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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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From: loantech8/9/2006 5:36:00 PM
   of 78416
 
An excellent Trotsky.

A legend and for good reason.

<Hambone@pm's and the stock market -- trotsky, 15:53:47 08/09/06 Wed
well, at the beginning stages of the 2000-2002 recession, pm's were ALSO dragged down wih the broader stock market initially - that changed the very second the yield curve began to steepen.
there is however a major difference between then and now - the decline in 2000 was the last leg down in a multi-year bear market, whereas the sector has been in a bull market ever since. the major problem as i see it is that gold and pm shares have been part of the global excess liqudity play since late 2005 - and are thus susceptible to weakness in the face of this liquidity binge ending. however, over the long term, gold actually performs BEST when liquidity is CONTRACTING (thus the correlation with the yield curve). especially gold's REAL price, or purchasing power, tends to improve in periods of contracting liquidity. this is therefore also the time when gold mining margins expand at a much faster pace than the PoG itself. the question is only if there will be a lead or lag this time around (w.r.t. the yield curve correlation) - unfortunately this is unknowable in advance. it all depends on how much of the 'excess liquidity premium' has been wrung out in the recent correction i guess.>>
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