March 22, 2002

*** Updated ***

Equity Outlook

The market retrenched somewhat in January and the first two weeks of February, before recovering back to the level that prevailed prior to September 11th. At this writing, the S&P is testing a trading range that extends from 1140 to 1180 with no indication of direction from this range forward.

Among the major corporations, AIG, General Electric and Citigroup continue to demonstrate some weakness as worries regarding the economy (surely justified) have come to the forefront despite helpful, albeit guarded, comments of a positive nature from Mr. Greenspan. Price-to-earnings ratios remain somewhat bloated at this writing and either real earnings will have to advance from present levels or share prices further retrench to bring the situation more into equilibrium with historic norms. Our equity allocation remains sound with only about 40% of the total portfolio so invested; the positions should not be disturbed at this time.

Meanwhile, gold pushes higher, at the $290 to $300 per ounce level, sending tremors through the international financial community, which has large speculative bets outstanding that the price of bullion will move lower in the months ahead. It is probably a poor bet, but may be sustainable for a while longer, until the situation explodes. The problem, of course, is that there is a physical shortage of the metal for delivery and the metal must be borrowed from a central bank. It is a scam that will end badly: a scam similar in many respects to the poor bets that Enron made regarding future price movements in oil, gas and other commodity items. In summary, all gold positions should be held.

Gold Outlook

As the price of gold continues to work higher within its trading range of $290 - $300 per ounce, the major manipulators, i.e., the international banks and their associates, are increasing pressure on central banks to sell a portion of their gold reserves to bail them out of their hopeless positions. The latest example of this is an interview with Bundesbank President Ernst Welteke published Monday, March 25th in the Frankfurter Allgemeine Zeitung. After gold surged to $302 per ounce on the preceding Friday (outside its trading range as indicated above) Mr. Welteke was interviewed. In this interview, Mr. Welteke stated "We must consider in the medium term if we can't convert some of our gold - small volume and without pressuring the market - into securities." The aim, presumably, if it weren't laughably, is to more efficiently manage the bank's portfolio of gold and currency reserves. Mr. Welteke might well consider that most market participants at this time seem to be going the opposite direction, i.e., converting worthless paper and government promises to gold, in his efforts to more efficiently manage the bank's reserve assets.

The pressuring of the Bundesbank to threaten to sell a portion of its gold reserves on the open markets is just another unseemly attempt at manipulating the gold price lower for the advantage of international banking interests. These interests have sold gold short in the market and borrowed the metal when delivery was demanded. These massive short sales of the metal continue unabated.

In view of the speculation in the market to depress the gold price, similar to the Enron situation in some respects, investors should retain all gold positions.

March 5, 2002

Market Snapshot

The market retrenched somewhat in January and the first two weeks of February, but seems to be recovering and stabilizing from mid-February forward. Among the major corporations demonstrating some weakness were AIG, General Electric and Citigroup as worries regarding the economy (surely justified) came to the forefront. Price-to-earnings ratios remain somewhat bloated at this writing and either real earnings will have to advance from present levels or share prices further retrench to bring the situation into equilibrium.

Meanwhile, gold pushes higher, at the $295 to $300 per ounce level, sending tremors through the international financial community, which has large speculative bets outstanding that the price of bullion will move lower in the months ahead. It is probably a poor bet, but may be sustainable for a while longer, until the situation explodes. The problem, of course, is that there is a physical shortage of the metal for delivery and the metal must be borrowed from a central bank. It is a scam that will end badly: a scam similar in many respects to the poor bets that Enron made regarding future price movements in oil, gas and other commodity items.