It is hard for an empty sack to stand upright.

Ben Franklin

Given this bit of wisdom, I say, deflation.

G'Day from Kalgoorlie in Western Australia.

In reply to J Wenck, Mission Viejo CA USA.

Since the 4 July 1997, and more importantly during October 1997, Australian gold stocks have been savaged, in the majority of cases dropping to 10 to 25% of their value a year ago. At a gold price of US$300, the Australian gold industry is finely balanced, being kept afloat by the dropping Aussie dollar and forward gold sales.

During the last ten years, there has been an incremental increase involvement of major overseas gold mining companies in the Aussie scene, largely South African and financied via London. We appear to be on the verge of another large influx of major overseas mining companies, who may or may not be financied by Rothchilds - who set the daily gold price in London.

By and large, most Australian exploration and mining companies are under capitalised, funded by the local market. There are therefore hugh opportunities for real overseas investment, rather than the more speculative local market.

Locally in Kalgoorlie, we tend to face issues - IF gold is stuffed, then it is all over red rover. Fundamentals tend to suggest that it is not. If you source FARM BOY'S FINANCIAL PAGES through Altavista, a number of issues become apparent.

1. Since 1995 the DOW, Standard & Poor, DAX etc have radically increased. Even with the short term October corrections, the indices are still ( as of today ) very high. The question is raised, are they artificially high. Since 1995, incrementally, as these markets have increased, gold has decreased. Has gold been taken down, to come back up upon correction of the markets?

2. This increase of the market indices may have occured on the back of non-US ( Japanese ? ) money purchasing US Treasuries. There is a large positive correlation between the market indices are the US Treasuries.

3. Asia, in particular the Japanese are in short term trouble. Could the Japanese resolve their problem by selling part of their US Treasuries holdings. What percentage.

4. The Japanese hold a low level of gold assets, and a high level of US Treasuries.

5. IF the Nikkei trends down below the 15000 point level, towards 14000, will the Bank of Japan step in to protect the Yen. If they do not there will be a complex negative compounding effect. On the current trend, this may occur in January 1998.

6. The US dollar has appreciated some 25% against the Yen in a relatively short time.

7. The current negative trend of the Nikkei now equates to that of gold. All other market indices are still relatively upish and high.

8. There is a potential HUGH short term shortfall of gold, reflected by the Chaps speculating on the gold market. It takes 2 to 5 years to bring a new gold mine on-line.

9. The Japanese now have a potentially shrinking Asia market, and up to US$100 billion in potentially bad debts. How much do they have invested in US Treasuries ?

10. The Japanese still have the clout to resolve their financial issues, but at whose cost - sell US Treasuries ? Should this happen, what effect on the other markets, in particular Wall Street.

Now, I am a Scotsman - pennies count. If your pennies are potentially worthless and/or are dropping in value - there is only one route to take, GOLD. There are very good historical reasons why the Rothchilds are bankers and long term dealers in gold. The two largest mining companies in the world, Anglo American Corporation and Rio Tinto, are funded and largely owned by the Rothchilds. It should also be noted that Anglo American and Rio Tinto form the Board of Barclays Bank in London. I believe that Mr Bill Gates has yet to be invited to join their Club?! Old European money.

I may be wrong, but I currently believe that gold will radically bounce upwards in the new year - conditional on wheither or not the Nikkei quickly drops to the 14000 point level.

In conclusion, the key issue is the Nikkei. If this continues to drop, and the other markets stay artificially high, the Japanese may buy gold. The other markets may then be expected to fully or partially adjust towards their pre-1995 levels. Potentially very messey, but good for gold.

Aye,

Haggis

This makes the gold channel ( volitility ) somewhat wider, but not unreasonable so, compared to the other metals. As a result, this channel allows gold to move up to the 330 range near term without breaking the trend, and can be down under 300 by year end, but not much under.

If you look to the left on the chart, around the end of February, you'll see the price movement within the channel looks very similar to the recent movement down to the bottom of the channel. This was followed by a rapid move up to the top of the channel. I wouldn't be surprised to see this happen again. This would allow a possibility to make some money, but I caution against too much excitement unless and until we break out of the top of the channel. The trend still seems to be downward.

Going up means: fill the gap at 325 and stay there a while....then on to 340 by February.

See you bulls there!

You and Mr. Puetz serve up an interesting economic buffet. I am helping myself to a serving of each and hope I come out of the economic dinner hall in one financial piece.

From Puetz @ gold-eagle

To create the potential for a market crash, there are several conditions that must first be present. The two most important ingredients are extreme over-valuation and massive leveraging. These two ingredients are virtually inseparable. They always seem to go hand-in-hand.

