- Date: Wed Aug 26 1998 21:35
Max__A (Turnaround in Gold Equities?) ID#173148:
Copyright © 1998 Max__A/Kitco Inc. All rights reserved - Today, the Editor-in-chief of TheStreet.Com ( TSC ) may have given us one signal to look for to start a turnaround. The following excerpt suggests that Wall Street has started begging for an interest rate decrease. If Mr. Greenspan acceeds to this pressure, it would almost certainly dramatically awaken inflationary expectations. . . and gold stocks.
. . .And the number of people arguing in favor of a reduction in Fed rates as a needed tonic for the stock market is growing. One of my favorite market thinkers, Richard Bernstein, the chief quantitative strategist at Merrill Lynch, has started to talk about the need for a cut in short-term interest rates. I listen to what Bernstein has to say because he has an excellent track record in this bull market. Long before
everyone noticed that the high-quality big caps would be the last dogs standing, Bernstein was advising clients to move in that direction. He pushed people more aggressively toward bonds back in June.
These days he's wondering when the current market volatility will diminish. Based on his assumptions, it won't be anytime soon. He argues that the Fed needs to ease and the yield curve needs to steepen before stocks can snap out of their current funk. . .
- Date: Wed Aug 26 1998 21:30
2BR02B? (f*) ID#266105:
- -
Warning, off-topic. But zat's ok here in the k2 ghetto section.
What the hey, Gold, God & Guns on K1, not necessarily in that
order--- maybe Bart should add bibles & bullets to his bullion
wares?
Gotta admit farf I did enjoy the Jenny Jones takeoff from
your lingo prof bud, even crossposted to another ( nonfinancial )
hangout. Here's a little ditty by one Richard Dawkins on the
brilliant '96 hoax by Alan Sokal, a physics professor with
impeccable leftist credentials getting his postmodernist
metatwaddle published in one of that clique's favored
'zines. Enjoy.
http://www.spacelab.net/~catalj/postmoderism_disrobed.htm
- Date: Wed Aug 26 1998 20:28
Bill2j (@Farfel) ID#259400: - Farfel, in your professional opinion how long will gold go down, how low will it go and when will it turn? Thanks.
- Date: Wed Aug 26 1998 18:52
farfel (Parsing Martin B*llSh*tter Armstrong...(Worth a Repost)) ID#17077:
Copyright © 1998 farfel/Kitco Inc. All rights reserved - Date: Wed Aug 26 1998 04:11
farfel ( Parsing Martin Armstrong.... ) ID#17077:
Copyright © 1998 farfel/Kitco Inc. All rights reserved
Is the last Bear Market leg in Metals
Just Getting Started?
By Martin A. Armstrong
August 25, 1998
Copyright Princeton Economic Institute
------------------------------------------------------------------------
The long-term perspective for both gold and silver is becoming very ugly to say the least. While the metals group
has been the target on intense manipulation involving everything from copper, palladium, platinum and silver,
there has also been attempts at trying to create the impression that even gold is getting tight.
( Armstrong means: I am an unmitigated liar and I do everything in my power to manipulate the metals markets.
Do you remember my spate of falsehoods about Buffett selling his hoard of silver? All proven to be lies! That's
because I am a complete BS artist! )
One trade house in particular has specialized in going after the funds day-in-and-day-out. Just recently, this house
has been taking delivery of gold trying desperately to force it higher based solely upon the commitment of traders
report that claims there are 60,000 short speculative positions. Despite selling in the cash and buying on the floor
of the COMEX in a vain attempt to keep up the image that they rule this market, the overwhelming bearish
fundamentals have prevented their latest play.
( Armstrong means: my hedge disciples keep shorting the crap out of these precious metals markets and damn
it...there's a trade house out there that is spoiling our BS party by buying the stuff and TAKING DELIVERY! It's
making me nervous as hell because it looks like there are some other players that might soon make hefty purchases
of the metals and TAKE DELIVERY. Pretty soon, there won't be any silver or gold to cover my egregiously large
short positions. Then the game is over for me and I will lose control of these markets. Yes, I am about to get
F*cked! ) .
