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THE
ROCKET SCHOOL OF ECONOMICS


Beware the Ides of March... April and May
by Professor von Braun

April 18th, 2000

Is the good ship Lollipop sinking? Well if its not, it is doing a great imitation of taking on water, lots of it by the look of things. Stock indices worldwide appear to be heading south. Fancy that. The great national past time, picking this week's stock market winners, appears to be getting more difficult to do.

"Investors are bracing for Wall Street's opening bell", says a financial commentator on CNNfn. How exactly are they doing that one could ask? The thought of millions of "investors" (W.C. Fields had another name for them) "bracing" for Wall Streets opening is in and of it self mind boggling. Will there be any side effects from this form of mass activity? Will there be a bull market for braces? Will the nation's hospitals be inundated with people suffering from "bracing" injuries? What exactly is the activity of bracing? Is it similar to the feeling one would have after, having placed all ones eggs in one basket, watching the basket fall to the floor? Personally I would have used a slightly different phrase.

The dot coms, those stalwart members of the "new" economy, appear to also be suffering from some form of "bracing". But theirs is a different kind of bracing as they begin to realize that running a profitable business selling things over the internet is more difficult than what they first envisioned. Oh well, never mind. There is always the flea market.

I suspect that what is scary for the investors who are "bracing" in preparation for Wall Streets open, is more the realization that margin calls are not far away and they don't have any cash or credit left. Which means that they will be sold out of their positions. Goodbye retirement plans.

Then we have all those investors that are there for the "long term". That's a phrase we will hear used more often as the selling continues. One wonders if the "bracing" investors have a clear definition of "long term". What time frame are they referring to? Are they talking about next month, next year, next decade or the next lifetime?

Of interest is a news report out of San Francisco, which informed us that President Clinton's limousine (with the esteemed leader of the free world in it) ran out of gas, after having dropped daughter Chelsea off at her university dorm. What happened there? Rising gas prices perhaps? How does a presidential limo run out of gas? Who was responsible for that? Or is it just a sign of the times?

The next few weeks, through to the end of May, will be very interesting for the practitioners of the art of "bracing". The "buy the dips" brigade will also have their work cut out. Which dip will they buy? The global economy we have been hearing about may extend to global stock market declines as well. Buying "dips", regardless of where they occur, may prove harmful to ones financial health. Even the practice of "bracing" may become global. Perhaps "bracing" should become one of the events at the Olympics. Sponsored by the dot com's of course.

Staying in cash may be the best course of action over the next few weeks, remembering that buying physical gold at these price levels and taking delivery, thereby protecting oneself against potential currency turmoil -- something which is foreign to most holders of US dollars (but their turn in the currency equivalent of "snakes and ladders" is coming), is not a silly strategy.

One also needs to remember that it is unlikely that Central Banks, with of course some prodding from politicians, will allow the gold price to rise too far. Globalization has occurred and the last thing the proponents of globalization need to see is an increase in the gold price. Better to allow the practice of "bracing" to become global as well.

We still firmly believe that all is not well in the gold market. The overall short position is large. The gold mining industry is one of the major players in this market and rising gold prices would create the potential for some serious margin calls to be made. More "bracing!" Gold stocks need to be carefully scrutinized and those with large forward sales books need to be recognized as containing a risk that won't go away quickly.

Lets see, we have "bracing" as "investors" wait for stock markets to open, more "bracing" as some mining company executives keep a watchful eye on the gold price, even more "bracing" as the Secretary of Energy investigates why the presidents limo ran out of gas.

Perhaps "bracing" will become the new "hot" investment sector. Move over health clubs, now we have "bracing" clubs. A rash of videos entitled "how to enhance your bracing", new books rushing into print, television interviews with practitioners of this art, talk shows and a new field for therapists and mental health experts. "Tonight on Larry King Live, an interview with the world champion bracer".


The Prof can be contacted by email at profvonb2@aol.com

Copyright by Professor von Braun. All Rights Reserved. Reprinted at USAGOLD by permission.

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The Rocket School of Economics -- The Lecture Series Index