Various measures of the absurd level of valuations span the gamut from price-to-book ratios, dividend yields, price-to-earnings ratios, the capitalization-to-GDP ratio, the capitalization-to-home-prices ratio, and the ratio of the market values of all stocks-to-bonds.

From Karlito @ Kitco post

To get a depression, I would still argue, you need a catastrophic mix of bad policy: fiscal, monetary and trade. I just don't see that mix of policies at this time.... I also see very favorable demographic trends that will bring a steady stream of funds into the financial markets for at least the next decade. Long term, the US stock market still has a lot of upside.

We just disagree on what reality is.

May I interest you in some gold and silver coins?

The New Year is a mere 46 six days away, no diplomas needed.

Palladium - STILL holding within the original channel. Incredibly resistant to the forces that are affecting the market prices of other metals.

Silver- Brushed off the affect of the drop in gold and recovered. The short term drop did not take it out of the channel defined last week, so maybe this one is valid. A nice slope of +40%/year.

Gold - Ugly! If a new channel has been established, it has a very steep downhill slope of -30%/year. Could have easily chosen a channel that would be even worse.

Platinum - Revision of the channel to accommodate recent price weakness results in a negative slope of -20%. For all you platinum bugs this bears watching, as the trend may no longer be your friend.

Futures World News - November 14, 1997 17:07

METAL GENERAL V%FWN P%FWN

New York-Nov. 14-FWN--THE COMEX DIVISION OF NYMEX TODAY reported that Swiss Bank Corp., who will cease to act as a Licensed Depoistory for the storage of gold and silver deliverable against COMEX's gold and silver futures contracts on Nov. 21, 1997, has informed the exchange that Swiss Bank has been incorrectly reporting the amount of gold and silver eligible for delivery against the respective contracts.

Due to an error in reporting stocks, the Metal Warehouse Statistics from the close of business on Nov. 13 incorrectly showed a total of 3,811,872 troy ounces of silver and 75,284 troy ounces of gold at Swiss Bank Corp. The actual total was 335,203 troy ounces of silver and 43,696 troy ounces of gold.

Today's inventory report, dated Nov. 14, 1997, correctly reflects the transfer of all Swiss Bank Corp. gold and silver inventories to Republic National Bank.

I do not believe in the creed professed by any church that I know of. My own mind is my own church.

Thomas Paine [The Age of Reason, Part One - 1794, Part Two - 1796]

I can tell you this. Watch for the silent majority in the United States to start flexing its muscles. You saw the recent and swift dismissal of an individual that sought to push a wedge between the United States Marine Corps and the very people they are oath bound to the death to defend.

You can be an American now and then, but you are a Marine for life. Pun intended.

Under the handle of Gloomy Gus, John Hepcat wrote yesterday:

Sorry to dissapoint you but I am NOT LGB but I sure wish I'd taken his advice a long time ago. George Cole: Thank you very much for responding but it doesn't make me feel much better. How could I have been so stupid to follow the advice at this site but I guess I'm just GULLIBLE.

I don't get it, John. If you *had* followed LGB's advice, that would be merely another instance of following advice at this site, which you now say is a stupid thing to do. Any yet, you wish, so you say, that you had followed LGB's advice; that is, advice at this site. So is it part of your wish, then, simply to do something stupid? If so, then perhaps you have gotten your wish. Several times over.

-Tom

There are many in the world that see the folly of the American build up in the Middle East. The addition of the fighter jets from England is making for a situation that could easily rupture the already thin veil of peace which currently is held together by the merest of strands.

Terrorism against the people of the United States and England is now a given. Make no mistake the Holy War seethes already in the Middle East community as a whole. The stupidity in the State Department that thinks it can create hatred for the leader of Iraq is dead wrong. He will become nothing in the final headlines. An act of aggression against the people in Iraq will be intertwined as an act against the religious beliefs of the surrounding states.

The pillar of belief in the area is that the people have already suffered and for far too long. The basis for their suffering is not seen as the leader of Iraq, but the Imperialistic Americans. In addition the Christen acting as a tool for the Israeli is the mass populace belief. England needs no mention, as they will be cast into lot with the United States.

The State Department is going to get the exact opposite reaction that they purvey to the American public.

G'Day from Kalgoorlie. This may be stating the obvious, but I have plotted out the relative trends of market indices, US$/Yen, Nikkei and gold price covering the periods for 1997 and 1993 to 1997. Gold and the Nikkei are a common sharp trend downwards at this time, in contrast to the others.

Will the Nikkei correct before or at the 14000 point level, and will gold correct itself upwards - in January 1998 !!.