We have maintained that silver has been the primary focus of a group of serious market manipulators that have
included one major member of the London bullion dealers. While stories of shortages have still filled the air, the
truth is that these stories originate from London where the dealers still REFUSE to publish the inventories on
hand. Given the fact that this type of behavior in the United States would be considered insider trading bordering
on the line or criminal activity, the only way to approach this market is based upon price action since the
fundamentals CANNOT be proven nor trusted.
( Armstrong means: trust me when I tell you that there is a superabundance of silver out there...just as you should
have trusted me when I told you that Buffett was unloading his silver. NOT!!!!!!!!! )
According to our sources, the vaults in London remain full with
the greatest shortage still being storage space itself. Combining this information with the fact that nearly 70% of all
silver exports from the US during the second-half of 1997 were made to London and not Asia, we tend to believe
the US government statistics over those in the bullion industry, which a vested interest in hiding the truth.
( Armstrong means: my sources tell me that the vaults are full of silver in London...the very same sources that
failed to tell me that Buffett was buying $100 million of silver ( yes, I was the last to know! ) and the very same
sources that told me that Buffett was unloading his silver way back when, only to be completely contradicted by
Buffett himself. My sources are the little green men dancing inside my duplicitous head ) .
We do know that demand for silver in India has fallen by 80% during the first quarter of 1998. We believe that
India’s silver consumption will be down on an annual basis at least 40% and perhaps as much as 60% for 1998
thus wiping out any shortage between current production and demand. The sanctions imposed on India for its
nuclear testing have had a major impact upon its economy as well. This situation is only further complicated by the
collapse in Asian currencies. The rise in the dollar due to the continued meltdown in the world economy is also
having a negative impact upon silver.
( Armstrong means: I don't have any unique original lies to spin so I'll revert to that tired old chant about India
dropping its silver demand. I sure hope all you Sh*t for brain lemmings out there buy it! )
The popular belief that gold and silver will rally with a stock market crash has anything but materialized. This is
largely due to the fact that gold is now a commodity and not the official form of money as was the case under the
gold standard. Therefore, as economic turmoil swirls around us, the first priority is liquidity. Where during the
Great Depression gold represented liquidity, keep in mind that gold was cash, which was acceptable to pay one’s
bills. Today, cash is the dollar. Gold is not acceptable as payment on your VISA card, mortgage or just about
anything else within the modern monetary system. Hence, gold this time will act like a commodity.
( Armstrong means: hey, kids, it's a New Era, I've got all my net worth tied up in blue chips and bonds. I'm short
PM's and God help me if there is a rush from the fiat currencies into PM's. Believe me when I tell you that gold is
just another commodity...in fact, I happen to know that, during the Korean financial crisis, the Korean
government didn't give a damn whether their citizens gave them soybeans or gold...any commodity would have
sufficed. NOT!!!!!!!! ) .
ALL commodities collapsed during the Great Depression bottoming in 1932 along with stocks. Commodities,
including silver, failed to provide any hedge whatsoever against the Great Depression despite the fact that the US
remained on a gold standard throughout the entire period.
( Armstrong means: God, I really think there might be a market Crash. I must have complete SH*t for brains
taking the kind of short position in PM's I've taken. Imagine a weasel like me making a bet against a financial
wizard like Buffett Just lock me up in a funny farm...protect me from myself! )
As illustrated here, silver collapsed from $1.344 in 1920 down to 25 cents going into the bottom of the Great
Depression in 1932. Those who have been preaching that as soon as the stock markets crash the metals will rally
do not have any historical correlation to support such a scenario. Consequently, 1998 appears to have been the
culmination of a 7-year bull market instead of the beginning of a breakout. We had hoped that a low in 1998 would
have developed. However, given the manipulation of the metals group in general, we now see that the low will
most likely develop in 2000 perhaps during the 2nd quarter. The portrayal of Buffett as the savior of silver, who
will NEVER sell under any circumstances, again has distorted the facts. When it comes to bonds and crude oil
investments, Buffett has NEVER been a long-term investor. He has always taken very short-term views. Buffett’s
long-term investments have been restricted to purely stocks that pay a reasonable dividend and good capital
appreciation. At this time, Buffett’s silver investment is already in a 10% loss position and it could become much
worse.
