1997 |
I'm a goldbug but when I see that purchasing Compaq shares 12 months ago would have TRIPLED my money, what am I doing chasing gold and buying puts on the S & P ??
Anyone any comments ?
Paul
Dow falls on Hashimoto's remark
By TOSHIO JO
Asahi Evening News
NEW YORK--Prime Minister Ryutaro Hashimoto said in a speech here Monday that Japanese investors could be lured into selling U.S. Treasury bills if the yen-dollar exchange rate keeps fluctuating--a comment that led to a decline in bond prices and subsequently sent New York stock prices plunging.
After Hashimoto's comments were reported, the Dow Jones Industrial Average plummeted by 192.25 points to close at 7,604.26 for the day. It was the second worst daily loss since a decline of 508 points on Oct. 19, 1987, the so-called Black Monday.
When bond prices decline, their yields, or interest rates, rise, which depresses stock prices. When interest rates rise, stocks become relatively less attractive to investors.
The 30-year Treasury bond fell about!, or $5 per $1,000 bond; its yield rose 3 basis points to 6.69 percent. The two-year note yield rose 3 basis points to 6.01 percent.
Hashimoto made the remarks while taking part in a question-and-answer session at Columbia University, after he delivered a speech on Japan-U.S. relations.
His comments were later taken as a threat to sell off U.S. Treasury bills--short-term debt papers-- in the bond market.
He was responding to a question of whether Japanese buyers of U.S. government bonds would continue to put up with exchange losses resulting from market gyrations.
"I hope there is no one here who is with the Federal Reserve Board or the New York Fed," replied Hashimoto. "To tell the truth, there were times when Japan felt tempted to sell off U.S. Treasury bills in large quantities in the past, such as when I was in trade negotiations with ( former U.S. Trade Representative ) Mickey Kantor or when it was clear that the U.S. was not interested in maintaining the value of the dollar, which is the key international currency."
He then called for efforts by U.S. monetary authorities to keep exchange rates from gyrating.
In the late 1980s, Japanese institutional investors such as life insurance companies sustained huge losses in their investment in U.S. government bonds as the dollar plunged against the yen. However, they could not dump their bonds because that would have lowered the dollar's value further.
Vice Finance Minister for International Affairs Takatoshi Kato, who accompanied Hashimoto to New York, told reporters later that his comment was misinterpreted.
Hashimoto's intention was to keep Japan's policy toward the United States consistent, bearing in mind the good relations between the two nations, he said. -end-
Good post. It's also true that all "weapons" are eventually used, sooner or later. Might this be the case here too with the threat to sell US treasuries and buy gold? Just finished discussing this with my Japanese wife, and she had some interesting points:
It would have been one thing if Hashimotosan said they would be inclined to no longer buy U.S. Treasury bills.
But it's a much stronger statement to say that Japan would actually be sellers
AND EVEN BETTER, THAT THEY WOULD ACTUALLY BE FORCED TO BUY GOLD!!!!!!!! Ah that four-letter word that politicians hate to hear-that dreaded archaic "stuff" that they can't create out of thin air.
From Cnnfn:
"Dow tumbles 192 points--Retreat from record highs pummels stocks; bonds pull back "
I find it rather humorous that CNNfn failed to even mention this in their explanation of why the DOW had its second biggest drop of all time. Not really surprising, just the usual pathetic groupthink journalism.
My wife said she'd swing buy the newsstand tonight to buy the latest Japanese newspaper, and I'll post anything relevant that we find.
the Japanese do. One of Mr Hashimoto's major problems is how to stem the
avalanche of capital which is being borrowed in Japan ( at 0.5% ) and stuffed
into the U.S.. Japan can do that by raising rates, but if they do that on their
own, they indeed risk, amongst other problems, an appreciating Yen.
The U.S. has done absolutely nothing to promote "stable exchange rates".
Just the opposite. They have relied on foreign support for their Treasury
debt to the extent that it has financed almost their entire deficit.
Mr Hashimoto's comment about selling debt for Gold is an indication
that he and his advisors are starting to think that there will NEVER
be a way to promote "stable exchange rates" under the current system
Oh, and by the way, I am sure that Mr Hashimoto's comments
were not made "off the cuff", as the U.S. media characterises them.
selling U.S. debt and buying Gold, was most concerned
about the U.S. helping to maintain exchange stability.
What can the U.S. do to "maintain stability". That's
right, RAISE INTEREST RATES.
I have posted an update to this situtation at The
Privateer's website. Normally, this would go out to
subscribers only. This is truly a "biggie", though,
so I am making it available to all.
The URL is http://www.the-privateer.com/corresp.html
This, BTW, is a startling development to follow so
closely on the heels of the first technical sign of
a Gold bottom. That is the Aussie Dollar gold chart
that I posted a week ago at
http://www.the-privateer.com/chart/twogold.html
LONDON, June 23 ( Reuter ) - Physical buying and short
covering as gold prices refused to fall below recent lows lifted
the market to near the top of Monday's narrow range by the
afternoon fixing.
