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To: Alex who wrote (16171)	8/19/1998 7:08:00 PM
From: goldsnow	Respond to of 116815

Beware of signs from US pension funds Portfolio, By Barrie Dunstan Now that the dust has settled on the latest stockmarket drop on Wall Street, a few unsettling signs are emerging that some members of US pension funds have been selling shares from their self-managed 401(k) fund portfolios. The signs are not definitive and rely on a survey of some of the biggest 401(k) operators by major US investment newspaper, Pensions & Investments. But the signs are worth noting - both for what they might say about the way small investors are behaving in the US and what Australian superannuation funds might need to consider as they enter the world of fund choice. The major signs of selling have come from Merrill Lynch Group Employee Services, which operates about $US80 billion ($134 billion) of 401(k) accounts. "In the past, we have seen participants take advantage of dips to buy equities, but this time we have seen liquidations out of equity securities into conservative investments," said a spokesman. Similarly, T Rowe Price Associates (with $US20 billion of funds) saw more people move out than into stocks, though a spokeswoman said this sort of behaviour was fairly typical during market jolts and the move away from stocks was "modest". A third case involved Hewitt Associates (managing $US62 billion of funds), where an index showed that participants moved twice the normal amount of money out of stocks into bonds in the July shake-out and the August downturn. It is worth noting that those three 401(k) plans alone account for about $271 billion of investments, which is approaching the total size of the Australian superannuation market. Against those examples, the biggest players in the US pension-fund defined-contribution market - Fidelity and Vanguard - reported no noticeable selling of stocks. Vanguard said as many people bought stocks as sold them, while Fidelity said people called more for reassurance than to move money. But, when they telephone a major US pension fund provider, we are really talking calls: Fidelity typically takes 40,000 calls a day and in the latest market downturn that figure rose about 20 per cent. The interesting part of the US 401(k) phenomenon is that the managers' systems enable them to identify those fund members who are "trading" or trying to market-time their pension fund. This is not a big number; in fact, the Hewitt group estimates it is less than 1 per cent of those members it tracked. But, when there is $US1 trillion of money in the funds, that still means a big amount of money which could move around in market shake-outs. Vanguard Investments Australia managing director Jeremy Duffield, who visited the US parent operations recently, says the feeling there is that education of 401(k) members is working fairly well. This is just as well, since - as the funds have expanded - there are many US employees whose balance in their accounts is more than the equity in their homes. But the really tricky question is: how will 401(k) investors and other mutual-fund holders behave if they are confronted with a prolonged downturn in the stockmarket? The answer to that, Jeremy Duffield says, is that no-one really knows. afr.com.au

To: Alex who wrote (16171)	8/19/1998 8:26:00 PM
From: paul ross	Read Replies (3) \| Respond to of 116815

Someday reality will hit, but as they say it may be eventual just may not be imminent. Talked to my resource stock broker today who says that several CB's are ready to enter the market and support gold if it should fall much below $280. He's convinced that we are very close to a bottom for the precious metal's related stocks. Some really good buys out there, some near cash value. With regards to the Russian problem, why doesn't the US govt. buy 100k acres or so of public lands from the Russian govt. for the $10B or so they are looking for. (Then we could build a military base on the land). It would be kind of like the Alaska deal. note: unsubstantiated rumor

To: Alex who wrote (16171)	8/20/1998 4:45:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116815

For the first time in a while I think Japan may indeed spend few "extra" yens on gold..sure would look like smart move... Yen seen damaged by China, Taiwan reserves move 06:31 a.m. Aug 20, 1998 Eastern By Pratima Desai LONDON, Aug 20 (Reuters) - A decision by China and Taiwan to reduce the yen portions of their foreign exchange reserves is a significant development which will weigh on the yen and possibly boost the euro in the longer-term, analysts said. Last week, China and Taiwan said they had cut back their yen-denominated holdings to protect the value of their foreign exchange reserves, adding to the arguments of yen bears, who have already driven it to eight-year lows against the dollar. ''It is important as a signal of things to come. There was a negative yen reaction after China switched some of their reserves, '' said Nick Shamim, currency and bond analyst at ANZ Investment Bank. ''The next big blow to the yen's reserve currency ambitions will be central banks, including those in Asia, warming to the idea of using euros in their portfolios.'' The euro will be the new currency of the 11 founder countries of European economic and monetary union when it starts in January 1999. Perceptions that the euro will be a strong and safe store of value will convince many central banks around the world to hold a proportion of their reserves in Europe's new currency, many analysts believe. China has now cut its yen holdings to below a quarter of the government's portfolio from just under a third. Taiwan has declined to specify the extent of reductions. China is the world's second largest holder of foreign reserves, Japan is the first. Analysts said some of the fall in yen reserves is an arithmetric result of erosion in the value of Japan's currency. But they also believe many central banks around the world have been for some time reducing their yen holdings. ''This trend of shifting from yen reserves has been in place for some time,'' said Rob Hayward, economic advisor at Bank of America. ''It makes sense to reduce your exposure to a currency you think has further to fall, some see it as an opportunity to buy it back cheaper at a later date.'' Many currency strategists expect dollar/yen to rise to 150. Shamim at ANZ Investment Bank sees the U.S. currency topping out at 160 yen. The dollar, which reached a post-World War Two low just below 80 yen in April 1995, has risen by more than 80 percent, last week when it touched an eight-year high above 145.60. In the same time period the mark has gained more than 35 percent. Last week it saw a 5-1/2 year high at 82.80 yen, and is currently trading around 80 yen. A gloomy outlook for the Japanese economy, now officially in recession after years of stagnation, has been the biggest factor behind the yen, analysts said. Copyright 1998 Reuters Limited.