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To: Tomas who wrote (64096)	4/8/2000 1:42:00 AM
From: kormac	Respond to of 95453

Thomas, Regarding: "E-commerce in this area will require 2-3 years to develop, the report says, estimating that oil companies might be able to trim worldwide inventories by 10% through supply-chain management." And just in time delivery will create even more severe shortages of heating oil in the North East and and shortages of gasoline in California. I hope these advocates learn how to pray earnestly so that no snafus will come to pass as this becomes reality. From James Smith at PEI: Gold rallied last Tuesday but has since given back much of its gains...and the XAU (gold/silver index) seems to be in trouble. It clearly closed below key support at 56.44 today, which leaves it vulnerable to a selloff down to 48.67 or lower. If investors are seriously interested in gold as a hedge against stock market volatility, why the heck are they selling their gold stocks and why can't gold hold onto its gains? In the January BOE auction, gold went for $298.50 with a "Bid to Sale" of 4.3 to 1. In the March 21st BOE auction, gold sold for $285.25 with a "bid to sale" of 3.0 to 1. In the March auction Gold sold for less than it did in the January auction, and yet, interest was also less as expressed by the bid to sale. By contrast, in the September auction gold sold for 255.75 with bid to sale of 8.0 to 1. It would appear that true interest in gold only materializes at much lower levels. Not a sign of an emerging bull market to say the least. Given the volatility in the stock markets of late, you might expect there to be more interest in the May 16th auction, but the proof is in the pudding...or rather in the "bid to sale" figures. If gold begins to plunge around the same time as the stock market, will there really be a pick-up in demand for gold? Or will margin calls cause investors to liquidate gold stocks as well as tech stocks? In the panic selling of August 1998, gold, gold stocks, and the S&P all went down together. BOE auctions have been only 25 tons every 8 weeks and even this small amount has not met with eager buyers. There is still a lot of risk to owning gold. Only a monthly close above 334.7 will confirm that the secular low is in. This year's 8 year cycle could very well produce New Lows for Gold below $252...possibly as low as 195-215 area. Are the Swiss really committed to selling 1300 tons? The Swiss National Bank is supposed to begin selling gold in April.....that's right, this month! Granted they aren't going to sell it all in one go, but no matter how much they sell, it could easily depress the market. Remember the first two BOE auctions in July and Sept last year. The market may treat Swiss selling as a shock even though people know its coming. Its one thing to talk about selling 1300 tons, its another thing entirely to start doing it. Perhaps this might explain why the Gold/Silver index is breaking below key support. Smart money may be getting out of gold stocks before the deluge. THE US ECONOMY REFUSES TO SLOW DOWN AND HOW THIS RELATES TO GOLD The FED will continue to raise rates 1/4 pt each time until the economy slows......which is nowhere in sight. The ECB cannot afford to continue raising rates in lock-step with the FED. The European economy has a much higher percentage of old economy stocks (that are more vulnerable to higher rates) than the US economy has. How convenient if the Swiss were to unload enough gold to depress the price of gold, painting a picture of "deflation,"& lessoning need for all Central Banks to raise rates. "Painting a picture" of "deflation" may become even more important once OIL starts its next leg up. For now oil is likely to continue down, but a bottom for oil may very well come here in April. Moving closer to the Summer Driving Season, Inventories are still very close to Record Lows. What happens when you give a loaded gun to a monkey? You have what the financial markets call "Event Risk." Maintaining record low inventories going into the summer driving season is a bit like giving a loaded gun to a monkey. Hey...maybe nothing will happen. With oil prices recently above $30, most oil companies were not willing to replenish their stocks because, like most of the public in general, they felt that oil could not stay above $30....so why stock up while prices are high. They may now try to make up for lost time, but the question remains whether they will be able to stock enough oil to meet the needs of the summer driving season and the potential for "event risk" (e.g. refineries suddenly shutting down for repairs, Saddam doing his normal thing, or quite simply demand for oil being stronger than projected). BONDS The 30 year bond continues to rally and as the price moves higher the yield moves ever lower. It is now yielding just over 5.70% . Sure yields have been as low as 4.84% but does any rational investor believe bonds are going back to that yield? The only reason bonds rallied so much in 1998 (with bonds yielding only 4.84% when bonds peaked in price), is because the FED eased 3 times in quick succession to supply liquidity to the system which had just been jeopardized by the LongTerm Capital Ponzi Scheme. You remember, LongTerm Capital took $5 billion raised from its clients, and leveraged it up to over a $1 trillion and became a "moral hazard" by virtue of the key financial clients (mostly Wall Street firms & Major European Houses) it put at risk. Greenspan bailed them out by lowering rates but in reflecting on the events of 1998 in a recent speech, he did not refer to LongTerm Capital as the reason for lowering rates. He prefers to highlight the Russian Debt Default which came just before LongTerm Capital as the reason for lowering rates at that time. No mention of LongTerm Capital at all. I wonder why that is??? Maybe he forgot. Now that the Oil companies have given that the monkey a gun with bullets in every chamber, (record low inventories on oil) whaddya s'pose will happen to bonds if the gun goes off. What will happen to stocks? Hey, maybe its just a coincidence that bonds have rallied strongly into the month of April....the same month that our system shows "Directional Change" for bonds. Maybe its just a coincidence that Nymex Crude is selling off strongly here in April, forming a Higher Low with a "Turning Point" and "Directional Change"indicated for the month of May. Maybe its also a concidence that the DOW and the S&P are about to move into Blowoff rallies into the end of April/early May with both markets due for Major Turning Points in May. New Highs for the DOW next week will confirm the New Highs in the S&P and signal an acceleration of what should properly be called a "blowoff rally." The DOW could add 1000 points, possibly 2000 points in just a few weeks time. But we still have to see the DOW make New Highs to confirm the blowoff rally will even happen. NOTE: All rallies are not equal. You might think it makes sense to buy stocks if the DOW makes New Highs next week, but you will have to be very nimble. Along with the fast move up will come higher volatility. Personally, even though I know that stocks will rally strongly if the DOW makes Closing New Highs, I would not be an eager buyer. Risk is increasing. The broker's lame excuse for putting clients into stocks at the peak of a market is, "You can't time the market!" Perhaps it is more accurate to say that a broker has no interest in timing the markets because it would depress his commissions. The next time someone says, "You can't time the markets!", ask them what they do for a living. Seppo

