Farfel: He has a point, doesn't he? Gold has been going down for nearly 20 years, and I know people who have been non-stop bullish gold for all of those twenty years. This is why we need the shorter term types such as EB, Oldman, and RJ on this site for balance. Cyclist and APH are of similar ilk. How about this -- how about promising not to be non-stop bullish gold -- how about the analysis I know you are capable of. Perhaps then we can have a truce, and everyone will post.

All of this is pure spec. until there is some form of confirmation.

When this forum goes for weeks about guns, and astrology, and WWI and every other damn thing except gold, it is OK, yes? But I am wasting bandwidth when I try to speak of THE ACTUAL MARKETS?

Farfel robs you all with his constant attacks and I suspect his intent is to disrupt and pander and any other thing to remain the center of attention. Remember, this is a guy who pitches gold to friends and acquaintances at cocktail parties, and declares PGMs dead based on the word of a drunk felon at a party? ( bait )

You are a bunch of nodding heads, like those old paper-mache dogs with the spring necks you used to see in the back of some folks cars. You need more nodding heads? This will get you closer to the truth? Or do you want to know what IS? The sun rises in the East. That IS. Farfel’s feverishly trying to sell his hackneyed agenda. It is EXACTLY what you want to hear. People are always warm and fuzzy to hear EXACTLY what they want to hear. Politicians make their living doing this.

Look around the universe. Where are things one sided? Anywhere? But this site is so damn one sided as to become useless.

This site is increasingly useless.

It is a fan club.

It cannot be taken seriously if this continues

Rah Rah, Sis boom BAH.

Screw this

When I receive an e-mail, as the one I posted earlier below, there is no assumption of confidentiality. This is unsolicited and certainly no friend or client of mine. This is an example of what I am dealing with; I focus on farfel and the larvae come out of the woodwork. I am not addressing these people, yet they take it upon themselves to join the attack.

PS

Crazy -

You try having a few beers and then put together sentences such as mine. I suspect you have had no beers today, yet your message to me is poorly written. Drunks and keyboards don’t mix. As Jack Nicholson said in Easy Rider, It takes a clear miiinnd I will not thank you for your concern as it was a thinly veiled stab of anger and deserves what it gets.

OK

Big Otis -

If you scanned for farfel, you have witnessed the many unwarranted attacks by him on several members of this forum. So either you do not know the whole story, or you too are dishonest and only decry the response to the attack and not the initial act of aggression. I must conclude the latter, since you did not leap to the defense when this little crybaby was whining daily and attacking myself and others. Is it OK for him? I may not respond? Your colors show well the man you are.

I mean it. I am tired of this crap. I fight for nobody else but myself. When farfel snipes, all is quiet. When I respond, all are up in arms. I do not attack his positions, I attack his obvious lack of knowledge and his bumbling ineptitude that he so grandly passes off as Yale Perfect. He is a joke. If you are fooled by his crap, perhaps you should keep your money in the bank, these markets are not for you. But to defend him is to demonstrate that you too know little of these markets and are probably not worth talking to in any case. So we won’t, yes?

Either play it fair both ways or shut up.

Seems that if a fellow agrees with your view on gold, he is OK, even if he is a jerk, coward, blowhard, crybaby, and pompous ass.

If a fellow disagrees with you views on gold, he is an unwarranted aggressor. Even if his knowledge, experience, and track record are demonstrably superior to your spouter of the party line.

For the rest of you who want to tell me to tone it down, save this message, for it is directed at you too. I will simply repost this each time another poster stands up for farfel but ignores his many gross errors in judgment, facts, manners, and the barest in civil behavior. And particularly for claiming that it is his views on the market that causes this rather than his continued attacks. Farfel has made it his hobby to attack me. I will elevate it to an art and he will rend his hair and shake to the marrow.

You don’t like it, go somewhere else, or ask Bart to throw me off - Like farfel just did below. I have been posting here for a year and have offered much of value. I have had my run ins with folks. They will attest I am very easy to get along with, until personally attacked. I will then shred the attacker and point out, for all to see, the warm puddle on the ground at their feet when they find that continued attacks bear a price, and the tag is a sobering read when they realize for what they must atone and how many beers are backing up on the bladder.