( Armstrong means: I am really concerned about Buffett and his huge silver position. After all he is only worth
around $20 billion and that silver position constitutes less than five percent of his aggregate net worth. Poor man
just might go broke because he just doesn't understand the silver market like I do. HARHARHARHARHAR! )
There is one popular rumor that has been floating around the marketplace, which we have no solid opinion on. It
has been alleged that PhiBro had a pre-existing silver position in excess of 100 million ounces dating back to
1995. In order for Buffett to sell Solomon Brothers to Smith Barney, he was had to take this unprofitable position
on his own books. This cannot be proven either way without getting into the books of PhiBro. Nonetheless, we
do not believe that some of the players who were front-runners would have jumped into the silver market with
both feet if this rumor were correct.
( Armstrong means: it's time for me to make up another rumor, defaming a major institution like Philbro. I am
getting desperate what with this jackass huge short position in the metal. Naturally, I cannot prove it because what
mathematical proof exists to validate the existence of sheer Bullsh*t? ) .
All things considered, the metals are simply headed significantly lower. A monthly closing for silver below $5 will
then warn that a decline to the $4.50 level is in order. At the end of the day, our computer models are still adamant
that silver will drop below $3. If our sources are correct that the London bullion dealers are indeed hiding 500
million ounces of silver from the world statistics, then this target is very realistic. While we no doubt will receive
the usual hate mail due to this forecast, the point is that this issue can be settled very easily. London should open
its vaults for a full INDEPENDENT audit. The mere fact that the London dealers refuse to publish these statistics
perhaps suggests that there is indeed a pile of silver they do not want the marketplace to know about. If there is
indeed a vast quantity of silver beyond Buffett’s 120 million ounces sitting in London, what better way to keep up
the propaganda about shortages than refusing to publish the inventory statistics?
( Armstrong means: damn it, I just know there's a secret pile of silver sitting in London and the bullion dealers
refuse to disclose it. Bastards! I demand a full independent audit. On the other hand, don't mention anything to me
about independently auditing the gold reserves of the Central Banks. Trust me when I tell you that those published
reserves are completely accurate. Central Banks would never lie, least of all to me, the grand shorter of PM's!!! )
If our sources are correct on this issue, then considering the collapse in Asian demand combined with 500 million
ounces in London, there is NO shortage at all and in fact we are back to a 2-year surplus or much more. Those
who simply point to the COMEX stockpiles and claimed that we assume that European stockpiles have declined
by a like proportion are making a very dangerous and irresponsible statement. They should take great care in their
reports when the bona fide statistics are NOT available. They are either being paid as a consultant to those who
want to propagate the myth of a shortage on an undisclosed basis, or they are not exercising their due-diligence
that is expected of all independent research. We are NOT prepared to join the crowd on this issue of a shortage
until London becomes a market where who own what can remain confidential, but total supply is fully disclosed to
the public. After all NO leading financial market in the world operates under such rules
( Armstrong means: I like to project my own egregious lies onto my antagonists. As you can tell, I am obviously
little more than a front for PM-shorting hedge funds, propagating the myth of a superabundant PM market ) .
In the end, the continued collapse in Russia is likely to spillover into the former eastern block as well as into Latin
America in particular Mexico. We are looking at another Asian contagion but this time in Europe. Unfortunately,
this reality may keep commodities in a deflationary trend going into early 2000 before any reversal develops.
( Armstrong means: I sure hope you've bought my BS concerning PM's as mere commodities. If you have, and
furthermore, if you believe we are going into a pure deflation, then naturally, you should expect PM's to drop in
value ) .
Indeed, the similarities of our current global crisis are a much better fit fundamentally with the Great Depression
than any other period in time. While the stock market peaked in 1929 and collapsed into 1932, the dollar soared
into 1931 where it established its major high against every currency known to man. Every European nation
defaulted on its debt, with the exception of Switzerland while Britain suspended payments for 6 months. Russia
defaulted, China, most of Asia and Latin America. With each default, capital fled to the dollar creating domestic
deflation within the US marketplace. Due to the fact that 40% of the civil work force in the US was employed
within the agricultural sector, as the dollar rose commodities fell forcing farmers and miners into bankruptcy.
