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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (38596)	8/8/1999 8:54:00 AM
From: Rarebird	Respond to of 116764

Very Interesting Commentary. If I don't provide additional commentary here it is because I think each individual should provide their own commentary and think and judge for themselves. Free Independent thinking is cherished and should be allowed to speak for itself without manipulation and control: economic & market commentary The leading story in today's Financial Times was titled "US inflation fears grow as wages rise more than expected". I couldn't help but immediately recall the conversation I had with Ravi Batra as recorded in August issue of J Taylor's Gold Resource & Environmental Stocks newsletter. Dr. Batra pointed out that going all the way back to 1770, we have had a 30 year cycle of rising and then declining rates of inflation. Since the last inflation cycle peaked about 20 or 21 years ago, Dr. Batra believes, as do I that we have probably seen most of the good news with regard to falling prices. The really interesting observation made by Dr. Batra was that while the Federal Reserve is viewed by almost everyone as being able to shape our economic future via monetary policy, in fact it has been able to do nothing to hinder the 30-year cycle. In fact, Batra believes the Fed actually accommodates the cycle. He believes forces far larger than the Fed are at work. Those same forces he believes make it likely inflation rates will continue to rise and that in fact we will face an inflationary depression after the market crashes, most likely this year or at the latest early next year. Those of you who are either fax or e-mail subscribers will have already had a chance to read my 9 page interview with Dr. Batra. If you receive your copies by mail, you will be glad to know the August issue was taken to the Woodside post office this morning. As David Tice pointed out last week, there are increasing signs of financial stress in the markets, with the spread between high quality bonds and junk bonds the highest they have been since last fall's Russian debacle. To the extent the economies of Asia are turning around, this is likely to siphon money out of the U.S. economy. This in fact may be one of the reasons the U.S. Dollar has been showing weakness in the markets. The U.S. avoided huge problems in the early 1990's to a great extent because Japan sent us large amounts of money when their economy hit the skids. Then as the Asian economies turned hellish in 1997 and 1998, and as the U.S. trade deficit continued to surge to historical highs, the flow of savings into U.S. dollars resulted in riches for the U.S. stock market. But this is hot money. Although our policy makers will continue to do all they can to attract a continuous flow of capital into the markets, at some time in the future, the spin artists of the Clinton Administration and Corporate America will no longer prevail. When the markets turn, they could turn awfully quickly. Gold could surge to over $500 or $600 per ounce in a few trading sessions. And the stock market could crash, (i.e. loose 50% or more of its value) also in a matter of days. It is interesting to note that one attempt last week by the Clinton Administration to keep confidence in the U.S. Dollar strong, interest rates low and the stock market rocking and rolling to still higher and more absurd levels, was largely unsuccessful. On Wednesday, the Clinton administration announced that it would use the budget surplus to buy back U.S. debt. The effects of this announcement was to allow the use treasury markets to rally for the first time in a week, as investors reasoned that less demand to borrow from the government would result in lower interest rates. The 30-Year U.S. Treasury gained almost one point on this news, so that its yield declined to 6.10%. However, by Friday as the markets digested the news that wages were rising faster than expected, the 30 year bond declined sharply once again causing its yield to close on Friday at 6.16%. On subscriber questioned me this past week about whether or not the U.S. actually has a budget surplus. The answer of course is that in fact, the U.S. does not yet have a budget surplus, contrary to what you hear on TV, radio and the press. The surplus that is spoken of counts social security revenues as part of the operating revenues of the government. This money, which is to be put away for us when we retire, is being used to fund the government. So it is a dishonest way of counting the money that allows our politicians to claim we have a surplus. If our politicians were honest, they would not report things that way. But who on God's green earth thinks our current politicians from either major party are honest? The modus operandi of almost every one of these guys and gals is built around deceit. But the important point to keep in mind is that the laws of nature will eventually prevail. The truth about our government's financial situation will become more obvious when the stock market finally crashes. What you should realize is that a major cause for the so-called surplus in our budget the last year or two has been the enormous taxes on stock market profits. When the stock market declines, so too will the revenues taken in by our Federal government. Interest rates will rise and the downturn in the market will feed on itself, at least for a while. And if, as I expect we face a depression or at least a recession, the red ink will begin to flow again like we have not seen since the early days of George Bush. When that happens, I would expect an exit out of dollars into other currencies and gold to take place. It for just such an occasion we urge you to buy gold as well as gold mining shares. GATA & GOLD Bill Murphy, at GATA stated last week that he believes the bullion banks that have been manipulating the gold markets to lower and lower prices are now starting to feel some pressure. He said he spoke with someone attached to the Joint Economic Committee in the U.S. Congress last Thursday who told him that the IMF GOLD SALES PROPOSAL IS "KAPUT" as far as the U.S. Congress is concerned. Since the United States requires congressional support before it can vote in favor of gold sales by the IMF and since the U.S. has veto power at the IMF, this should mean that the proposed IMF gold sale will never take place. I have assumed that gold was being at least talked down, long before Bill Murphy began his excellent work at GATA. So I expect this is the case and the information that GATA has brought to our attention supports my long-term suspicion. Assuming the crony capitalists are in fact manipulating the gold markets, I hope they will soon have their day of reckoning and that gold will rise to where Frank Veneroso has suggested the equilibrium price is, namely around $600 per ounce. I believe everything is coming together to trigger a major sea change in the global financial markets in which gold should once again be the best investment vehicle in the world - at least for a while. But we have learned the hard way that the powers that be can fool mother nature for a long time. Jay Taylor Gold Resource & Environmental Stocks www.miningstocks.com JTaylo5203@aol.com 9 August 1999 gold-eagle.com