Gold Editorials & Commentary

We turned temporarily bearish in last week's newsletter, but it is beginning to appear as though our bearishness was unjustified. The past week in stocks was an extremely volatile one-probably the most volatile week since last October.

The blue chip averages pulled back around 10% during the last few months, but the overall damage is more serious than that. Several sectors are down sharply and many high quality issues are down 30%-50% or more.

1998 was another banner year for equity investors. The major indices finished the year close to their all time highs and double-digit gains were again the norm.

Chart Symmetry is designed around the observation that prices tend to change direction along certain preferred gradients. New readers are advised to read the first article in this series to discover how Chart Symmetry works.

AN OPEN LETTER TO:

His Excellency The Governor

Sheikh Salem Abdul-Aziz al-Sabah

Central Bank of KUWAIT

Ref: Central Bank of KUWAIT's decision to lend gold

The gold price has fallen sharply over the past few months, and the market has been gripped by fears of large ongoing future sales by central banks. The importance of future central bank sales has been overdone by the market, for several reasons.

Conviction in technology . .

The Bank of England's (BOE's) ridiculous second 25 ton gold auction took place on September 21 ( basically giving it away at $255.75 within a few bucks of the 20 year low).

Today's reports of stronger than expected productivity gains and less than expected unit labor costs will only incite more giddy chatter of a "new era" miracle economy.

We have to go somewhere we haven't been before. We started writing about markets in 1967, seven years after becoming involved in world financial markets. Never did we think our sometimes lonely road would lead to where we think it's now headed.

The explosive reaction of the Gold market to a sudden policy shift by the European Central Bankers has brought to limelight the "hedging" activities of the Gold producers.

Introduction

Technical, fundamental and monetary factors . .

Technicals

As expected, it was another very unsettled week in the stock market and financial markets generally. Despite higher interest rates, stocks rocketed higher led by the most speculative issues in a move that looked to be exacerbated by derivative trading.

Don't be confused by self-serving outcries from various parties trapped in the gold short squeeze. I am amazed to hear reports that so-and-so has restructured their hedge book or that this or that group has covered its short position in gold.

Options trading and bungee jumping have a lot in common. Both can slam you into the ground ... and both can send you flying into the stratosphere. So why attempt such extreme sports?

Gauging the wind .

It seems unanimous: the economy is booming. Presidential candidates allude to it in condemning their opponents for not proposing more spending for education, or housing, or whatever pleases their current listeners.

In "A Peek at Smaller Golds" (Part I) I presented a group of successful advanced stage exploration companies that should offer substantial upside gains in a gold bull market.

During the first part of this year, I wrote an article for Gold-Eagle titled GOLD, COMMON SENSE AND PATIENCE.

Here's an update from my last piece, "No Way Out", in which I postulated that the leasing scam in gold and silver would soon come apart and we would have a market event similar to what occurred in the stock market in Oct 1987, which was triggered by "portfolio

In the last "Midas," I reported that several sources had told me that the Federal Reserve was "jawboning" futures commission merchants not to pressure firms to deliver gold.

A lot of shorts must be wondering why the European Central Bankers decided to limit their Gold sales to not more than 400 tons per year for the next five years.

The European central banks moratorium on gold sales limits aggregate sales to 2,000 tons over five years and 400 tons per year and specifically excludes "already decided sales." The ban includes the UK and Switzerland.

Pinch me quick and tell me I'm not dreaming. How can this be? Fourteen European central banks plus even the English Poodle announce that they will restrict gold sales and lending for the next five years.

Aftershocks following Tuesday's Wall Street circus . .

Chart Symmetry is designed around the observation that prices tend to change direction along certain preferred gradients. New readers are advised to read the first article in this series to discover how Chart Symmetry works. The link to this article is :

A former professional football player and commodity trader named Bill Murphy is shaking things up in the gold markets and perhaps in the boardrooms of some of the most powerful bankers in America too. Mr.