To: Tomas who wrote (64096)	4/8/2000 4:38:00 PM
From: Tomas	Read Replies (1) \| Respond to of 95453

The OPEC deal may have stopped the rise in crude, but oil stocks will continue to soar By Jeffrey Rubin, chief economist and managing director of CIBC (Canadian Imperial Bank of Commerce) World Markets From The Globe & Mail, April 8 ... At first glance, falling crude prices and rising oil shares is a rather odd juxtaposition of events. Until, of course, you look at the price assumptions embedded in market valuations of oil stocks. The OPEC agreement effectively establishes a supply floor from which crude prices will not fall and, with growth in global demand, will likely rise over time. And the current price for crude supported by OPEC's supply floor is a good 25 per cent higher than the oil price assumptions that were previously embedded in this year's oil stock valuations. That means the oil companies will be getting substantially more cash flow than the market had expected. For example, with oil now staying above $25 a barrel, Canadian oil producers are now expected to reap an additional $8-billion (Canadian) in cash flow this year, compared with 1999. Still to be reconciled with market valuations is the assumption of $20 (U.S.)-a-barrel oil embedded in next year's cash flow projections. Only oil stock analysts know why oil prices are expected to sink back to this level in 2001 when the OPEC announcement provides little opportunity for any significant rebuilding of global crude inventories. For the rest of us, there is every reason to believe that the stock market has significantly underestimated not only the oil sector's cash flow this year, but also its earnings next year. Until those cash flow projections come into line with the reality of today's oil market, the value of oil shares will continue to soar. globeandmail.com