Perhaps the same thing written over and over and over and over and over again passes for wisdom to some folks, but it is a broken record playing the tired refrain from a tune that hasn’t been a hit for two decades. The Beetles were cool, but they don’t get much airplay these days do they?

Once again:

This guy attacked me time and again, even when I did not post, so silence does not work, he keeps coming. Would anyone stand by and take this? If so, you go to hell too, I’ve got no use for you. When he got bested, he stole away to nurse the stigmata on his martyr’s hands. I go out of the country for a week and this clown chooses the first opportunity to make a slam at me - after crying and ringing his hands about how sorry he is that he advised people to loose money. I advise nobody here, I just report what I am doing. Yale Boy apparently has second thoughts about his credentials and would now like to save the world again with his pedestrian yammering.

Had he chosen to do this without attacking, nary a peep would have been heard from me. But he makes his first post an insult to several VALUABLE posters on this forum. Myself, John Disney, LGB, included.

If farfel’s words are such a revelation to you, I can give you URLs for a dozen sites filled with farfel clones. None of what he says is in the least way unique, informative, or even makes much sense. It is just what farfel feels. If this is important to you, get his home phone number and call him up to coo in his ear, and speak breathless coaxings of golden avarice in muted moaning tones.

If, however, you are interested in how these markets work, you may want to listen to a professional or two. When these pros try to speak, they are drowned out but Farfel’s Fat Frowning Foibles driven by an ego that wants to hear itself speak, but has nothing to say - and he says this nothing over and over and over and over……..

So you are now his champion and have mounted your steed. I don’t know you, I have no investment in you, so I will just ignore you. I am actually just addressing this to you as a kind of proxy so I can get in a few jabs at farfel at your expense. I am therefore using you in the most whorish of ways and I don’t even know you. Pardon me for being so familiar, but I feel as if we are old acquaintances by now and you seem so enamored of farfel I felt as if you two were intimate enough to share this post together.

Good luck with your new sovereign. You will find with time he has no clothes. You will then feel too foolish to ever post on this site again - at least under the same name. Read LGBs post below, or ask hereabouts regarding his infamous short squeeze with the market fell through the floor. There are a dozen posters on this site who can give you valuable info. Farfel can only give you farfel’s opinion on his feelings. How this has any value is beyond me. You keep reading and assimilating. Meanwhile, I will grind him into sand. He will slip through your fingers in any case.

OK

It drives people crazy, ask me , I'm a goldbug.

Please remember -- the strength of this site is its intellectual depth, and its information gathering resources. I think we should remember why Bart set this site up for us to use -- we are virtual guests of Bart Kitner.

Relax me friend, things are always darkest before the dawn. Come down, we'll take a couple days on my houseboat. We can cruise right up to the Horse Shoe casino, on second thought lets go fishing.

What I value are your thoughts about other items than what you think about Farfel. I agree with you that nonstop buy gold statements are tiresome, but he has a right to his opinion.

How about some thoughts about the markets?

Just received this e-mail, it is from nobody I know. Says he is crazytimes. Is he a farfel clone?

Your pathology is coming out on the internet. Work your problems out in

life, not on Kitco. How much do you drink? Your posts give me a strong

impression you are a raging alcoholic or addict. Be careful, at the rate

you're going, getting thrown out of Kitco would seem to be the least of

your worries. If you find this e-mail arrogant, you have just a SMALL taste

of how people are reacting to you. Crazytimes

E-mail address available on request.

I know exactly what you mean, heres hoping others hear learn soon.

First you write:

PMF ( RJ @ Get off that horse before it kicks you off ) ID#224363:

RJ, I don't recall anyone electing, or even nominating, you as protector of this site. You do seem to spend ample amounts of time telling us just how incorrect, or idiotic, others are. Don't you get tired of hearing your own voice. I certainly do.

Then:

Date: Sun Jun 14 1998 19:09

PMF ( RJ - Excuse Me ) ID#224363:

I guess that I along with everyone else on this site will now bow before the incredible powerful presence that you have brought before us.

Now Me,

I’ve never heard of you or seen you post on this site. I never addressed you about anything, yet you write the above. You chose to make the first move toward me but it seems your first action was tell me how tired you are of hearing my voice. This is an unkind beginning, yes? Was there some particular reason that you needed to set me straight on this whole farfel thingie? You are now surprised that the words you wrote bring hostility from me?

