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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Bobby Yellin who wrote (3395)	11/22/1997 10:43:00 AM
From: Sergio R. Mejia	Respond to of 116816

From the Privateer Gold page: "It Can't Happen Here". Korea, Japan,... U.S.A? the-privateer.com For three days at the start of this week, the South Korean Won fell limit down on a daily basis. The Korean government gave up and "floated" the Won. The next day, it fell 10% against the $US fifteen minutes. The government went to the U.S. and Japan and asked for bailout money, saying it was in these two nations' long-term best interests to bail them out. The U.S. said no. So, South Korea bit the bullet and went to the IMF. They asked for $US 70 Billion. There are many estimates that they will need more than 100 Billion. It's been quite a week. The Japanese stock market was rescued from the brink while a large bank bit the dust and so did another large Japanese broker. A department store chain went bust in Hong Kong. The IMF is facing the biggest bailout in its history. China is staring at a banking system with bad loans on its books that are conservatively estimated at $US 350 Billion. The Dow is back to within 120 points of the 8000 level. Oh yeah - and Gold didn't go below $US 300 after all. The complacency in the U.S. staggers the imagination. The obvious comparison is with the title of an old book by Sinclair Lewis: "It Can't Happen Here". Of course, it hasn't, has it? Social Security almost went belly up in 1982. The market "crashed" for a whole day in 1987. Savings rates are at historic lows while bankruptcies continue to set records. Government funded debt is almost $US 5.5 TRILLION. No problem. The U.S. (that is, the IMF) bails out the Asians, and they rescue their markets, and we recover from the "Asian Flu". And off we go again. There is a classic old cartoon from Warner Bros which puts all of it in a nutshell. In one of the scenes, the character is standing on a branch high up in a tree with a saw in his hands. He proceeds to saw off the branch he is standing on. What happens? Simple, the tree falls down, leaving the character smiling happily while the branch hovers in mid air. "See" - he says - "we can do anything in a cartoon." In real life, things are different. A group of men get together and sign some official documents. With that, a book keeping entry appears in the ledgers of some hard-pressed banks. Presto, the "debt" is no more. According to modern economics, these things don't only happen in cartoons any more. Gold itself stopped falling this week. So far, it has not gone on to slip below the $US 300 level. What has happened is that it has been divorced from its traditional "little brother", silver. While Gold languishes just above the $US 300 level, silver has jumped 6% over the past three days and now sits at $US 5.41, its highest level in eighteen months. Please see our precious metals chart for a comparison of the action in silver and Gold over the past two weeks. It is Gold against the Dollar. As long as the Dollar holds up, and as long as Treasury long bond yields continue to fall, the financial world is sticking with Dollar denominated assets as their ultimate "safety". Watch for one or both to weaken as a lead indicator that it's time to start watching the Gold price for evidence of a bottom. That's what we said here last week, and it still holds.