(GATA News) ...per some experts...WHY gold has been held down...since 1979.
Date: 1/2/00 10:49:45 AM EST
From: LePatron@LeMetropoleCafe.com
To: dougak
Le Metropole members,
David Tice has served commentary at The Hemingway Table
entitled, "Equity Mae or Techie Mac - Day 45."
"... the current game will not work well in reverse."
Steve Hickel has served commentary at The Kiki Table
entitled, "Euro Speaks."
"The market is friendly to the least amount of people possible."
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The Hemingway Table
Discussion du Jour: US Financial Markets
David Tice
The Prudent Bear Fund
ticed@prodigy.net
December 31, 1999
Equity Mae or Techie Mac - Day 45
For the year,
Dow
S&P500
NASDAQ Composite
S&P100
Wilshire 5000
NASDAQ Composite
NASDAQ100
NASDAQ Telecommunications index
AMEX Composite
AMEX Broker/Dealer index
Russell 2000
Interactive Week Internet Index
and the Street.com Internet index.....
The bond market, on the other hand, ended with the worst year since 1977.
Throughout most of the world, historic stock market gains.
In Europe,
German Dax index
French CAC 40
Amsterdam exchange
Italian Milan index
Demark
Finland
Luxembourg
Norway
Sweden
and Iceland.....
In Eastern Europe,
Poland
Hungary
Romania
and in Ukraine.....
Wild speculation has led stocks in,
Greece
Turkey
Cyprus
major index in Israel
Egypt
South Africa
and in Zimbabwe.....
In Asia,
Japanese
Nikkei 225
Nikkei 500
... by huge gains in technology shares, Japanese JASDAQ stock index
In Hong Kong,
Hang Seng
while in China
Shanghai A index
and Shanghai B index
Taiwan
Korea
Singapore
Malaysia
Thailand
Indonesia
India
Pakistan.....
Down South,
Mexican stocks
Argentina
Brazil
Chile
Peru
and Costa Rica.....
Up north in
Canada, TSE index
1999 was a defining year for the US and global financial system.
After the Federal Reserve accommodated...in the face of global crisis.....
... it could have and should have been a year when the Fed.....
... not only continued but gathered additional momentum.
... while the epicenter for this bubble is the US financial system and
economy, increasingly it appears that a synchronized boom is unfolding
in the economies of the industrialized world. Certainly, the global boom
in shares has been extraordinary, especially in technology stocks.
... extraordinary price gains, we pin responsibility for rampant stock
market inflation and speculation firmly on a global financial system
that only grows more dysfunctional by the year. For more than two years
now - since the boom turned terrible bust throughout SE Asia and
particularly since the Russian and Long Term Capital Management
collapses last year - global central bankers have accommodated
rampant money and credit growth. Global liquidity has been stoked by
unprecedented credit creation by the International Monetary Fund and
World Bank, as well by profligate lending by bankers and investment
houses worldwide. Here at home, Wall Street has been operating with
reckless abandon, while Fannie Mae, Freddie Mac and the Federal Home
Loan Bank System have increased credit by upwards of.....
... the past two years, creating unprecedented financial system
liquidity and fueling an historic financial and economic bubble.
The liquidity flowed to where inflation psychology was strongest,
technology stocks. It has been a classic and exceptional mania.
So now a big question becomes, who is left to buy technology stocks?
And, more specifically, who is going to purchase shares from the flock
of leveraged speculators and derivative players who now hold positions
that could easily total more than $* trillion. We certainly do not
believe that the majority of hedge funds bought tech stocks to hold for
long-term investments - no way. In fact, we strongly suspect that many
funds have simply been playing the speculation game buying what the
crowd is buying while aggressively playing the greatest stock market
speculative blow-off in history. With this in mind ... leveraged
speculating community moves in herds and when this immense pack begins
to liquidate tech shares, it is certain to be.....
Fannie Mae and Freddie Mac stepped up and were massive buyers
in the marketplace when the speculators were panic sellers.
They, however, buy mortgages and credit market instruments.
What will be needed this time is an Equity Mae or Techie Mac buyers
for $***'s of billions of technology and Internet shares to let
the speculators off the hook again, thus providing yet another
lease on life for.....
With this in mind, we will make one prediction for the new year:
... in spite of epic bullish euphoria, the number one issue for
investors over the next * months will be a *** and, specifically,
in *** and *** shares. As we have said before, the current game will
not work well in reverse.
From all of us at the Prudent Bear Fund,
we wish everyone a healthy, happy and risk-averse New Year.
David Tice
The Prudent Bear Fund
ticed@prodigy.net
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The Kiki Table
Discussion du Jour: Potpourri
Steve Hickel
smhickel@iserv.net
Euro Speaks
Stratfor has been accused by some readers of being.....