As I asked, Are you kidding?

Yes

PMF -

Who the hell are you?

If you don’t know what you are talking about, shut up.

You don’t.

So shut up.

When I first posted Friday, I indicated that I would speak on two subjects and exit. This is the second, concerning Farfel. It will end my brief writing.

I started lurking in January. It soon became apparent that the forum was different from others that I had visited. There was a pervasive level of higher intelligence. There was wit and tasteful humor. There was a discussion of one another's positions, but carefully worded to suggest that one was not looking for ulterior motives, but rather for ideas. But most of all, for me, there was the magnificent Farfel. The respect for ideas and the way phrases were turned to incorporate those ideas were special for a forum. Indeed, on some busy days, I scanned only for Farfel.

Then things started to change, or perhaps I just started noticing the personal attacks questioning motives and not just positions. I realize that your unwritten code is for one to defend oneself, but the onslaught against Farfel goes too far. You attackers must realize that, although your intelligence levels seem equally high, differences of opinion can occur. And you as a group must make it known when one goes too far attacking those positions. A recent case was especially wordy, snooty, and guttural: when Farfel mentioned short positions in equities.

When Farfel's anguish spilled to the forum last week, I then obtained a password so I could write. Maybe some of you had noticed the more civil tone of the forum immediately following Ferfel's silence, as if there was to be an embarrased period of polite talk, as at a wake. This did not last and some are back to their snarling ways.

The forum needs this type of eloquence. You will revert to the drivel of many other forums if you drive those such as Farfel away.

JTF -

Once again I ask the question:

Where were the condemnations when this little ferret came back to insult us all?

You know I like you, but I am fed up with this one sided scolding. Pardon me for vastly overmatching farfel, it is not my fault that Yale neglected to teach our farfel ferret the English Language as well as Economics, History, and Mathematics.

I was out of town. This creep posted the crap I reposted earlier. He is a coward, and he is stupid. He has proven his cowardice. I will prove his stupidity.

Don’t ever tell me to stop this again, unless you wield the same rules at farfel puppy. Remember to scold first those who offend first.

Each time you do this to me, I wonder about your fairness

No

I will not stop

Once again, he came at me

He will suffer the consequences

Perhaps you all could save bandwidth by telling this creep he is an assshole when he acts like one. I certainly will. Silence throughout his diatribes while scolding me for my response is disingenuous, unfair, and just pisses me off further.

OK

Oftentimes the best way to determine how good a market is, is to see how it responds to a solid push the opposite direction. It is time to go long when the shorts are unable to do their dirty work anymore.

See you all later.

This is why Tienamin Square, Tibet, and other Human rights abuses are ok. How would we deal with the Serbs and Kosovo if they were contributing to the Democratic party?

For example, there are bullish stirrings in the gold markets, with Oriental gold purchases, and Swiss gold purchases, even if the latter was apparently short covering. Also Duesenberg ( sp? ) , the EMU bank chairman designee, told us how much gold is to back the EURO -- as another Kitcoite pointed out. Now -- just when do you remember any Central Banker mention gold reserves in respect to their currency -- other than the EURO countries, or Switzerland? When is the last time a US FED Chairman announced what percentage of the US dollar is backed by gold?

On the down side, it does look like the EURO CB's may be allowed to sell gold until Jan 1999. I don't have a clear handle on whether this is true, or what this means. Regardless, I think we have to assume that gold rallies -- when they come -- are going to be short-lived for some time to come.

RJ -- Why don't you give us your thoughts about whether Japan is buying gold, whether Brazil/Mexico/Aregentina troubles will be bearish for gold, or whether there are other currency devaluations pending that might push gold down some more? Someday -- I think fairly soon -- there will be no more gold sellers -- because all the countries that want to sell gold will have sold it. When the US is the only country left that has not devalued significantly, there will be no way for gold in US dollars to drop any further.

As far as I can tell, the price of gold is rising in most currencies. The number of countries where the price of gold is rising or steady is getting rather small, indeed.

John Disney: How about South Africa? Are South African gold firms seeing rising profits due to a favorable exchange rate for gold?

sharefin/Bill Buckler: How about profit margins for Australian gold stocks?

