The International Harry Schultz Letter

"The premier international financial, socio, geopolitical & philosophical newsletter"

Gold is back. Back in price, back in the news. After years of weak prices & an eerie silence about the reasons, a flood of information is bubbling out of the ground like a new oil well. Mysteries are being cleared up. Like why gold didn't rise in the last decade when wars broke out. Answer: it wasn't allowed to rise by an unholy alliance of bullion banks & NY bond brokers(with help from certain central banks, eg, the US Fed), who benefit heavily from low gold prices. How? Bullion banks, like Goldman Sachs, profit hugely from lending gold & handling hedge positions for gold producers. It only works of course if the price remains steady. Makes even more profit if gold drops. Bond dealers need rising bond prices for good business. When gold rises, bonds fall. The NY pits of bond & bullion dealers are back-to-back. How convenient! Govt gains because it can only control interest rates & the currency, not to mention political control, if gold is not seen as a viable alternative & is not seen as reflecting public lack of confidence in the economy, govt or currency--fiat paper money--as it did in the 1970's.

Gold is an ongoing threat to all those govts who worship power/control. Gold is a freedom tool for the individual. Well, the unholy alliance is now threatened. The pro-freedom (ie, pro-gold) forces are getting their act together & attacking the Klingons, the colluders. They're exposing every indecent action, eg, spreading disinformation & false rumours. Freedom forces want a free-mkt price for gold, an end to the "allowed price" (courtesy of Alan Greenspan). They've got web sites who daily punch out the expose's. Most notably: www.gold-eagle.com--a free site. And the cutting edge site by Bill Murphy: www.lemetropolecafe.com. U should visit & support these websites daily if U love liberty.

GATA proclaims: "The 20 yr gold bear mkt is over. Gold will go much higher than most anyone realizes & the risk/reward ratio now is as good as it gets. Gold should double over the coming year or two. Silver's base is massive & can support a move to our target of 9.78. Patience is called for, but it'll be rewarded." BM also says "Peter Munk & Barrick are no friend to gold, talk it down to buy out suffering smaller mines, sell gold forward heavily, opposed a gold millennium coin. A fund mgr avoids Barrick due to size of its hedge." He recommends Agnico Eagle, who never hedges (sell forward), a policy our friend Paul Penna began & Sean Boyd continues.

UK gets big static for its illicit gold sale, not only from African producers but from fellow central banks! So reports FT (8/16) pg.1. Charges of illegal gold manipulation are coming from many quarters. Lapdog press loves to report gold sales, but never asks: who bought it? They didn't shove it off a cliff! Someone wanted it! I've a ton of gold notes, but end o'space. It's like Y2K, an abundance of info boiling up; wonder if there is a link here? An ominous Y2K is probably gold-bullish. In any case please get your daily (gold) "fix' from the websites above.

A Potpourri of HSL Predictions

I'm boxing myself in because these forecasts are premised on factors that will probably make me 100% right or 0%. I doubt I'll get credit if right & will certainly be reminded if wrong. So, here we go, & remember,we've been bullish on the economy & stk mkt for years, & remember, I'm on your side. HSL's First Law is "Be Happy, via Confidence"that U know what's coming.

Whether pre & post-Y2K is a mini-sardine, a midi-size tuna, or a JAWS-type shark, there will be a tremendous buying opportunity (in stocks, property, biz) at the point where the problems are starting to be overcome/solved. Whether that is early-2000, mid-, or late-2000, or whenever, HSL will be monitoring day-by-day & will flash U signals.

I predict interest rates will move dramatically higher next year, maybe sooner, due to shrinking liquidity.

Cash (in hand, not in bank) will become rare, at a premium, will earn discount prices in/over next 16 months. Cash may gain in value at rate of 10-20% a year, a good investment!

Int'l trade will drop by 40-50% by mid-2000, due to Y2K.

Most nations will shut down their nuclear power plants by Jan 1 for Y2K reasons. If so, it guarantees a global power shortage in 2000. Some will delay shutdowns til Feb, 2000.

The 1999 IMF gold sale will be blocked.

The Swiss will not sell any gold in 1999 or 2000.

Mkts hate uncertainty more than bad news, so many will sell stock before Jan 1, 2000. This, plus all the above, means world stock mkts will decline sharply, probably an average of 40% over next 12 months. Big profits to be made in buying put options. HSL will guide U. Bulls will switch hats. But U needn't just dump stocks; let your stocks sell themselves, if they wish to, via stops, if they fall. See inside.

If all the above is valid, it will obviously result in a severe recession in 2000, far more severe than 1973-74.

Silver & gold will end the year well above present prices. Silver is the safer bet. In year 2000, gold/silver may or not rise far, but relative to lower prices for all other things (& investments), will have a defacto rise, ie, buying power up.

Bond prices will move lower over coming 18 months.

Y2K will almost certainly result in worldwide power outages, but the pattern will vary wildly. Nor will it remain constant. If it dominos, we get the worst-case scenario. If not, it'll be a checkerboard of perfect power here & no power there. Quite possibly, large parts of the world will have power for only 1-3 hours a day. This is also oil-related.

Don't assume US/UK/Cda/Oz/NZ will escape the worst Y2K effects, as they're also the most vulnerable, being so highly dependent on computer chips. 3rd world nations are unprepared, but they're also under-computerized to start.

Y2K fears will create a cash shortage at banks during or before Nov-Dec, & cash-rationing will be imposed to prevent bank runs. But bank runs aren't preventable or predictable; they may occur anyway. Numerous bank failures possible.

There will likely be a shortage of small denomination bank notes. Some govts (eg, US) are printing mostly large denominations in order to increase liquidity; they're terrified. Save small bills now. Also common coins.

