicacity of any other nation for that
matter. That currency for those of us who have reached for the deeper
truths of economy is called gold. As an American, I must say that I have
never seen the concept of American hegemony explained in quite the same
way before. Perhaps, my eyes were closed. I keep getting this feeling
that Americans must necessarily begin to understand a new role for this
country in a rapidly changing international political and economic
environment -- a role for which our political and economic institutions
appear ill-prepared. I will not be so presumptuous as to explain what
the Friend of ANOTHER is saying, I will let you read for yourself. I do
not think it could be said any better than Friend of ANOTHER says it.
The fact that his analysis implies how one should design one's portfolio
is a happy side benefit.)

Michael Kosares,

It has taken some time to send this, but now I can also offer my
thoughts to your questions.

Your statement: "As a matter of long term policy, do you believe that
ECB will "sell" gold to defend the Euro or "buy" gold to defend the
Euro? Each of course would entail a different course of action with
respect to reserves of the new national bank. Along these lines,will ECB
buy gold from its member treasuries, or will it simply force them to
transfer it to ECB coffers if needed to defend the Euro? I am prompted
to ask this question in view of your assertion that there will be much
selling of Euros to defend the dollar. If the Euro, as you suggested, is
being printed to buy dollars isn't this just another manifestation of
the U.S. exporting its inflation? It appears to me that the Euro will
need to be defended -- and not with dollars -- but with gold! "

Michael, I believe the most difficult part in understanding the modern
gold market is overcome by seeing all the various political factions
involved. Essentially and basically, the largest pro gold groups are
those who want a world currency that is not subject to the performance
of the American economy. At this moment and in this period of economic
history, all currency reserves held by foreigners (non-Americans) is a
debt of the US Government and by extenuation through tax collection, a
debt based on the ability of the American economy to function
profitability!

In essence, America has told the world that as long as the business of
this country is functioning, your wealth, as represented in Marks, Yen,
Pesos, etc. is backed with performing US debt. It's like saying, "as
long as your neighbor, next door, does not loses his job, you will not
lose all your money! Most people would be surprised at how clear this
is, outside the USA sphere of influence. This, the largest of the pro
gold group, is largely made up of countries with economies that have no
need to sell most of their production to the US. The business of these
communities would not totally fail without the American engine. Yes,
they would slow down, but not collapse, as trade with other countries
would continue. To add what was said before: If your neighbor loses his
job, you can still trade with the other people in the town, as long as
the currency system is not based on your neighbors debts!

This group, made up of much of Europe and the Middle East, is not
looking for a return to the old Gold Standard, but perhaps something far
better. They do not see any advantage in holding the currency bonds of
one country, as a reserve asset of future payment, over holding physical
gold as a reserve asset in full payment. The fact that the debt reserve
asset pays interest is little more than a joke in these banking circles.
Any paper currency, the dollar included, can fall in exchange value
against your local currency far more than the interest received! In
today's paper markets, the only true value in exchange reserves, held by
a government as currency backing, is found in it's effectiveness for
defending the local currency from falling against other currencies. In
other words, use the reserves to buy your countries money. But, this is
a self defeating action as sooner or later the reserves are used up!
This fact is not lost on many, many countries around the world, as they
watch their currencies plunge, lacking reserves as defense. Ask them how
important the factor of earning interest on reserves is under these
conditions.

On the other hand, buying gold on the open market, using your local
currency, works as a far different dynamic from selling foreign
bond\reserves. This action takes physical gold off the market, and in
doing so increases it's value in dollar terms. Gold is and always has
been the chief competitor with the dollar for exchange reserve status.
The advantage here comes from the fact that governments do not run out
of local currencies to use in buying gold, as opposed to selling foreign
currency reserves to buy the local currency on the open market. Of
course, the local price of gold goes sky high, however, in this action
you are seen as taking in reserves, not selling them off.