Farfel the Wrong wrote:

SELBY...as per Rhody's info, you owe me an apology concerning your erroneous attacks upon my assertion that Bush served on Barricks's Board of Directors.

We already know, when an apology is offered this fellow, he accepts like a pompous king, offers nothing in return but condescending lectures and worn out platitudes, and then proceeds to bugger you all over again like the duplicitous fornicator he is. I am not accusing this fellow of sodomy; rather it is his own head that is up his ass.

Again, no calls for me to desist. I will follow through until he quits or I am thrown off this site. He called the war quite some time back. I am just showing up for the action. I will rub his nose in his farfel feces like a naughty little puppy, and then lock him in the laundry room with newspapers on the floor for the rest of the night. Here, the best to issue forth from farfel puppy, will fall on truth, knowledge, and facts. But the droppings remain little farfel’s. It is all he has to offer.

I will smite farfel for the fun of it

And then I will gloat over his charred corpse

Ready…. Set…… Go!…….

Date: Fri Jun 12 1998 18:50

farfel ( @LGB...why do you keep saying you love the gold metal... ) ID#340302:

...yet you consistently disparage her role in our world economy?

It's classic Orwellian double-speak, if you ask me.

Why not do us all a great favor? Cease and desist with your chronic negativity about the yellow metal. Why not try something new...like sincere ( non-sarcastic ) questions as to why it is trading at less than 300?

F Child,

Why not do us all a great favor? Cease and desist with your chronic negativity about the people who actually know these markets and keep your own mouth shut? Every time you open it, you are proven dull or wrong. This site sucks because of you. You suck the usefulness right out of it. In fact, you suck.

We are only getting started.

Having fun yet?

I am…….

Date: Wed Jun 10 1998 22:12

farfel ( @AUROPHILE...I am violating my new no post rule one last time... ) ID#340302: ...because I cannot bear it when Economics undergraduates like yourself post sheer nonsense on this forum.

I would say this is a rather boorish statement, Yes?

So we will now concentrate on the absolute and incredibly dim sheer nonsense that farfel posts ( we call him Short Squeeze Farfel, hereabouts, in honor of a falling gold price ) . He is clueless as to what makes these markets tick. I would be happy to prove it. It will cause farfel pain and embarrassment. This is as it should be. It is as it will be.

Go back under your rock F boy, or I will squash you.

This will be no fun for you at all

Count on it

Yes

Date: Sun Jun 14 1998 13:08

Voyeur Professor wrote:

…….So I must with regret add my name to the list of those who have been shocked by the boorish attitudes of those who have trashed farfel.

Voyeur Guy,

Were you shocked by the boorish attitude manifested in it’s paramount by farfel?

This creep has either kissed ass or insulted every poster on this site

If there are doubts, I would be happy to repost his garbage

Farfel is a blathering hypocrite

I will call him such

I will never quit

Ever

Welcome home, farfel

Yes Indeedy!

PS

An old maxim say’s something about knowing somebody by the company they keep. He will not post while his bosom pal is denigrated. But he had no problem accepting the attacks on myself and others from the whining guttersnipe. If this Voyeur fellow has bedfellows like this, good riddance to him too.

See Ya……

Farfel wrote on:

Date: Tue Jun 09 1998 13:26

farfel ( Oh, Terrible, terrible Angst.... ) ID#340302:

……… Special Hellos to Little Gritty Bum Bum, Disskneed, Jeillo, and RotJerk. I miss you all.

Just remember what I posted many months ago...

Okaaaay:

Oh, I remember. I would be happy to repost for you fella.

Told you he wasn’t done being a martyr. Another prediction come to pass

Filet of farfel, anyone?

I am well rested and feel like stomping this twit

So I will

Yes….

PS

I will heed no calls of peace. While I am gone and unable to respond, this little coward comes out of his closet with this crap? The bill is due. He will pay…….. Cha CHING!

OK

Unfortunately the punishment never quite fits the crime, does it?

