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To: Horgad who wrote (16486)	7/13/2004 6:12:09 PM
From: orkrious	Respond to of 110194

Date: Tue Jul 13 2004 15:47 trotsky (speaking of leverage....) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the South Africans may be unable to make money at the current Rand PoG - but they have big potential leverage on account of owning the most massive reserves/resources base. HMY's Avgold subsidiary alone sits on a potential 100 milllion oz. orebody - that's an elephant times ten. one of these days the Rand PoG is bound to turn...and since SA's miners have been forced to restructure to deal wiith the hard times, this would flow to the bottom line quickly. note that this subsector peaked when talk about mine expansions was rife. now that talk about closures is rife, it may be time to adopt a more constructive view.

To: Horgad who wrote (16486)	7/13/2004 9:18:31 PM
From: ild	Respond to of 110194

Date: Mon Jul 12 2004 11:50 trotsky (@Stx (SA) ) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "and, it appears the government is managing the currency against the miners. " not so. the government is NOT 'managing' the currency. not only should government not do that anyway, in SA's case it actually sticks to this sensible approach. the reason why the Rand is so strong is the restrictive monetary policy of the SARB, which is independent of the government. criticism of this policy is a bit awkward - after all, why criticize a central bank that is actually conservative, and doesn't open up the spigot at the drop of a hat a la Greenspan? one must give the SARB credit for having achieved what seemed nearly impossible for over 2 decades: namely taming SA's inflation rate. this is especially noteworthy in the context of how difficult such a conservative monetary policy is to implement in a country like SA with its vast economic problems and population growth pressures. however, it is reasonable to assume that this could come at the cost of a recession in the not too distant future, since one of the effects of the SARB's policy stance has been a pretty sizeable decline in outstanding bank credit ( i.e. negative growth in bank credit ) , which should impact the economy with a lag. once that happens, the SA yiled curve should begin to normalize toward steepening, and the Rand should begin to fall. timing: unknowable.

To: Horgad who wrote (16486)	7/16/2004 3:08:18 PM
From: orkrious	Read Replies (1) \| Respond to of 110194

Date: Fri Jul 16 2004 14:40 trotsky (frustrtated @SA stocks) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i'd say they represent value here, since trees don't grow to the sky. i.e. the Rand won't go up forever. very likely it's now in the speculative blow-off phase though, so there could be more pain in the short term. also, it's unfortunately likely that when the Rand finally succumbs, gold will also decline. trotsky (frustrated@USD) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved unfortuately there is good reason to expect a rally in the dollar soon. for instance, the hedgers have a very large net short position in the Swiss Franc now - right at the extreme end of the short/long net exposure channel of the past 10 years. of course, sometimes a trend continues for a while in spite of such extreme positioning data - but i take the Swiss Franc CoTs as yet another warning sign w.r.t. gold related investments. note also, throughout the recent rally in XAU/HUI ( excuse for a rally really ) we haven't even had a single really decent up day...which is one of the things we need to dispel the impression that this is just a weak bear bounce. btw. from a technical point of view it does not matter if the 'reason' behind the divergence is the strong Rand or something else.