HEYA PEDRO!!
Waddaya think of dis Arhentina gold. Is good no?
You read this hey amigo:
Midas du Metropole
"The Gold Market and Precious Metals Commentary"
Q. Little Bear is in the 'doghouse'. Which table do you think he'd be under ?
A. Gold, of course. But he is hopeful.
January 15, 1998 - Spot Gold $286.90 up 10 cents - Spot Silver $5. 12 down 4.5 cents
Special Commentary
We have identified Goldman Sachs and JP Morgan as the "Leaders of the Gold Selling Pack". We also believe, that for various reasons, U S officialdom and some highly visible financial entities have orchestrated the capping of the gold price to keep it below $300. For months we have documented anecdotal evidence for you that this is so.
Recently, Goldman Sachs replaced John Corzine as its CEO. A new regime was installed. One of our more plugged in and astute www.lemetropolecafe.com members suggested to me at the time that there would be changes in Goldman policies. He told me right after the change of leadership was made to also look for a change in their gold shorting policies at some point, because if the gold loans are as dangerously large as we think they are, the newly appointed Goldman regime would not want to be caught heavily short in a gold buying panic. We have been on that alert. Until late yesterday we heard nothing, and saw nothing, but more Goldman selling.
We also suggested to you that if JP Morgan and Goldman Sachs were going to try and extricate themselves from their very large gold short positions ( along with some others in the "Crises Management Team" ), they might first do everything they could to attract shorts to the market, so that when they wanted to start buying, the price would be a good deal lower and there would be willing sellers around that they could buy size from.
Then late yesterday, one of our members sent us the following: From Steve Kaplan's www.goldminingoutlook.com :
"In a surprising departure from the brokerage community's neutral to bearish near-consensus on the future price of gold, Goldman Sachs' investment bank released its weekly FX report predicting that "the spot price of gold bullion is poised for an upside breakout." Part of the reason for such a prediction is their belief that the Australian dollar will rise sharply against the U.S. dollar, as it is close to breaking above a downward sloping trendline. A strengthening Aussie dollar will make Australian gold producers less eager to sell gold forward, as they will receive diminished U.S. dollar returns"
Midas did not know what to make of it. Was it a planted comment as a result of even the Financial Times knowing how short they were? Did they want to deflect some attention away from their shorting? It was time to do some checking around, so I called one of our Wall Street wizards, a Le Metropole member. It just so happened he was on a Goldman Sachs conference call. What a coincidence!
To my surprise and delight, the gist of the conference call is that Goldman Sachs said today that the dollar has to go down and go down a good deal. They see a good chance of our trade deficit ballooning to $20 billion per month at the rate things are going. The Brazilian devaluation and their allowing their currency, the Real, to float, can only exasperate the situation. A Brazilian soybean farmer now receives 30% more for his soybeans than a US farmer does. Thus, he can sell his soybeans to end users more cheaply than the US farmer can. This is not a happy day for US farmers as they are big losers - his soybeans are just not as competitive. US exports of soybeans have to suffer. It is not a happy day for other types of US merchants. Profit margins will be squeezed.
And this is the first week of the devaluation. The Thai Bhat, Indonesian Rupiah and Russian Ruble, all continued to devalue after their first round of devaluations. What if the Brazilian Real goes down 50 to 100% against the dollar? "Beggar Thy Neigbor" is now in full bloom. How does Mexico compete against Brazil? By the way, the Mexican Peso slid about 6% this week. How about US companies that have to compete against Mexican ones?
Then, there is the minor problem of Brazil's US demoninated debt which I understand was $275 billion last week. That has to be paid in dollars. The debt service went up 30% in a week. Two Brazil states are not paying their own government. Russia defaulted. What if Brazil HAS to?
We, the US, are a debtor nation already and our debt is growing by leaps and bounds. Debt has to be serviced. According to Goldman, the servicing of our own debt is going to be a problem unless something is done about reducing it. Our trade deficit has to be reduced. It is already too high - $20 billion per month is unacceptable. The dollar must be depreciated to reduce this deficit.
Goldman Sachs is Secretary Treasury Rubin's former firm. You can be sure that if Goldman Sachs is putting out this commentary, it has Mr. Rubin's blessing, and most likely, his encouragement. The best way to start the selling of the dollar is to let the hedge funds and Wall Street insiders know what the next deal is. If I know this now, you can be sure the Wall Street big guns do too. The wink is on.
This also makes sense because you have the Japanese and Euro crowd calling for more stability in the exchange rates among the dollar, yen and euro. Maybe our Treasury officials and Fed are considering just that. If so, the dollar must be trashed first, according to Goldman. It must be trashed enough to erase our monthly trade deficit. Then, perhaps some acceptable range for the dollar, yen and euro can be structured.
This should be a very bullish development for the gold market. First, our assessment that Goldman and JP Morgan did whatever they could to break gold down so that they could buy gold in size at favorable prices, may be correct. Second, there should be some substantial gold buying coming from Goldman very soon. That should attract other "informed" buying. Maybe that is why the XAU is so steady. Third, it may encourage the Asian official sector to step up to the plate and buy many hundreds of tonnes of gold.
Why not? You can be sure that if I have knowledge of the Goldman Sach's conference call, they surely do. The Asian's dollar reserves are very large and their gold reserves are very small. Why not switch some of those dollar reserves into gold reserves - especially when you desire to have the Yen acquire reserve currency status. The greater gold backing the better. And why make 5% in US bonds if the currency is going to go down 15% from here. That is a negative 10% return. Worse, if the dollar is headed south, then the prices of bonds are probably headed south too. That represents another loss. It only makes sense that this "outed" information will bring the Asian official sector to the gold pits.
The Midas quotes- "Got them right where we want them" and " Fasten Your Seatbelts" are beginning to resonate. Up up and away for gold and silver. The bugler is blowing a bullish gold and silver tune. Tally Ho, Ray.
Solon Don Juan Goldbug
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