  • 22 May 2009 -- An Often Overlooked Issue!
  • 28 Mar 2009 -- Problematic Banking Systems!
  • 14 Nov 2008 -- What Exactly is an Asset?
  • 23 Aug 2008 -- Through the Looking Glass?
  • 02 Aug 2008 -- Compounding to the Downside!
  • 26 May 2008 -- Back to Basics Again!
  • 31 Mar 2008 -- The Broken Watch -- Part 2.
  • 27 Mar 2008 -- The Broken Watch -- Part 1.
  • 06 Feb 2008 -- The Financial Equivalent of Faulty Towers.
  • 10 Dec 2007 -- Monetary Systems & Productive Assets.
  • 14 Feb 2007 -- Divorced from Reality
  • 06 Sep 2006 -- Gold, Bankers, the Trade Deficit and Unsettled Transactions
  • 19 Jun 2006 -- When is a Reserve Not a Reserve?
  • 31 May 2006 -- The significance of August 15, 1971.
  • 08 Apr 2006 -- Keep Your Eye on the Ball!
  • 30 Mar 2006 -- What came first?
  • 11 Mar 2006 -- An Unanswered Question.
  • 08 Jan 2006 -- Where have all the projects gone!
  • 11 Dec 2005 -- Gorillas, Rising Gold Prices and Depreciating Paper Currencies!
  • 23 Oct 2005 -- Custodial Risk.
  • 16 Sep 2005 -- An Inherent Flaw.
  • 08 Aug 2005 -- Central Banks and 'Reserves'.
  • 31 Jul 2005 -- Central Bankers, Actors and 'We'.
  • 17 Jul 2005 -- Unintended Consequences! -- Part 3.
  • 07 Jul 2005 -- Unintended Consequences! -- Part 2.
  • 25 Jun 2005 -- Unintended Consequences! -- Part 1.
  • 14 Jun 2005 -- The Two Greater Fools Theory.
  • 03 Jun 2005 -- Real Money, Funny Money and YOU -- Part 4.
  • 30 May 2005 -- Real Money, Funny Money and YOU -- Part 3.
  • 26 May 2005 -- Real Money, Funny Money and YOU -- Part 2.
  • 21 May 2005 -- Real Money, Funny Money and YOU -- Part 1.
  • 09 Nov 2002 -- Carrying a Big Stick.
  • 17 Sep 2002 -- Wishful Thinking!
  • 27 Jul 2002 -- Gold Bugs Beware -- part 2.
  • 10 Jun 2002 -- Gold Bugs Beware!
  • 06 Apr 2002 -- Currencies versus Gold.
  • 26 Jan 2002 -- Bear Market Strategies.
  • 01 Jan 2002 -- 2002 -- A Perspective.
  • 20 Oct 2001 -- The Storm Clouds are Gathering.
  • 30 Sep 2001 -- What to Say?
  • 01 Jul 2001 -- ...Said the Fly to the Spider.
  • 14 Jun 2001 -- Upward and Downward!
  • 28 May 2001 -- Volatility Time, Again!
  • 14 May 2001 -- The Coming Bull Market in Gold Stocks?
  • 24 Feb 2001 -- High Hopes, Wishful Thinking & The Absurd
  • 20 Feb 2001 -- Who Put the Holes in the Swiss Cheese?
  • 22 Jan 2001 -- US Dollar Admits Identity Crisis!
  • 16 Jan 2001 -- Dear George W.
  • 24 Nov 2000 -- The Bubble Has Burst
  • 11 Nov 2000 -- The Media, Bull Markets & the Gold Price
  • 02 Nov 2000 -- Gold Stocks
  • 29 Oct 2000 -- Oh The Tangled Web We Weave ...When We Set Out to Deceive
  • 24 Oct 2000 -- A Mystery!
  • 16 Oct 2000 -- A Peso Here ...and a Few Thousand Pesos There
  • 10 Oct 2000 -- The Unfolding
  • 30 Sep 2000 -- What's Wrong with THIS Picture?
  • 25 Sep 2000 -- Buy Gold Now!!
  • 23 Sep 2000 -- The Times, They Are a' Changing
  • 15 Sep 2000 -- Time WILL Tell!
  • 27 Aug 2000 -- SS "Paper Assets" Begins to Take on Water
  • 06 Aug 2000 -- The Indian Summer
  • 26 Jun 2000 -- A Yellow Brick Wall
  • 22 May 2000 -- The King IS Naked
  • 30 Apr 2000 -- Goodbye Yellow Brick Road
  • 18 Apr 2000 -- Beware the Ides of March, April and May
  • 08 Apr 2000 -- Really, Sir Aldot!
  • 25 Mar 2000 -- Where To From Here?
  • 18 Mar 2000 -- The Gnomes of Zurich
  • 12 Mar 2000 -- The "New" Economy??
  • 06 Mar 2000 -- Two Questions
  • 04 Mar 2000 -- Iceberg Dead Ahead!
  • 28 Feb 2000 -- The Wizard of Oz
  • 06 Feb 2000 -- Here We Go Again!!
  • 15 Jan 2000 -- Comments on the Gold Market
  • 29 Dec 1999 -- No Raw Ingredients Required
  • 28 Dec 1999 -- No Way Out
  • 14 Dec 1999 -- Ho, Ho, Ho!
  • 07 Dec 1999 -- Greenspan's Bubble
  • 03 Dec 1999 -- Early Warning Signs


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