It certainly looks like the Dow is setting up for a real dive. Looking

at the dow 30s tonight I couldn't help seeing all of them have rallied

but are very technically weak. Should be very interesting day Friday.

Maybe a up and down key reversal?

Anyone hear from Nick Puetz? Would be interesting to hear his

interpretation!

A few weeks ago, I pointed out that the gold/silver

ratio had broken it's more recent supports and that there

was no likely support before the 57.75 ratio than it hit

around 1988.

Well, we are effectively there now. Fortunately, the

fall in the ratio was not so much due to gold falling

as it was to silver rising. It could have been worse.

In any event, I would NOT like to see the gold/silver

ratio fall below say 57.5. Then there would be no

telling where it may go.

I wonder when the article on the US budget surplus in 1998 was written.

It would seem to me that the author had not seen the updated National debt web page that Bill Buckler had posted! Perhaps we are more on the ball than Princeton Economics!

BTW, did you know that in the 1970's, the U.S. kept an official debt ceiling of $400 Billion throughout the decade. They had a temporary ceiling which remained in force until September 1982, when the debt hit $1.3 Trillion. Then they eliminated the temporary ceiling for a permanent ceiling. The rest, as they say, is history.

I haven't done a broad survey of the larger dealers but I don't think this is too far off from what is happening around the country.

In light of the over-the-top inflationary policies now being employed by the major economies and the apparent decision to prop up the US and Japanese markets at any cost, the ultimate result is going to be far worse than what I had considered it might be.

Consider buying pre 65 90% junk silver in large quantities. There are several benefits to this strategy.

A ) Gold is an excellent store of wealth but is simply not practical if you want to purchase a few bags of groceries whereas a roll

of silver quarters or dimes would allow you to conduct this sort of transaction easily.

B ) There is still significant downside risk of eroding gold value in relation to currencies. The downside risk in silver is minimal.

C ) In light of the fanatical attacks on gold I believe it is naive to think that demand alone can change the rules of the game. The parties that are suppressing gold prices still make the rules.

Government confiscation is a very real possibility.

It is highly unlikely that silver would be confiscated especially when it is held in the form of lawful US currency that has been in circulation for over 30 years. Even if PMs were made illegal to trade, the coin of the realm will be the lowly silver dollar not a 1 ounce gold coin. I can easily envision authorities trying to trace illegal transactions conducted in gold coins but silver is another matter entirely. Who is going to waste their time tracking down someone who had a roll of Mercury dimes?

D ) I own a large parcel of land high in the mountains that is well stocked with food and fuel I've lived in the wilderness for a year and half. It gets lonely even with a family. Having other people to share ideas with is almost as important as food and water. No matter how bad things get there will always be interaction with others. Man is a tribal animal that does not do well alone. Therefore, we must consider some way of interacting with the system as it will exist which will not create danger for ourselves or our friends and family.

E ) The recent intervention in the marketplace has caused me re-evaluate my worst case scenario. Food, shelter, security and fuel are going to be worth a lot.

For these reasons I've shifted a large portion of my bullion holding to junk silver US coins. Even if gold is driven into the basement there has to be pressure relief in the system to allow people to invest in somthing that will not lose it's value. I think that vehicle is silver.

There are other parts of the world where the flight to safety has yet to come, the largest being South America. If this part of the world heads south soon, the flight from the dollar could be postponed.

LGB ( 18:58 ) So the Asian investors are dumping Gold to satisfy debt obligations

OF COURSE THEY ARE! First of all, these Asian investors are neither

banks nor governments. They cannot lend themselves a new batch

of money to service the paper they have already lent themselves, nor

can they hold a refunding auction. And the IMF wouldn't touch them,

nor, for that matter, would the World Bank.

They can't borrow the paper needed to service their debts. They

can't raise the capital by selling their shares. Either they've

already done so or at present prices, they couldn't raise enough

anyway. What is there left. Bankruptcy is not the painless

procedure in South-East Asia that it is in the U.S.. Not for

your average joe. They could sell themselves into what would

amount to indentured servitude. Or they could sell an asset

that is no one elses liability. That's what they chose to do.

Gold will protect you from market and currency turmoil, UNLESS

you are in debt. If you are in debt when the financial earth moves,

then NOTHING will protect you. The mistake of the Asians was

not to buy Gold, it was to buy paper on margin or real estate

using stock portfolios as collateral.

Of course, us sophisticated investors here in the West

would never make that kind of silly mistake, would we?