( Armstrong means: I sure hope you buy the Bullcrap concerning my direct analogy of today's US economy with
the US Depression economy. Please forget that today, unlike the USA of the Thirties, America is the largest debtor
nation in the world. Please overlook that little fact such that you may rest assured that the entire world will convert
all their crumbling currencies into US dollars. HARHARHARHAR. NOT! ) .
To a large extent, we see the similarities with this period of the 1930s as striking to say the least. However, we do
NOT see a 90% decline for stocks or commodities from current levels. While gold might collapse to the $190 area
and silver down to $2.75, the US share market at worst might reach 3800 on the Dow or about a 66% correction.
To be much more modest, we would expect perhaps a more realistic decline in the 40% area assuming that the next
low in September/October unfolds with about a 23% correction. A correction of 66% would ONLY become likely
if by mid October the Dow were down by 40%.
( Armstrong means: God, I'm really f*cked if all my DOW stocks crash over the next few months. Trust me when
I tell you they could never fall as much as gold or silver! TRUST ME, PLEASE!!!! )
In summary, during the 1930s gold was money. It could be used to pay your landlord and debts. Today, a
deflationary contraction drives the same forces into a search for liquidity. In the 1990s, liquidity is still cash; it’s
just that cash is the dollar – not bars of precious metals.
( Armstrong means: trust me, gold is NOT money. The Central Banks are completely deluded in treating it as
though it has any value or any liquidity. The US DOLLAR is king, even though the world is rapidly becoming
awash in this overabundant paper debt. TRUST ME, DAMMIT, DON'T YOU BELIEVE ME YET )
Gold and silver might rally if the dollar were at risk. However, the economic crisis is NOT taking place in the US
– it is taking place everywhere else but! Reagan at least reversed the trend in the US economy away from socialism
and toward a more fiscal conservative system. This shift has yet to take place in either Japan or continental Europe.
The unfunded liabilities throughout Europe are more than twice those in the US on a percentage to GDP basis.
This too is similar to the 1930s when European debt simply collapsed due to fiscal irresponsibility.
( Armstrong means: the US is an island impervious to any outside forces. Global currency crises could never
contaminate the US paradise. FOreigners could NEVER lose faith in the American government or its currency.
The sun rises in the West and sets in the East. Why do these purple bugs keep crawling around my underwear?
Who put the cat in my refrigerator YADDAYADDAYADDA. ) .
To add salt to the wound, the IMF has led the hedge funds and the Banks to the slaughter over Russia. By
standing out as the guarantor of the world, many ran into Russia to buy GKOs yielding 100% or more. These
guys looked at the high yield and assumed that the IMF would never let Russia collapse. The problem now is that
Russia has collapsed and the losses are spreading around the globe. Again, Europeans hold about 90% of this
exposure. Those who still think the dollar is a fiat currency are merely living in a fantasy world. The dollar
remains as the most secure and fiscal responsible currency today. That might change in a few years, but for now –
the dollar is looking very, very strong. The final death-blow to the metals may in fact be the IMF, which in the end
will be forced to see its gold reserves for cash. The IMF is broke and with the collapse of Russia, in part propelled
by the IMF itself, funding in the future is going to be lean indeed. With 70% of its liquid assets in gold, the IMF
will become the next seller of last resort. With the rise in the dollar, we can also expect a continued increase in
mine production for silver as well. Selling should be expected from both Russia and Mexico. A few years back,
Russia was selling gold and buying silver switching their own reserves in part due to the shortage myth. Again
reliable sources claim that Russia is also sitting on at least as much as Buffett bought.
( Armstrong means: BS and more BS and even more BS. Now can I ride on my pony, Daddy? ) .
During the final days of any bear market one is confronted by fundamentals that suddenly turn very ugly. When
governments began to default during the 1930s, the final low came about 1.5 years later. Here too, we may be
looking at about a 50% decline over the next 1.5-year period moving into a final low by the 1st or 2nd quarter of
2000.