Also, as gold begins to rise against the dollar, the local gold reserves
are seen as assets of increasing value, backing the local currency.
Under these conditions, with a stable currency, citizens will purchase
more gold as it is seen as a positive asset. Not unlike a rising stock,
everyone wants an increasing investment. Contrast this action against
that in Korea, where everyone sold gold as it increased in an unstable
currency!

Basically, this is the direction the Euro group is taking us. This
concept was born with little regard for the economic health of Europe.
In the future, any countries money or economy can totally fail and the
world currency operation will continue. What is being built is a new
currency system, built on a world market price for gold. Michael, you
are absolutely correct in that the USA will see a hyper inflation of
it's currency and a gold price in dollars that reflects it.
Unfortunately, for most investors, the gold price rise will be sudden
and also hyper fast. as it will occur just after a rapid plunge in
dollar based assets including, stocks, debt and the entire banking
system. This action will destroy virtually all gold based paper assets
as they are also dependent on a functioning economic system. A local
gold mine, in any country, must sell production to realize a profit. The
contract system they deal with will not be functioning during this time.
Contrary to many hopeful investor, local treasury officials will not
allow miners to pay employees or buy equipment with physical gold. When
the dust does clear for mining to continue, gold will be recognized
worldwide as real money, and the mining of money will, no doubt, carry
Extreme taxation. Stock prices of these operations, after being priced
to zero, will then double or triple in price. Zero times three equals?

Back to your original question. The Euro will not replace gold, it will
evolve into a gold transactional currency. It will also price Euro gold
very high, perhaps $6,000 in current dollar terms buying power. However,
in actual dollar terms of the future, $30,000 US will reflect the
American debt as the negative reserve asset it truly is. The ECB will
have an easy time issuing Euros to buy gold from the member banks. The
real political warfare will be in trying to force them to sell the gold
at all, once this ball starts rolling. The Euro has, in effect already
been dispersed in the form of Gold Leases not gold sales. One has only
to look at the official gold holdings of most central banks to see that
physical gold sales are little more than the average, with a good amount
of that coming from nonEuro countries. Gold is a funny thing, it can be
sold many times and pass through many countries and still remain in a CB
vault. Truth Be told, some 14,000 metric/ton have been sold this way.
Far more than the street thinks. Using this amount it's easy to see how
certain entities have moved off the dollar standard in the last few
years. If we use a future price of $6,000+US, the move is about
complete.

The process: An oil country (or others) goes to London and purchases one
tonn of gold from a Bullion Bank. The BB borrowed this gold from the CB
(leased). The one tonn gold certificate is transferred to the new owner.
The gold stays in the CB vault and the owner goes home. The CB leased
this gold to the BB and expects it to be returned plus interest. The BB
financed the Actual Purchase of this gold mortgaging assets of the
buyer. The BB, who created the loan, then uses the cash arranged in this
venture to contract with a mining company (or anyone wanting a
gold/cross financing deal) to purchase production gold, using this cash
to pay for it. In the eyes of the mining company, the BB just sold gold
on the open market, for cash, and will purchase future production at the
contracted price. The mine does not know where the gold came from, only
that it was sold and a fixed cash price is waiting. Of course, most of
this made more sense when gold was higher. There were thousands of these
deals, structured in every possible fashion. Look to the volume on LBMA
and you see where the future reserve currency is traded today!

Now when we look at this picture, who is at risk here? The Euro CB Group
still holds the physical gold and will buy it back from the new owners,
if asked, using printed Euros. The new gold owner has just replaced his
dollar reserves with either bargain priced gold, or Euros at an exchange
rate never to be seen again! Some of this was done to buy the pricing of
oil in Euros. The BB owe the CBs 14,000 tons of gold that they must
collect inthe future from producers or currency speculators. And they
must collect it by paying what will be a, then, ridiculous price of
$300/$400US, while the world market price will be, well, a little
higher.

With Canada, Australia, and perhaps England having sold much gold to
hold US$, much of the English speaking, IMF/dollar world is about to
change. Any country, Japan, Mexico, etc., that has locked their future
by selling most of their production to the American economy , is headed
for a depression. Another is answering some of your mail questions and
is also sending a letter. Will send it on arrival.