For example, the Euro is directly competing with the dollar for market
share as a world reserve currency. At first glance that doesn't seem
frightful because Europe and the US both have about the same amount of
gold (which everyone says is dead, except all the people who have bought
the ** thousand tonnes of metal that has been sold short into the
market) with the EU at **,000 tons and the US at *,000 tons.
The US has burned its gold bridges twice: first was with the US citizen
back in 1932 when Roosevelt made all US citizens turn in their gold.
Next, President Nixon defaulted on the dollar's gold backing in 1971.
This is considered by some experts to have been the reason for the
Mid-East oil crisis, as the Arabs love their gold and didn't want to
give up their oil for fiat dollars (fiat is faith in Italian). As a
result of this default, the Jamaica Accords saw the demonitization
of gold and an allegedly secret deal that would keep dollars strong
and gold weak while the Arabs become the Fanny Mae, Freddie Mac of
paper gold delivery contracts from large mining companies.
In other words, the Arabs were able to take long-term delivery of
gold mining production while the dollar was kept strong and oil
kept low as the Arabs were able to buy cheap gold with cheap dollars.
This is the reason, again per some experts, that gold has been held
down and actually dropped over the period of 20 years since 1979.
Currently the Federal Reserve and Goldman Sachs and other bullion banks
have been actively participating in a large paper gold sales effort
culminating in the Bank of England auction whose direct result was to
knock gold down to its 20-year low of $252 per ounce.
Some suggest that.....
... Paper gold is defined as gold derivative contracts that leverage
physical gold at times up to 100 times the actual amount of metal available.
Why are bullion banks trying to restrain gold ? Gold is.....
... Certainly gold isn't reacting to normal market forces as.....
As I see it, the US dollar is likely to lose its stature as a world
reserve currency. When that happens, the Euro will takes its place.
Signs of this are evident now. EU long term bonds.....
... I am even hearing discussion of oil contract settlement in.....
... As oil turns the world, as oil countries prefer.....
... and as the Euro is less encoumbered with.....
... whose debt is estimated to be *** Trillion dollars and whose
derivative positions and counter-party risk contracts go into the.....
... including gold-based investments, stocks, and bonds.
The EU is going to treat gold differently this time than at any other
time in history. They have said they will allow their currency to be
marked to market or be valued at the price gold on the open market at
the end of each quarter. If the price of gold were to double, that would
back the Euro effectively with a **% gold-backing. If gold doubled
again, they their current money supply, which is all digital currently,
would be backed by **% gold. This is sufficient to interest the Saudi's
in their quest for gold instead of dollars. For when Saudi oil is gone
they don't want dollars, they want the gold.
So what does this mean for the US? I believe it means a massive
***** or ***** of commodities and gold ***** and a ***** where
current ***** and ***** come down as this market mania unwinds
with the flow of dollars overseas to EU investments.
Is this a guaranteed analysis ?
No, but it certainly breaks a mold of current CNN and CNBC financial
guru's and wizards who talk their book and predict the trend.
Any market at an ... from where nobody suspects. I say watch the *** market,
watch the ***, and watch *****. They are making noises about jumping the
dollar ship and moving into the EU. Further, watch the settlement of ***.
If that moves towards the Euro then the writing is on the wall.
One other factor may also surprise people. The stock option plans of the
tech companies creates a bookkeeping profit only if the prices of these
stocks continue to rise. Here is how it works:
Company A ... if the stock ... doesn't get the ***, doesn't get the ***,
and their *** ..., stock price.....
If the company isn't making a profit then the pattern intensifies.
Combine these factors and the rosy outlook of the US economy becomes
somewhat susceptable to foreign inflow of cash and an ever rising
high-tech stock market. Combine that with a competing Euro for world
reserve currency status that will orphan lots of excess dollars whose
sole purpose was a reserve of a foreign CB. When that money needs a
home, where will it go ? [Answer] The *****.
When that situation reverses because of the liquidity that is constantly
being pumped into this market dries up then this could turn out to be
worse than.....
... they have been trained to buy on dips, they may just buy all the way
down on the dips of the big dipper ... Are they that smart they will know
when to get out of a down market? Not.
... The market is friendly to the least amount of people possible.
... Beware the *** of March ... *** already announced a *% surcharge on.....
Steve Hickel
smhickel@iserv.net
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All the best, Bill Murphy
For new readers, the above mention of GATA is as follows.
Bill Murphy, Chairman, Gold Anti Trust Action (GATA) gata.org
Also, GATA related articles can be obtained at the pay for view site.
Bill Murphy, Le Patron, Le Metropole Cafe lemetropolecafe.com |
