- If the Gold price is going to be "hit"... it should happen next week (From the Privateer)
- The cause (for the crisis) is the simple fact that the money,
all the money, is fatally flawed
- the "cure" being put forward (by the G7) is worse than the disease
- The U.S. has a "heavy responsibility" to lead the world "back away from this financial precipice." (Mr Clinton)
- they are going to have to make sure that the price of Gold does not take off
- $US Gold has bottomed. But as also stated on that page, a bottom is not the same thing as a bull market
October 2 Commentary
"$US Gold is presently right at resistance levels. If the financial system and those in
charge of it can continue to function, we do not expect to see it rise from here. If it
does, we have a certain indicator that the financial situation is worsening to an extent
beyond their control. The chances that $US Gold has bottomed are very good. Be
warned, however, the downtrend remains intact."
(Posted here on Sept. 11)
The Privateer put up a basic explanation of the nature of the problem here at our
website back in 1995. Here are the links:
Do You Know Where Your Money Is Tonight?
Your Money - Your Life
(Posted here on Sept. 18)
In regard to the first quote above (Sept. 11), take a closer look at the technical situation
in Gold by visiting our pages on Gold bottoms and Gold Comparisons. Now, look at the
charts of Gold in other currencies. The $A chart proved its mettle long ago, and now the
$US chart has broken its downtrend.
But look at the Japanese Yen chart. Consider how excellently this chart showed the
turnaround in Yen Gold - before the Japanese market slumped below the 14,000 level.
And finally, look at the DMark chart. Again, this chart shows an aggressive "buying
opportunity", in time to rescue One's capital from the meltdown on the German stock
market in the wake of Mr Kohl's defeat.
And in regard to the second quote reproduced above (Sept. 25), consider this snippet
from an article in the Australian Financial Review on October 2:
"The chorus of voices asking world governments to rein in the free market is reaching
a crescendo."
We have no argument with the contention that the the voices are reaching a crescendo.
But what has the "free market" got to do with it? If there is one thing that is fundamentally
incompatible with free markets, or indeed capitalism itself, it is dishonest money. The
meltdown of hedge funds and stock markets, the world wide credit crunch, the liquidity
crisis in Asia and Latin America, and all the attendant economic ills faced by the world,
are symptoms. The cause is the simple fact that the money, all the money, is fatally
flawed. How is it flawed? Read the two pages listed above.
The FOMC lowered rates on Sept. 29. The Dow promptly fell 448 points in two days and
the long-term Treasury bond yield plumbed previously unvisited depths below 5.0%.
Widening fears of as yet unrevealed bank exposure to more hedge fund debacles has
hit stock markets all over the world, European markets faring very badly and the German
market (exacerbated by the recent election) faring worst of all.
This weekend, the G-7 meets. Next week, the IMF/World Bank meets. The global
financial situation is universally regarded as grave. But the "cure" being put forward is
worse than the disease. From all sides, regulatory measures are being proposed. For a
run down on most of them, see the Australian Financial Review article quoted above.
What no-one dares mention is any proposal to address the fundamental problem, the
state of the money itself. And because, apart from Europe and the Euro, no such
discussions are underway, Gold, the alternative and honest money, is stirring.
The risk, and potential reward, for Gold now lies precisely in the severity of the financial
crisis and the fact that the overseers of the world's financial system are about to meet in
Washington. How potentially dangerous are these meetings? Well, here's a quote from
President Clinton, which was credited, amongst other things, with a 270 point intra-day
turnaround on the Dow on Oct. 2.
The U.S. has a "heavy responsibility" to lead the world "back away from this financial
precipice."
Yes, Mr Clinton has a vested interest of using any means to deflect attention from his
domestic political problems, but you will find that most of his fellow Heads of State are
with him on this one. You can be sure that Gold will be on the agenda of all the financial
agencies meeting next week.
If the assembled financial potentates are going to come up with any semi-plausible
means of "fixing" the system, no matter how short-lived, they are going to have to make
sure that the price of Gold does not take off. The only shock that would be more
profound than that would be a debt default by a G-7 nation, up to and including the U.S.
itself. And as long as there are printing presses available, that's not going to happen.
So, Gold stands just above $US 300. Gold stocks, anticipating higher prices, have
boomed. To give one example, here is a list of Australian Gold stocks which reached
52-week highs in trading on Friday, October 2:
ACACIA (AAA)
DELTA GOLD (DGD)
HOMESTAKE (HSG)
ROSS MINING (RSM)
SONS OF GWALIA (SGW)
These are taken from our regular feature on Australian Gold Stocks.
If the Gold price is going to be "hit", as it has so many times before over the past three years, it
should happen next week. If the price is not "hit", or if the "hit" fails to move the price back to the
safer regions below $US 300, then you can be confident that the international financial agencies are
losing control of the situation.
As already stated in our commentary, all technical indicators show that $US Gold has bottomed. But
as also stated on that page, a bottom is not the same thing as a bull market. The resolution of that
question should not be long in coming. Watch the Washington meetings closely ...and watch this
space. |
