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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: macavity who wrote (6336)	1/29/2001 8:22:17 AM
From: J.T.	Read Replies (3) \| Respond to of 19219

mac - a biased viewpoint from miningstocks.com: GOLD A Rigged Gold Market has Made Our Predicament Worse Were gold permitted to trade freely, rather than being rigged at ever descending prices by the past administration in quest of the political benefits of a strong dollar policy, no doubt we would not be in the dire straits our economy is currently in. If the price of gold had not been rigged at lower and lower prices through the use of the gold carry trade mechanism, a warning sign would have been issued to investors and policy makers that all is not so well with the economy as a continuously declining gold price suggested to folks like Lawrence Kudlow who has continually harped on that theme throughout the Clinton years. Had the gold price not been manipulated since 1994 so that it could have moved toward a level where we think it rightfully belongs, namely $600 or higher, it is doubtful the new paradigm myths that led to huge does of money creation and an insanely priced stock market could have occurred such that President Clinton avoided removal from office. Instead, investors and policy makers would have been in tune with economic realty to a much greater degree than they have been in which event the huge debt burden we now face and which threatens to catapult us into the first depression in 70 years would not have occurred. The gold manipulation measure can be compared to a simple medical analogy. My 15-year old son is currently experiencing a viral infection of some kind. This morning his temperature spiked up to 103 degrees and he felt absolutely terrible. Two Advil tablets and one-hour later his temperature fell to 99. He felt so good that he began walking around the house and went on his computer to go on the Internet. Though he felt much better, nothing of an intrinsic nature had changed as far as his viral condition was concerned. But he felt good so rather than rest, which would have been better for him, he became active presumably to the detriment of his illness. So it has been with gold during the Clinton years. As well documented at www.GATA.org and in Reginald Howe's law suit against Mr. Greenspan, the U.S. Treasury Secretary, the BIS and several large bullion banks, the gold price has been pushed to artificially lower levels so as to disguise basic and fundamental weaknesses in the American economy and in the process create a sense that things are much better than they in fact are. The eventual price we will pay for these false readings will be much more severe than if an equilibrium gold price had been permitted to provide an accurate "temperature" reading for global economic participants. GATA Denounced by Doug Casey & Others One of the big disappointments for me at the Vancouver Venture conference came at the end of the show when Doug Casey and a couple of other speakers on the "World Outlook" panel at the end of the show talked about GATA in a disparaging manner. Without giving any reason other than to say that you can't get two or three people to agree on anything, Doug laughed off GATA's gold conspiracy message and said the folks at the conference should "get a life." Clearly Doug nor another speaker who spoke against GATA had ever seriously considered the charges of Reginald Howe's suit against Alan Greenspan and other heavy weights nor have they looked seriously at the 119 page document titled the "Gold Derivative Banking Crisis." The impression I had was that these panelists were simply too busy being politically correct to appear to even entertain the notion that our government would or could do anything wrong. One wonders what world these guys are living in. Also being politically correct was Bob Bishop who also went on record saying that he did not subscribe to the manipulation theory. However, he did at least point out that some big bullion companies were making huge profits from involving themselves in the gold carry trade. But I am really puzzled as to why Doug Casey and a majority of the gold mining industry itself is being so stupid about this issue. An unspoken policy of aiding and abetting the short sellers of gold was obviously made when, during the Asian crisis and Long Term Capital Management crises of 1998 Alan Greenspan said, "....Central banks stand ready to lease gold in increasing quantities should the price begin to rise." How can anyone see those words as anything but a statement aimed at keeping the bullion banks borrowing gold at say 1%, selling the gold for dollars and re-investing it at 5% to 7% in U.S. Treasuries? Why on earth would they continue not to do so, if uncle Alan assured them that they did not need to worry about a rising gold price when they covered their shorts? Are we to believe the great financial engineers at places like Goldman Sachs, JP Morgan, Chase, Citigroup and Deutsche Bank would not take those words to heart and profit from them? Ok, so if you don't like the "M" word or the "C" word, call it what you like. Mr. Greenspan by his words has instituted a policy based on a guarantee from central banks to the heavy hitting gold bullion banks most closely aligned with our political process by guaranteeing them huge profits by continuing to sell gold short. That my friends is "crony capitalism" American style. The policy ensured that the buddies of then Treasury Secretary Robert Rubin could continue to reap huge profits without facing normal risks in this business because of protection from the Fed. Indeed, it was Goldman Sachs who most heavily benefited from the gold carry trade business during Rubin's tenure at Treasury. A Growing Belief in Manipulation from the Main Stream Casey's stupidity notwithstanding, there are those who are examining the GATA's charges with an open mind and some of them are concluding that GATA is right. A couple of weeks ago, the CEO of Freeport McMoRan said on CNBC that "Central banks are the OPEC of the gold markets and that they will keep the price of gold down as long as they want." Then this past week, Richard Russell, editor of "The Dow Theory" who is certainly no card carrying member of the "Gold Bug Society" said, "I don't as a rule, believe in manipulation in the markets, but if there are two areas of manipulation they are (1) gold - every time gold sticks it's little yellow head up, someone, somewhere - brings a hammer down on that poor head. Ouch! (2) The Dow and the S&P - watch the last 15 minutes of every session. Someone, probably a fund or a brokerage house, moves in and buys just enough to move the Dow up 15 to 25 points and the same in percentages with the S&P. I understand the SEC is investigating this strange and really naughty action. You can always count on a little upward pop in the average near the close. Hey, it's just not fair to the shorts." JAMES MOFFETT is Almost But not Quite Right Where I differ with James Moffett is in his suggestion that "the OPEC of the gold markets" will keep the price of gold down as long as they want to. It is my contention that they will keep the gold price down AS LONG AS THEY ARE ABLE to do so. Policy makers will never wish to see gold rise because that will represent a bad report card for their handling of the economy. But, at some point, attempts to suppress the gold price will fail because faith in paper will disintegrate at which time there will be no stopping people from trading dollars for gold short of totalitarian means. With the money supply (M-3) now at 7.2 Trillion vs. 1.8 Trillion when gold hit $850 per ounce in January 1980, the potential for gold to rise substantially above that old high is very obvious. It is for that eventual move out of paper and into gold, representing a systematic breakdown, that we hold steadfastly to our allocation of gold in our model portfolio. We continue to recommend investors place up to 20% in gold shares and 2% in gold and silver coins as "emergency" money. January 29, 2001 Jay Taylor, Editor of J Taylor's Gold & Technology Stocks miningstocks.com **************************************** I will give you my own personal perspective later today as I get some java in my nocturnal head... Best Regards, J.T.