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WEDNESDAY, 19, August, #859
Dr. John Shingler had just returned from a month in South Africa and was keen to share his latest findings with us. As many of you know, John taught Political Science at McGill for many years; he then joined Brockhouse Cooper and has been responsible for establishing Malan Brockhouse Cooper of Capetown.
John's views are always articulate, fascinating and illuminating, and this Wednesday's "Shingler, Ph.D. Seminar on South Africa" was no exception.
David and Diana Nicholson

Dr. John Shingler |
Dr. John Shingler proved himself once again to be both exceptionally well informed and a brilliant conveyor of information.
The evening opened with a tightly edited video on the more recent history of South Africa, followed by an invitation to John to discuss his month-long visit there and the developments he has noted since the Fall of 1997.
Sabra Ledent |
Since the extensive coverage of the elections, South Africa has virtually dropped off the map (except for the few items on the Truth and Reconciliation Commission), therefore John wished to draw particular attention to three key areas: the State, the Economy and the Social Order.
1. The State
The Constitutional Talks of 1991-1992 resulted in compromise curtailing the previously powerful states and concentrating power in the hands of the federal -African National Congress (ANC)- government and political parties. Taking into account the nature of the South African economy, the 12 official languages and the large concentrations of the population in the East and along the coastline, the models which appeared most suited to South Africa were those of Israel and Germany.
The greatly reduced authority of the provincial (state) governments has meant that they can do less for their constituents. The result of this lack of "connection" at the local level is that the true constituency of the Central government is the national parties including the IVP, United Democratic Movement, and Pan-African, rather than the voters. One consequence of this is that public services are very weak. On the other hand, the current structure allows policies to be developed along the lines of truly national - rather than tribal or local - lines.
There remain many unresolved issues, notably how long this situation can last after the current unifying factors (individuals) in the political parties retire from the field. It is accepted that the ANC will try to obtain a 2/3 majority in order to make constitutional change.
In reply to a question concerning whether the grassroots-level voter is an informed political voice, Dr. Shingler remarked that awareness of issues is not a facet of voting behaviour. The civis of South Africa probably numbers a mere 100,000.
Louise |
On the question of power sharing, John stated that some whites do take an active role in the ANC, but their power has been very limited. At this time, Afrikaans ("The White Tribe") are thinking about how to preserve what power they have. The current political structure with its limitations on local powers certainly has helped to maintain a degree of importance for the Afrikaans, but there is uncertainty about their role, their future and possibilities of power sharing over the long term.
On the question of the role of white supremacists, our expert replied that the right wing is no longer a factor. There are professional soldiers who are very effective.
Political action generally involves or degenerates into violence. There have been 30 killings in the last month.
2. Social Order:
Under the previous régime, South Africa was a "hard" state, guilty of extreme oppression. Today it might be described as a "soft" state. There are two responses to recent history - "let bygones be bygones" or punish the former oppressors.
Perceptions relate to age. Many younger people are unaware of key historical legislation.
Many whites were against apartheid, but still live in a highly segregated world where the great instrument of segregation is the automobile which allows whites to continue to live apart from the vast majority of the population, behind walls at home and behind security devices in their offices. It is virtually unheard of to walk to a neighbor's house, drive with the car window open, or ask directions of anyone.
Crime is rampant. Over 1000 policemen have been killed, some 200 farmers a year. The townships' crime rate has soared since the 30's; the kids who were left alone in the 40's and 50's are today's hardened criminals. In relative terms, blacks are much greater victims of crimes. The level of corruption is astonishing. There is suspicion that members of the police are in collusion with the gangs of hijackers (cars which have been stolen go to the Police Pound!). However, contrary to impressions abroad, South Africa is one of the world's most under-policed countries.
3. The Economy:
While some are returning to old, socialist 1950's agenda, the socialist platform has been abandoned and a liberal economy adopted. John held some 75 meetings with companies and institutions and underlined that workdays are long in South Africa (7 a.m. til dinner time).
There is a new business architecture developing, related to the issues of security and segregation : 4-5 storey buildings in compounds. (Editor's Note: Not an altogether new concept if one remembers the industrial "parks" built in certain neighborhoods of U.S. cities. South Africa could import some 1970's Miami or Detroit architects!)
Contrast this with Canada where you can work in the streets.
There are well educated, entrepreneurial blacks who are building companies.
There are numerous Canadian joint ventures; small companies forming partnerships with locals. Technological expertise exists, university graduates are highly trained; South African expertise is highly sought-after in other (less-developed) African nations, but this also causes a problem. Many of the best and brightest are emigrating and at this point in time, they are badly needed in their own country.