( Armstrong means: is it too late to unwind my huge short position in PM's, God? I'll do
anything....ANYTHING! Just save my ass! Please!! )
Thanks.
F*
- Date: Wed Aug 26 1998 18:43
farfel (@MAX...correction to previous post....) ID#17077: - ...should read: and 4.95 ( for SILVER ) .
Thanks.
F*
- Date: Wed Aug 26 1998 18:42
farfel (@MAX...you've figured it out....) ID#17077:
Copyright © 1998 farfel/Kitco Inc. All rights reserved - ...all the technicians are declaring that a fall below 278 ( for gold ) and about 4.95 will cause capitulation in the market.
Do you think for one moment this will NOT happen? Of course it will.
The shorts are counting on it. They will delight in watching the technical longs fall into a mass of hysteria. Moreover, the deep-pocket longs are counting on it. They will gleefully snatch up loads of gold and gold stock tossed at them by despondent, terrified gold technical longs.
It will be a once in a lifetime buying opportunity for those with balls of steel.
I can't wait.
I'm buying more.
And so are several people with humongous deep pockets.
The slingshot is in place, it will soon draw even farther back, then spring forward. Then, we'll see just who continues to call gold a mere commodity.
Thanks.
F*
- Date: Wed Aug 26 1998 17:26
Max__A (Avoiding Disgust) ID#173149:
Copyright © 1998 Max__A/Kitco Inc. All rights reserved - The downward trend for the POG and particularly gold equities is not only intact but gaining strength. There is no apparent rationale to support that a very sudden reversal of this trend will occur.
Worse is the possibility that the downtrend will accelerate if the ~$278 POG is breached ( ~$4.95 for silver ) . Defensive measures are in order if only for one reason - to avoid the disgust phase of a bear market. It is popularly thought that the final phase of a bear market is some level of panic accompanied by capitulation. This is true for the market but not for the investor.
The final killing phase for the investor is capitulating in disgust. A great sense of aversion to re-entering the market accompanies this. This is the final blow - an inability to reverse to a bullish position when called for.
To avoid this, follow J.P. Morgan's advise to the question when is the right time to sell? His response was I sell to the sleeping point.
- Date: Wed Aug 26 1998 15:22
Jack (farfel.....@ your 04:11, very good) ID#252127: -
But remember, that A**strong has to make his follower's money, so lying through his teeth is acceptable to the following and those who want PM's on the cheap.
- Date: Wed Aug 26 1998 04:11
farfel (Parsing Martin Armstrong....) ID#17077:
Copyright © 1998 farfel/Kitco Inc. All rights reserved -
Is the last Bear Market leg in Metals
Just Getting Started?
By Martin A. Armstrong
August 25, 1998
Copyright Princeton Economic Institute
------------------------------------------------------------------------
The long-term perspective for both gold and silver is becoming very ugly to say the least. While the metals group has been the target on intense manipulation involving everything from copper, palladium, platinum and silver, there has also been attempts at trying to create the impression that even gold is getting tight.
( Armstrong means: I am an unmitigated liar and I do everything in my power to manipulate the metals markets. Do you remember my spate of falsehoods about Buffett selling his hoard of silver? All proven to be lies! That's because I am a complete BS artist! )
One trade house in particular has specialized in going after the funds day-in-and-day-out. Just recently, this house has been taking delivery of gold trying desperately to force it higher based solely upon the commitment of traders report that claims there are 60,000 short speculative positions. Despite selling in the cash and buying on the floor of the COMEX in a vain attempt to keep up the image that they rule this market, the overwhelming bearish fundamentals have prevented their latest play.
( Armstrong means: my hedge disciples keep shorting the crap out of these precious metals markets and damn it...there's a trade house out there that is spoiling our BS party by buying the stuff and TAKING DELIVERY! It's making me nervous as hell because it looks like there are some other players that might soon make hefty purchases of the metals and TAKE DELIVERY. Pretty soon, there won't be any silver or gold to cover my egregiously large short positions. Then the game is over for me and I will lose control of these markets. Yes, I am about to get F*cked! ) .