Dealers said buying came as the price hovered between
$336.75 and $337.00 per ounce.
``It would have taken quite a push to get it down to $335.00
or so, and that just wasn't there,'' one dealer said.
Gold was fixed at $338.00 per ounce up from $336.95
this morning which was just five cents above the four-year low
struck on February 12.
Dealers said the weekend's Group of Seven conference was
seen to be dollar positive and the strength in the U.S. currency
was behind gold's shaky performance in the Far East and its
weaker tone in Europe this morning.
At the fixing the New York Comex August contract was
indicated up 40 cents at $339.80.
However dealers said the trend was still downwards and
today's support did not indicate a change in sentiment.
``If it gets back up to $340.00 or $341.50 we would see
selling bringing it back down and then we could be looking at
$330 or $325,'' a dealer said.
A move below February 12's low would take gold back to the
levels seen early in the brief 1993 rally when the well
publicised entry to the market of financiers George Soros and
James Goldsmith took the gold fix from a trough of $326.10 -- a
seven year low -- on March 10 to a high of $406.70 on August 2.
The firmer move in gold also raised silver prices which were
indicated at $4.77/$4.79 up three cents in a day's range of
$4.72-$4.80. Silver has failed twice so far this month to get
past $4.82-$4.92 on what dealers said were speculative plays.
``There is not that much happening in silver,'' one dealer
said and another said a further upward spike was forecast.
Platinum and palladium were mixed and volatile with both
prices moving in relatively wide ranges aided by a $5.00
bid-offer spread.
``They have lost a lot of their gains but have held on well
and there is a bit more left in them,'' one dealer said, adding
that neither price was to be trusted,.
Dealers said they were still looking for confirmation of a
start up of deliveries from Russia that have been delayed by
bureaucratic foul-ups since last December.
Platinum was at $418.50/$423.50 down $3.00 and palladium was
up $1.00 at $195.00/$200.00.
I think tonights ( American Monday ) rally should be something not to be missed! I think you will see gold rally back above 340-342 tonight...
I took your advice about two month ago and put 20k into a gold mutual
fund. It has taken a dive ( I was fully responsible for my investment ) .
I want to hold a little while, probably until August.
This is from Asia Times this week,
http://www.asiatimes.com/97/06/20/20069721.html
Oliver
JOHN DISNEY.
A big thanks for the great info on the Blyvoors ( Durban ) deal. I promise not to ask any more BLYDY questions for the rest of the week!
Here's my attempt to explain the current state of the metals market:
Market prices are determined by the ATTITUDE of investors to the current economic environment rather than by the true environment itself.
I sure hope they change their attitudes soon! :- )
Re your remark about the Brit stock market. The Bank of England have actually raised rates twice over the past couple of months. Not like the good old Fed.
I think that Mr Greenspan is getting plenty nervous. Rate rise on July 1-2 would certainly throw a Bengal Tiger amongst the pigeons, but I don't think the rest of the FOMC will go for it even if he wants to.
Thanks for the Blyvoors update. I can't imagine selling S.A. shares at this point--they're practically giving them away. I guess the people who think gold is really going to $200 are the ones selling. I can't help but thinking that what we're seeing now is the buy of the decade.
Do you have any more info on the big Durban Deep merger?
JOHN DISNEY,
( Regarding our ongoing discussion of Japanese desire for platinum )
Sorry for the delay in getting you a good explanation for the Japanese word SHIBUI. Just moved yesterday and it took me hours and hours to find all the pieces to get my computer hooked back up.
One of my better dictionaries defines SHIBUI as "subdued, refined, tasteful," as in "My teacher is wearing a "tasteful" tie.
My wife and I discussed SHIBUI, and the first word out of her mouth when I asked what SHIBUI means was "dandy".
I then asked her why she thought Japanese like platinum more than gold, and she had some thoughts I hadn't considered before.
1 ) . PLATINUM IS MORE EXPENSIVE THAN GOLD. The Japanese really have a thing for quality, and will routinely buy the most expensive item when shopping, because it's "the best".
2 ) . PLATINUM LASTS LONGER. I hadn't really considered this one, but it seems like a very valid point. Although you can substitute white gold for platinum, it isn't nearly as strong and won't hold up as well. In addition, it's nice to know that platinum, and not its weaker cousin, is holding that big rock in place!
3 ) . PLATINUM'S COLOR LOOKS BETTER ON ASIAN SKIN. Some westerners would disagree with this, but this IS a common opinion here in Japan.
4. PLATINUM IS HIGHLY ADVERTISED AS THE METAL OF CHOICE. The Japanese are constantly being exposed to advertising of platinum…TV, magazines, newspapers etc.
Hope this helps. Feel free to fire my way any more questions I can help with.
PS. What's with the price of BLYVOORS? Ouch!
(QUOTE OF THE WEEK (MONTH, YEAR, DECADE)):