What we are seeing in Asia is the poor individual getting it

square in the neck. They don't have a lobby group. They don't

have any relations in government. They don't owe enough to be

too big to fail. They are the ones who are storming the banks

in Hong Kong and now in South Korea.

In many countries across Asia, someone who is NOT in debt and who

holds Gold has done better than he or she could have done holding

any other form of local asset. Don't forget, the South Korean currency

fell by more than 10% against the U.S. Dollar yesterday - IN FIFTEEN MINUTES!

Consumer confidence seen peaking in 1997 --U. of Mich.

ANN ARBOR, Mich. ( Reuters ) - U.S. consumer confidence is likely to peak in 1997 at its highest level in more than 30 years, followed by modest declines due to a slightly slower economy in 1998, University of Michigan consumer surveys director Richard Curtin said Thrusday.

Curtin, speaking at an economic forecasting conference here, said low inflation, low unemployment and strong personal income growth has spurred the University of Michigan's widely followed Index of Consumer Sentiment to a 1997 average of 102.9, the highest level since 1965, when it averaged 103.4.The restoration of confidence has been widespread, extending across all major population groups and in all parts of the

country, Curtin said.Significant declines in the index next year are not likely, barring any significant external shocks to the economy, Curtin said in his presentation. Data collected in October and November showed no discernible impact on consumer confidence from economic turmoil in Southeast Asia.

The 1997 peak is likely to be followed by modest declines in confidence, moving more sideward than downward, Curtin said. While possible, it is not likely that even higher levels of consumer confidence will be recorded during the year ahead. Curtin said that if the turmoil in Asia worsens, it could have a twofold effect on consumer confidence: creating uncertainty about future domestic U.S. economic prospects but also causing the Federal Reserve Board to hold off on anticipated interest rate increases, which could help spur growth in vehicle sales, home purchases and durable goods sales. It would be negative on the one side but overcome by interest rates that do not rise as much as I would expect, he said.

He said the surveys show 42 percent of U.S. families expected their financial situation to improve in 1998, compared with just 8 percent that expected their financial situation to worsen. Consumers expect inflation to remain below 3 percent during not only 1998 but over the next five years as well.

He said that although rising wages could add inflationary pressures, consumers today are very savvy and will postpone purchases and seek out discounts in an effort to limit the ability of businesses to raise prices.As consumers look ahead, they say that even though the rate of growth is going to slow, it's not going to affect unemployment levels, Curtin said. Consumers look ahead and they are quite pleased.

University of Michigan economics professor Saul Hymans, releasing his annual economic forecast Thursday, said the U.S. economy will slow from its brisk growth rate of 3.7 percent in 1997 to 2.6 percent in 1998 and 2.1 percent in 1999.

The forecast assumes a 150 basis-point increase in the U.S. federal funds rate by the Federal Reserve Board starting next spring through 1999.

Hymans and fellow researchers said they expect inflation in consumer prices in 1998 to be little different from this year's 2.1 percent but predicted the rate would increae to 2.6 percent in 1999.

In calendar year 1999, prices of medical care will rise 2.9 percent, the price of oil will rise by 2.6 percent and the prices for crude material will rise by 6.5 percent.

These are hardly major supply shocks, but they help nudge the inflation rate up from exceptionally low in 1997 to just plain low in 1999, Hymans said. We expect to witness higher inflation despite the restrictive monetary policy-- and the resulting economic slowdown -- that we assume the Fed will institute early next year.

Conventional mortgage rates should increase from 7.3 percent presently to 8.5 percent by 1999, roughly their highest level since 1991, but in line with inflation-adjusted rates over the past 23 years, Hymans predicts.

The forecast also predicts that:

-- Real disposable income, or household purchasing power, will rise 3.3 percent in 1998 and 3 percent in 1999.

-- Private housing starts will slip from 1.46 million in 1997 to 1.39 million in 1998, and to 1.35 million in 1999.

-- U.S. light vehicle sales will hold steady at 1997 levels, with 15.1 million units expected to be sold in 1998 and 15.0 million in 1999.

-- The U.S. federal budget deficit of $49 billion in 1997 will fall to $22 billion in fiscal 1998 but will rise to $48 billion in fiscal 1999.

-- Business capital spending will slow from a growth rate of 12.3 percent in 1997 to 6 percent in 1998 and to 3.2 percent in 1999.

Sterling Foster executive pleads guilty

NEW YORK ( Reuters ) - The former director of corporate finance at brokerage Sterling Foster & Co. pleaded guiltyThursday to conspiracy to commit securities fraud and money laundering, federal prosecutors said.

