Harry Schultz on Gold.............
Editor's Note: HSL is written by the world's highest-paid investment consultant, Chevalier Harry Schultz (Guinness Book of Record s- International Editions: 1981-2000). The HSL was the leading gold advocate in the early 1970s, when it called the Great Gold Bull market. Interestingly, HSL is again bullish on gold.
The International Harry Schultz Letter
Gold The anti-gold press (which is 95%, as they're owned by insiders) loves to describe those who believe in the discipline of gold in the monetary system as having "religious fervour" about gold. Presumably, we are supposed to be ashamed of that description. I am not! Apparently the foaming-at-mouth media feel it's ok to have religious fervour if discussing political freedom, religious freedom, & press freedom, but not OK about monetary freedom. If U want a real "free mkt in gold," free of govt/central bank interference, U are a fanatic. Yet the paper money in your pocket shrinks in value every day & always does in a fiat (non-convertible, dictated) money system, as the supply is endless. In former days, in most nations, the public was not so cowed. Eg, in the 1st 150 yrs of US history (not to mention, French or Grecian) people demanded & got gold coins, as govts always debase money.
Govts debased coins by cutting gold content or clipping edges. Later came gold-backed paper, & then paper-backed paper. People like to get paid for their work. And they like that payment to be worth the same in buying power next yr as this year. But present day fiat money doesn't allow that. People should again demand gold-backed paper, if not actual gold coin money, as before. And meantime, demand an honest, free gold mkt. And demand it with religious fervour!
PS: If U are a WHY-bird, & want to know why govts/banks hate gold & are preventing a free mkt & are trying to cap the price, the answer is childishly simple: under present fiat-rules, they can create money from fresh air. If U had that power, U might be tempted to hang on to it. Unless U had a conscience. :-)
Our page 1 cartoon reflects the other reason govts/banks want to cap the gold price: if it rises, it reflects the REAL health of the economy/monetary system/debt loads as bad, inflationary, dangerous. So they must stop gold being a functioning thermometer. This makes Greenyspan a hypocrite, for he claims to watch the gold price as an inflation indicator while behind the scenes he engineers the price lower, by his own testimony in Congress.
PPS: Framers of the US Constitution (the most advanced of all world constitutions, then or since) made gold & silver money mandatory, not optional. Politicians & bankers have gradually chipped away at those cast-in-stone rules. Today's paper money is actually illegal. So, into the fridge with the gold thermometer! Them: :-) and us: :-(
But let them know U know what they're up to. Let them worry about what U plan To Whom It May Concern: do about it. They assume U're blind & toothless.
Gold II I promised to deliver a fundamentally "correct price" for gold at the moment. Several analysts come to about the same conclusion. Frank Veneroso, the leading authority on gold statistics, says, based on supply/demand fundamentals, the equilibrium price is $600. Anything less reflects price-capping actions by certain bullion dealers, govt intervention, & forward selling by misguided miners (eg, Barrick). Physical gold demand was up 21% in '99 to a new yr-record, 7% above the prior 1997 record, so obviously something is rotten on the supply side. US Congress may investigate it!
Most gold share & gold index charts currently have similar patterns: bullish falling wedges & neutral triangles. Usually price rises to the top of a wedge, eg, 90 for XAU index. But if one of all-the-above break downside, they probably all will. IMO, the pattern odds are 70% bullish.
Greenspan is opposing CFTC regulation of the OTC gold mkt. Why? Clearly, he doesn't want transparency, which would expose govt selling gold short to cap the price. This is a dead giveaway but lapdog press doesn't see it, or is told to play dead like a good doggy. CFTC chairman Brooksley Born was fired as she wanted more govt transparency. Rubin wanted her out, I hear. Make U ill? Take a tummy pill. US govt apparently sinks gold through the Exchange Stabilization Fund, as it's secret. Statute (31 USC s.5302(a)(2) says only the President or Treasury Sec can use it. "Decisions of the Secretary are final & may not be reviewed by any officer or employee of govt." Volcker used this slush fund to bail out Mexico, to save his NY bank friends. It's perfect for shorting gold. Take another pill. :-)
I've 100 pages of gold notes. Can't say it all here. If U are serious about gold, from a monetary or investment view, U must update yourself by vetting at least 1 fax &/or 2 websites 3x a wk. 1. Join LeMetropoleCafe. They're fighting the gold war in the trenches against gold price-fixers, merit your support/donations. They created GATA (Gold Anti-Trust Action). The anti-free-mkt for gold crowd are well organized/funded. The pro free-mkt forces are scattered, disorganized, under-funded. But GATA & Gold-eagle are slowly changing that. It's David/Goliath. Yet David won. ??2. Also download (free) www.Gold-Eagle.com which is a really excellent gold opinion/info source. U need both these services, if gold matters to U.
Bill Murphy of GATA, says: "It blows my mind how few gold industry people really understand the gold mkt. They have no clue the gold mkt has been manipulated, that gold loans are 10,000 tons+, that there's a monthly supply/demand deficit of 100 tons+ & that gold could rocket sharply higher at any time. What a pity." Ignorance is the enemy in every area, Bill.
GoldFields Ltd, world's 2nd biggest gold producer, said: "It's insane for miners to keep major hedge books that depress gold prices & make new projects uneconomic." Congrats to CEO.
Harry Schultz
hsletter.com
hsl.mentor@skynet.be
Tel +32 (for Belgium) 16 533 684 -- Fax +32 16 535 777
Postal address: HSL, PO Box 622, CH-1001 Lausanne, Switzerland
17 March 2000
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