Culture
Brian |
Literature is driven by social causes and change. 1994 was a turning point. Today, everyone is impressed with money; it is all American culture, in English. Culturally speaking, South Africa is a peripheral of the U.S. Many indigenous arts and languages are quite lost. South African publishing houses are small and it is hard to find books by local authors on local issues, literature, poetry; the Black culture is struggling because of a lack of self-identity. Publishing and the media are overwhelmed by the multinationals.
How far should a country go to protect and preserve its culture? Should CNN and other foreign broadcasts be censored? It has been tried in other countries with little effect other than to make the "forbidden fruit" more attractive and today the Internet makes censorship even less possible.
In conclusion, John stated that eventually one could see South Africa evolving into a country like Brazil -with a small political élite, a certain hedonism, segregation based on security concerns and wealth, no public spaces.
He does not subscribe to the gloom and doom theories, however, but there is still much to do to guarantee a progressive and comfortable society with a stable economy and political structure.
It was a fascinating and challenging evening. So much so that there was barely mention of the ludicrous political happenings in the U.S. , the continuing slide of the Canadian dollar, the impending decision from the Supremes or the devaluation of the Russian ruble!
Notes by Michael Judson
Edited by Diana Thébaud Nicholson
Please see the account of other Wednessday's fascinating discussion at:
- Wed 858 the Dollar and Mexico
- Wed857 Nazi Gold.
- Recent Wed-Night
- Ron Meisels new page on the market
From: "Ron Meisels"
Date: Wed, 19 Aug 1998 17:44:11
D & D....
Great page, great chart, great picture, great job. What else can I say?
Yours truly, great man
Gold (US$275)
5-Sell (short term)
Another Break-down, Worse Around the Corner?
Monday, August 31, 1998
1-Yr. Spot Target: $310
Short-Term Target: $252
>P>Golds (US$275.00) - Felix Freeman
Gold cracked the important $275 level last night, reaching a low of $271.80 on the back of heavy fund selling on expectations of increased sales from Russia as well as the continued extreme currency and market volatility. While the direct connection with the Yen has been broken, there is still a general connection to currency markets. Gold is still a slave to global real rates, and cannot be seen as a desirable asset in a deflationary environment. We have a problem seeing sustained trading strength unless rate cuts are forced on the U.S. Technical support exists at $271, but, if this is broken, the next major support appears to be in the low $250s, greatly increasing the risk over reward potential for the sector.
08/31/98
-
The physical aspects of the gold market remain healthier than might be thought, with the latest World Gold Council demand statistics showing continued healthy offtake from most areas except, as would be expected, the Far East. Overall demand in Q2 was 9% down, which, while not directly comparable to the Goldfields numbers, suggests that annual demand might fall 350-450 tonnes this year. In the critical Indian market, imports are actually up 33% compared to last year, and a generally good monsoon suggests good demand from the start of the festival season in mid-September, and the Rupee is holding in well. The worst of the outflows from Korea also appears to have ceased. The main supply problem overhanging the market is the fate of non-collateralised Russian holdings and the large amount of Central Bank lending seen over the last six weeks. Central Bank activity has pushed the one-month lease rates down to as low as 0.53%, suggesting a distinct lack of interest in borrowing. Producer hedging from South Africa and to a lesser extent Australia is still a threat, although many Australian producers are fully hedged and have positions that are underwater. Our $310 12-month target is predicated on the health of physical demand.
- While the gold stocks have come under pressure with the decline in bullion, they continue to trade tightly in the same relationship to gold that has prevailed since late March 1997, albeit at the bottom of the range, suggesting no overall worsening of sentiment. The NPV premium has contracted to 3.2%, the lowest since December 1995, but not yet quite at traditional buying territory of sub-zero. Further, there is a high variance in the premia of the individual companies at present. A contraction of gold to the $271 support would indicate a further 8%-9% downside on the stocks to about 4,450 on the TSE Golds. While this is not quite at the 1992 low of 4,248, it should be noted that the Philadelphia Gold Index (XAU) is already significantly below those levels, at 53.13 compared to 1992's 64.38. In the event of a collapse to $252, the stocks would be expected to retreat another 36% to around 3,450 on the TSE Golds, with the future of many of the companies in serious jeopardy despite the success of recent cost-cutting.
- While under the circumstances it is difficult to recommend any significant weight in the sector, it has been outperforming the TSE 300 over the last few weeks (!). At current prices ABX, ASL, CBJ, FCX, FN, GGO, PDG and TVX represent the more attractive values. Of these, ABX, FN and FCX represent the safest havens, while GGO and TVX are higher risk, although selling of ABX by generalist funds has hurt it recently. We would avoid BMG, HM, K, NEM and PRU, and, of course, ECO and RYO and any smaller producers. Even though some values exist among the smaller producers, notably GRE, G and RNG, the lack of a good market increases the risk significantly.
Roslyn Takeishi |
PS [Gold is a very thin market STAY AWAY DTN]
#858 Mexico and the Dollar previous week
Sup Court next week
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