We have maintained that silver has been the primary focus of a group of serious market manipulators that have included one major member of the London bullion dealers. While stories of shortages have still filled the air, the truth is that these stories originate from London where the dealers still REFUSE to publish the inventories on hand. Given the fact that this type of behavior in the United States would be considered insider trading bordering on the line or criminal activity, the only way to approach this market is based upon price action since the fundamentals CANNOT be proven nor trusted.
( Armstrong means: trust me when I tell you that there is a superabundance of silver out there...just as you should have trusted me when I told you that Buffett was unloading his silver. NOT!!!!!!!!! )
According to our sources, the vaults in London remain full with
the greatest shortage still being storage space itself. Combining this information with the fact that nearly 70% of all silver exports from the US during the second-half of 1997 were made to London and not Asia, we tend to believe the US government statistics over those in the bullion industry, which a vested interest in hiding the truth.
( Armstrong means: my sources tell me that the vaults are full of silver in London...the very same sources that failed to tell me that Buffett was buying $100 million of silver ( yes, I was the last to know! ) and the very same sources that told me that Buffett was unloading his silver way back when, only to be completely contradicted by Buffett himself. My sources are the little green men dancing inside my duplicitous head ) .
We do know that demand for silver in India has fallen by 80% during the first quarter of 1998. We believe that India’s silver consumption will be down on an annual basis at least 40% and perhaps as much as 60% for 1998 thus wiping out any shortage between current production and demand. The sanctions imposed on India for its nuclear testing have had a major impact upon its economy as well. This situation is only further complicated by the collapse in Asian currencies. The rise in the dollar due to the continued meltdown in the world economy is also having a negative impact upon silver.
( Armstrong means: I don't have any unique original lies to spin so I'll revert to that tired old chant about India dropping its silver demand. I sure hope all you Sh*t for brain lemmings out there buy it! )
The popular belief that gold and silver will rally with a stock market crash has anything but materialized. This is largely due to the fact that gold is now a commodity and not the official form of money as was the case under the gold standard. Therefore, as economic turmoil swirls around us, the first priority is liquidity. Where during the Great Depression gold represented liquidity, keep in mind that gold was cash, which was acceptable to pay one’s bills. Today, cash is the dollar. Gold is not acceptable as payment on your VISA card, mortgage or just about anything else within the modern monetary system. Hence, gold this time will act like a commodity.
( Armstrong means: hey, kids, it's a New Era, I've got all my net worth tied up in blue chips and bonds. I'm short PM's and God help me if there is a rush from the fiat currencies into PM's. Believe me when I tell you that gold is just another commodity...in fact, I happen to know that, during the Korean financial crisis, the Korean government didn't give a damn whether their citizens gave them soybeans or gold...any commodity would have sufficed. NOT!!!!!!!! ) .
ALL commodities collapsed during the Great Depression bottoming in 1932 along with stocks. Commodities, including silver, failed to provide any hedge whatsoever against the Great Depression despite the fact that the US remained on a gold standard throughout the entire period.
( Armstrong means: God, I really think there might be a market Crash. I must have complete SH*t for brains taking the kind of short position in PM's I've taken. Imagine a weasel like me making a bet against a financial wizard like Buffett Just lock me up in a funny farm...protect me from myself! )
As illustrated here, silver collapsed from $1.344 in 1920 down to 25 cents going into the bottom of the Great Depression in 1932. Those who have been preaching that as soon as the stock markets crash the metals will rally do not have any historical correlation to support such a scenario. Consequently, 1998 appears to have been the culmination of a 7-year bull market instead of the beginning of a breakout. We had hoped that a low in 1998 would have developed. However, given the manipulation of the metals group in general, we now see that the low will most likely develop in 2000 perhaps during the 2nd quarter. The portrayal of Buffett as the savior of silver, who will NEVER sell under any circumstances, again has distorted the facts. When it comes to bonds and crude oil investments, Buffett has NEVER been a long-term investor. He has always taken very short-term views. Buffett’s long-term investments have been restricted to purely stocks that pay a reasonable dividend and good capital appreciation. At this time, Buffett’s silver investment is already in a 10% loss position and it could become much worse.
