28 SEPTEMBER 1974, Page 25

Writing on the Wall...Street

Charles R. Stahl

It has been said recently that hearing that a bank with a Teutonic-sounding name went bankrupt conjures memories of the 1930s, So it does, although the current German banking measles appears to be more contagious than its predecessor epidemics in the 1930s, and with a new twist. The banks are now playing the forex game, apparently in competition for the laurels of who can afford the bigger loss without going busted. So far the top contenders for the forex bold medal are the Westdeutsche Landesbank, $120 million; Union Bank of Switzerland, $110 million; Lloyds Bank, $75 million; Franklin National Bank, $45 million; United California Bank (Basel), $45 million; Seattle First National Bank (Switzerland), $22.5 million; Hill Samuel, $21.5 million, etc. It would be interesting to have those banks stand up who were on the other side of those transactions, and who did make money in the foreign exchange markets The road to the forex bold medal award is strewn with the corpses of the banks la Herstatt who overestimated their judgement capacity as well as their resources, and we believe that there will still be more banks which will succumb to the German banking measles. The New York Stock Exchange appears to take every bank collapse and disclosure of a loss in foreign exchange trading as a personal offence, and recently stock prices were dropping from one new low to another. But this makes us only more bullish, because the lower the Dow Jones Industrial Average, the

closer we are to the bottom, and the greater the forthcoming recovery. We well remember what happened to silver, a metal with the most bullish fundamentals of all (yearly worldwide consumption by far .exceeding the yearly production of the metal), yet the silver price took a dive from $2.56 in 1968 to $1.27 in 1971, The lower the price of silver went, the more bullish we were, and finally, when the bottom was reached, we were the only bull around, but because our confidence in the ultimate direction of silver prices was unshaken, we lived to see silver at $6.40 in the beginning of this year. We are confident that the New York stock market will

likewise recover, and that the next bull market in stocks will bring the averages to new highs. Therefore we would like to leave our readers with the thought which we brought up once before: if your money does not appear to be safe in banks, why not park it in the stock market?

Mr Stahl is President of Econdmic News Agency and publisher of Green's Commodity Market Comments