Doomsday-Dejavu

May 25, 2003

On Tuesday, June 17th, 2003, after repeated denials, North Korea admitted that it was re-processing spent nuclear fuel, that they have found they have enough plutonium for several nuclear weapons, and that they have possessed more nuclear weapons than first estimated. Secretary of State Colin Powell condemns the news and says, "The North Koreans are on a path of reclessness." On the news, Gold moves up $6.10 to $386.40, sparked by heavy buying in Asian markets. The dollar also rises to its highest level in four months against the Yen. The Dow Jones sheds 181 points on the troubling news to 8338; Kudlow and Cramer claim the market will surge back once the true nature of the "bluster" is understood.

The last two weeks of June saw a choppy but steady rise in the gold price as the dollar continued its swoon against foreign currencies. The USDI fell to 87.65 by month's end. Rumors of problems developing in the financial markets with currency and interest rate spreads moving to adverse extremes against several large unnamed financial institutions, but rumored to be located in New York, Germany, and Japan. Of furthur Note: Several large short players and hedgers in the gold market were making aggressive moves on gold price dips, to exit unfavorable positions, as the gold price moved significantly into the $400 range as the month closed. New buyers entered the market when the Federal Reserve abruptly cut short-term interest rates to 3/4% in mid-June. Banks were reportedly paying as little as 1/10 of a percent interest on savings accounts. Gold had now gained a full 25% in the previous year alone!

By July 4th, several congressional, as well as United Nations' meetings had taken place to dicuss the Korean situation. All agreed on one thing--Now was the time for talk. President Bush also chose this historic occasion to talk (by television) to the American people. Telling us all again, how we have always stood in times of trouble to defend freedom, whenever it was threatened. "We now face such a time; the North Koreans WILL NOT be allowed to keep their nuclear arsenal!"...(Well,that was clear enough). He continued, "We must first sit down with the North Koreans, in an attempt to voice our concern. Therefore, the United States will open dialog with representatives of the North Korean government as soon a possible [something we had previously said we would not do unilaterally] to bring lasting Peace and Stability to the region."

Monday, July 7th, the stock market opened up 136 points on the "good news of impending talks." Gold dipped $3.70, to $414.60. Later in the week the first estimate of second quarter growth was released showing a GDP up-tick of 2.3%; the Dow Jones tacked on another 91 points, and Gold closed at $416.10. At about this time, (no one knows for sure but the decision maker) Alan Greenspan, stepping out of character, decided to make a guest appearance on "Larry King Live". Don't ask me why, only he knows that answer. Although publicly supported for re-appointment by the President, some said it was the first stop on Al's "farewell tour".

Anyway, the guest appearance was on Thursday, July 24th. A record audience tuned in to see "The Maestro" and fellow market crooner, Louis Rukyser exchange notes with "Mr. Suspenders". The audience that night saw their beloved Chairman, Mr. Greenspan, "live" as never before; he was witty; he was even comically engaging, exchanging clips with Rukey and acting almost giddy at the economies recently reported performance. At a point near the show's end. "Rukey" offered that were it not for Alan Greenspan, that he [Rukyser] would not be were he is tonight. King looked perplexed, pondering the comments meaning, as if thinking and wishing to say: "Hey Bozo, who do you think gave you the invite here, anyway?" King then turned his head and asked Greenspan in his most sympathetic manner, "Alan, when do you see the economy returning us to real prosperity?" Greenspan, in rare historical based glibness responded, "Larry, prosperity is just around the corner."

Ted Turner, owner-or former owner of CNN, later commented about the show. "I thought I was going to throw up. Here are those three, yucking it up, like a bunch of drunken frat brothers at a fifty-year reunion. They should have shown a little more concern for the poor folks that lost all their money in the Markets." Ted failed to futhur mention, that he too, was now one of these much poorer folk.