( Armstrong means: I am really concerned about Buffett and his huge silver position. After all he is only worth around $20 billion and that silver position constitutes less than five percent of his aggregate net worth. Poor man just might go broke because he just doesn't understand the silver market like I do. HARHARHARHARHAR! )
There is one popular rumor that has been floating around the marketplace, which we have no solid opinion on. It has been alleged that PhiBro had a pre-existing silver position in excess of 100 million ounces dating back to 1995. In order for Buffett to sell Solomon Brothers to Smith Barney, he was had to take this unprofitable position on his own books. This cannot be proven either way without getting into the books of PhiBro. Nonetheless, we do not believe that some of the players who were front-runners would have jumped into the silver market with both feet if this rumor were correct.
( Armstrong means: it's time for me to make up another rumor, defaming a major institution like Philbro. I am getting desperate what with this jackass huge short position in the metal. Naturally, I cannot prove it because what mathematical proof exists to validate the existence of sheer Bullsh*t? ) .
All things considered, the metals are simply headed significantly lower. A monthly closing for silver below $5 will then warn that a decline to the $4.50 level is in order. At the end of the day, our computer models are still adamant that silver will drop below $3. If our sources are correct that the London bullion dealers are indeed hiding 500 million ounces of silver from the world statistics, then this target is very realistic. While we no doubt will receive the usual hate mail due to this forecast, the point is that this issue can be settled very easily. London should open its vaults for a full INDEPENDENT audit. The mere fact that the London dealers refuse to publish these statistics perhaps suggests that there is indeed a pile of silver they do not want the marketplace to know about. If there is indeed a vast quantity of silver beyond Buffett’s 120 million ounces sitting in London, what better way to keep up the propaganda about shortages than refusing to publish the inventory statistics?
( Armstrong means: damn it, I just know there's a secret pile of silver sitting in London and the bullion dealers refuse to disclose it. Bastards! I demand a full independent audit. On the other hand, don't mention anything to me about independently auditing the gold reserves of the Central Banks. Trust me when I tell you that those published reserves are completely accurate. Central Banks would never lie, least of all to me, the grand shorter of PM's!!! )
If our sources are correct on this issue, then considering the collapse in Asian demand combined with 500 million ounces in London, there is NO shortage at all and in fact we are back to a 2-year surplus or much more. Those who simply point to the COMEX stockpiles and claimed that we assume that European stockpiles have declined by a like proportion are making a very dangerous and irresponsible statement. They should take great care in their reports when the bona fide statistics are NOT available. They are either being paid as a consultant to those who want to propagate the myth of a shortage on an undisclosed basis, or they are not exercising their due-diligence that is expected of all independent research. We are NOT prepared to join the crowd on this issue of a shortage until London becomes a market where who own what can remain confidential, but total supply is fully disclosed to the public. After all NO leading financial market in the world operates under such rules
( Armstrong means: I like to project my own egregious lies onto my antagonists. As you can tell, I am obviously little more than a front for PM-shorting hedge funds, propagating the myth of a superabundant PM market ) .
In the end, the continued collapse in Russia is likely to spillover into the former eastern block as well as into Latin America in particular Mexico. We are looking at another Asian contagion but this time in Europe. Unfortunately, this reality may keep commodities in a deflationary trend going into early 2000 before any reversal develops.
( Armstrong means: I sure hope you've bought my BS concerning PM's as mere commodities. If you have, and furthermore, if you believe we are going into a pure deflation, then naturally, you should expect PM's to drop in value ) .
Indeed, the similarities of our current global crisis are a much better fit fundamentally with the Great Depression than any other period in time. While the stock market peaked in 1929 and collapsed into 1932, the dollar soared into 1931 where it established its major high against every currency known to man. Every European nation defaulted on its debt, with the exception of Switzerland while Britain suspended payments for 6 months. Russia defaulted, China, most of Asia and Latin America. With each default, capital fled to the dollar creating domestic deflation within the US marketplace. Due to the fact that 40% of the civil work force in the US was employed within the agricultural sector, as the dollar rose commodities fell forcing farmers and miners into bankruptcy.
