Ken Benes: "The pattern you described will continue until the carry trades in gold, bonds, currencies begins to buckle. When will this happen? "
Wednesday, May 19 1999 3:37AM ET
Hutch:
"A tightening bias does not neccesarily lead to tightening. But what it does do is place on the bond issues a weaker stance, and lessens monetary inflation. And this is EXCELLENT if you are long the US Dollar, short gold. ... In such a bias CPI inflation will either deteriote over time, or the FED will raise rates. But untill rates are raised you can bet all your gold will be sold into the market and bonds will be purchased. If this so called gold-carry rate was good at 4.5%, it must be ROCKING at 5.9% But if at the next FOMC the CPI style inflation is subdued again then the NEW PARADIGM will be back in vogue, and the growth will over whelm the inflation rates again. And with that the darken metal will die with a whimper. This philosophy that gold does best in higher rates is a preverification. Gold does best when the FED leads bond rates higher, not Bond rates leading the FED rates higher."
#reply-9605958
This that CAN help break the carry rate
1) Canadian bonds rates higher then US bonds
2) Canadain Dollar gaining rapidly against the US Dollar
3) US Dollar index start collasping, DRAMTICALLY.
4) Gold
5) and more, but lunch is coming.
Don't think it'll happen soon. |