Sherman Drusin faces a possible maximum prison term of 25 years in prison and a possible maximum fine of $750,000. The plea grows out of a state and federal campaign to stop alleged abuses in the selling of stocks of small companies.

In May, regulators from 20 states accused 14 brokerage firms, including Melville, N.Y.-based Sterling Foster, of usingfraudulent high-pressure telephone tactics to sell penny stocks. Earlier in the year, the Securities and Exchange Commission sued Sterling Foster, alleging it charged customers more than double the price of new stock offerings and pocketed $75 million in fraudulent profits.

In the charges against Drusin, prosecutors said Sterling Foster acted as the principal underwriter of an initial public offering of stock issued by Applewoods Inc., which makes beauty products such as soaps, oils and lotions.

According to the charges, Drusin recruited certain people to provide interim financing to Applewoods in exchange for the company's promise to repay the loans plus interest as well as Applewoods stock and warrants to purchase Applewoods stock. Drusin and the lenders also secretly agreed they would sell the stock and warrants as directed by Sterling Foster and they would split any after-tax profits made on their sale of the securities. Drusin, in turn, secretly agreed to share the profits he received with an unnamed representative of Sterling Foster, the

charges said.

Prosecutors said that Drusin, the lenders and the Sterling Foster representative failed to disclose the arrangement to the Securities and Exchange Commission or the National Association of Securities Dealers.

Glendale Fed proposes $1.5 billion settlement in suit

LOS ANGELES ( Reuters ) - Golden State Bancorp, the holding company for Glendale Federal Bank, Thursday proposed a $1.5 billion settlement in its lawsuit alleging the federal government broke promises it made to the thrift industry in the 1980s to enlist its help in the savings and loans crisis.

Glendale's lawsuit, charging the government changed accounting rules offered as goodwill incentives in the 1980s for thrifts to buy other troubled thrifts, stands as a test case for other savings and loans seeking up to about $15 billion in similar lawsuits. Glendale Federal's case, which dates back to 1990, is the largest and most advanced case in the thrift industry.

The government, whose liability has already been established, is presenting its arguments in the case to determine damages in the U.S. Court of Federal Claims in Washington, with a decision expected in the second half of 1998.

Stock in Golden State, which is giving the government until Jan. 30 to negotiate, rose $1.06 to $33.25 in consolidated Thursday.

A Justice Department spokesman said the two sides have been in settlement negotiations.We don't find it productive to discuss settlement offers in public. It's usually done in confidence between attorneys for the opposing parties, Justice Department spokesman John Russell said.

If the government agrees to the $1.5 billion settlement by Jan. 30, Glendale said it will add an equal amount to its existing community investment financing activities.We are willing to offer the government an opportunity to settle its liability for damages that are due the bank and simultaneously advance public policy, provide jobs and housing and improve the lives and outlook for California residents, Chairman Stephen Trafton said in a staetment.

While it would not fully compensate the bank for the consequences of the government's breach of contract, we believe that $1.5 billion would be a fair settlement, he said.

Hoping to take advantage of the goodwill incentives in 1981, Glendale acquired a troubled Florida thrift with $734 million in losses. The accounting changes left Glendale and several other thrifts saddled with large losses. Glendale itself almost failed in June 1993 and was forced to reorganize and shed branches to stay afloat.

With banks consolidating at a feverish pitch, Glendale and many other thrifts have long been considered prime takeover candidates, but many would-be buyers are waiting for the uncertainty of the goodwill cases to be removed before making a bid, analysts said.

http://canoe2.canoe.ca/ReutersNews/BANKING-GLENDALEFEDER.html

I believe it was the late FDR who said, In politics, NOTHING happens by 'accident'.

Somtimes, you have to respect experts in their fields... :- )

I think First Boston's buy recommendation for Battle Mountain Gold ( BMG ) also helped. BMG up 7/16 today on volume of 1,050,600 shares.

Is the current market rally a flight to safety by foreign investors? I would guess that they might prefer the blue chips of the DOW to other stocks. If so, the DOW would go up more proportionately to the other indices.

spike right at the opening. I also note that long bond yields are

up slightly.

I especially like the comment by Roy Jastram that gold is a poor hedge against inflation, but a much better currency hedge during major deflations. When everyone either has debt or owns liability, that money can vanish in an instant, but not if you own gold. So, the deflation associated with debt crises is actually a process of inflation for paper vs gold, because all of a sudden all the paper money ( read debt ) is worthless. Perhaps another way to say it is that all of those years of inflation, the hidden inflationary effect of all that debt and credit come home to roost all at once during that major deflationary period.