( Armstrong means: I sure hope you buy the Bullcrap concerning my direct analogy of today's US economy with the US Depression economy. Please forget that today, unlike the USA of the Thirties, America is the largest debtor nation in the world. Please overlook that little fact such that you may rest assured that the entire world will convert all their crumbling currencies into US dollars. HARHARHARHAR. NOT! ) .
To a large extent, we see the similarities with this period of the 1930s as striking to say the least. However, we do NOT see a 90% decline for stocks or commodities from current levels. While gold might collapse to the $190 area and silver down to $2.75, the US share market at worst might reach 3800 on the Dow or about a 66% correction. To be much more modest, we would expect perhaps a more realistic decline in the 40% area assuming that the next low in September/October unfolds with about a 23% correction. A correction of 66% would ONLY become likely if by mid October the Dow were down by 40%.
( Armstrong means: God, I'm really f*cked if all my DOW stocks crash over the next few months. Trust me when I tell you they could never fall as much as gold or silver! TRUST ME, PLEASE!!!! )
In summary, during the 1930s gold was money. It could be used to pay your landlord and debts. Today, a deflationary contraction drives the same forces into a search for liquidity. In the 1990s, liquidity is still cash; it’s just that cash is the dollar – not bars of precious metals.
( Armstrong means: trust me, gold is NOT money. The Central Banks are completely deluded in treating it as though it has any value or any liquidity. The US DOLLAR is king, even though the world is rapidly becoming awash in this overabundant paper debt. TRUST ME, DAMMIT, DON'T YOU BELIEVE ME YET )
Gold and silver might rally if the dollar were at risk. However, the economic crisis is NOT taking place in the US – it is taking place everywhere else but! Reagan at least reversed the trend in the US economy away from socialism and toward a more fiscal conservative system. This shift has yet to take place in either Japan or continental Europe. The unfunded liabilities throughout Europe are more than twice those in the US on a percentage to GDP basis. This too is similar to the 1930s when European debt simply collapsed due to fiscal irresponsibility.
( Armstrong means: the US is an island impervious to any outside forces. Global currency crises could never contaminate the US paradise. FOreigners could NEVER lose faith in the American government or its currency. The sun rises in the West and sets in the East. Why do these purple bugs keep crawling around my underwear? Who put the cat in my refrigerator YADDAYADDAYADDA. ) .
To add salt to the wound, the IMF has led the hedge funds and the Banks to the slaughter over Russia. By standing out as the guarantor of the world, many ran into Russia to buy GKOs yielding 100% or more. These guys looked at the high yield and assumed that the IMF would never let Russia collapse. The problem now is that Russia has collapsed and the losses are spreading around the globe. Again, Europeans hold about 90% of this exposure. Those who still think the dollar is a fiat currency are merely living in a fantasy world. The dollar remains as the most secure and fiscal responsible currency today. That might change in a few years, but for now – the dollar is looking very, very strong. The final death-blow to the metals may in fact be the IMF, which in the end will be forced to see its gold reserves for cash. The IMF is broke and with the collapse of Russia, in part propelled by the IMF itself, funding in the future is going to be lean indeed. With 70% of its liquid assets in gold, the IMF will become the next seller of last resort. With the rise in the dollar, we can also expect a continued increase in mine production for silver as well. Selling should be expected from both Russia and Mexico. A few years back, Russia was selling gold and buying silver switching their own reserves in part due to the shortage myth. Again reliable sources claim that Russia is also sitting on at least as much as Buffett bought.
( Armstrong means: BS and more BS and even more BS. Now can I ride on my pony, Daddy? ) .
During the final days of any bear market one is confronted by fundamentals that suddenly turn very ugly. When governments began to default during the 1930s, the final low came about 1.5 years later. Here too, we may be looking at about a 50% decline over the next 1.5-year period moving into a final low by the 1st or 2nd quarter of 2000.
( Armstrong means: is it too late to unwind my huge short position in PM's, God? I'll do anything....ANYTHING! Just save my ass! Please!! )
Thanks.
F*
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