Date: Tue Apr 13 2004 12:00
trotsky (Carmack, 10:59) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
you've hit the nail on the head with that question. when people are trying to tell you that there is NO circumstance that could be construed as bearish for a given market, better become very cautious. what you've mentioned w.r.t. the gold market and interest rates reminds me of a similar question posed to a housing market bull recently. he argued that while, yes, rising interest rates would be considered bad for housing, the rising rates would be the result of an economic recovery , which in turn would be good for housing. iow, NOTHING could possibly derail the housing bubble. similar arguments were put forward at the Nasdaq top: rising rates weren't bad, since they denoted good business conditions...bad business conditions otoh would be bullish as well, since they would result in falling rates. in the end, business conditions deteriorated, rates fell, and the Nasdaq collapsed by 80%.
the lesson is: there is no market for which conditions will remain bullish or bearish forever, in spite of the fact that one can always rationalize such a scenario. in gold's case, rising interest rates ( especially at the short end ) , or rather, a flattening of the currently very steep yield curve, would be bearish. this would imo hold true regardless of inflation rates, since both gold and the yield cure, at least in theory, are concerned with FUTURE inflation expectations, and not the current situation.
Date: Tue Apr 13 2004 10:03
trotsky (bonds and stocks) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the stock market looks precarious to me as well...note that a fall in the gold price is always a sign of the 'reflation' trade being in trouble - and the stock market is part of that trade.
bonds and notes otoh are likely to put in a spike low right here - due to the recent piling up of speculative short positions in the debt markets, which have reched fresh all time extremes by some measures |
