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To: John Hunt who wrote (33744)	5/12/1999 4:09:00 PM
From: long-gone	Respond to of 116764

Andrew Smithers' weekly column in the Crisis is over says IMF - so run for cover. Monday 10 May 1999 The International Monetary Fund has announced the world crisis is over. Because its forecasting record is so poor, this has caused widespread alarm. This is an over-reaction. The IMF is unlikely to be consistently wrong. Any organisation that could be consistently wrong would be very useful. It would make reliable economic predictions possible. The IMF's history suggests that such usefulness is unlikely. Despite the IMF's past failures, it must be sensible to try to stop crises recurring. Contingency plans are also needed in case of failure. We can expect international meetings of the good and the great to discuss these matters. Unfortunately, the real issues are most unlikely to be raised because they are politically sensitive. At the G7 meeting which has just broken up, the Europeans and the Japanese were lectured about how they must do better. The fact that America is the most likely cause of the next world crisis did not get a mention. This is absurd and dangerous. There is an overwhelming case that Wall Street is more overvalued now than it was even at its 1929 peak. There is a mass of evidence that we are in the midst of the fifth Wall Street mania this century. On each previous occasion the result has been a crash, followed by a major recession. It is possible that the world has changed. It may be that we don't have a mania. But there is an uncomfortably high chance that we do. While we can hope that things will turn out all right, it must make sense to have contingency plans in case it turns out all wrong. It is absurd, therefore, that world leaders do not discuss the matter openly. We have had two asset bubbles recently that have ended in tears. Japan went bananas in the late 1980s and its economy is still suffering. The rest of Asia followed suit in the middle-1990s. On neither occasion, however, did G7 or the IMF have a plan ready to deal with the problem. Had a plan been ready, it would have been a great boost to confidence. A well- discussed plan should also have avoided much of the bad advice that was given. These unhappy precedents make planning for a possible US crisis all the more important. It is sadly unlikely, however, that any discussion and planning will take place. If world leaders discuss the Wall Street mania, they will consider its cause and its consequences. As prevention is better than cure, this will mean that US economic policies will be critically examined. The US government will not welcome this. It will argue that its policies have been wildly successful and should not be criticised. If policies can only be criticised after they have failed, problems can only be discussed after they have surfaced. So long as this attitude persists, the only role for the IMF and G7 will be shutting the stable door after the horse has bolted. smithers.co.uk

To: John Hunt who wrote (33744)	5/12/1999 4:24:00 PM
From: donald martin	Read Replies (3) \| Respond to of 116764

Don't get me wrong. If I ran Barrick, I wouldn't have as much production hedged as they do. But.... <<It seems to me the emphasis is more on profiting from a falling gold price and earning interest than on obtaining the best price for the metal ... >> They don't profit at all from more falling gold prices. Once they lock in, there's nothing more to be gained. As far as getting the best price for the metal, TO DATE, they've done that well. BUT, I doubt it'll last too much longer. You gotta love what it's done to their income to date though. Imagine being able to earn interest in 1999 on half of the income you'll earn from 1999 to 2003. The only caveat is, you give up on any raise you might have earned. See what I mean?

To: John Hunt who wrote (33744)	5/12/1999 6:06:00 PM
From: Ken Benes	Read Replies (1) \| Respond to of 116764

John: Barricks hedged position is almost equivalent to the total sale of gold announced by the BOE. This represents forward sales by only one company. When taking into account the actions of other companies plus the South Africans, the Australians, and others, the sum total of their hedges represent more than all of the central banks sales to date going back ten years. So who is responsible for the fall in the price of gold. Barrick is the architect and when advised by some very powerful brokers and central bankers, you have the deplorable state of the gold market. These guys set the stage, the hedge funds jumped onto the wagon and sold gold short in what was a sure bet with the complicity of the gold producers ready to sell future production and their reserves in the ground and the central banks ready to empty the vaults to keep the price from rising. The 31000 tonnes of gold held by the central banks is a hollow number. England probably sold only 416 tonnes because that is all that is left. Chits from gold producers and hedge funds, for the remaining gold, probably sit on the shelves. CEO Munk addressing the travails of the gold market is tantamount to Milosevic praying for the victims of the war. Look for the gold market to change when Barrick begins to cover their positions. They will know because the feed back from the central bankers will be impeccable. Ken