Daily News from New York, New York • 30

an ouric i ACK IN SEPTEMBER with I London gold selling around $695 an ounce gold bug Jim Dines urged clients to let their gold profits run. In late November, after the price had dropped to $630, he reiterated his env dorsement, declaring that the "technical reaction" might already be. over. By gold had tumbled to around $573. But that didn't stop Dines.

leading gold experts around the world are predicting a maj oc sellof Several see the strong likelihood of gold which peaked at $875 a year ago tumbling to around the level this year. In a transatlantic phone interview, gold expert Hubert Bashnagel of the Swiss Bank Corp. of Zurich told me: "The people who bought gold on margin are bleeding to death because of the high financing costs. And if interest rates remain high over the next 30-60 days which I suspect they will we're going to see a lot more bleeding." Bashnagel, whose bank is one of the world's largest buyers and sellers of gold, describes the current demand for the precious metal as very small. David Potts, chief gold analyst at Consolidated Gold Fields, of London, the world's second-largest gold producer, also sees gold declining.

Potts told me in a telephone chat from his London offices: "'With all the scares being squeezed out such as Afghanistan no longer appearing in the headlines and the Iran-Iraqi war not getting any bigger we think gold is in for a long quiet Poland maintain some semblance of a better standard of living. International Moneyline publisher Julian Snyder has frequently had hot streaks in calling gold price moves in his investment newsletter. His latest forecast: a sharply lower price tag by the third quarter of 81. I "We've been shorting gold since $630 an ounce," he says. 5 He thinks a declining inflation rate to 6 by the third quarter will play havoc with gold.

Snyder also sees the i inflation rate experiencing further downward pressure from the impact of a strengthening U.S. dollar. Snyder adds that his Saudi friends who have bought gold at higher prices 5 are now much more interested in buy- i ing ocean property on the West Coast or town houses in New York. Although negative on gold for now, i Snyder says he'd still maintain 5-10 of his assets in the precious metal. 1 "Our economic problems are still a long way from being solved," he says.

But for the year as a whole, the word from Snyder is to shun new gold purchases because "it's going to be a rotten "81 for gold." CO 181 Chicago Tribune-New York New Syndicate, Inc. Aside from outbreaks of military conflicts, the course of gold is very largely determined (as you probably know) by inflationary expectations. And the overriding view of professional gold watchers is that inflation's going down. Adding to gold owners' woes is the' likelihood of stepped-up Russian gold sales this year, and the apparent lack of Arab purchases (some Arabs continue to sell). "The gold market is weak, and it has a propensity to go lower," says Jim St Clair; head of a currencies and precious metals trading firm bearing his name.

"You talk to the big traders of gold (primarily overseas) and they're more interested in talking about skiing," adds St Clair. St Clair predicts gold will drop to around $500 to $525, with the prospects of an even bigger decline to the level, if a couple of things happen: (1) the Federal Reserve refuses to print more money to pay for the rising price of oil; (2) a decision by Moscow to acquiesce to Poland's socialistic mutiny (such as the workers' demand for a five-day, 40-hour week). The latter would result in accelerated Soviet gold sales to help finance DAE1 3 The doomsayer enthusiastically declared that it was the "last heaven-sent opportunity to buy gold cheap." And he was wrong again. At press time, gold was selling around $570. While Dines continues his never-ending love affair with gold an infatuation that cost his clients a 20 loss on their money in just four months some iet cutter pushes for f4 1 A loww 5 aroitrary siasn 4 ft ffi By JEROME CAHILL (News Bureau) WASHINGTON REP.

Jim Jones would like to see the incoming Reagan ad 'Ti- til "If- VIJ ministration talk softer about curing the nation's economic ills. "One of the problems we have is that people are jaded about govern ment ability or willingness to do anything about inflation," he said in an interview. "We have to be credible. We have to do something dramatic, but we shouldn't The landmark Seventh Regiment Armory may never be the same Carey aide backs bid by builder to develop Park Ave. armory By RANDY SMITH from a 41-year-old f4! Democrat from should be on the fiscal 1982'budget that covers the 12-month period beginning next Oct 1 and, even more importantly, on the fiscal 1983 budget that President Reagan will submit to Congress next January.