I must admit I am worried regarding our fellow Kitcoite's post about China: They want the US to open the technology trade floodgates completely, and to ignore the commotion in Tibet. So much for Shangri-La. We must remember that we are trading with a Communist government that may become a world leader in a generation or less. If WJC places no human rights restricions on our trade with China, that clearly indicates to them that 1 ) We are no better ethically than they are, and 2 ) They can do whatever they want regarding human rights violations, without fear of retaliation.

We are now cultivating the kind of Communist Chinese government that we will eventually get leading the world. If we do not place firm rules on our trade, the difficult child that is Communist China will grow up to be a much more unruly adult. Unfortunately our leaders seem to have no insight into what their current foreign policy is creating.

And, any foreign investor investing in US dollars can buy whatever real assets they want with US treasury sales -- at the going rate. The US must comply or default.

There is one other feature I would add -- and that is the Japanese and Chinese have been adversaries for centuries. Furthermore, China has not forgotten what Japan did to China during WWII when China was essentially unable to defend herself. Apologies after over 40 years will have little effect.

The devaluation of the Yuan hurts China relatively little, since the majority of Chinese internal trade is by barter. The pending devaluation hurts her creditors much more -- namely Japan and Europe.

I'm not sure why the Communist Chinese have not yet devalued. Perhaps they fear the consequences of possible world deflation. They may also be reluctant to the loss of foreign liquidity -- for a time. Won't be much longer however, as the discount is already about 10% on the black market.

My intuitive guess is that the Japanese government will suffer for years to come by their inability to come to terms with their debt problems, and will continue to squander their savings. If the Japanese fail to correct their problems very soon, the Communist Chinese will eventually become the leaders of Asia, and SEAsia, not Japan.

My confusion is with the split opening Noble mentions on pg. 63-65. In the example he uses he claims the June 21 closing range was 6.78-6.75. The next day's opeing range for july beans was 6.76 1/2 and 6.78 On the chart he provides I don't see the June 21 range. It looks like 6.78-6.70 to me. Which would put the 7/22 opening out of the range. Does anyone agree with this?

His chart is 30 minute periods - its not clear to me if he is defining the opening as the whole 30 min. period or not. If he is - then the first period of 7/22 must be inside the last period of 7/21 to have a split opening? Once we have the split, the trading strategy kicks in once the break out of the opening occurs. Fade the upper resistance zone and buy the lower support zone?

Anyone have any experience with this trading strategy? Has anyone tried it with daytrading stocks?

This is a great book - I've used the pivot formuals alot they work very well.

First, BOJ and other banks buy and hold enormous quantities of USD denominated debt. They allow their own currency to drift low and lower, enjoying both a terrific real interest rate and a tremendous currency play. Together, these bring enormous profits and hold up banks which are sitting on otherwise unsafe ground. [this has already occurred]

When they feel the time is right, they buy up gold at fire-sale prices. They are, remember, the ones with the money, the creditor nation, perplexing economists everywhere with the wondering why they're doing so poorly when they're doing so well. This gold is used to back the currency, in a manner yet to be announced. The IMF has made it clear, as well as other writers, that a three-legged currency system is being put in place, the Yen, the Euro, the USD. They are setting the stage for making the yen the new Asian currency. [this is rumoured to be occurring now]

The final step is for the BOJ to support the yen. Perhaps the announcement of increased gold backing, a revaluation, whatever. It will probably be in a form that is symbolicly important to their own people, and a bit mystifying to us. The message will go out to their banks, buy yen. They have demonstrated in the 80's an amazing discipline, which was demonstrated in their expansion then. The banks buy yen, the yen rises. Possibly it will be supported by higher interest rates, making the USD look like a bad choice for their own investment. This money coming home to roost is used to restimulate the economy at home, before the problem really gets out of hand. [patience. these guys routinely plan, even at the corporate level, 200 years into the future. remember?}

If the Chinese currency, yuan, suffers a major hit during the early phase of this, so much the better! They are, after all, the real competitor for dominance of the Asian markets. [bingo!]

This scenario makes sense because gold moves from weak hands to strong ones. At the moment, all fears to the contrary, the Japanese hold the strong hand. They are the world's great creditor nation. Everything else is just poker. Where my thinking differs from much of what I read, is that I believe the real game has shifted from US/Japan to China/Japan. Maybe it always was.

Any comments?

