GOLD, SILVER, PLATINUM & DIAMONDS

Persistent rumors have been coming out of London for three weeks that G-7 bankers have been bailing out hedge funds to the tune of $25 billion and at the same time making a coordinated effort to drive down the price of gold, so that as much gold as possible can be bought at lower prices. Players are the Bank of England, the ECB, the Fed, Bank of Japan and the remainder of the G-7. Supposedly Tiger Fund had market exposure of $650 billion and made grievous mistakes that would have forced it into bankruptcy taking the world financial system down with them. That is why other elitists rode to their rescue. Tiger was another victim of the yen carry trade. As we explained in previous issues, that there were forces in play that were driving interest rates higher, that had nothing to do with the supply and demand of credit. Rates on the 30-year Treasury bond moved from 5 3/8 to 6.2%. We now feel a good part of this move was caused by Tiger and others selling Treasuries and buying yen to terminate their carry positions, which had pushed them to the brink of insolvency. The yen had moved upward from 1.25 to 1.15. The higher the yen goes the larger the losses. Rumors or not, there is now enough evidence that since June 12th the G-7 has covertly agreed to a bailout to prevent a repeat of the October 1998 LTCM triggered meltdown. As usual the controlled media kept a lid on the entire event, which is still in progress. At the heart of the crisis is Japan and Switzerland's ultra-cheap credit markets. They both have almost zero interest rates. You borrow yen and francs, buy dollars, buy Treasuries on 90% margin and make a profit as long as the yen and franc don't go up in value. The franc just went up from 1.57 to 1.49 after having broken down at 1.55. The Japanese have already intervened and purchased $25 billion in dollars to stem the upward rise of the yen and it's gone up anyway. This exercise by the Japanese government is to allow the hedge funds to cover their short yen positions. As it is U.S. Treasuries were sold, hence the almost 1 point jump in yields. The idea was to sell Treasuries and have the Japanese intervene so these hedge funds wouldn't have to sell stocks. The other part of the equation is manipulation of the gold market by the IMF, Swiss and British. The British being the main culprit. The hedge funds had borrowed billions of dollars in gold at 1-1 1/2% interest, sold the gold into the market and used the funds to leverage stocks and bonds on margin and in derivatives. If gold had gone up the entire financial system would have collapsed. Thus, in order to be sure gold went down the British announced the sale of 50% of its gold reserve, which we believe was a sham transaction. We expect gold could hold between $250 to $260 an ounce, but the financial elite could force prices lower to some level predetermined among themselves, then amass huge private gold holdings in preparation for the day when paper becomes worthless and this new world order introduces its new One World Currency. Why else would the Bank of England choose the most disruptive method of selling gold? In retrospect we can now see that the fervor over an increase in interest rates was simply a dog and pony show to divert attention away from the real crisis, that as of yet hasn't been resolved. It is still on life support until the elitists decide which process might be to their long-term advantage.

It's official, Placer Dome is halting development of the $575 million Las Cristinas mine in Venezuela. Management said, because of changed gold market conditions and lower prices, which have created greater uncertainty about the future, we are halting development. Those are certainly factors, but just as, if not just important, is the protracted legal dispute with Crystallex and accusations in Venezuela that a judge on the panel, that adjudicated the claims, had been paid off, puts a dark cloud over Placer's ownership claims. The question is, will the ownership situation become an issue within the U.S. Court Systems? Additionally, Venezuela Guyana Corp., the 30% JV Minca Partner, says it wasn't even consulted prior to the decision. Stating these very one-sided reasons displayed complete disrespect towards CVG investments in the project. CVG was infuriated being shunted aside and got more disturbed when Placer stated it would "continue in other countries" to create a portfolio that would increase its proven and expected gold reserves. Now CVG says, "they will continue to analyze alternatives to secure continuity in Las Cristinas", as well as study the consequences derived from Placer Dome's unilateral decision. Placer's arrogance may well have gone too far this time. You don't do a trip on your partner in crime on his turf. In addition environmentalists have long been opposed to Placer's presence in Venezuela because of an incredibly bad reputation on environmental issues. At least in Venezuela it is common knowledge that PDG is involved in the endemic local corruption.

Cyprus Amax Minerals & Asarco announced a merger and both their stocks fell 3%. Both are big producers of copper as well as precious metals. It looks like the public sees the marriage more like a suicide pact.

Gold Fields lost a court bid to have a strike by workers at its Oryx mine on the Free State declared illegal. 4,000 workers have stopped work due to retrenchment packages. The redundancies, caused by lower gold prices, is raising social and economic havoc. The company offered two weeks pay for each year of service. The union is demanding four months pay for a year of service and six months notice of any redundancies. There recently has been massive marches in Pretoria citing British and Swiss gold sales.

