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To: Tom Byron who wrote (9180)	4/2/1998 1:26:00 PM
From: Alex	Respond to of 116759

From the USAGold site............. MARKET UPDATE (4/2/98) AM---- Gold surged this morning on news that Japan's Nikkei was down 3% overnight and renewed bullishness over the level of gold holdings in the new European central bank. Also buoying gold today is short covering in advance of next week's gold options expiration and fund buying -- the signal that many speculators have been looking for with respect to which side of the market they want to take. The result is gold up $3.30 as this is fetched over to the server. Silver surged this morning as well. The dollar is down against the D-mark and Swissie and even against the yen (not surprisingly) Stocks are up (what else?). And the bond market is firm probably the beneficiary of Japanese nervousness over their own currency. Many traders have voiced their opinion that gold was due for a rise and it looks like this could be a breakout if it holds. We will be watching closely to see if there's any follow through. An interesting interview of a Warburg Dillon Read director reveals some of the behind the scenes maneuvering as the European Monetary Union moves toward its May, 1998 freeze on gold reserves. Stephen Yorke, the director of foreign exchange for Warburg, echoes themes advanced in this report last week. Some quotes from Mr. Yorke: "The reasons many gold analysts did not foresee the extent of European central bank total sales last year, and are not currently expecting the coming freeze in European central bank gold sales, is that they are not reading the Maastricht Treaty and European political situation correctly." "The whole EMU project is driven by law and the basis for any decision must be the Maastricht Treaty." "Germany has 28.9% of the vote, France 21.8% and Italy 20.3%, so Germany and France together have a majority and will most likely make this decision in conjunction with Italy." "At least 10% of reserves (will be in gold) which appears to be the market consensus, but the risks are on the upside, that is, it is more likely to be 30% than zero percent of total reserves. Why? Because Germany, France and Italy will effectively make the decision and they have the highest proportion of gold to total reserves of any European country." "France has about 50% of its reserves in gold, highest of any industrial country. As France has gold on the books at around $340 and ounce and Italy at around $364 it would clearly not be in their interest for gold prices to fall much." "But there are also political reasons why ECB gold reserves are likely to be higher than the market is currently expecting. Germany has an election year and there is a huge amount of skepticism in Germany and France about how stable the euro will be, so clearly Kohl will need to reassure the electorate of euro stability and gold backing may be necessary to do this, as gold equates to stability in the public's mind." On the subject of potential gold sales after January 1, 1999, Yorke says "it will be very difficult to get the ECB's approval in the first few years of EMU as the ECB will not want to do anything that will jeopardize the stability of European foreign exchange or interest rate markets and gold sales affect these markets." This counters statements by London Bullion Market Association ex-director Terry Smeeton's claim that sales could come between now and 1999. "Technically," says Yorke, "Smeeton is right legally, but the pressure to cooperate from May this year is likely to be so great as to effectively put a freeze on further European central bank gold sales from May." So there you have it from someone in the know. These are ideas not unfamiliar to those who read this report regularly. The verification is encouraging. The big question in my mind is why Britain is so anti-gold? Is it because they see it as a threat -- since their central bank hold very little? Or is it because they are secretly trying to acquire? I think the former. Be prepared for a sea change in all markets as the year progresses and EMU becomes a reality.

To: Tom Byron who wrote (9180)	4/2/1998 2:19:00 PM
From: bobby beara	Read Replies (1) \| Respond to of 116759

Tom, let it run to at least 87 will ya -g-, better yet 90. Then it can take a break. Yahoo cooperating with my speculation/safety thesis today. Gold ignoring strengthening dollar - and the market ignoring the fact that the N225 is headed to break 14000 and probably end up under 10,000. The Tankan Survey/GDP combo chart shows they are nearing the area of the 74 recession. Asia tankan round two coming up? Fasten your seat belts. bb