THE WINDY CITY TRADER

P.O. Box 1673, Chicago, Illinois

(October 28, 1997) METALS: Ouch! Gold dropped over $16.00 last Friday reaching a 12-year low down to $308 basis December. This was supposedly in response to the Swiss Bank announcing plans to sell (dump) 1400 metric tons on the market. This was only part of the story. Gold had already been dropping and it is becoming quite evident that this market lacks the luster (no pun intended) which it once had. Wars, world crisis, and stock market bludgeonings used to be occurrences which immediately sparked a surge in gold prices. The world and the markets are ever- changing. Apparently gold is dead as an indicator. In reality we think the Asian problem is actually very deflationary world-wide. So even if you think you'd like to buy gold because it's cheap, don't look for much more than a dead-cat bounce of $8-$10 up from here. Silver, simple. It will follow gold. Copper will have trouble if stock troubles continue. In reality this market is probably a better gauge of world economy than gold. Perhaps the weak copper market has been trying to tell us something.

Stephen Connell and William Frejlich

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