House Banking Committee Chairman Jim Leach (R-IO), stunned the world elitists when he announced it was unlikely that committee members would approve the IMF gold sales, because it would sink gold prices when they're already near 20 year lows. He said, "care must be taken not to jeopardize the mining industry that provides many of the most stable jobs in the developing world." The elitists are deeply surprised by the depth of the opposition to the gold sale, particularly from American citizens, which would pay for the IMF's share of a plan to reduce the debt which poor countries owe to wealthy nations. The IMF wants to approve the sale in September, but the U.S. holds veto power, and can't offer support without Congressional approval. Major opposition was drawn from gold-state lawmakers, the Congressional Black Caucus, IMF critics in Congress, and poor-nation gold exporters such as Ghana and So. Africa.

Aber Resources, which holds a 40% interest in the Diavik Diamond Project in Canada has sold 14.9% of its interest to Tiffany for $72 million. Tiffany needed a reliable supply of high-quality diamonds so it opted for this vertical integration strategy, which will also widen profit margins.

Demand for platinum comes from its use in automotive catalytic converters, jewelry, chemicals and glass manufacturing, petrochemicals, electrical and computer components and investment bars and coins. In 1998, total demand for the metal rose 4% to 5.35 million ounces. Mine and supply from stocks gained 8.9% to 5.4 million ounces during the same period. Each year, many more high-technology applications are discovered, from computer hard disks to new fuel-cell vehicles where platinum is used in the proton exchange membranes technology for electric cars. Last year So. Africa produced 3.68 million ounces. Russia is the second largest producer.

Robert Chapman

6 August 1999

The International Forecaster An international financial, economic, political and social commentary. Published and Edited by: Bob Chapman

brockton_magt@hotmail.com

-- Andy (2000EOD@prodigy.net), August 05, 1999

Answers

Link

-- Linker (howdy@doody.com), August 05, 1999.

...poor ol' Andy, still trying to flog gold to his fellow doomer rubes...

-- Y2K Pro (y2kpro1@hotmail.com), August 05, 1999.

y2k pro - I was wondering when you would surface again from under your rock -

we'll see who's laughing at Christmas my brain-cell challenged little friend...

-- Andy (2000EOD@prodigy.net), August 05, 1999.

As Walter Cronkite would have said:

"And that's the way it is..."

Good find Andy. Poor old Pro, he still does not get it. It's not just Y2K. A multitude of issues are coming to a head and the Pro still reiterates:

"It's only a computer problem."

No, dude, it's a civic, monetary, ethical, economic, natural, man- made, governmental, private, business, international, national, and personal problem.

If it was only the Y2K part by itself, hell, I would be a polly. I am hoping for minimal disturbances. BUT, I am prepared for a lot more.

Got confidence??? (I sure as hell don't)

growlin' at the clown on TV...

The Dog

-- Dog (Desert Dog@-sand.com), August 05, 1999.

Y2K Pro:

I'm not siding with Andy, but since you don't believe him, where are your facts to disprove him? Is sarcasm all you have? I have my own opinions on gold and they have nothing to do with Andy's post. Gold is at a 20 year low. If you don't believe there is upside in gold, then why don't you take a short position in gold. Assuming that you know what a short position is, then your actions will prove that you actually believe what you say.

Actions speak louder than words.

Regards

-- Buffalo Bob (courtesyiscontagious@respect.com), August 05, 1999.

Andy: Glad to see you're "keepin' on keepin' on" and not letting guys like Y2K Prophylatic quench your posting of interesting/informative stuff.

-- A (A@AisA.com), August 05, 1999.

BYW -- buying gold/silver/platinum you might suffer a loss as denominated in fiat money, over the short term. And there's a good chance in my opinion that even that won't happen. And, when things settle out, you could be well ahead.

Compare that with fiat money -- of which every such in history has become totally worthless.

Flip the coin -- gold: possible partial "loss" -- or fiat: probable total loss.

-- A (A@AisA.com), August 05, 1999.

Andy and A:

Y2kpro has another plan. In event of societal problems, he's gonna sell that bovine compost coming out of his mouth for fertilizer. So perhaps he does have a plan that is superior to our own. :)

-- Not a Pollyanna inbreed (y2kpro_is_an_@inbreed.com), August 05, 1999.

Thou Protesteth Too Much, Methinks - Well, well. It seems that inbred Andy isn't the only doomer bufoon who has lost money in gold lately...angry fellas?

-- Y2K Pro (y2kpro1@hotmail.com), August 05, 1999.

I've "dollar cost averaged" and "asset allocation swapped" occasionally, so while prices are down from nine or ten months ago, I'm down only about 6%, which is not good, but is acceptable to me. (But I am doing four metals -- gold, silver, platinum, palladium) An e-gold account helps with this. (http://www.e-gold.com)

-- A (A@AisA.com), August 05, 1999.

Hey, Y2KPro, glad to see ya back. Have a question.

The other day on CNN, the lip-reader was talking about how the .gov is nervous about hackers busting into the IRS and ATC systems.

Are you (meaning aviation industry) aware of that or having to beef up security based on that?