Thanks Michael,

FOA


beesting (5/28/99; 10:16:33MDT - Msg ID:6819)
To Mr. Canuck
Short answers for a,b,c.
a and b; Gold is real money!Paper is real paper with numbers stamped on it.
c; Long position when applied to investing(as far as I know) means; The thing purchased(stock,bond,etc.)has been fully paid for and is owned by the name on the paperwork.(contract)
Short position(again as far as I know)means the thing purchased is not fully paid for(bought on margin)it is being financed thru a brokerage firm. Let me add the word Leverage;It means to control something(investment)with as little capitol outlay(money)as possible.Many here believe the world monetary system is on the verge of collapse because of the excessive use of leverage.All this is my humble opinion.Hope it helps a little bit........beesting


SteveH (5/28/99; 9:14:21MDT - Msg ID:6818)
August gold now...
http://www.usagold.com/ANOTHERPAGE.html
$271.60.

I was just tooling around and found this at the above link plus more. Fun rereading....

"...I think the mistake, for many, does come from their "eyes of youth". Even the old experienced mind does, at times, view the world with "eyes of trust". Few can, or will understand what makes a currency, a currency. Gold has not changed, nor has it lost it's place in the world as money. It is still the test of currencies, yesterday, today and tomorrow!

Thank You

Another"



USAGOLD (5/28/99; 8:34:16MDT - Msg ID:6817)
E-Mail Request
I thought I would pass this along to the FORUM. Anybody want to help Canuck?

------------

Dear USAGOLD,

I'm new at this; please excuse my ignorance. I recently purchased a modest
portfolio of 'precious metals' because of a gut feeling that the markets are 
destined to correct (down/possibly severly down). I also have a negative view
of Y2K.
 
Can someone please explain, in terms of the novice that I am, the following:
a) the relationship of gold to markets.
b) the relationship of gold to money ie. paper, currency, etc.
c) 'short/long' selling of gold.
d) 'prospectus/future' buying of gold.
 
Thank you,
 
Canuck

TownCrier (5/28/99; 8:27:49MDT - Msg ID:6816)
From FWN: Bullish Consensus Report
Thought I'd give it a try. Don't know how table will post.
------------

Chicago-May 28-FWN--The Weekly Bullish Consensus
figures, released to FWN, courtesy of Market Vane
Corporation follow:

The weekly readings, as of May 25:

Weekly Last 12-Month High 12-Month Low

Stock Market 38 44 76 22
T Bonds 31 28 90 28
T Bills 19 17 96 17
Eurodollar 26 24 90 19
Gold 21 28 61 15
Silver 32 41 84 13
Platinum 48 45 91 8
Copper 29 36 60 3
J. Yen 37 36 89 2
D. Mark 15 20 92 6
S. Franc 15 17 93 3
B. Pound 14 26 93 10
C. Dollar 67 69 78 2
Dol. Index 79 71 97 7
Crude Oil 48 53 70 3
Heating Oil 34 38 66 3
Unleaded Gas 42 53 78 3
Soybeans 12 18 57 4
Bean Oil 8 11 95 4
Bean Meal 8 9 52 3
Corn 12 16 65 4
Wheat 8 15 46 2
Oats 21 25 34 3
Cattle 41 44 65 2
Fdr. Cattle 42 38 66 2
Hogs 57 65 78 3
Bellies 41 50 93 5
Sugar 19 19 53 2
Cocoa 2 5 81 2
Coffee 57 48 83 5
FCOJ 17 18 95 9
Cotton 3 5 92 3
Lumber 64 72 93 3

"The Bullish Consensus can be used for trend following
and for contrary opinion situations. The Bullish Consensus
is a measure of sentiment toward a given market and will
generally increase with rising prices and decline with
falling prices. When the Bullish Consensus reaches an
extreme over-bought or over-sold level, prices usually
correct or reverse direction--often quite briskly."-- Market
Vane Corporation, Pasadena, CA., 91109-0490.

