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To: philv who wrote (5448)	1/8/1998 10:34:00 PM
From: lorne	Respond to of 116810

Hi Phil, I guess what I find important about this is that this government wants gold to boost their reserves they are going to issue 3&5 year bonds so maybe there planning to keep this gold for a few years. Lorne

To: philv who wrote (5448)	1/8/1998 10:36:00 PM
From: Jim Ilchyshn	Respond to of 116810

Good question is, what will the government do with the gold? Probably keep a good portion for themselves so they can still continue with their standard of living while the rest of the country suffers. That's they way politics works! - Jim.

To: philv who wrote (5448)	1/8/1998 11:29:00 PM
From: CuriousGeorge	Read Replies (2) \| Respond to of 116810

Martin Armstrong of PEI radio interview. Taped this today late afternoon. WOW!!! The Euro goes live on May 1st??? Q. Stocks and bonds are moving in opposite directions, what is happening? Martin Armstrong: What is interesting right now is that we are getting this flight to quality here so the bonds are moving up fairly rapidly. I think the bond market is probably going up to the 128 zone fairly soon with this whole Asian crisis continuing and getting worse. Hopefully the stock market will remain in this sideways fashion for the first part of the year. The S&P has made a technical new high above last year by 25 tics and that is a cautionary note that the market is capable of blowing out to the upside. That means we could hit a high around mid summer and then maybe suffer a significant selloff. Q. What is happening with the dollar? Martin Armstrong: Nobody seems to understand, they think this is just some hedge funds and spec positions; this is really really big capital flows. I was just talking to someone on a very major bond desk and was told six months ago people would come in and say where is the bid, now they just come in and say buy me five billion at five years now. They are not even asking prices anymore. This is big capital coming into the United States. Q. Where is it going to push the yen? Martin Armstrong: I think the dollar yen is going at least to 145 and that is a conservative target. The next target after that is about 160 and the most extreme projection by mid year would be at 200. Q. The bonds will be the main beneficiary of the dollar buying? Martin Armstrong: For the last three months all of the big foreign institutions don't even ask me about the stock market anymore. Everybody is asking about the dollar, interest rates and the budget surplus. Nobody asks about the DOW anymore. That seemed to die out at the end of the third quarter. So what I sense is that the big foreign capital is most interested in the dollar and the bond market. That is reflected in the way the two are moving opposite right now. Q. But as long as the dollar is strong, is the bull market still intact, can the dollar get too strong and begin to threaten the stock market? Martin Armstrong: As long as the dollar is strong there really isn't a chance for a major 1987 style 40% crash. That happened because the dollar was weakening and everybody was leaving. Now the capital is sill pouring in. Yes, we could get a correction in the stock market; yes, we could go back and test the old S&P low in the 830/840 area. I think that is probably the maximum downside area. Q. If we go into the summer and hit a new high, and face the July correction that you predict; if the dollar is still strong then the correction will be less dramatic? Martin Armstrong: Yes. What will happen, and of course Indonesia has gone completely nuts, the first inkling is to go towards USG bonds, a flight to quality. In the middle of the year, starting around May 1st you have got this European currency crisis developing too. Now if this begins to spread into those governments then what is happening in Germany right now is they are buying the stocks as a hedge against the currency weakness. The DAX just keeps making new highs, out performing the US market. There has been a plunge in their savings rate, going out of currency and bonds and into stocks. If you own bonds in Germany you will automatically be converted at the governments choice into the Euro at whatever the conversion rate will be. If you own stocks, you will not, and that is why the European stock markets are going up dramatically. These markets will collapse big time. It could be in early 1999 or mid year if the EMU sneaks the Euro dollar in as of May 1st, because of the volatility of the currency markets. At May 1st they say they will fix the various currencies to the Euro, but the Euro won't yet exist until Jan 1st, 1999. It would be a tremendous risk to Europe and the Euro to try and fix the currencies to a fictitious currency. Consequently the government would not even be able to intervene against it. It is a brilliant political ploy.