Many small businessmen won't deposit all usual cash flow in '99, to be sure of funds to pay staff in case of Y2K bank problems. Has same effect as withdrawing bank cash.

Look for shortages of many items in late '99 as some people stock up & some companies build inventory. US Beige Book on 8/11 said shortages are already here & driving up costs. If Y2K hits oil refineries &/or foreign oil deliveries, as seems 80% likely, there'll be acute shortages of everything.

Oil will rise in '99 as oil companies & business build inventory & citizens simply tank up & maybe store a bit. In 2000, if Y2K is even moderately severe, price will rocket & rationing would follow. Present oil rise reflecting this now!

Year end corp earnings will be reduced by corp spending on Y2K compliance & inventory building.

Odds favour a modest China devaluation within 8 mos. If so, effect will be deflationary.

For the stubborn, the emotionally bullish, & the Y2K- doubters, the next 24 mos will decimate their assets. Blue ribbons will go to the flexible & the open-minded. Note: much of the "cause" in all the above is fear, worry, & anticipation, aside & apart from any actual bad Y2K events. UK friend Mr. B. says "Here's a solution for Y2K problem: everyone adopts the Jewish calendar. The year will be 5760, & we'll have 240 more years to fix the problem. Or wander in the desert." Sounds a good solution to me.

Harry Schultz http://www.ihsl.com hsl.mentor@skynet.be Tel +32 (for Belgium) 16 533 684 -- Fax +32 16 535 777 Postal address: HSL, PO Box 622, CH-1001 Lausanne, Switzerland

25 August 1999

-- Andy (2000EOD@prodigy.net), August 25, 1999

Answers

Well, Andy, even someone new to this NG can see where you're coming from - endless reports on how high gold is going to go. I don't think that talking it up on this forum is going to advance your gold position much though - got to get amongst and convince the BIG spenders for that. And by the way, your mate Harry Schultz was pretty much on the money 20 odd years ago, but like all crystal ball gazers, he fell flat on his face by subsequently getting most predictions wrong, most of the time, and lost his cred. Anyway Andy, keep buying gold. At the right time I just might sell you a tin of beans for an ounze....make that 2 ...ounzes... Porky

-- Porky (Unimpressed@Sceptic.com), August 25, 1999.

And another thing, Andy. Whilst I don't have the luxury of time to read everything posted, your posts always seem to be repetitions of what other people have to say (usually l- o-n-g and often booorrring). Do have an original thought in YOUR little head, old buddy? Just wondering....Porky.

-- Porky (Unimpressed@Sceptic.com), August 25, 1999.

Buy AU now and avoid the rush!

-- Porky (Porky@in.cellblockD), August 25, 1999.

...poor ol' Andy has lost so much money in gold over the last year...these posts may be the most pathetic self-serving stunts of his on-line life...

-- Y2K Pro (y2kpro1@hotmail.com), August 25, 1999.

Y2K Pro--It's a rarity when I agree with you and I do agree with you on this one. When people start getting wind of the future, they won't have any money left to buy gold, most won't even have a pot to p*ss in.

-- A No Brainer (anobrainer@anobrainer.com), August 25, 1999.

y2k Amateur,

Name ONE Fiat money system that has survived beyond the demise of the government that created it over the last 1000 years.

Now tell me the history of the RELATIVE value of gold over that same period of years.

Nuff said !!

Your Pal, Ray

-- Ray (ray@totacc.com), August 25, 1999.

nobrains: You said:

When people start getting wind of the future, they won't have any money left to buy gold, most won't even have a pot to p*ss in.

Please explain. And a questions: Do you believe the adage "History repeats itself?"

-- a (a@a.a), August 25, 1999.

Thank you Andy for another very interersting post. I for one appreciate them very much. Keep them coming. Hey Porky and Y2K Pro, I hope you have the guts to show your face next year...After gold and silver do what they always do during infationary cycles, which is go up. Most agree the equity markets will suffer a hit due to Y2K related problems. Gold and silver are counter cyclical assets and will rise,especially in an infationary enviornment which is what will occur as productivity drops. Today gold is at a near 23 year low (ever heard of buy low sell high ?) and the stock market is at an all time high. By "all time" I mean it represents the biggest artificially created speculative bubble in the history of mankind. Based on fiat money. It's gonna burst. And you will say...I can't believe it. Some cowboy said " It aint what we know that hurts us so, it's what we know, that just aint so." Fear God, not Y2K. Fear God, not man.

-- potent (potent308@hotmail.com), August 25, 1999.

Patience Porky and y2k pro, patience - you will see the error of your ways soon enough...

Bwwwwaaaaaahhahahahahahahahahahaahahah ha ha

Buying more drooy...

-- Andy (2000EOD@prodigy.net), August 25, 1999.

Andy,

Thanks for a GREAT post.

One thing: I tried to access the web site but was unable to do it. Can you try it and tell me what I did wrong?

-- Rick (rick7@postmark.net), August 25, 1999.

Andy,

As usual, Porky is getting it all wrong again, all mixed up. He senses that gold may be a good thing to have in the future, but not right now while it is so cheap. So, he plans to wait for really hard times and trade some of his stored food for gold. Go figure.

-- Gordon (gpconnolly@aol.com), August 25, 1999.

Hi Andy. Still trying to teach pigs to fly huh? LOL. Thanks for another good catch.

-- Rob Michaels (sonofdust@com.net), August 25, 1999.

Who is Harry Schultz, and how accurate have his predictions been?

-- Johnny Canuck (j_canuck@hotmail.com), August 25, 1999.

Sorry Rick - looks like Mr. Schulz has gone incognito...

-- Andy (2000EOD@prodigy.net), August 25, 1999.