Scenarios that could prove me wrong:

Silver - The new upward-trending channel is based on the assumption that since gold and platinum are at the bottoms of their respective channels, silver must be too. If silver breaks down further, back down to the bottom of the previous downward-trending channel, it is highly likey that gold will break through its channel bottom, and head significantly lower. At the first sign that this is happening, I'll immediately exit all precious metals positions 100% and batten down the hatches.

Platinum - The risk here is that palladium will break its uptrend. If this happens, I think platinum would drop further, perhaps even down to the price of gold. This possiblity warrants close attention.

For the moment, I'm invested as the channels that I posted dictate. Can't say I'm not nervous though.

Cheers.

The Miller commentary, recomended by Vronsky is a fine long term perspective on Gold. The Japanese ( if they have purchased that 400 tonnes ) are sending a signal that will ultimatly shock the current fiat system to its core. Given that they have not held gold, are now deep in the glue, have a massive dependancy on the US$, their action to buy Gold ( all be it a little ) is more significant that the EMU announcing 10 - 15% backing. That was expected. European peoples have long held personal value in Gold. Therefore, the Japanese reversal is more significant. The signal will be out. Keep the Miller commentary in mind when news of the Japanese actions come out, and lets see if they follow it up with more.

Watch for a US counter attack. Perhaps some thinly veiled assurances from the Chinese that they ( the Chinese ) will stay pegged to the US$. The Chinese are not to be trusted, and are smarter negotiators than the current US leaders. So that tactic is suspect if announced, and will in all likelyhood, be short lived.

I started lurking in January. It soon became apparent that the forum was different from others that I had visited. There was a pervasive level of intelligence. There was wit and tasteful humor. There was a careful discussion of one another's positions, carefully worded to suggest that one was not looking for ulterior motives, but rather for ideas. But most of all, for me, there was the magnificent Farfel. The respect for ideas and they way phrases were turned to incorporate those ideas were special for a forum. Indeed, on some busy days, I scanned only for Farfel.

Then things started to change, or perhaps I started noticing the personal attacks questioning motives and not just positions. I realize that the unwritten code is for one to defend oneself, but the onslaught against Farfel goes too far. You attackers must realize that, although your intelligence levels seem equally high, differences of opinion can occur. And you as a group must make it known when one goes to far attacking those positions. A recent case was especially wordy, snooty, and guttural: when Farfel mentioned shorts. How and why would you question it? EVEN I made money shorting in 1997: even Dell and Bankamerica, among others. One hedge fund returned 57% for the year and all it did was short. ( For those of you who demand verification, see Smartmoney about Fleckenstein earlier this year ) .

When Farfel's anguish spilled to the forum last week, I then obtained a password so I could write. Maybe some of you have noticed the more civil tone of the forum immediately following Ferfel's silence, as if there was to be an embarrased period of polite talk, as at a wake.

This did not last and some are back to their snarling ways.

The forum needs this type of eloquence. You will revert to the drivel of many other forums if you drive those such as Farfel away.

Otis

He was all too happy to tell me that business was booming. He had sold over $20k in junk silver to a guy the day before and gold bullion coins were going out the door at a phenomenal rate ( silver wasn't doing too bad either ) His commission rate would not be considered favorable to a knowledgable collector. Very telling, don't you think?

Page 351 of The Great Reckoning

By studying past booms and collapses, we have identified at least a few of the regularities that seem to be at work from one episode to another. The process works something like this:

The Inflationary Stage........

1. Some shock often a war, sets the process in motion by disturbing the system. It alters property rights, encourages monetary instability, and raises real asset prices.

2. This leads to extraordinarily high rates of return in real assets, especially for debtors, who gain disproportionately. The high rates of return seem to justify massive new investment.

3. A credit binge ensues, as people borrow at accelerated rates to capture the extraordinary profits. Real estate, in particular, rises in value.

4. Institutions and contracts are adjusted to reflect the inflation. Debt maturities shorten. Nominal and real interest rates rise.

5. Nonetheless, a credit binge continues, as investors now accustomed to high rates of return calculate that they can continue to earn supernormal profits.

6. Financial as well as real assets are purchased on a basis of increasing leverage, and a bull market in stocks follows, though not yet a drooling frenzy.

Then Comes the Deflationary Stage...........

