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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: kacy_in_LA who wrote (1955)11/17/2005 11:51:55 AM
From: SouthFloridaGuy  Read Replies (2) of 78418
 
I suppose, but then why is the yield curve almost at inversion if the Fed is so behind the curve on inflation?

I can only think of one thing: the market requires short-term rates to be significantly above long-term rates - effectively a Fed induced recession to purge out the excess debt. A Volker style modern-day depression if you will. Perhaps the Fed understands this and that is why they are gaming the market by saying the Yield spread has less meaning today so they can raise as much as possible so as to cut tomorrow. Nevertheless, the evidence overwhelmingly suggests that the US yield curve has a great deal of explanatory power.

Most likely scenario is that long bond yields continue to fall even while the Fed raises, and especially when the Fed stops, until the yield curve is SO inverted that recession occurs through natural economic forces.

I think this move in gold is more a last hurrah (for now) than anything else because sometime in the next 12 months, as far as I am concerned, either the 1) the Fed will catalyze a recession or 2) the yield curve will catalyze a recession through a credit crunch

Neither of the above would be bullish for gold.

However, I have always believed the technicals outweigh the fundamentals so I am in for the next 50% run in gold stocks.
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