The following day, the markets gave their assessment of "The Maesto's" performance--Two thumbs down! Shedding nearly all of the post 4th of July rally and ending at 8351 on the Dow. News of a new record trade deficit, and a record slump in auto sales helped to push down the Chairman's scores. Gold surged ahead to $426.50 (a new high for the move) as both U.S. and Chinese efforts to organize talks with North Korea had come to nothing.

Outside of the USA Gold Forum's vigilant membership, few were aware that the Comptroller of the Currency, in a highly unusual move, had swooped in to examine both of New York's largest banks simultaneously. Obviously though, some gold traders had also taken note.

At the end of the day, Greenspan said that he used a poor choice of words, when referring to "prosperity," but had felt a little light-headed at the time. Both Rukyser and King said they couldn't explain it either, but both said they had felt almost "high" during the television broadcast. After reviewing tape of the show, all three, it was noticed, were drinking much more liberally than would normally be expected, from their French bottled waters. The bottles were located and sure enough, tested positive for a mild hallucinagenic drug. Tom Ridge declared it, "An act of financial terrorism." Ordered a full investigation and promised, "total justice to the guilty." The French ambassador immediately denied any French involvement.

The poor Dow, Nasdaq, and S&P continued to sag into August as did the weary countenance, jowls, and eyes of the forlorn, Sir Alan.

On August 4th, (The one-month anniverary of the President's "Let's sit down with the North Koreans speach," They abruptly said all talks were off...They did not trust the United States...They were armed and well prepared for war...They as a sovereign nation would decide their future...They welcomed support in the name of freedom from any country willing to stand against the United States. They also now admitted to having over a dozen nuclear weapons and stated that those weapons would be used WITHOUT DISCRETION to defend themselves.

The following day Iran and Syria both issued support for North Korea and admitted having nuclear weaponry--nothing more than that. Within a day, Israil sealed its borders and declared that any provocation was a act of war.

Russia's Vladimir Putin spoke in Paris. "The World is poised for War...Only the United States can prevent it."

You can imagine what was going on in the markets.. Gold futures lock-limited up three consecutive days. After that, the Comex was closed. A spokes man said, "because of computer tampering and the necessity to protect traders from the unscrupulousness of speculators." At the same time, spot rose to $500, then 6, then 7. Stocks? I wasn't watching them that much, but they crashed to about 6,000 on the Dow within days, and kept heading South.

The news of financial insolvencies and the inability of market makers and banks to meet obligations now were causing the public to "run" from the markets and banks. The FDIC had joined in the New York bank investigations and stated that a congressional "pay out" might be needed to meet legal mandates in certain situations.

Rumsfeld must have seen his face reflected in the new foreign enemies and blinked. He demanded, "The United Nations must act!" What!(?) This from the new town Marshall, who only months before had been looking for new gunslingers to blast? The world froze for two weeks. The USDI plummeted to 53.

Then at 8 A.M. in the morning, on Sunday, August 24th, one day after the traditional Dragon Boat Festival in Hawaii, a nuclear device was detonated a few hundred yards offshore of Waikiki Beach at Honolulu. The device, believed to be aboard one of the many luxury yachts in the area, leveled the beachfront Hotel Strip and immediately killed and estimated 300,000 people.

The following day, Monday, none of the markets opened-nor did they open for the remainder of the month. I visited the local trader in my small town. He figured physical gold at somewhere around a thousand dollars and ounce, but he didn't know for sure--didn't seem to care. Nothing seemed to matter now. "What were you thinking of doing?" He asked. "You DON'T want to sell it now. I don't even know if you'd get your money. And even if you did, you might not want it after a while. Because gold's probably just going to keep going up...for a while anyway."

By September 1st, --Labor Day-- Physical Gold Stood at $1787.35 per ounce and was still climbing, as the United States considered retaliation--but against whom?

From the USA Gold Forum
http://www.timebomb2000.com/vb/showthread.php?s=1792eb8189f40692607d8f1bbb9af1c3&threadid=69323