-- lisa (lisa@work.now), August 05, 1999.

Welcome back Y2kPro:

You didn't answer the question. Why don't you go short on gold? If you're so sure of your strategy, then you're guaranteed to profit. Or are you just another vacuous BS'er who is all talk and no action?

-- Buffalo Bob (courtesyiscontagious@respect.com), August 05, 1999.

Y2K-pro???

I doubt that anyone has lost money on gold this year!

People that are buying gold as a hedge against Y2K/credit squeeze/ or crash are buying not selling. You can only loose if you buy high and sell low. If you bought a few months ago, you ahve an opportunity to buy more today. The time to sell will be this time next year.

So your statement that Andy and others have lost on gold is absolutely without merit.

-- Bill P (porterwn@one.net), August 05, 1999.

Hey smegma breath, I don't short any stock, just like I don't take my paycheck to vegas. Why? I don't gamble. If loosing your money on gold gets you your jollies, then loose away...

-- Y2K Pro (y2kpro1@hotmail.com), August 05, 1999.

Y2K Pro says he doesn't gamble! Hah! He's the biggest gambler of all around here. He's gambling that his rosy picture of the future is all he needs to make it through. Actually, he just doesn't understand investing at all, as evidenced by his statements. Nothing ventured, nothing gained. Bet he lives paycheck to paycheck. Sad case, Y2K Pro.

Andy,

Good post on this unfolding situation. What's so breathtaking about it all is the *exposure* that the big money players have taken on. They are running like hell now to escape the bear, but the bear will catch them soon enough and it will be a carnage. Just like the leveraged insanity of the late 1920s just prior to the Great Depression, this bubble has reached it's limit. All they are doing now is robbing Peter to pay Paul. I have seen that happen many times on smaller scales and it always comes to a bitter end. Look out!

-- Gordon (gpconnolly@aol.com), August 05, 1999.

Welcome Back Pro? Pro can go to hell. Or should I say, will be going on the other side. Jeesh, it sounds like you guys actually miss him. Puke

-- DOWNtheROAD (foo@foo.com), August 05, 1999.

Ya know, as much as I dislike the doomer mentality, I do not wish any of you ill. I do not want to see anyone dead, injured or hurt because of poor desicion making regarding Y2K. Why is it then that so many doomers want to see me dead or injured?

-- Y2K Pro (y2kpro1@hotmail.com), August 05, 1999.

You said Pro, we didn't. The fact is, Y2K is a life or death kind of event THEREFORE those who prepare have a better chance. You, obviously, have no chance, THEREFORE you are likely to bite it after the rollover. Capious?

DOWNtheROAD

-- DOWNtheROAD (foo@foo.com), August 05, 1999.

Translation:

I hope, hope, hope that Y2K turns out bad so that you and others I disagree with will die...

"People who want to survive Y2K should be prepared to kill."

-- (its@coming.soon), July 27, 1999.

-- Y2K Pro (y2kpro1@hotmail.com), August 05, 1999.

So, Y2KPro, did you hear that on CNN? That the ATC's gonna get hacked along with the IRS circa the Rollover?

-- lisa (lisa@work.now), August 05, 1999.

Why Tu K Wannabe Pro, the one that's all hat and no cow. Keep up the goodwork Andy. The Truth Points to Its Self!!

-- jaime estrada (cowboy@elrancho.net), August 05, 1999.

Pro:

I can't speak for anyone else, but I don't wish you or anyone who believes differently any harm. Certainly not. Why do you think we're all doomers? I don't believe it's the end of civilization. But thanks to people like you who use blanket statements, civility is lost when discussing this issue. Admit it, you're the one who started name-calling in this forum.

Personally, I hope that you're right. Nobody here wants to see death and destruction because of Y2K (at least anyone sane). But when I see people like you trash talking, then backing your position up with NOTHING FACTUAL, then it's time to play. What have you presented here that debunks what was originally posted? Yet you act like the original poster is way out in left field, as if you were an expert. Your're not.

For what it's worth, I wouldn't short gold either. Too risky. Just makes your first post that much more meaningless because it's based upon opinion. Not facts.

Regards

-- Buffalo Bob (courtesyiscontageous@respect.com), August 05, 1999.

Buffalo Bob I like your style... good post.

Y2kPro I have nothing against you. I only wish the best for anyone with an upcoming unknown... (you know...) Hell I don't even wish my ex-wife ill, and she's a real pain in the butt.

I do hope you realize its not just Y2K thats coming up...

regards to all on this forum, even Al-d and Andy Ray...

scratchin' at the door...

The Dog

-- Dog (Desert Dog@-sand.com), August 05, 1999.

Dog:

Thanks! I like your post about the ex-wife, as well. Was good for a few laughs.

Regards (and knocking on wood on Dec. 31!)

:)

-- Buffalo Bob (courtesyiscontagious@respect.com), August 05, 1999.