Look how much more gold is worth in SE Asia, and all the unhappy people who didn't bother to buy it when they could afford it!

Right now the Western Central banks are spending or lending their real money - gold - to keep the dollar strong. It is only a matter of time before they realize they are getting rid of the good currency to support the bad - paper. I think this is exactly what was happening in the UK, Germany and several other countries around 1925, and why those world banking leaders came to the US -- asking the US bankers to inflate the dollar in an attempt to stop the gold exodus from Europe. This time the gold is going to the Middle East, SE Asia, China, India and ?. We are just repeating the same cycle again -- and we are at the top of the currency Tsunami, looking down at the beach! Just a matter of time.

We should be using all that Western world Central Bank Gold to restore a gold-backed currency now -- not throw it away!

should be made sooner rather than later to avoid a truly wrenching

impact on older Americans, Federal Reserve Chairman Alan

Greenspan said Thursday.

We owe it to those who will retire after the turn of the century to be

given sufficient advance notice to make what alterations in retirement

planning may be required, he told the Senate Budget Committee's

Task Force on Social Security.

If we procrastinate too long, the adjustments could be truly

wrenching, he said. Our senior citizens, both current and future,

deserve better.

Greenspan, who chaired a 1983 commission during the Reagan

administration that led the last overhaul of the retirement program, said

the system's problems were significant but manageable.

Younger workers probably are paying enough into the system to

finance their future benefits, but current retirees and older workers have

not, he said. Thus, the system is expected to start paying out more than

it takes in by 2014.

The central bank chairman discussed the pros and cons of privatizing

the system, but said at a minimum other initiatives should be addressed,

including raising the retirement age.

As a result of the changes already in place, the age is scheduled to rise

from 65 to 67, but Greenspan said a further increase is becoming

increasingly pressing as Americans live longer and collect benefits

longer.

Such an initiative would become easier to implement as fewer and

fewer of our older citizens retire from physically arduous work, he

added.

Raising Social Security payroll taxes would have negative

consequences for growth, he said. But he said he favored shaving

benefit cost-of-living adjustments. Currently, benefits are adjusted

based on an inflation index that overmeasures inflation, he said.

Greenspan said privatizing the Social Security system in a way that

increases Americans' overall retirement savings was worthy of

intensive evaluation.

But he warned that it was an open but critical question as to how

financial markets would respond to a change of the magnitude

contemplated by immediate full privatization.

A thorough examination of the risks and benefits to the financial

markets would be wise, he said.

An alternate to what he called a big bang transition would be a

gradual transition, leaving current retirees and older workers in the old

government system and moving younger workers into a new, private

system, he said.

A Clinton administration commission issued a report early this year but

could not agree on a recommendation. A slim majority, however,

endorsed one or the other of two competing privatization plans.

The Senate task force has been charged with providing an agreed

upon set of facts on which to base future debate, said its chairman,

Sen. Judd Gregg, R-N.H.

having puter problems...damn!

away...to toss it out the window

Éßanginghishead

go gold and lakers...oh my

All - These currencies are like yo-yo's today....what is going on Oh, it looks like a market crash.......UP...........hmmmmmm......Gold?.....how will you act We are waiting.......tick-tock, tick-tock.....

away...to wonder what happened to all the posters

Éßewildered

To Front: Welcome back!

MachF-15

By the way, where is Donald?

Allen ( USA ) , John K: Your point about the Japanese postal savings to bail out the Japanese banks -- I raised another concern last night -- but had password problems -- so my post was probably missed. My concern is how the money has been invested.

Bank stocks, real estate, cash, other equities? Treasuries? Is it really 2.8 trillion US$ or after conversion to cash is it alot less?

We don't have to worry about our US government doing that with our Social Security, because they've done it already!

Worden Brothers have a Time-segmented Volume calculation which is a proprietary cousin to On balance Volume. It fluctuates like an oscillator.

Using monthly charts and a 21 month Time Segmented Volume calculation, I look for issues that are 100% pinned overbought or oversold. This is a very rare condition.

