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Strategies & Market Trends : Strictly: Drilling II
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To: craig crawford who wrote (864)8/30/2001 8:03:57 AM
From: Arik T.G.  Read Replies (1) of 36161
 
Craig,

Re : Downside potential
Theoreticaly there could be an extreme situation in which spot goes below average production costs, but that cannot be other then temporary market failure. Still a lot better then currencies and stocks that have no downside limit but zero.

Re: Safe haven
I'm talking about international big boys, not your J6P.
Far east (HK, Japan) and European banks and insurance groups could start thinking about a small gold position as hedge against the Dollar. That's a a few Billion Dollars to start with, and the hedge funds sharks would smell blood and leverage another few Billions into this narrow market.
I guess that for Gold to utilize its old safe haven qualities the world financial system will have to go from bad to worse and currencies would really have to suffer a confidence crisis.
The worst thing that could happen (best for Gold) is if somewhere down the line of currencies instability a CB with medium size reserves (Swiss?) will announce a halt of Gold sales. Just imagine the havoc. 1000? do I hear 1000? Hedge fund manager offering 1000. Yes sir? 1200? The man with the umbrella offers 1200. Anyone bids higher? Sold to the man with the umbrella for $1200.

We're still in early stages of the post strong Dollar era and have a long long way downhill to the described scenario. Lots of disbelief in the Gold market that shows on the charts. Still the lows on the metal are sequentially higher now.

ATG
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