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

To: skelly who wrote (9290)	4/4/1998 1:05:00 AM
From: Alex	Respond to of 116763

From the privateer................. This is what we posted here a week ago - on March 27: Regular visitors to this page will notice that something new has been added. Below the Open Interest chart, there is now a new "table" showing the details on Spot Future Gold trading over the previous week. And in this case, "the previous week" is shaping up to be a potentially momentous one indeed. Gold is now above $300, and traded as high as $305 intra-day on Friday. On top of that, we now have sufficient technical signals to call a bottom on $US Gold. For more information (if you haven't already been there), please see our Gold Bottoms (since 1976) page. When The Privateer called a Gold "buy" on these pages (Note: Not a Gold "Bottom") on Feb. 27, we said that the call held as long as spot future Gold did not close below the $US 290 level. It didn't. ------------------------------------------------------------------------ And now, the $US Gold price has risen to its highest level since November 1997. Compare the present situation with Gold and U.S. stock markets. On the stock market, there is not a worry to be found. The only annoyance is that the "9000 party" had to be postponed for another day as the Dow could not hold its early gains on April 3 and closed down 3 points at 8983. Gold, in sharp contrast, is climbing an almost vertical "wall of worry". Very few believe this move is for real. Open interest on the futures market is down by almost 25% since Gold hit its recent low of $US 288 just over two weeks ago. A lot of shorts have run for the exits on the futures markets. The longs have not been eager to rush in to replace them. The first signs are coming in, though. Gold volume nearly doubled on April 3 from the previous day and open interest rose, albeit only slightly. Another caveat is the behaviour of the U.S. Treasury long bond yield, which has fallen from almost 6.0% a week ago to be back to 5.77%. This is not particularly surprising when One considers the meltdown in Japan, capped of by a downgrading of its sovereign debt by Moody's and a stern lecture from Mr Clinton (fresh from his African Safari) that the Japanese must "do more"?? Actually, the Japanese are "doing more". They have been selling their U.S. Treasury Debt paper, to the extent that the U.S. Treasury has just seen fit to announce that Japan is no longer the largest overseas holder of Treasury debt. That dubious honour has now gone to Great Britain (known in some circles as "Perfidious Albion"). The situation, in a nutshell, is this. The Japanese are facing the possibility of an actual financial systemic meltdown. That, if it happens, would turn the Asian "Crisis" into an Asian "Apocalypse". At the same time, the Europeans have frozen their reserve assets preparatory to the final moves towards their own Reserve Currency, the Euro, in early May. In the face of these two potential earthquakes in the global financial system, it would have been astonishing if Gold had not moved. Thus far, its smallest move has been against the world's reserve currency, the $US. But over the next month, the challenge to the $US is going to intensify. As long as the Dollar is seen by foreigners as the asset to hold (and it still is, look at its rise against the Yen and D-Mark and look at the Treasury bond yields plummeting again), Gold cannot be expected to really take off. But once the challenge to the Dollar's supremacy becomes evident, and/or the Japanese take desperate action to rescue their system, Gold will loom large as the only port in the storm. The bottom for Gold is in - now it's really going to get interesting.