Reprinted with permission of FWN. Any further reproduction prohibited.
http://www.futuresource.com/internet.shtml

TownCrier (5/28/99; 8:20:07MDT - Msg ID:6815)
Soros warns against Argentina peso devaluation
http://biz.yahoo.com/rf/990527/bdk.html
Soros, who has invested hundreds of million of dollars in Argentina in real estate and
agriculture, said in a newspaper interview earlier this week that ``a devaluation, or a devaluation
attempt, would have very adverse consequences.''

TownCrier (5/28/99; 8:06:04MDT - Msg ID:6814)
Euro, Euro, Wherefore Art Thou, Euro
http://news.bbc.co.uk/hi/english/events/the_launch_of_emu/euro_latest/newsid_355000/355027.stm
"Bundesbank president designate Ernst
Welteke said (on the euro's precipitous slide): 'I am not happy. I am
concerned about this development. This
development has to stop.'"

USAGOLD (5/28/99; 7:47:46MDT - Msg ID:6813)
Today's Gold Report: Yen Surprise, Gold Lower Despite Short Covering Overseas
MARKET REPORT(5/28/99): Gold tracked back down this morning in New York
following yesterday's run-up toward the end of the session. Gold had been slightly higher
in London overnight on short covering. Reuters quotes Rhea O'Connell of THoare & Co as
saying, "We understand that the major seller of recent weeks turned buyer yesterday, and
also that put options which had been heavily bought were being partially sold out. This may
only be a short-term profit taking exercise, but is certainly of interest." Short covering also
lifted the price in Asia overnight according to the same report. Yesterday's dollar decline
against the yen has the attention of the market this morning. In what was described as a
"wild trading day," in Reuters Tokyo report, the dollar went from 122.7 yen to a low of
119.65 yesterday before settling at 120.60. We'll see what kind of carryover we get in the
U.S. market today. Standard Charter London reports that a New York trade house "bid the
floor (yesterday) as he sold out some of the $265 puts accumulated over the last two
weeks." This report does not square with this morning's action in New York.

A couple reports from this mornings Bridge News Precious Metals Report:

"New York--May 27--The World Gold Council, a trade group representing gold producers,
has run an advertisement in the UK's Financial Times newspaper, saying that a "national
opinion survey" found the UK public disapproves of the UK Treasury's plan to sell over
half of its gold reserves. The advertisement said that the survey found that disapproval was
5 to 2 against the sale plan, with 54% disapproving, 32% expressing strong disapproval
and only 21% approving."

And....

"Washington--May 27--A spokeswoman for the UK Treasury today told Bridge News
there has been no change in the UK government's plans or schedule for selling about 400
tonnes of its gold reserves. The first auction is still set for Jly 6, she said."

Lastly....

"New York--May 27--Gold prices, which continue to hover near 20-year lows, appear to
have disconnected from supply/demand fundamentals amid pessimistic sentiment and
massive short positions, according to a Salomon Smith Barney report. The firm says it is
anticipating a record 1,000 tonne supply/demand deficit in 1999, more than double last
year's 481 tonne deficit, as mine and gold scrap supply decline."

That's it for today. We will leave yesterday's report up over the weekend for those who
didn't read it and newcomers. It explains well our current evaluation of trends in the gold
market.

MARKET REPORT (5/27/98): Gold lifted its head above the foxhole this morning to
survey the apparent aftermath of one of the most severe short selling attacks the metal has
ever endured. For the moment the battlefield is quiet though most in the industry really
don't know what to expect next. Some analysts say the short-covering will have to begin
soon; others say that the shorts will just roll over their positions and continue the attack.