It will be the first spending plan bearing the full, imprint of the new Administration. FOR FISCAL 1982, Jones said he believes it 'will be possible for Congress to cut the deficit in half from the $55 billion to $60 billion forecast at current spending levels. That would reduce the deficit to the $27.5 billion figure endorsed by President Carter last week in his final budget message. But "ad hoc" spending cuts of about $30 billion will have to be made to accomplish the goal, Jones indicated. Revenue sharing, food stamps, community development block grants, farmer loans, military loans, index entitlement programs all were listed as targets for the budget Economics at largo cutters.

"We will need some arbitrary cuts across the board," Jones admitted. In Jones' opinion, the Kemp Roth bill with its promise of a 30 income tax rate reduction over three years is not the way to go. He said he was confident that Congress would reject the bill as inflationary and instead approve a one-year tax cut of about $35 billion with about two-thirds going to individuals in the form of rate reductions and savings incentives and one-third to business. Jones agrees with Treasury Secretary-designate Donald T. Regan that a balanced budget is not likely, until the 1984-85 period.

"The first six months are crucial," he said. "If the new Administration and Congress use the honeymoon spirit to make the hard budget decisions and approve non-inflationary tax cuts, they can change the prevailing psychology and set in motion an economic recovery that will give us a balanced budget in three or four years." CO that covers a fourth of the block and contains the regiment's intricately decorated offices, dining and reception rooms, plus a gymnasium and two courts each for handball and squash. Some of its massive wooden beams are even inlaid with silver. Behind it the cavernous 80-foot high drill shed extends, complete with tennis courts, the rest of the way to Lexington. Since the state-owned building sits on city land, government sources told The News, the drill shed could be auctioned to the highest bidder to generate more tax revenues while preserving the Park Ave.

tower. Speyer, managing director of Tish-man-Speyer Properties, wrote Carey's secretary, Robert Morgado, last Nov. 24 that "we do not feel this site is being used to its highest and best use," and said his group would be willing to pay "a substantial eight-figure price for it Morgado, who more or less runs the state for Carey, replied with a brief "letter Dec. 9 telling Speyer: "I have directed the Urban Development Corp. to work with our agencies (the office of General Services and the Division of Military and Naval Affairs) for a development plan.

"Also, I personally called Mayor Koch regarding the state's interest in moving ahead. As soon as we're ready, I'll be in touch with you." Gov. Carey's top aide has ordered plans drawn up for a hotel or apartment tower on the site of the landmark Seventh Regiment Armory at the request of builder Jerry Speyer, The Daily News has learned. The unusual move by Carey's secretary, Robert Morgado, could result in the razing of three-fourths of the imposing turreted red brick fortress that covers the entire block from Park to Lexington between 66th and 67th Sts. Both state and city agencies have begun work on but are reluctant to talk about the project But it already has some of the 2,300 past and present members of the 174-year-old State National Guard regiment up in arms: "We certainly intend to fight this," said retired Brigadier Gen.

Charles Hangley, president of the Veterans of the Seventh Regiment "This building has been here 100 years and now they just want to use it to make a quick buck." THE ARMORY THEY'RE fighting for has two connecting parts. One includes the room where Gen. Douglas MacArthur lay in state in 1964. The other, members boast, holds one of the city's most exclusive tennis clubs, with six wood-floor courts. MacArthur lay in state, in the tower fronting on Park cut his political Jone5 eyeteeth in John Kennedy's 1960 presidential campaign and later worked in Lyndon Johnson's White House might seem a bit gratuitous to a conservative Republican administration.

BUT JONES CANNOT be A leader of conservative Democrats in the House who could provide the "swing" vote that Reagan budget cutters need, he is the new chairman of the-House Budget Committee. Already he has had several lengthy private sessions with Rep. Dave Stockman, who is giving up his heavily-Republican Michigan house seat to become Reagan's budget chief. Jones agrees with Stockman and other Reagan advisers that a start -should be made toward bringing the budget into eventual balance by trying, to make some further cuts in current year, fiscal 1981 spending. But he warned that by the time such budget cuts clear Congress, the budget year will be three-fourths over.

Hence their impact will -be small. The major emphasis, he said, 3 a ro 5.