7. Profitability declines toward more normal levels as investment matures and new output is brought onto the market.

8. Commodity prices decline.

9. The farm economy goes into recession.

10. Interest rates fall, and as they do, hot money moves into financial assets, further stimulating the stock market.

11. As opportunities in the real economy subside, investment is concentrated on financial assets, leading to a stock market blow-off.

12. The boom is self-limiting because debt contracted at high interest rates compounds faster than income, eventually requiring that owners of leveraged assets liquefy their holdings, thus driving asset prices down.

13. Real estate sags.

14. Some trigger such as credit squeeze, a major bankruptcy, fraud, or simply the slowing of the real economy reveals the overvaluation of assets.

15. The stock market crashes, credit contraction intensifies, the money supply implodes, and depression ensues, with returns on previous investment falling to subnormal rates.

16. Real interest rates skyrocket, even as nominal interest rates fall, further reducing economic activity.

17. Unemployment skyrockets because real wage rates rise.

18. Wages and prices are cut as the system winds down.

19. Bingo. You have been in deflation for some time.

It must be stressed that Davidson does go on to discuss timing, and, at the time of his writing, said there was evidence that the world was well into the early stages of deflation as 1993 began. He goes on to list his arguments, but I won’t write them here.

( if you can't get gas, neither can the

delivery trucks ) but I do see it as a great

alternative to the wheelbarrow or kiddie

wagon for foraging water, wood, you know,

that kind of stuff.

The net result of all this is the opportunity to

simplify your life by reducing your vulnerabilites,

cleaning up your finances and prepare for a much

slower pace of life and fewer opportunities.

That scenario would be lovely, and please tell me if

I'm wrong in my thinking BUT the problem, however

insignicant looking to some, will be hugely

exacerbated by the people who DO NOT make

preparations and are caught with their financial

and personal pants down and dragging. Millions upon

millions of whole families will be in dire straits.

I started lurking in January. It soon became apparent that the forum was different from others that I had visited. There was a pervasive level of intelligence. There was wit and tasteful humor. There was a careful discussion of one another's positions, carefully worded to suggest that one was not looking for ulterior motives, but rather for ideas. But most of all, for me, there was the magnificent Farfel. The respect for ideas and they way phrases were turned to incorporate those ideas were special for a forum. Indeed, on some busy days, I scanned only for Farfel.

Then things started to change, or perhaps I started noticing the personal attacks questioning motives and not just positions. I realize that the unwritten code is for one to defend oneself, but the onslaught against Farfel goes too far. You attackers must realize that, although your intelligence levels seem equally high, differences of opinion can occur. And you as a group must make it known when one goes to far attacking those positions. A recent case was especially wordy, snooty, and guttural: when Farfel mentioned shorts. How and why would you question it? EVEN I made money shorting in 1997: even Dell and Bankamerica, among others. One hedge fund returned 57% for the year and all it did was short. ( For those of you who demand verification, see Smartmoney about Fleckenstein earlier this year ) .

When Farfel's anguish spilled to the forum last week, I then obtained a password so I could write. Maybe some of you have noticed the more civil tone of the forum immediately following Ferfel's silence, as if there was to be an embarrased period of polite talk, as at a wake.

This did not last and some are back to their snarling ways.

The forum needs this type of eloquence. You will revert to the drivel of many other forums if you drive those such as Farfel away.

Otis

Gold will have its' day, I hope. The currency situation bears watching here. This will be our only clue. When the reversal takes place, it will be quick. That's the damn problem. Look at the SOX index. Semiconductors? Who wants 'em! ( Now, that is ) . For an eye opener take a look at Analog Devices Inc. ( ADI ) or Texas Instr. ( TXN ) . Now, turn those market breaks upside down and imagine that you are looking at the price of gold...

I don't know when that MAY happen, but that is is probably HOW it will happen. Yes, the 'towel' is being thrown in on gold. So, we must be near something. I'm just not sure of what.

How's that for a brilliant insight? :- ) )

Yup, I'm just as confused as everyone else. My solution? For the moment, T-Bills...............

Logic would dictate that gold 'should' move up, but if deflation is the worry then 'cash' would be the place to go to. The problem is, most don't realize that cash is a debt instrument.

Damn, I just got up and my head already hurts...... :- ) )