Here are some examples for your interest ( data goes back 6-12 yrs ) :

Gold Oversold Now

Silver Overbought Oct 94

Investment Brokers Overbought Sep 97

Semiconducors Overbought Aug 95

TVX Gold Oversold Now

Korea Fund Oversold Now

Dow Overbought Aug 97

Dreifontein Overbought Jan 94 Oct 94 Oversold Aug 86

Kloof Overbought Oct 94 Oversold Now

Newmont Overbought Oct 87

Barrick Overbought Oct 87

XAU Overbought Jan 94 Oversold Close but no cigar right now

Worden Gold Index Overbought Jan 94 Oct 94 Oversold Very close

Homestake Overbought Jan 94

Placer Dome Overbought Jan 94

Free State Overbought Oct 94 Oversold July 97 ( $4.625 )

Asian Market Turmoil Dims

Gold Luster; Price Cuts Seen

By AARON LUCCHETTI

Staff Reporter of THE WALL STREET JOURNAL

The widespread financial and economic problems in Asia have sharply

diminished demand for gold there, threatening further price erosion for the

metal, analysts say.

Despite increasing world-wide demand for gold, growth was muted in the third

quarter by lackluster performances in key jewelry-consuming countries like

Malaysia and Thailand. Demand for the commodity plummeted 52.8% in

Southeast Asia during the third quarter compared with the same quarter last

year, said the World Gold Council, an industry marketing organization based

in Geneva, Switzerland.

The Asian crisis that started with the devaluation of the Thai baht on July 2,

triggered widespread selling of jewelry, said Richard Scott-Ram, an

economic adviser to the Gold Council. Instead of turning to gold as an

alternative asset or investment, many hoarders sold their gold out of

economic distress, he said. By the end of the year, Southeast Asian

demand for the metal could be off by 50-100 metric tons from the 455.1

metric tons level at the end of 1996, said Timothy Porter, an analyst for Refco

Inc. in New York.

That's more bad news for gold bugs, who watched the price of the yellow

metal fall to $300 last week, a 28% cratering from the February 1996 peak.

Intense speculative fervor touched off by fears of central-bank gold sales has

hurt gold prices and mining stocks for months. Since approximately one-third

of the world's above-ground gold sits in central-bank vaults, the fear has hurt

market sentiment, Mr. Scott-Ram says.

In trading on the Comex division of the New York Mercantile Exchange, gold

rallied early, then failed to follow through as producers stepped up sales

programs. December futures on the metal fell $2.60 to $305 a troy ounce.

To be sure, the falling demand in Asia has been met with increasing demand

for the metal in India, Saudi Arabia and the U.S., all top consumers of gold.

World-wide, gold demand increased 6% during the third quarter as the falling

price and stronger dollar made buying the metal a cheaper proposition for

some.

But in Asia, the decline in gold demand may not be finished, warns William

O'Neill, chief futures strategist at Merrill Lynch. While the World Gold

Council's figures include international surveys through September, the

financial turmoil and global stock volatility of October and early November

have yet to be taken into account. The worst of the Asian gold selling may

not be apparent yet, said Mr. O'Neill.

An even more bearish signal, says Mr. O'Neill, is the slackening in gold

during a period of increased uncertainty in stocks and financial assets.

We've had the Asian crisis and the Iraqi situation and gold has been going

down. Even as a long-running bear, I thought something of this magnitude

would be supportive of the gold market. The next support level for the metal

could likely come near the 12-year low of around $280 a troy ounce. At that

point, mine closures could keep about 400 tons of gold in the ground, Mr.

O'Neill notes.

While gold has fallen, testing the $300 an ounce milestone recently, silver

futures have continued to rally. December silver gained 11.8 cents on the

Comex to $5.218 a troy ounce. Tight stockpiles and a lack of central-bank

selling pressure explains some of the differences in the fates of the precious

metals, says David Rinehimer, head of futures research for Smith Barney Inc.

in New York. As of Wednesday, silver cost more when compared with gold

than at any other time since 1987, he said.

evening The Aurator...I am still trying to find what my password means. It is the mystery of the eve for me and I will not surrender to the challenge. Wish I could tell you. You could figure it out.

Gold - Friday is approaching........like a Freight Train.......choo, choo!! chuga, chuga, chuga.......

away...to move out of the way

Éßlowing the horn......toot, toot!!

Are the passwords working?

BART, ?- Why the access/time problem in the early morning RSA time? Is it and area problem my side, or something you're working on? How can I fix it?

It seems to be a Universal Communications Indicator - my radio station has also been having 'blanks'in the early mornings!

AURATOR: Miss the early 'show' these days.. so busy outside the office.

I was hoping to get some answers from Fred Crooks for JTF, Nick and the rest of you chaps, but by the time they arrived from Natal there was little time, and they were gone by 6 this morning so that he could speak at a business breakfast

I had thought dinner- and wanted him to come onto Kitco for an hour or two today to chat to you. He will be responding directly to JTF's questions, so I look forward to the results of that exchange.

Take care.