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A poem for the folks who do the real work

Section: Daily Dispatches

11:50p EDT Thursday, October 28, 1999

Dear Friend of GATA and Gold:

Commentary posted tonight at
by William A. Fleckenstein may interest you. It follows.

Gold Anti-Trust Action Committee Inc.

* * *

By William A. Fleckenstein
October 28, 1999

Gold gets going....

The yellow dog came in barking this morning. It traded
around $300 an ounce, had a bit of a selloff, and then
lifted its head to close slightly over $300. This is
the action I've been wanting to see since we had the
initial flurry to the upside.

I expected we'd have a bone-chilling decline that would
make everyone question whether this thing was ever
going to go up, or if it was a head fake. I believe
that has all occurred, so I think gold is going to be
quot;goodquot; here.

Buying gold stocks makes some sense. The ones I'm most
comfortable with are Anglogold and Homestake, but in
the end as far as precious metals go, I prefer silver,
as regular readers know. I think folks should do their
own work and find companies with good balance sheets
that don't have hedging. I'll leave it to you to figure
out what to do.

Gold's performance was interesting especially given the
fact that oil got clobbered today, down about $1.25,
which is about 6 percent. That helped the bonds, which
were up about 3/4 of a dollar, extending their rally.

But on the other hand, given the celebratory effects
that the stock market saw, you'd have thought the bonds
were up 5 points. The dollar was strong as well, so we
had the trifecta of oil down, bonds up and currency up,
which added to today's delirium.

A potential wet blanket at today's gold party was the
fact that the XAU did absolutely nothing. We'll have to
see whether we're going to get a delayed effect there,
or whether the XAU has smelled out that the rally's not
going anywhere. That's one fly in the ointment.

Gartman on gold...

Speaking of gold, I want to include some observations
from Dennis Gartman. Dennis has been correctly bearish
on gold for a least a decade, so when he says something
about gold that appears to be constructive or
thoughtful, it's worth noting. Most people who write
about gold have been bullish the entire time he's been
negative. He had these comments about the fact that
Kuwait moved all its gold reserves from London:

quot;There may have been more than Kuwait's wish to earn
some reasonable return from its gold reserves at work
when the Central Bank there moved all of its reserves
to the Bank of England to be put into the gold lending
pool there. We thought (and we still do think) that the
US brought some pressure upon the Kuwaitis to act,
hoping to push the price of gold lower in order to keep
that important signal of monetary circumstances sending
the quot;rightquot; signals. We do not doubt that conversations
at the highest levels regarding this circumstance took
place...and we are not conspiratorialists. But perhaps
there was more than US pressure; perhaps there was also
pressure brought upon Kuwait by its other chief ally,
the UK.

quot;Consider that the UK still watches monetary
circumstances in its current and former Commonwealth
nations, which we know it does. [Ed. Note: Ghana was
ruled by the UK for more than a century, and was known
throughout that period as The Gold Coast. Ghana became
a republic within the Commonwealth in 1967.] Consider
that Ashanti Gold, one of Ghana's most important,
privatised companies whose shares were floated on the
London stock exchange only two years ago, was in
jeopardy when its hedge book was exploded as gold
prices roared higher late last month.

quot;Is it far fetched that the BoE might do what it could
to push gold prices lower, allowing Ashanti (and its
creditors...who thus far have been `on the hook' for
Ashanti's hedging losses) the opportunity to cover its
positions at more reasonable levels? We think it is
not. Certainly we think it is worthy of consideration.quot;