One thing is certain: We are quickly approaching a price level where only a handful of even
the world's largest gold mines can remain in operation. That fact must weigh heavily on the
gold carry trade which relies on that production to repay much of the 8000 tons of gold that
has been loaned out in recent years. As James Turk (Freemarket Gold & Money Report)
pointed out recently, "In contrast to national currencies, all of which can be created by
bookkeeping entries. Gold cannot be created out of thin air by any accounting technique."
Is this the prime motivator behind the recent BOE announcement? After the British
government put extraordinary pressure on Europe's central banks to sell, followed by even
more heavy handed tactics to get the International Monetary Fund to sell its gold,
Chancellor of the Exchequer Gordon Brown returned home from the recent IMF meeting in
Washington empty-handed -- the IMF would not be selling its gold. It wasn't two weeks
later that the announcement was made that it would be the Bank of England that would be
selling gold.

All of this smacks of problems in foggy Londontown that go beyond the run of the mill
institutional failure that would require printing a truckload of sterling and rushing it to the
scene. Perhaps there might be more wisdom to Turk's words than revealed in his matter of
fact statement: You can't print gold. When a domestic counterparty in the gold carry trade
gets in trouble, you can't print money to bail it out. Contractually, the loan must be paid
back in gold. If you go into the market for a large quantity, it would surely send the price
into rocket trajectory. If you can't persuade some other central bank to sell at these bargain
basement prices, the domestic central bank would then be forced to sell its holdings to
defend the integrity its banking system -- a flow of events that should force every central
bank in the world to take note of what's going on the gold market these days. If the mines
are forced to close, where is the gold going to come from to repay the loans? Default, and
the prospect that you didn't lend the gold at all, but inadvertently sold it (at historically low
prices, looms in the not so distant future. This means that some other central bank may have
to bail out a counterparty (and lending central bank) with gold from its vaults. Now you
know why Gordon Brown put on the full court press to find gold. Until proven to the
contrary, I continue to believe that the circumstantial evidence points to gold bailout in
Britain and that this gold being auctioned by the Bank of England will never see the light of
day. If that were not the case, the auction would have been made public and not restricted to
London Bullion Market Association members and certain approved central banks. If I am
correct and wind of it gets to the markets, an immense short covering rally could be touched
off -- the likes of which have never been seen in the gold market before.

There is little in the way of gold news so far today. Have a good day, fellow goldmeisters.

The featured article in this month's News & Views centers on government finance in an
article entitled "The Financial State of the Union." I'm sure it contains many
surprises for our readers. There is a great deal of difference between what our government
leaders are telling us and the reality with respect to the government's books. This issue is
one or our best and most informative. Please go to our ORDER FORM or call Marie at
1-800-869-5115 for a Free Copy of News & Views -- our widely read monthly newsletter
-- and introductory packet on gold ownership.

Julia (5/28/99; 6:05:32MDT - Msg ID:6812)
SteveH
Steve, Thankyou for the gold site info. and your daily presence here. Julia

Oregon Geezer (5/28/99; 5:25:34MDT - Msg ID:6811)
Here comes the Fed (again) to the "rescue."
The Federal Reserve has announced plans to authorize banks and other thrift institutions to make "Y2K" loans to those who need/want/desire/crave them. The loans would begin in November and run through April, 2000. This is on top of the $200 billion currently being printed.

SteveH (05/28/99; 02:26:34MDT - Msg ID:6810)
August gold now...
$273.50. hmmmm?



Usul (05/28/99; 02:00:18MDT - Msg ID:6809)
Inverted World
http://www.ansible.demon.co.uk/writing/cpriest.html
In Christopher Priest's SF novel Inverted World (1974),
across a world geometrically transformed from a sphere to
a hyperboloid whose equator and poles taper off to infinity,
trundles a whole city on wheels, fleeing disaster... its
creators thought they had solved the problem of obtaining
limitless power, but the power given to them by their
invention did not come without a reckoning... it turned out
that their physical destruction was guaranteed unless they
remained within a limited zone, and this zone was moving...

They must continue building tracks and moving their city
along the path, ever in one direction, for to deviate from
that path would entail certain disaster.

Remind you of anything?




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